- Large companies are planning to hire thousands of supply chain workers for the holiday season.
- But in an ongoing labor crunch, it’s uncertain if any will meet their goals.
- Insider spoke with four supply chain experts about what’s next for the space.
- See more stories on Insider’s business page.
Facing the swiftly approaching holiday season, companies are throwing massive job events, touting pay hikes, and embracing the gig economy to staff up in critical supply chain roles.
Amazon said it plans to hire 125,000 new warehouse and transportation employees. Walmart declared that it will onboard 20,000 new permanent supply chain workers. FedEx recently touted 90,000 open positions. UPS said it intends to hire over 100,000 workers for the holidays.
The pressure is on, as these companies and many others face one of the toughest hiring seasons for the supply chain on record, experts say.
“This is an ongoing labor shortage,” Dan Johnston, founder and CEO of logistics solutions provider WorkStep. “It’s no secret that with the continued boom of e-commerce and the continued growth of the supply chain sector, as well as some structural labor challenges, that there is significantly more demand for talent in this space than there is supply.”
High turnover makes hiring even harder
The pandemic changed how many people work and shop. As online shopping soared, so did the strain on the entire supply chain, from fulfilment centers and warehouses to retailers that served as a pick-up stop for online purchases. Workers at every level felt the impact, especially in jobs where employee retention is already difficult.
“It’s always hard to get people to really commit to warehouse work,” Maggie Barnett, COO of logistics provider ShipHero, told Insider. “There’s a lot of turnover.”
Some companies hoped to see an uptick in job applications after expanded federal unemployment benefits ended in early September.
“There had been a narrative that as unemployment benefits lapsed, we would see a change in behavior with workers re-entering the workforce,” Mathieu Stevenson, CEO of hourly work online marketplace Snagajob, told Insider. “We are not seeing that.”
Stevenson said that blue collar workers are especially impacted by lack of affordable childcare options and uncertainty around school openings, which keeps them “sitting on the sidelines of the workforce” despite a record number of 10.1 million job openings in July.
Employers need to focus on retention
Many employers have focused on attracting new hires with financial incentives and other perks. Experts say they should focus instead on keeping current employees engaged and happy.
“When I talk to my network, the main thing is not just money,” Barnett, the logistics executive, said. “They’re getting creative around offering childcare for free, or at a greatly reduced rate. They’re doing meal plans at a discounted rate.”
Hiring bonuses can be more of a “brute force hammer,” effective for snagging short-term hires but not for long-term retention, Johnston explained.
“The most sustainable strategy is that investment in workforce satisfaction and growth potential, and how that translates into the ability for a company to deliver the same number of goods while requiring less new hires,” he said. “The more you retain, the fewer new hires you need overall. The more you retain, the higher the average productivity per worker.”
Supply chain is one area of hourly work where frontline workers can graduate into “more specialized, more highly compensated roles,” Johnston said. To strengthen retention, managers should foster strong relationships with their reports and show them what their career path could look like, he said.
Experts say that even a simple culture shift where workers are treated like essential and valued employees, rather than an amorphous mass of expendable labor, could help employers with retention.
“We all depend on these folks,” Barnett said. “During COVID, thank goodness everyone that went into the warehouses did what they did so that we could all have our luxuries. It should be rewarded and it should be noticed.”
Workers are after ‘the sweetest deal’
The current tight labor market within supply chain is a challenge for all businesses. But it will weigh more heavily on certain employers than others.
“Small businesses cannot afford to pay what Walmart or Amazon would be able to pay,” Dr. P.K. Kannan, the Dean’s Chair in marketing science at the University of Maryland Robert H. Smith School of Business, told Insider. “They will try to pay and hang onto the workers they have, but that workforce would come under tremendous pressure.”
Most companies will fall short of their hiring goals, Johnston and Stevenson said, and some may struggle just to stay on top of turnover.
“These folks are going to jump around until they get the sweetest deal,” Barnett said.