Senior management in the warehousing industry has every reason to worry about the many external challenges. While warehousing today is relatively prosperous, it remains competitive.

Government regulations are more intrusive than ever before. Furthermore, the regulators are frequently people who have no love for private enterprise and are perfectly willing to push their weight around. In some industries, cyberattacks have tarnished corporate reputations as they steal the identities of innocent customers. Finally, there is a continuing shortage of skilled labor.

While the most severe problem is a lack of truck drivers, it is not easy to find experienced people in any part of the warehousing world.

The threat within

While the external challenges just mentioned are formidable, consider the probability that the greatest threat to your organization is not from outside, but rather from a malady called disengagement.

What does disengagement look like? It means that middle managers, supervisors and workers have checked out. While they may not be your enemies, they are not part of your cheering section.

Here are a few of the signs of employee disengagement:

  • Turnover increases — employees leave as fast as you can find new ones
  • Productivity declines — it takes people longer to complete their jobs
  • Silos are pronounced — "That's not my job."
  • Employee complaints increase
  • Absenteeism increases
  • Warehouse damage and theft increase
  • Returns and canceled orders grow
  • Information is disrupted — leaders don't know what is really happening, and workers don't know either

Any of the above signs will dilute profitability, and if several of them fall out of control, the results can be fatal.

What can you do?

It is easier to talk about disengagement than to correct it. Whether the disengagement issue is just emerging or already deep-seated, there are at least three steps that can change the culture.

  • Intensive practice of MBWA by senior management
  • Detailed communication of bad news as well as good
  • Recognition of those who show the greatest improvement in performance

MBWA

The initials stand for "management by wandering around," a practice made famous by David Packard of Hewlett-Packard. He believed the essence of leadership was to be on the shop floor, visiting with the workers and learning about their jobs.

When everybody in the warehouse recognizes they are on the same team, when they not only know their boss but also the boss's boss, then everyone takes a serious interest in the success of the organization. In contrast, when senior management is at a remote location, and the senior people are seldom seen in the warehouse, some people will react with a feeling that "If they don't care, why should we?"

One of the first signs of disengagement is poor warehouse discipline, with product left in the aisles, bent storage racks, damaged cartons mixed in with good merchandise and little effort to maintain a clean workplace. Housekeeping is a barometer of good management, and when workers lose interest in maintaining a neat workplace, this is a serious sign of disengagement.

At one furniture distributor, corporate policy requires at least one member of the senior management team keeps his or her primary office in one of the buildings in the operation. While the company has several buildings in its system, each of them is home to a senior executive.

Communication

At one distribution firm with a significant damage problem, we were surprised to find line supervisors were not aware of the fact that the company was experiencing a high level of damage. Since line supervision is usually the first step toward correcting any issue in a warehouse, it was clear that lack of communication had aggravated a problem that was already serious. No change in behavior can be expected if the workers don't see any need to do anything different.

Peter Schutz was the CEO at Porsche. Early in his tenure there, he asked: "What is happening at Porsche today that is so exciting you can hardly wait to run and tell our customers and your friends?" When he first asked, the question was met with silence. Schutz recognized the problem, and by the time he left that job, everyone on the team knew the company was going to play to win.

The Container Store believes in overcommunication. Sharing information builds trust, and it helps everyone recognize they are part of a team. Founder Kip Tindell admits that some say he shares too much information: "Communicating the way we do things adds up to a competitive advantage that far offsets any fragments of information falling into the wrong hands."

His company decides which information will be shared, and then they do it frequently and consistently.

While the importance of communication cannot be overemphasized, we should also recognize the most effective messages start with clarity in the head office. Does your company have a mission statement and a vision statement? Do you have values and objectives? Is every message fully aligned with the mission and vision of your organization?

If you say one thing and do another, the communication will lose credibility and rapidly become unproductive.

Recognition

While our first thought is rewards, recognition also includes accountability.

It is a pleasant task to recognize your people for a job well done, but it is also a necessary duty to hold people accountable for promises that are not kept or goals that are not met. Remember that we recognize people in two ways: ability to exceed expectations, and also for failing to accomplish what was promised.

Accountability involves the need to deal with underperformance. Greg Bustin's book about accountability describes seven questions you should answer as you consider your next steps with an underperformer:

  • How important is this person to the organization?
  • Is this person capable of doing what is required to get performance back on track?
  • Is this person willing to do what is required to get back on track?
  • How much of my time am I willing to invest to help get this person back on track?
  • How much of the organization's time are we prepared to invest?
  • What is my backup plan if this person is unable or unwilling to change?
  • What is my commitment?

Bustin goes on to list some questions that you might ask when dealing with the underperforming employee:

  • How would you describe the situation?
  • Are the expectations clear?
  • If you do it again, what will you do differently?
  • What is your plan for getting back on track?
  • If you were me, what action would you take?
  • What can I do to help you?

Here are a few other questions that deal with recognition, or the lack of it:

  • Do we reward results or activities?
  • How do we celebrate victories?
  • Does everyone know the difference between a mistake and underperformance?
  • Do our employees speak up when they observe underperformance?
  • How much of my time should I invest in coaching an underperforming employee?

Effective communication is a key factor in recognition. One Japanese warehousing company asks each shift supervisor to conduct a five-minute meeting at the beginning of each workday. In addition to sharing news about the company, the supervisor answers questions. In the meeting I observed, there were a number of thoughtful inquiries.

Celebration is an essential part of recognition. Celebration involves reward, but the reward need not be extremely expensive. One wholesale distributor has a periodic celebration of one outstanding employee, and that person is called "The Legend."

During the celebration, all of the warehouse workers gather to cheer as The Legend is identified, photographed and congratulated by the CEO. Photographs are prominently placed in the company newsletter, and The Legend's reward is a restaurant dinner for two.

When I observed the ceremony, it was obvious this recognition meant a great deal to every worker in the warehouse, and the result was a highly motivated and productive workforce.

Engagement with customers

While most of our concern is about disengagement with employees, similar things can happen in your relationship with key clients. Even if your primary job is not marketing or sales, maintaining a close relationship with clients is a critical success factor in warehousing.

Furthermore, that relationship is active on many levels below the senior management. The warehousing business is all about trust, and if any person on your staff fails to maintain a trusting relationship with the client, significant trouble may follow.

Retention: The ultimate barometer

As we have demonstrated, engagement is not always positive. Staying engaged requires recognition of underperformance as well as superior performance. It requires discipline, right up to termination of those who lose the right to be on the team. Your people will tolerate discipline as long as it is fair, and they probably prefer a boss who is engaged to one who seems to be absent.

Take a hard look at your performance as a warehousing leader. How much time do you spend with MBWA? How do you recognize those who have exceeded your expectations? But what about those who are underperforming?

What is your record for retaining employees? And what about retention of key customers?