Labor represents the single largest cost for a fulfillment operation. That cost can quickly get out of control if your logistics partner fails to take steps to reduce warehouse turnover. Consider that it may cost up to $10,000 to replace a single warehouse associate. Given the high turnover rate in the warehousing sector, those costs will quickly spiral into the millions for a 3PL that operates numerous fulfillment centers.
Handing off responsibility for labor management is one of the key benefits of using a fulfillment 3PL. But your fulfillment provider can only absorb so much of its labor expenses before passing the excess on. So, to ensure your rates don’t get unduly impacted by poor labor practices, ask your fulfillment partner what it’s doing to improve employee retention in the warehouse.
Why Do Warehouse Associates Quit?
While money will always play an important role in employee retention, employees don’t typically quit over the hourly rate alone. So, before you can understand if your 3PL is doing all it can to retain employees, you need to understand why associates quit. Here are some of the reasons employees may choose to leave a warehouse:
- Poor work environment. Unsafe work practices, inefficient processes, and bad managers can quickly push employees out the door.
- Remote work. The COVID-19 pandemic popularized remote work, making it challenging for places like fulfillment centers, which require on-site workers, to compete in the labor market.
- Other industries. Rising wages across other sectors, such as hospitality and retail, have made it easier for an unhappy warehouse associate to find alternative employment.
- Work/life balance. Most warehouses are understaffed, which means existing employees must work overtime to cover gaps in the schedule.
These issues present challenges for fulfillment providers, but a best-in-class 3PL will take steps to reduce warehouse turnover and mitigate its impact on employee retention efforts.
What Should My 3PL Be Doing to Reduce Warehouse Turnover?
When addressing employee turnover, you want your logistics provider to take a multi-faceted approach. The following questions can help you learn more about your provider’s retention efforts.
Do you provide a good work/life balance?
Work/life balance in warehouse work is difficult to achieve, but doing so is essential if your 3PL hopes to reduce warehouse turnover. If your fulfillment provider expects its associates to be available to work 24/7, those employees will quit sooner rather than later. Therefore, your 3PL should allow scheduling flexibility, paid time off, and good health benefits to keep warehouse associates from burning out. It should also strategically use temporary labor to relieve pressure on full-time employees.
What perks and benefits are you offering beyond the hourly wage?
Most warehouses have raised hourly pay to compete in the labor market over the past two years. However, warehouse associates now look at the total compensation package instead of the hourly wage alone. You want a provider that offers a well-rounded compensation package, including affordable health insurance, 401(k) matching, and recruitment bonuses. Smaller perks can also help retain employees, such as free coffee, snacks, and meals.
What channels do your associates have for feedback?
An organization can’t reduce warehouse turnover if they don’t identify practices or situations in the warehouse that might drive an employee to quit. A 3PL should provide opportunities for both direct and anonymous feedback, such as employee reviews or suggestion boxes. It’s also important for a logistics provider to foster a culture where warehouse associates feel like they can speak up. When employees do quit, management must also conduct exit interviews to see if they can identify and correct any trends that may keep other employees from quitting.
How do you show appreciation to your warehouse associates?
Warehouse associates pick and pack high volumes of orders in tight time frames. Additionally, many associates work voluntary or mandatory overtime to make up for understaffing. Incentivizing good performance through reward-based programs — such as employee or facility of the month, for example — can help motivate employees to keep productivity up while showing them that their hard work doesn’t go unnoticed.
The best way to measure turnover and the success of retention efforts requires analyzing the reasons for turnover and changing the things that trigger attrition. Though some facets of warehouse work may be inevitable, the chances are good that your provider can fix most problems driving warehouse employees away.
At Amware Fulfillment, we offer competitive wages, affordable health benefits, 401(k) matching, recruitment bonuses, and numerous perks that help us to keep our warehouse associates happy and proud to work for us. Please reach out to us to see how our skilled warehouse associates can improve your order fulfillment capabilities.