Reducing the Cost of Employee Turnover

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Situation

For over a decade, attracting and retaining warehouse workers has posed a significant challenge for manufacturers and logistics companies. Despite advancements in automation and artificial intelligence reshaping the industry, the human element remains essential in warehouse operations.

A significant challenge in the warehouse sector is the difficulty in recruiting and retaining warehouse workers. This issue stems from several factors, including the physically demanding nature of the job, the potential for monotony, and often harsh working conditions, such as extreme temperatures and manual labor.

The financial impact of employee turnover is substantial, encompassing recruitment and training costs, lost productivity, and the erosion of institutional knowledge. According to the U.S. Bureau of Labor and Statistics (USBLS), the average cost of turnover for a single employee is approximately $18,600 as of 2024. High turnover rates can be particularly problematic during peak seasons when companies need to quickly scale their workforce. By prioritizing employee retention, businesses can minimize the need for constant recruitment and cultivate a more experienced and reliable workforce.

Empower Partnerships (EP) recognizes these challenges and is equipped to address them. Over the past 6 years, the firm has partnered with a national last-mile delivery services provider to optimize and scale its recruitment process, focusing on hiring warehouse workers to meet staffing needs and reduce turnover costs.

Solution

EP collaborated with the national last-mile delivery services provider to customize its Recruitment Process Outsourcing (RPO) services to meet the specific needs of their warehouse workforce. This partnership provides comprehensive support in sourcing, recruiting, screening, and submitting candidates for all warehouse positions. The recruitment model follows a structured, five-step process that begins with identifying hiring needs and extends through to new hire orientation.

The cornerstone of reducing turnover is EP’s thorough recruitment process, which emphasizes consistent, compliant, and standardized pre-screening questions conducted by recruiting specialists to ensure the quality of new hires. A strong focus on candidate care and multiple touchpoints are implemented to ensure that new hires attend their first day of new hire orientation. Additionally, follow-up communications are conducted at 3, 7, and 10 days into the job to address any potential issues and reduce the risk of job abandonment.

This approach is rooted in a collaborative partnership, where understanding the dynamics of the warehouse environment and sharing insights with the client fosters continuous improvement. Minimizing No Call, No Show (NCNS) rates is also crucial, especially since some other suppliers report average NCNS rates of 75%, where EP’s NCNS rate is just 14%. And, ensuring that new hires arrive prepared on their first day is vital, as it significantly contributes to their long-term success and productivity, ultimately leading to reduced turnover costs.

Results

The successful outcomes of this partnership can be attributed not only to EP’s expertise in attracting and hiring high-quality candidates but also to the last-mile delivery services provider’s commitment to fostering an environment where employees can thrive, regardless of their pay grade. When the right processes, tools and technology are in place, the benefits in productivity, employee satisfaction, and reduced turnover costs are substantial.

Key metrics from the RPO collaboration between EP and the national last-mile delivery organization include:

  • Average active warehouse workers per month for EP client: 8,525
  • Average active warehouse worker turnovers per month for EP client: 2,056
  • Average active warehouse worker turnover rate for EP client: 24.1%
  • USBLS warehouse worker average turnover rate benchmark: 49% i
  • Projected EP client turnover based on USBLS turnover rate: 4,177
  • Saved turnovers for EP client: 2,121
  • Average industry cost for full-time warehouse worker turnover based on national figure of $18,600 ii
  • Estimated cost savings due to reduced employee turnover for EP client: $39,450,600

Conclusion

Empower Partnerships takes pride in its thorough and strategic approach to talent acquisition. The company employs a comprehensive talent acquisition assessment, employer brand management tools, and a proven five-step hiring process, all supported by innovative technology and meaningful human interaction including diligent pre-screening and consistent communication prior to new hire orientation and after the new hire starts on the job. Combined, these solutions help organizations of varying sizes convert best-fit candidates into quality hires for the longer term.

Moreover, EP emphasizes that retention is as crucial as hiring. The firm provides in-depth human resources consulting solutions aimed at enhancing employee engagement, increasing retention rates, and fostering a high-performance workplace culture.

This balanced approach to talent acquisition and talent management is essential for employers looking to fuel growth in the years ahead. Empower Partnerships believes the cornerstone of any successful business lies in hiring the right people, providing them with effective training, treating them well, and utilizing the right technology to support both the people and the processes.

i 2024 KPI Solutions Report.

ii Ibid.

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