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How to Recruit, Retain, and Train Employees in the Outdoor Power Equipment Distributor Industry?

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Title: How to Recruit, Retain, and Train Employees in the Outdoor Power Equipment Distributor Industry?


1
How to Recruit, Retain, and Train Employees in
the Outdoor Power Equipment Distributor Industry?
  • To insert your company logo on this slide
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  • To resize the logo
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  • Dr. Hokey Min

.
UPS Center for World Wide Supply Chain
Management University Of Louisville
2
Why Matters?
  • 52 of the U.S. Companies reported that their
    employee turnover is increasing (Wilson, 2000)
  • One in 10 (17 million) U.S. workers were quitters
    in 1994, while one in 7 (6 million) quitted in
    1999.
  • Cost of turnovers 93 to 200 of the quitters
    salary (Cascio, 2000)
  • Lost time gt lost productivity gt lost efficiency
    gt Hurt Bottom Line

3
Why Matters?
  • There is 58 more absenteeism in departments when
    employees are dissatisfied than in those where
    staff morale is high.
  • Sales people are the least committed to a company
    (38 plan to leave in 2 years), followed by IT
    workers (31), hourly employees (28),
    professionals (25), and managers (11).
  • Lack of career development opportunities and
    dissatisfaction with the leadership not low pay
    were the most likely reasons for all workers to
    contemplate leaving their jobs. (The Hay Group,
    2001?)

4
The Extent Of the Impact Of Warehouse Employee
Shortages
1 largest impact 7 no impact
5
Potential Turnover Cause
  • Geographic factor Job too far Job relocation
  • Personal reasons
  • Marriage
  • Other employment opportunity better pay
    elsewhere increase of pay in other industries
  • Unsatisfied work hours
  • Conflict with management
  • To stay home
  • To attend schools

6
Turnover Cost Formula
  • For a manager or professional, the estimated
    replacement cost is 1.5 ? the annual salary
  • For a frontline person, the estimated cost is
    25 to 75 of the annual salary
  • 80 of the turnover cost is hidden (e.g., 13.5
    months to achieve the productivity of a mature,
    accomplished performer)
  • -- Performance differential and low morale
  • (adapted from Hense Bennett of GLI)

7
Simple Turnover Cost Formula
  • Annual wage employees annual salary ? 25
  • Annual benefits employees annual salary ? 30
  • Total turnover cost per employee Annual wage
    annual benefits
  • Total number of employees who left
  • Total cost of turnover total turnover cost per
    employee ? total number of employees left
  • (adapted from Saratoga Institute and
    Kepner-Tregoe, Inc.)

8
Cost Of Employee Turnover
  • EXIT COSTS
  • Cost of exit interview
  • Cost of existing employees time
  • Cost of administrative functions related to
    turnover
  • Separation pay
  • Increase in unemployment tax
  • Source H. Bennett of GLI

9
Cost Of Employee Turnover (Continued)
  • REPLACEMENT COSTS
  • Pre-employment administrative expenses
  • Cost of attracting applicants (Job
    advertisements)
  • Cost of entrance interviews
  • Testing costs
  • Staff costs (review of candidates)
  • Travel and moving expenses
  • Post-employment information gathering and
    dissemination
  • Cost of post-employment medical exams
  • Source H. Bennett of GLI

10
Cost Of Employee Turnover (Continued)
  • MANPOWER COSTS
  • Cost of additional overtime
  • Cost of additional temporary help
  • Wages and benefits saved due to vacancy
  • Source H. Bennett of GLI

11
Cost Of Employee Turnover (Continued)
  • TRAINING/EFFICIENCY COSTS
  • Cost of informational literature
  • Formal training costs (e.g., compensation of
    trainers)
  • OJT (On the Job Training) costs
  • Productivity inefficiency during training
  • PERFORMANCE DIFFERENTIAL
  • Differential in performance costs/benefits
  • Source H. Bennett of GLI

12
Annual Turnover Rate
13
Why Warehouse Employee Shortage?
1. Rapid Growth of the 3PL Markets (a) A gradual
increase in industrial warehouse space
(e.g., total industrial warehouse space in the
U.S. 6.5 million square feet in 2000)
(b) Increasing demand for value-added services
Increased skill level (multi-functional skill
requirements) (e.g., average annual turnover of
20 in the warehouse industry gt median employee
turnover in the U.S. of 8.4)
14
Expectation of demand for entry-level employees
in the future
15
Satisfaction with current quality of entry-level
employee
16
Why Warehouse Employee Shortage? (Continued...)
2. Declining Labor Pool (a) A slow growth rate in
U.S. labor force
Source US Bureau of Labor Statistics
(b) Lack of interest in less glamorous jobs
17
Time required to find the right warehouse employee
18
Why Warehouse Employee Shortage? (Continued...)
  • 3. Poor Working Conditions
  • Demanding working hours and Higher rate of
  • work-related injuries

Industry Average weekly working hours
Warehousing 40 hours/week
All Private 34.6 hours/week
Industry Frequency of work-related injuries
Warehousing 10.0 per 100 full-time workers
All Private 7.1 per 100 full-time workers
Source US Bureau of Labor Statistics (1998)
(b) Non-competitive pay scale (e.g., 11.16/hour
for public warehousing vs. 12.77 for all private
industry)
19
Obstacles To Effective Warehouse Employee
Recruitment and Retention
1 extremely serious 7 not at all serious
Work ethic
Tight Labor market
Lack of qualified labor
Loyalty
Rising pay and compensation
Increased skill requirement
Irregular working hours
Lack of job incentives
Lack of training program
Seasonality of jobs
Location of facility
20
Key Findings
  1. Warehouses with a larger number of full-time
    employees tend to have the higher turnover than
    those with a smaller number of full-time
    employees.
  2. Mega-warehouses tend to have the higher turnover
    than warehouses with smaller square footage of
    space.
  3. The severity of warehouse employee turnover has
    little to do with the starting salary of
    warehouse employees.

21
Key Facts
  • Turnover is likely to be higher in rapidly
    growing firms.
  • Bureaucracy or autocracy increased turnover.
    (Barron et al., 2001)
  • Turnover is caused primarily by poor supervision,
    a poor work environment, and inadequate
    compensation. (Hinkin and Tracey, 2000)

22
Key Findings (continued)
  1. Warehouses that stress job security for their
    employees tend to have the lower turnover than
    those that do not.
  2. Warehouses that nurture family friendly
    atmosphere for their employees tend to have the
    lower turnover than those that do not.

23
Key Facts
  • Pay satisfaction is not significantly associated
    with turnover.
  • Household main-income earners would be less
    likely to exhibit turnover behavior.
  • Part-time employees still may leave the
    organization despite being satisfied with working
    conditions and jobs. (McBey and Karakowski, 2001)

24
Key Findings (continued)
6. Warehouses that use a referral bonus program
more frequently for their employee recruitment
tend to have the lower turnover than those that
use it less frequently. 7. Warehouses that use a
word-of-mouth recruitment method more frequently
for their employee recruitment tend to have the
lower turnover than those that use it less
frequently.
25
Key Facts
  • Rehires, walk-ins, and referred employees had
    lower turnover than the ones drawn from hiring
    agencies and newspaper ads. (Gannon, 1971)
  • Employees hired via referrals tended to have long
    tenure and recruits hired via newspaper ads and
    employee agencies tended to have the shortest
    tenure. (Decker and Cornelius, 1979)

26
Frequency of Use of Warehouse Employee
Recruitment Methods
Word-of- mouth through employees
Assistance from local employment agency
Advertising in newspapers
Referral bonus program
Advertisement in professional magazines
1 frequently used 7 rarely used
27
Potential Solutions
  • 1. Employee Internal Customer
  • (a) Personalized attention
  • Determine What motivates each warehouse employee
  • Figure out What are important to each warehouse
    employee
  • Key immediate supervisors into their workers

(b) Reward managers/directors for their
people management skills
28
Potential Solutions (Continued...)
  • 2. Hire Tough, Manage Easy
  • Realistic job previews Identification of
    dedicated
  • workers (Recognition/Reward for work ethic)
  • (b) Target non-traditional recruits
  • The labor force with an age group of 45-64 will
    grow faster than other groups over the 1998-2008
    period.
  • The womens share of the labor force will
    increase from 46 in 1998 to 48 in 2008.
  • The Asian and Hispanic labor forces are projected
    to grow faster than other groups, 40 and 37,
    respectively during the 1998-2008 period.

(c) Ensure job security (d) Multi-functional
training for value-added services
29
What is a Realistic Job Preview (RJP) ?
RJP gives a prospective employee accurate,
unbiased and honest information about the job so
he/she can make a better job choice and reduce
subsequent dissatisfaction and turnover.
30
What is a Realistic Job Preview (RJP) ?
(Continued)
  • Main Objectives
  • Stimulate self-selection among job applicants
    who are most likely to withdraw
  • Change the expectations of new employees to be
    more congruent with what they encounter later
  • Prepare individuals to cope with the unpleasant
    aspects of the job
  • Provide more complete information about the job
  • (Reilly et. al , 1981)

31
Four Key Issues
  • How to present the negative aspects of the job?
  • When to present the negative aspects of the job?
  • How to clearly convey job descriptions to
    applicants instead of ambiguous terms open to
    individual interpretation?
  • How to lower job expectations for newcomers?

32
RJP Tips
  • Present the positive aspects of the job first
  • Provide a moderate degree of negative information
  • (e.g., amount of time on the road, hours of
    work, physical working environments,
    boredom)
  • May show how current drivers deal with the
    negative aspects of the job and how the company
    will help them cope with such aspects
  • Provide RJP during recruitment, not during
    orientation

33
RJP Tips (Continued)
  • Install RJP as a component of the companys
    normal recruitment process (Make it policy)
  • Use multimedia (e.g., brochures, audio-visual
    methods, descriptive materials) for RJP (Talk
    is cheap)
  • Provide specific information on starting
    salaries, fringe benefits, hours of work,
    hours on the road, career advancement
    opportunities, degree of supervision, etc.

34
Potential Solutions (Continued...)
  • 3. Minimize Role Stress
  • Assign tasks to your employees with adequate
    equipment and resources
  • (b) Clarify the criteria for pay raises and
    promotions
  • (c) Ensure clear policies and guidelines
  • (d) Switch schedules to accommodate employees
    family duties
  • (e) Permit personal phone calls to check on
    family members

35
Potential Solutions (Continued...)
  • 4. Motivate Employees through Training
  • Offer cross-training opportunities that lead to
    career development and personal growth
  • (b) Train both supervisors and floor-level
    workers immediately when new technology (e.g.,
    RFID) or systems (e.g., WMS) are implemented.
  • (c) Adopt standards and methods derived by
    employees to enhance employee participation in
    the decision-making process.

36
Potential Solutions (Continued...)
  • 5. Conduct Thorough Background Checks
  • Perform a criminal check.
  • Check the visa status for foreign nationals.
  • (c) Check into academic claims (as many as one
    third of claimed college degrees are false).
  • (d) Do not skip background checks at the
    executive or manager level (Beware of
    white-collar crime).

37
Potential Solutions (Continued...)
  • 6. Leverage Labor Standards to Increase
    Productivity
  • Guesstimates An educated guess at how long it
    takes to do a particular job.
  • Historical standards A measure of how long it
    has taken in the past to perform a particular
    task.
  • (c) Engineering standards a scientific measure
    of how long it should take to do the job with the
    goal of discovering the way to do the job with
    the least amount of effort in the least amount of
    time without compromising safety or quality.
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