The Logistics industry is growing fast as never before and will grow even faster in the future. But, all together, it creates an employees shortage problem. If you would like to find out about other challenges seen in the logistics industry, you can read our previous article on this topic here.
Anyway, there is a considerable shortage of employees: Drivers, sales, operational, marketing personnel. A study done by McKinsey (Great attrition or great attraction) revealed a stunning fact that 40% of employees are thinking of leaving their job within 3-6 months, without even having where to go (The study was done in the United States of America, United Kingdom, Australia, Canada, and Singapore). Moreover, an average of 60% of employees is thinking of leaving their jobs. Companies are trying to solve this problem with ad-hock decisions, although without understanding the root causes of this situation, companies can do more harm than receive benefits. And Of course, as with all crises, this labor crisis provides many opportunities for forward-thinking companies.
In this article cycle, we will talk about the labor shortage issues in the Logistic’s industry. We will answer whether this is a short-term or a long-term issue and provide you with advice on how to solve those issues.
What impact has the McKinsey study had on the Logistic’s industry?
I always look skeptically at any study, and it doesn’t matter if it is done by the big five consulting companies like McKinsey, E&Y, and others. Why? Because the answers cannot be entirely correct. In his excellent book “Everyone Lies, “Seth Stevens Davydovitsh analysis men’s answers to various studies with actual behaviors seen on the web. He argues that men behave in a completely different manner than compared to their answers to pool questions. The author says that people are not always honest with the interviewer and even with themselves when answering questions; they do not disclose important information or try to make a better impression. Therefore I think that the attrition study is not entirely correct. No studies are needed to understand the simple truth that most employees are not happy with their current job position. Everyone reading this article has thoughts about leaving their job, leaving their wife or husband, or becoming entrepreneurs. Although thinking and doing are two completely different things. Of course, some employees will find new jobs, choose different carrier paths, or create their businesses. Although, we need to understand that when men switch careers or open their businesses, there is a time when they become alone with their decisions, and this loneliness is not for everyone. Therefore, I believe we will see many men who will somehow change their lives coming back to previous jobs or returning to their previous carrier path and so on,
Please note that the above thoughts are related to the general situation. Although talking about the logistics industry, I believe this study may be accurate. I even believe that we can see an even worst situation in the future. And I also believe that logistic’s companies need to implement solutions to hedge this risk already today.
The Anatomy of Logistic’s industry
I have been working in the logistics industry for more than 15 years. I’ve passed many carrier paths; therefore, I have an inside and outside understanding of this business. The logistics industry is famous for its excellent salaries, intense workloads, and 24/7 working schedule.
If operational personnel like drivers, their work specifics are almost similar; nevertheless, they have fixed hours and somehow lesser stress levels, but their work conditions are much worse than management personnel.
It’s also important to mention that most logistic business owners have built their business from scratch; many started working in the lower ranks (like dispatchers, drivers, sales managers, operational managers, etc.), gained knowledge there, and afterward built their own business. That’s why Logistics business owners have excellent operational skills, although not all of them have management skills that are super important to dealing with employees and growing their business. Of course, some logistic businesses evolved into multinational businesses that employ professional managers. Nevertheless, probably 90 % of all companies are small or medium companies, with a company owner and few loyal employees staying with this business from the beginning. In other words, there is a huge chance when the owner will leave the business or some key employees will leave the business, such a business will be closed. And if this happens, it will actually hurt the rest of the industry. Keeping in mind that this is a growing industry with decreasing popularity, all logistic industry players are super important. We all received a great lesson during the pandemics and quickly understood that every supply chain part is crucial.
There has been a prevalent saying in this area that only the most robust employees remain in this sector; in other words, you are thrown into the pit, and you either swim or drown. As a result, the sector is ruthless for newcomers, leading to an increase in staff turnover.
However, I have passed this old school, my first two jobs in logistics were a disaster (I do not know why I stayed in it, maybe because of the excellent pay and work dynamics). Finally, I found myself lucky at my 3rd job, and then I started showing promising results and climbing up the food chain.
Why is the thinking “that the strongest will survive ‘is becoming deadly? Will the employment situation worsen in the future?
First of all, we need to understand that earlier employees haven’t got so many choices to choose from. And now we have a completely different situation, as they can get a job anywhere in the world without leaving their country or even city. Moreover, now many more positions are paying the same salary without the stress and long working hours seen in Logistics.
Moreover, the pandemics have not softened the situation. On the contrary, pandemics forced operational employees to work more hours. As a result, workloads have increased and diminished the high and low season’s which earlier has balanced the workload. Furthermore, many logistic organizations previously worked on decreasing service costs, invested in process efficiency, and either fired part of employees or increased their workloads as a result. So now we have a situation when employees already worked long hours before covid, the workload increased, even more, now companies owners would welcome new employees, but there is not too many to choose from. Ironically, the salaries haven’t increased a lot for the operational employees that aren’t involved in profit generation activities. That’s why there is a change that many employees working in the operational part are starting to feel demoralized and wonder if such a sacrifice is worth it.
We also need not forget that we are at the crossroads of different generations stepping into the job market. Today, companies are already employing Z generation (1997-2012) and will start employing younger employees in the future. And this new generation has different requirements. They are looking for purpose and meaning in the organization. They are switching jobs more often and do not prefer dirty jobs like truck driving. Therefore, it’s essential to understand that younger generations need a different kind of management style. And here, we can have a disbalance as most managers and key employees are famous for their one-sided view and strict management style.
As for the future, I believe that the future situation will depend on Logistic’s companies’ ability to adjust to this new reality. Although the sector is rapidly digitizing, this should reduce the need for workers in the long run. However, the sector needs technologically educated people, which will create some headaches in the short term, as all other sectors are competing for this talent.
Finally, it will also depend on the Logistics sector’s ability to move away from the “boring,” “stressful,” “no hype” jobs perspective towards “cool” and meaningful job perspective.
How to solve those employment-related issues?
As I mentioned at the beginning of this article, every crisis creates several opportunities for forward-thinking companies. Therefore, those companies that start to change now will take over the business in the future from those that have failed to change. We will talk about specific measures in other articles. But in the end, I want to say that I believe in the bright future for this sector. Moreover, the pandemics did one fantastic thing, transforming it into a boring sector towards a meaningful one. Suddenly, everyone is curious about how the food gets on the table and how many companies are involved in this function. Now logistics and supply chain news is taking up more and more media coverage. So I think this is a great time to attract new employees and build up the hipe, which is crucial in modern companies culture.
If you are looking for ways to attract new employees or are planning initiatives related to creating a modern workplace, improving and optimizing the quality of employees’ work, and promoting your company and the logistics field in general, contact us, we can help.
About the author:
Tomas Ananjevas is a supply chain professional with 15 years of experience purchasing and selling Logistic’s services and building a supply chain from scratch. He founded a consulting, training, and staffing company that works exclusively with the logistics industry. Tomas is currently helping logistics companies implement the necessary changes that ensure business growth and continuity. You can arrange a time to talk with tomas by clicking here.