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Turnover rates for warehouse workers are notoriously high. With a 49% turnover rate last year, companies need to adapt their recruitment and retention strategies to remain competitive. Wages are rising amid shortages, but compensation is only part of the solution.
We asked several industry experts to weigh in on what it takes to attract more job candidates and retain more workers. In this article, we’ll share their approaches as well as what others in the industry are doing to compete effectively for workers.
What Companies Can Do to Attract More Candidates
“Since 2020, eCommerce has boomed in all aspects,” said David Anaya, Co-founder/Sales Director, Serviap Logistics. “The demand for warehouse work has risen, so warehouse staff have more options to choose from. People who quit are looking for the best opportunities.”
Because there is still a significant shortage of workers, there are more jobs available. “There are more job openings than unemployed people, so companies need help filling open positions,” noted Jamie Irwin, E-commerce Growth Expert, James and James Fulfilment. “Baby boomers are also retiring in large numbers, creating even more vacancies.”
On top of that, there’s a significant skills gap in the workforce, creating even more competition for skilled workers and top performers. So, what can companies do to attract more candidates?
Increasing Wages and Benefits
Order fulfillment and logistics companies are evaluating compensation and benefits to win the talent competition. The median salary for a warehouse worker is $34,674 in 2023. With typical wages ranging from $15 to $18 an hour, warehouse owners are competing with retail, food service, grocery, and other industries that have recently increased salaries and benefits.
For example, fast food and quick-serve restaurants are commonly offering salaries in those same ranges and also added benefits such as health insurance, paid time off, tuition assistance, childcare, and retirement plans.
“To attract more candidates, companies can consider offering competitive salaries and benefits, promoting positive company culture, providing opportunities for professional development, and leveraging social media and other recruitment tools,” said Muhammad Adil Rizwan, Head of Marketing, OurPCB Tech Limited.
Bonuses, performance incentives, cost-of-living adjustments, and wage increases are increasingly becoming common in the workplace.
Enhancing the Employee Experience
Abe Eshkenazi, CEO of the Association for Supply Chain Management, said one of the keys today is giving workers more than just pay.
“The paradigm of work has evolved,” said Anaya. “Today, people value more flexible schedules so they can have more time to live and spend with their families instead of living in the workplace. This is something we must always keep in mind when hiring if we don’t want to lose money due to turnover.”
“Higher wages provide employees with financial stability and can demonstrate a commitment to their well-being, while flexible schedules can allow for a better work-life balance,” said Adil Rizwan.
Besides better wages and benefits, warehouse managers are working to create a better overall employee experience, including consistent schedules, improved warehouse safety, wellness programs, and expanded paid time off.
“Having control over one’s schedule can allow for greater work-life balance and increase job satisfaction, which is increasingly becoming a priority for many job seekers,” said Irwin.
Retaining Top Performers and Reducing Turnover
“During inflationary times, constant turnover in the warehouse can have high costs,” said Anaya. “The way to avoid these constant outflows is to work on job retention programs.”
When you consider that hiring a replacement worker takes an average of 42 days at a cost of nearly $4,700, you can see how important employee retention is. While hiring depends on many factors, including location, skills, and experience, recruiting for some positions can exceed annual wages.
“The cost of position vacancies is more important than ever because of the current tight job market,” said Adil Rizwan. “When a position remains vacant for an extended period, it can lead to decreased productivity, increased workload for existing employees, and potential revenue loss.”
As such, companies are prioritizing strategies to increase retention, including better communication and providing career development opportunities.
Transparency and Communication
Employees today are worried about economic conditions, layoffs, outsourcing, and the impact of automation on their jobs. An increasing number of workers worry about whether they can be replaced by artificial intelligence and robotic process automation.
Adil Rizwan reminds us about the importance of communication and transparency. “To boost employee satisfaction during inflation, companies must communicate openly with employees about any changes or adjustments being made and offer support and resources for financial planning,” he said.
Focus on Career Development
A big part of keeping workers engaged is providing career development opportunities. When it comes to the warehouse and order fulfillment industry, companies have fallen behind. A recent Gartner study reported that 81% of workers want to learn new skills to advance their careers, yet just 42% said such development opportunities were easy to access.
“People choose to stay in places where they see that they can have greater professional growth and stability,” said Anaya.
Nobody wants to work in a dead-end job and warehouse workers that don’t see any potential for advancement are most at risk to leave the industry. Only a quarter of employees say they are confident about a career at their current company.
“By investing in employee development, companies can demonstrate a commitment to their employees’ long-term career goals and foster a positive company culture that values learning and growth,” said Adil Rizwan.
Irwin agrees. “Development programs are crucial for retention because they not only provide employees with an opportunity to expand their skill set but also assure them that their employer values their contributions enough to invest in their professional growth,” said Irwin. “It allows employers to retain talent at a fraction of the cost that it would take to recruit externally.”
Attracting and Retaining Workers
Warehouse, shipping, and logistics companies need to be proactive about strategies to attract and retain workers. Industry leaders are revising their wages and benefits packages and exploring other ways to improve the employee experience. They are also investing in employee retention programs to reduce turnover and create clear career pathways.