A new hotel employee was asked to clean the elevators and report to the supervisor when the task was completed. When the employee didn’t show up at the end of the day, the supervisor assumed that, like many others, he just hadn’t liked the job and left. However, after four days, the supervisor ran into the new employee. I was cleaning in one of the elevators. “Surely you haven’t been cleaning these elevators for four days, have you?” asked the supervisor, accusingly. “Yes sir,” said the clerk, “this is a great job and I’m not done yet, do you realize that there are more than forty, two on each floor, and sometimes they’re not even there …”
The story may be familiar to some. However, the underlying message is that proper training in unfamiliar surroundings is essential. Warehouses and distribution centers pay close attention to management training looking for the brightest, most talented and most experienced person available. However, when it comes to recruiting people who are actually going to do the job, they get someone with minimal education and work experience. Most companies hire hourly workers who may have been with multiple companies in the past and assimilate them into their organization immediately and become familiar with the operation as they go along, or in some cases not assimilate them at all.
The problem with this method is that the company gains perhaps a few months of employee productivity before the effects of a lack of adequate training and experience begin to show. If the situation persists, it can result in many challenges, from inventory accuracy to audits, not to mention lost revenue for the company and the repeated cycle of firing the employee and making the same mistake again with a new hire.
Most of the new hires at the warehouse come from other organizations or temporary services, and after a few days on the job, they practice the old habits of the company when receiving, storing, picking up, and moving products. But not all companies are the same, and while you may want them to perform differently if you haven’t trained them in your company culture and processes or worse, they come with a lack of experience, they usually they learn from others, which may not be the case. Be the right path if you want a quality workforce.
Deficiency in training and experience
Poor training and experience can have an adverse effect on your organization. When traveling the world, I have noticed many excuses why organizations cannot adequately train their hourly workers. Some were, for example, “if I train them, they will go away and take the training elsewhere.” Or “we don’t have the budget for company formation.” But the question is, can you afford not to train them? According to recent statistics, the average business experiences a minimum of 1.6 hours of downtime per week (i.e. reduced production, maintenance delays, shutdowns, and inaccurate data collection). To put it in more proper perspective, a distribution center with 50 employees who are paid $ 29 per hour ($ 15 per hour salary + $ 14 per hour in benefits), the cost of downtime for said company It would be $ 9,280 per week, which translates to more than $ 110,000 a year.
This under the assumption that all workers in the company will be forced to stop all production during a downtime scenario that may not happen, but only a few key distribution workers on the docks could create a severe impact on the operation. But before you can assess the cost of downtime, you must determine its source. The best way to accomplish this is to run a downtime threat scan. Some threats that can cause downtime,
1. Internal and external sources
• Accidental versus intentional
• Controllable risk or beyond the control of the organization.
• Events with prior warning versus those without warning
• Employee sick leave
• Skilled versus unskilled workers
2. Three questions to focus on when conducting a threat analysis.
• Identify relevant compliance issues
• Establish a cost associated with each compliance issue
• Develop processes to reexamine downtime threats on an ongoing basis.
The benefits of training and experience
Having skilled and dedicated workers at the lower levels is good business practice and makes sense. Empirical evidence shows a significant correlation between experience and compensation (see surveys in Robert Willis 1986 and Theresa Devine and Nicholas Kiefer 1991). Furthermore, on-the-job training, apprenticeships, and internships provide experience at significant costs to both individuals and organizations: Sherwin Rosen (1972: p327) asserts, “(w) workers demand learning opportunities and are willing to paying for them since your marketable skills or knowledge and subsequent income are increased. “
The importance of the experience and training of your employees can provide more than compensation, it can save time for the organization; workers have a more positive feeling about the organization, they are off to a good start and they know what they are doing.
Experience and training add value to their organization and employers recognize that the values these employees bring to bear translate into;
• Higher earnings
• Lower costs
• Higher quality and
• Higher customer satisfaction
Heymann and Barrera (2010) exemplified employee values in their study in which they interviewed employees at all levels, from the lowest paid to those in senior management positions, including CEOs, CFOs, and COOs at nine different countries. The companies ranged in size from 27 to 126,000 employees and included those in the public and private sectors of the automobile, financial services, personal property, technological hardware and equipment, pharmaceuticals, food production, building materials and industrial metals industries.
They concluded that companies like Costco and Great Little Box Company, because of the incentives they offered from the lowest level employee to top management, had happier and more productive employees and a lower turnover rate than their competitors in the same industry. They also found that for Costco, treating workers well was important, leading to higher motivation and better quality of service. This combination, along with good pay and the knowledge that advancement opportunities existed, were important incentives for employees to work hard. The high quality of service from Costco’s motivated and engaged employees, coupled with low prices, meant that customers came back and were willing to pay the membership dues.
Great Little Box Company practiced an open book management strategy (holding monthly meetings to discuss organizations, finances, production, and sales performance with staff members at all levels), this gave employees a sense of ownership in the company even in or to be more effective the leadership of the organization incorporated the distribution of profits. The Great Little Box Company also encouraged employees to come up with cost saving ideas. One of these ideas resulted in the interdepartmental use of a particular piece of equipment that is used exclusively in the labeling department, but is now shared with the department in charge of folding carton printing, resulting in cost savings for the labeling department. 12%, a task entrusted to a printing company in the past.
Employee engagement ideas and strategies are nothing new. We have seen programs like TQM, Quality Circles and Agile, they all emphasize the same thing, but unlike The Great Little Box Company that was really implemented and followed; it was just another trendy idea that died out when the next big wave of pop management techniques appeared.
The open book management strategy has been of great use to The Great Little Box Company in terms of substantial profits and profits. In the last decade, its sales have doubled from 17 million to 35 million and in the last seven years the success of the company has allowed it to acquire the assets of six companies.
Zenger, Folkman & Edinger (2010) concluded in their study of profitable companies. They identified five areas that were common among companies with substantial growth.
1. Employee satisfaction / engagement
2. Employee turnover
3. Percentage of employees thinking about quitting smoking
4. Satisfaction with payment
5. High commitment
The study by Zenger, Folkman and Edinger (2010), although not inclusive, shows that the experience, training and participation of employees are essential for the growth and profitability of a company. Costco and Great Little Box Company are two good examples of companies that succeed with experience, training, and company involvement at all levels, but it’s not the exact rule of thumb. Incentives and participation are noteworthy factors, but to have great money-saving ideas for organizations, there needs to be some experience and training among staff at each level.
Reach the kind of success that Costco and The Great Little Box Company have had; Businesses need to find what works for them and how it relates to business goals. Do not follow other organizations or emulate their operating systems because each company is different and does not necessarily translate into success for your company.
Heymann, J. and Barrera, M. (2010). How companies can benefit from increased compensation at the base. Ivey Business Journal, December 2010.
Rosen, S. (1972). “Learning and experience in the labor market”, Human Resources Magazine, 1972, 7. pp. 326-342.
Zenger, J., Folkman, J. and Edinger, .K. (2010). How Extraordinary Leaders Double Profits:
Decoding leadership trends to discover patterns.