The Impact of Turnover on Blue Collar Companies

the impact of high employee turnover is a significant treat for companies

56% of employees in blue-collar industries are at risk of quitting. Workers have lots of choices for where to work as the national unemployment rate is around 3.7%, the lowest it has been in 50 years. In blue-collar industries like manufacturing, logistics, and transportation, the cost of employee fluctuation can have a devastating impact on profit margins. As a consequence, it is a significant competitive advantage if you understand the impact of high turnover on your company.

Each time someone quits, you are losing money, which you could have invested in innovation or into your team. For example, assuming it costs $5,000 to replace a single worker, each resignation could pay for a pay raise off $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.

Top Reasons Why Blue Collar Employees Quit

Salary is an essential part of blue-collar worker retention. Third-party eCommerce logistics companies who pay at least 50 percent more than minimum wage have much better retention.

However, a paycheck certainly isn’t everything. Studies show non-financial compensation matters, too. Especially high-performing warehouse employees appreciate options such as time off. Environmental factors also play a significant role in the worker experience, including a clean, well-lit work environment and high-quality equipment.

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 a recent survey, here’s what manual workers rank from most-to-least important:

  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

Many Costs of High Employee Fluctuation Can Be Controlled

You could prevent a significant percentage of employee turnover with better retention strategies. Listen to your employees carefully before finalizing those strategies.

For example one study shows, 66% of employees in logistics, manufacturing, and transportation would quit over “feeling unappreciated.” In addition to that, 94% of employees would stay at a company longer if their employer invested in training and development courses. Those numbers can lead to an easy conclusion, but has to be implemented into company culture.