If you’re responsible for hiring and retaining supply chain employees, you know that turnover is at an all-time high. Even though the U.S. unemployment rate is at a relatively healthy 6.1% as of April 2021, companies continue to struggle to retain hourly workers.
High turnover is bad news. It’s incredibly expensive, but it also compromises safety and decreases overall productivity. It creates a skills gap, making it difficult to find team members that can be promoted into leadership roles. Ultimately, high turnover can create a downward cycle that impacts your business in a multitude of ways.
So, why does supply chain turnover keep going up? Today, we’re sharing the top 4 reasons why supply chain turnover continues to increase. These reasons will make it clear why things won’t turn around on their own– in order to better retain hourly workers, you’ll need to make changes in your organization.
An hourly worker has more access to flexible work alternatives than ever before. With options like Uber, InstaCart, and TaskRabbit, an employee can instantly find work and instantly get paid. Rather than wait 3+ weeks for their first paycheck from a new W2 role, a worker can quit today and get paid elsewhere tomorrow. Flexible work alternatives are attractive to workers because:
Not all workers want gig work, as pay can be inconsistent and jobs can be grueling, but having the option available decreases the short-term downside of leaving one’s current employer. It is easier to ‘no call, no show’ when an issue arises because doing so no longer necessitates a gap in earnings.
Love them or hate them, rigid union structures provide incentives to stay at a given employer in a few ways. They offer better schedules and clear and continued compensation increases as workers gain seniority.
Unfortunately for those who love this structure, union density has decreased all over the United States, which has stifled retention-based financial opportunity for many hourly workers. A study in The Economic Journal found that increasing union density leads to more productivity and higher wages.
With decreased union membership, there’s less opportunity to make substantially more money because of a long tenure. In short, without a union, employees have less incentive to stay in one job.
Past generations often expected to stay in a job or at a single employer for their entire career, but that expectation has diminished over time. As pension programs have lessened and new opportunities have grown, people are more comfortable with the idea of moving around to find a good fit.
This is especially true for younger generations such as millennials and gen z. According to a report from Gallup, 21% of millennials say they've changed jobs within the past year, which is more than three times the number of non-millennials who reported changing jobs. Not only that, but Gallup estimates that this millennial turnover costs the U.S. economy $30.5 billion each year.
One of the reasons turnover is so high is that there aren’t many incentives to stay. After all, in many roles, workers reach the top of the pay scale relatively quickly, meaning there are minimal opportunities to earn more without a promotion, even when employees get better at their job. Combine that with sign on bonuses from other employers and it can often make more financial sense to leave one’s employer than to stay.
There may be few cultural reasons to stay, as well. If workers don’t feel they have a community or see that their employer has their best interests in mind, they’re unlikely to develop any sense of loyalty or pride in their work that will keep them around when the facility across the street is advertising steep sign on bonuses.
Although there are many reasons why workforce turnover is high– and will continue to climb– there’s also reason for hope. At WorkStep, we’ve seen many companies improve employee retention, thanks to a focus on developing strategic workforce retention strategies. With circumstances unlikely to change on their own, company leaders need to collect information from their employees so that they can develop programs that will encourage them to stay.