- UPS employs around 454,000 people around the world and operates in more than 220 countries.
- As the world’s largest package deliverer, UPS said it moves 3% of the world’s GDP every day.
- Part of the 111-year-old company’s success lies in developing its operations workforce. A third of the 100,000 seasonal employees hired this year at UPS will be hired for permanent roles.
- Increasingly, corporations are depending on contract labour for blue collar work. But Teri McClure, Chief Human Resources Officer at UPS, said providing professional development opportunities for the company’s operations workers is key for UPS’ growth.
- This is article is part of Business Insider’s ongoing series on Better Capitalism.
It was a particularly rainy summer day when Ken Buenker, then a UPS delivery driver in his 20s, knocked on a front door in New York’s tony Hamptons resort area with a package.
The woman at the door was stunned that UPS managed to go from Portland, Maine all the way to New York with the goods a relative had sent her. “The woman who answered thanked me profusely for coming all the way out from Portland, Maine, to deliver the package,” Buenker said.
Of course, that’s not how UPS package sortation works. Buenker simply picked up the package at a New York state UPS sorting facility after it made its way down the coast from Maine.
That was more than 30 years ago. Buenker is now the vice president of corporate transportation services at UPS. He manages the company’s intermodal freight operations, in which freight containers are transported by rail and other modes of transport.
Buenker joined UPS as a package handler his junior year at Hofstra University. He moved from a part-time hourly role to a part-time supervisor role and soon to full-time management in transportation. Then he served in a few different vice president stints in and outside of the US before landing his current role.
Much of Buenker’s knowledge base stems from those days working in UPS’ distribution hubs, driving the iconic brown truck, and explaining to vacationers that he didn’t personally drive their packages across the country.
“A lot of what I do is help people understand why the network works the way it does,” Buenker said. “Because I’ve worked in all our delivery hubs and all of our transportation efforts, that exposure allows me to translate how the operations work.”
The idea of a part-time package handler climbing up to vice president might seem quaint in 2018, when economic data has more or less proven that the American Dream is dead.
But much of UPS’ corporate leadership started in seasonal or part-time work. In fact, it’s so typical in UPS to have started in operations that those who join later in their career are jokingly referred to as “hired off the streets,” while those who began their careers at UPS are said to have “grown up at UPS.”
About a third of UPS management started in operations, said Teri McClure, Chief Human Resources Officer at UPS. Around half of its lawyers “grew up” in the company. And even UPS CEO David Abney started as a UPS package loader 40 years ago, when he was trying to make money for his degree at Delta State University.
UPS is the third-largest employer of seasonal workers
Most of the seasonal UPS jobs are in the warehouses handling packages or serving as driver helpers. In 2017 and 2016, 95,000 seasonal employees were hired each year. A third of them stayed on permanently, UPS said.
“This can be a career, a foot in the door to a career,” Dan McMackin, a UPS press relations manager at UPS, told Business Insider. “Most other retailers and other companies in the Christmas season don’t have that to offer. It’s a dead-end.”
Along with hiring those who have developed their careers elsewhere, ensuring hourly workers are empowered to move into corporate roles is key for UPS’ success, McClure said.
“We value tremendously the knowledge that comes from individuals who have worked in core operations, such as
drivers and loaders or unloaders, and have seen the extent of volume that we move on a daily basis,” McClure said. “There’s this tremendous knowledge that comes from working in the operations, and we don’t want to lose that.”
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That long-term view is clear in how UPS trains its workers. Package car drivers train for a full week at a dedicated facility, while those who drive 18-wheelers for UPS train off-site for three weeks. There’s even an artificial ice patch in the training facility that delivery drivers have to practice walking on.
And the training is not all about the job itself. UPS’ training also delves into the organisation’s 111-year history, the technology, and the changes the organisation has seen.
“We have to invest in our seasonal employees because we have customers we have to take care of,” Stefond Harris, Vice President of Human Resources for US Operations, said. “The demands we have this time of year create a spike and, in order for us to do that in a customer-satisfying manner, we have to make sure they know how to do the job.”
“They generally don’t contribute productively for the first week,” Buenker added. “We don’t really look at people transactionally. We value ourselves as investing into that person. It’s an investment. Someone who we look at, they might be an exceptional delivery driver, or they might become the next CEO.”
Investing so much in training is expensive. But the results are clear. UPS delivered 20 million packages every day last year, up from 18.3 million in 2015. FedEx, its closest competition, delivered 4.3 million a day last year, just 200,000 more than 2015.
A ‘two-way street’
While plenty of folks may be coming to UPS just needing a seasonal role or hoping to succeed in an operations job, there’s also opportunity for those looking for more. “We are always looking to upscale the expertise of our employees,” McClure said.
McMackin started his career at UPS in 1978 as a seasonal package handler at 17 years old. He worked there through college and then took a full-time driver job upon graduation. After three years of driving, McMackin joined UPS’ HR team.
From there, his career is a patchwork of different special assignments at the corporate headquarters and around the country doing everything from helping produce a newspaper on UPS pilots to supervising car wash operations to time studies with the engineering team.
“There’s this notion that it’s not only good in terms of my development as a UPSer, but it’s also good for the company,” McMackin said. “It’s a two-way street.”
McMackin’s managers created new opportunities and areas for him to work in so that he could understand the company better. That’s made his current role explaining UPS to journalists that much easier. “I can answer just about any question you have about us,” he said.
There are more operations jobs, but not more good operations jobs
While transportation and logistics have seen massive job growth in the past decade, particularly as e-commerce explodes in growth, many of those jobs just aren’t good.
Take the typical warehouse job. The median pay is $US15.74, which is an unlivable income in many areas. Nearly half of warehouse workers have a second job. Of those with a second job, 40% work 31 hours or more at that second job in addition to their full-time work.
Long-haul truck drivers have seen their earnings tumble by as much as 50% since the 1970s. Industry leaders say lack of interest in trucking has caused a shortage of 51,000 drivers in the US, but economists say the reason for the shortage is because wages and working conditions are so bad.
Blue collar wages have been sinking for decades, even as corporate profits have shot up. One key reason is the increasing reliance on part-time or contract employees.
One in five Americans are contract workers; they clean offices, deliver packages, and even write code at Google. While some workers are freelance by choice, the stress of not having a stable schedule, lacking benefits, and needing to work multiple jobs can be psychologically as well as economically damaging.
Matthew Poland, a senior program manager at education and workforce reform nonprofit JFF, said companies have built up their stable of temporary workers as they see it as a way to cut costs. “There’s just been this deep-seated approach to labour that treats labour way more as a cost and a liability, rather than an asset,” Poland told Business Insider.
But shoddy training and benefits usually end up costing employers. Wharton professor of management Claudine D. Gartenberg said keeping workers on a contract basis hampers their loyalty, and that lack of employee engagement ultimately costs firms. For instance, the trucking industry’s reluctance to bump wages (until recently) has helped lead to turnover rates of 95%; replacing those workers is a major expense for firms.
“It’s very short-sighted,” Poland said. “You’ll save money this month or next month if you cut your labour costs, but you’re losing long-term value that you could have from investing in your workforce. The more you invest in your workforce, the more value you get.”
UPS leaders say they’re more interested in the long view. However, the organisation has seen labour disputes among its package delivery drivers and freight drivers, who are both unionized, this year. One UPS Freight driver told Business Insider benefits have sunk at UPS in recent years.
And for its package delivery drivers, UPS eked out a labour contract in October even though the majority of voting members voted “no” on the agreement. It passed because less than half of the union members voted.
During contract negotiations for UPS Freight, the company countered that its drivers receive “wages and benefits at the top of the industry.”
UPS is pursuing an unusual yet prudent strategy
In retail, where unstable, poorly-paid work is rampant, labour economist Zeynep Ton found that the companies that treat their workers well, like Costco and Trader Joe’s, also happen to be financially successful. Good retail work cultures ensure that costly marketing schemes are implemented in stores, lead to more streamlined inventories, and decrease costly turnover, absenteeism, and tardiness.
Ultimately, a happy, loyal workforce saves companies money.
And for UPS, even when a worker isn’t destined for the C-suite, ensuring that workers feel supported every day is part of the ethos.
“It’s all about the long haul. It’s certainly not about quarterly reports, as some people on Wall Street think,” McMackin said. “This is about the long haul. We’re 111 years old. You don’t get to be 111 if you are strictly on quarterly reports.”
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