Can the alliance proposition work in managing warehouses?
Tuesday, June 28, 2016
One of the greatest misunderstandings in business is the illusion that employment is permanent. Few companies can offer guaranteed employment with a straight face. Even those who do offer have no credibility with employees who probably know better.
As early as the 1990s, Jack Welch of GE said, "Loyalty to a company? It's nonsense." Yet back in 1962, the employee benefits manager at the same company said "maximizing employee security is a prime company goal." Back in the mid-20th century, business careers were considered to be as permanent as marriage, and workers who were loyal and honest could expect to stay with the same organization until they retired.
One key question must be answered when you recruit talented people: How can I build trust and loyalty with my employees even if I cannot offer lifetime employment?
The 21st century promise
If you cannot promise long-term employment, what can you offer? Before answering, you must be willing to make an investment in development of your people. This could include both internal training and compensation for outside educational activities. If you are unwilling or unable to make this investment, stop reading now.
Reid Hoffman, Ben Casnocha and Chris Yeh discuss the broken employee relation in their book, "The Alliance." They suggest employers should "stop thinking of employees as family or free agents, and start thinking of them as allies. The alliance is a two-way relationship that lets company and employee work together toward common goals, even when some of their interests differ."
Here is the alliance proposition, adapted to warehousing. It should attract the talented people you need:
Warehousing is a risky and unsteady industry. We sell flexibility, which means our customers have the freedom to leave if business patterns change.
Some of our work is seasonal, which means that volumes are higher in the busy season than in the rest of the year. Loss of a major client will cause layoffs of talented people through circumstances beyond our control. We cannot afford to pay people when there is no work for them to do.
In return for joining this risky industry, you are paid well, you will have a more interesting job than can be found in most manufacturing or service companies, and we provide an opportunity for constant learning. If you join us and leave, the things you learn while you are here will make you more valuable in the future.
Reducing the risk of layoff
A workforce with a mix of part-time staffing service workers and full-time employees will reduce instability by cutting the temporary people during a seasonal slowdown or an economic downturn. The part-time workers create a buffer that improves the stability of full-time workers.
While this plan can function effectively at the hourly level, it is more difficult to implement with supervisors and management people. If you cannot or will not hire part-time staff, then you must live with the instability that is inherent in most warehouse operations.
The coaching analogy
Are there other occupations that face a similar challenge? One of these is athletic coaching at a high school or college. With student athletes, the longest possible tenure is the four years from freshman to senior. No matter how talented the athlete may be, the coach must find a replacement when each student graduates.
While the tenure of warehouse employees should be somewhat longer than four years, every student will graduate or leave school. In the best of warehousing situations, graduation is a promotion to a more senior position in the same company. But in the 21st century, graduation may also mean a move to a new job at another company.
Therefore, a reasonable amount of employee turnover is the new normal. To deal with unavoidable employee turnover in your warehouse, perhaps one of the best business advisors you might find is an athletic coach.
Orientation for new hires
Here are some things that need to be explained to new employees on their first day:
- We are an alliance, not a family. We hope you will stay here for many years, but we can't promise that.
- While you are here, you will go through tours of duty, somewhat like a military tour. We hope you stay here for multiple tours.
- Every time we gain a new client, you will have a new learning experience.
- Whenever we adopt new material-handling equipment, you may have a new learning experience.
- Whenever a different software system is introduced, all of us have a learning experience.
Each of these learning experiences will allow you to grow, and when you leave here you will have knowledge and skill you don't have today.
Will this work in a low-tech environment?
The authors of "The Alliance" are Silicon Valley types, and their experience is in high-tech industries. Yet there is nothing high-tech about a fast food chain.
McDonald's Chief People Officer Len Jillard explains it this way: "Whether you're with us for one year or you're here for more, we will help you meet your future. We will invest in you and your growth. You can take many of the competencies we will help you develop in whatever it is you choose to do, whether it's with McDonald's or whether it's outside of McDonald's."
While few warehousing organizations can afford the training investment of McDonald's "hamburger universities," there are many opportunities to expand the capabilities of warehouse employees.
3 varieties of duty tours
"The Alliance" describes rotational, transformational and foundational tours of duty. Here is how each of these three duty tours might be implemented in a warehousing organization:
The rotational tour of duty is for all incoming employees, both hourly and management. It allows every new hire to "learn the ropes" in every part of the warehouse operation. During the first days or weeks of employment, every new person will engage in the freight-handling aspect of pallet building and pallet stripping. Some time will be spent in the receiving department, and later in the shipping area. The new employee will learn the procedures for marking, packaging and every other freight-handling task. New people will also have some time in the warehouse office, learning the functions of software and customer service activities.
The transformational tour of duty is not for everyone, but will be offered individually to management candidates. This tour of duty could involve transformation of the employee's career, and at times the tour could result in transformation of the company. The duration will be longer than the rotational tour, usually measured in years rather than days. During this time, the employee may be offered a new tour, or may be transitioned out of the company. The transformational tour allows the candidate to tackle a key issue. For example, assume that John Doe has been offered a tour. Recognizing John's background and interests, you might give him the project of investigating excessive turnover of truck drivers and recommending changes that would reduce turnover and make the truck driving job more attractive.
Foundational tours will be offered to those employees who are candidates for leadership positions. Not all candidates are senior managers, since leadership challenges also occur at the foreman or supervisor level, as well as mid-management. The hallmark of a foundational tour is total alignment of employer and employee. No foundational tour candidate would allow the company to cut corners to meet short-term financial goals. People and companies change, and you cannot guarantee that the alignment goal will always be maintained.
Dealing with the unexpected
The tour of duty is not a contract. It is an informal agreement designed to govern a relationship. The imperative of a tour should never force an employee to be a square peg in a round hole. You need a collaborative process to allow either employee or employer to terminate a tour of duty before it is completed. This would usually happen when the unexpected takes place.
The alliance may be broken when an employee departs from the company, or when the candidate is terminated. The tour candidate may get a new manager, and it's unfair to both to discard the terms of a previously negotiated tour. The tour process is compromised if either party is performing poorly. If the company cannot maintain an environment that delivers the promised growth opportunities, the alliance may be broken.
Conversely, the candidate with poor on-the-job performance will not be able to finish the tour. The alliance is a relationship, not a transaction. Ups and downs are inevitable. A good coach won't cut a player simply because that athlete had one bad game, but repeated performance failures require that some action be taken.
Building a corporate alumni network
When you graduate from school or college, the institution makes a strong effort to stay in touch with you. At private schools, the primary goal of this is fundraising, since successful and contented alumni are often willing to give money to support the school.
Unfortunately, this practice seldom is followed in business. When people leave a company, they are lost forever, and there is little or no effort to stay in contact with them.
Of course, an employee who leaves under bad circumstances does not need to be part of an alumni network. But those who leave under honorable circumstances can be almost as valuable as alumni from a school. Alumni can refer customers, and sometimes they do. In a few cases, high-achieving alumni will actually become customers.
Putting it all together
We have entered an era when the presumption of corporate loyalty is dead, and where the likelihood of extremely long-term employment is no longer realistic. Your warehousing organization can cope with this condition by creating and maintaining a work environment that is different from your competition, and by offering superior opportunities for growth and learning on the job.
We can all identify a few companies where people come to work and stay there for many years, sometimes even right up to retirement. It is useful to find out what they are doing and imitate their processes.
The three tours of duty just described provide a framework that should increase the likelihood that people will join your company and stay for quite a while. But it won't happen unless you are willing to make the investment that allows every employee to learn new things and become more valuable.
Recognize that this growth in value could cause the worker to leave your company, and the only way to reduce that possibility is to offer continuous opportunities for further growth within your firm.
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