The Impact of a High Employee Turnover Rate in Logistics

Fifty-six percent of workers in blue-collar industries are at risk of quitting

With the national unemployment rate at ~3.7%, the lowest in the last 50 years, warehouse workers have lots of choices for where to work. For most blue-collar industries including manufacturing, logistics, and transportation, the cost of employee fluctuation can have a devastating impact on profit margins. 

Each time your warehouse worker quits, you lose money. 

Case in point: Assuming it costs $5,000 to replace a single worker, each resignation could pay for a pay raise of $2.60 per hour for an entire year. That means, if you’re a third-party logistics warehouse with 100 workers and an average annual churn rate of 29%, you’re paying $145,000 in direct fluctuation costs.

On the other hand, by understanding the impact of high turnover on your company, there’s potential for smart companies to save billions of dollars each year on talent fluctuation.

Common but Preventable Causes Behind High Worker Turnover

In the warehousing industry, salary is an essential part of worker retention. Third-party eCommerce logistics companies that pay at least 50 percent more than minimum wage have much better retention rates.

Though a paycheck isn’t necessarily everything. Studies show that non-financial compensation matters, too. Most high-performing warehouse employees appreciate options such as time off. 

Environmental factors including a clean, well-lit work environment and high-quality equipment also play a significant role in the worker’s experience. 

Surprisingly, 78% of turnover has nothing to do with wages. Blue-collar workers consider a spectrum of factors before they quit or accept a job. According to an Industry Today survey, here’s what manual workers value besides money:

  1. Job security
  2. Benefits
  3. Training and learning new skills
  4. Opportunities to advance
  5. Leadership quality
  6. Schedule quality and flexibility
  7. Paid vacation and sick time
  8. Company culture
  9. Recognition

75% Voluntary Turnover Is Preventable

While it is clear that worker fluctuation can drastically dampen the overall turnover of a company, warehouse managers can prevent a significant percentage of employee turnover with better retention strategies. 

A 2017 study shows that 66% of employees in logistics, manufacturing, and transportation would quit over “feeling unappreciated.” Besides that, 94% of employees would stay at a company longer if their employer invested in training and development courses.

Focussing on workers’ needs, creating a reliable employer brand, implementing a good onboarding schedule, and equipping the workers with customized training material — are some of the effective ways for warehouse managers to boost retention and prevent high worker turnover. 

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