by Rene Jones, AHN Corp.
First of all, I’d like to state that what we say here can be used for more than just warehouse personnel. And with that I would like to ask some basic questions: How important is hiring good people to your personal success as well as to the success of the company? Would you rank it number one or number two in overall importance? How accurate would you say the typical one-on-one employment interview is in predicting performance?
A study was performed at Michigan State by Professor John Hunter. It says that with all positions from entry level to chairman, the typical employment interview is somewhere between seven and 11 percent more accurate than flipping a coin.
Let’s think about that. We have the most important thing we do, which is hiring good people for our teams, and it relies fundamentally on a random process. Do you have any process in your organization that produces 43 percent scrap? If you did, would you continue to use it? Of course not. Then why do we continue to use the traditional hiring methodology? We have proven to ourselves time and time again that it does not work, so why do we continue to use it?
All right, let’s flip scripts here for a second. Having a warehouse, of any size, is something I want you all to think about. How important is your warehouse to your overall process? Would everyone agree that your warehouse is the one of a few tools you have to retain your existing level of business?
Your customers see you by your product guide/newsletter, your receptionist, inside sales, outside sales, and visiting your facility, which they do the least. But the most important way they see you is by the package that is prepared and shipped to them by your warehouse personnel. This means that your warehouse is vitally important to your company’s success.
Now back to my original question: We have proven to ourselves time and time again that the traditional hiring methodology does not work, so why do we continue to use it with one of our most important processes in the organization? Let me walk you through the process we use today:
• We place the ad(s);
• We review the résumés;
• We interview the candidates;
• We flip the coin.
Then almost half the time we wonder what we were thinking. We have to change our mindset and begin by focusing more on what a person needs to do, rather than what they have.
Does the ad tell any potential candidates what they need to do to be successful with your company? It says what they need to have to get yelled at for not doing a good job. What we have to understand is that, if we want to hire top performers, we must first define top performance.
What is top performance for your warehouse personnel? Is it getting to work on time? Is it keeping the warehouse clean? Is it having an accurate inventory? How many shipping errors? If it is a supervisor/manager position, will it be getting the employees to work on time? Is it doing a day’s work in a day? Or maybe it is reducing your warehousing cost.
With all the warehouses I have visited and board rooms I have sat in and talked with upper management about the performance of the warehouse, less than 20 percent of the time I receive quantifiable and, more importantly, achievable goals for the warehouse. I have heard all the items I just mentioned, but when I ask, "Well, how many shipping errors do you have now?", the answer I receive is, "A lot." When I ask "Well, how accurate is your inventory now?", I have heard: about 60% accurate; I have heard it is not that bad we just need to improve it, and my all time favorite, "We do not know because we don’t perform physical inventories." With all these answers, how do we expect to hire someone and legitimately tell whether he is doing a good job or a bad job at meeting your expectations?
Is this the way your sales personnel are measured? See, I learned some time ago we measure what we value. Every company I have ever visited measures its sales staff. Every company I have ever visited has goals for its sales personnel. Every company I have ever visited pays for performance when it comes to salespeople. But what I did not understand is why this was not happening in the warehouse. As I mentioned earlier, "We measure what we value." Therefore, since a large majority of the upper-management personnel I have spoken to came up through selling, it only made sense that the emphasis was placed on the sales personnel. But as we have learned, your warehouse is selling as well. That package that leaves your dock and arrives at your customers’ dock, office or jobsite is a sales call. What do you think your customers perceive when that box is dropped?
So, by knowing what top performance is we have the ability to identify top performers. This allows candidates the opportunity to trade short-term compensation for long-term growth.
In reviewing résumés, we look for spelling errors, salary history, experience, no gaps in employment, etc. Let’s touch on that thing called "experience" for a second. If someone has 10 years of experience with running warehouses, is that good or bad? In other words, does that candidate have 10 years of experience or one year of experience repeated nine times? When I was in the military I received a position as a trainer with a so-called elite unit in the Air Force. This was only after I had been in the service for several years. When I asked my superior why they did not hire right out of basic training, he told me, "The best people are already working." I did not know what that meant at the time, but in my business career it makes nothing but sense. Top performers have been top performers for some time. The key is they are usually looking to better themselves. So why would they respond to an ad that is doing the exact same thing they are doing in their current position?
Therefore, when we are viewing résumés we need to look for someone who is growing, with a bright future, and not someone who has the best past. It took man 1,200 years from the birth of Christ to double our knowledge. Now it happens in less than 18 months. That means what your warehouse supervisor or candidate knew 18 months ago is now obsolete. Unless, they are keeping up with the industry by reading the periodicals, attending training classes, going to seminars, etc. How many seminars have you sent your warehouse supervisor to? Better yet, how many has he or she asked you to attend in the past 18 months? How often do you see the Logistics Management Report, The Distribution Challenge, or LogisticSociety News on their desk? How much knowledge has that candidate acquired since getting his last job? So I ask again: When a person says he has 10 years of experience, is that good or bad?
The interview is my favorite part. The reason is because we have warehouse supervisors and managers interviewing people to work in our most critical area of the business, and they have no training on how to perform a successful interview or labor laws. Or we have Human Resource personnel who do not know anything about the processes in our warehouse, other than it receives and ships merchandise, selecting our warehouse personnel. Let me get you to think about this for a second. Is there any relationship between the first interview and subsequent performance? Of course not. Because there are too many factors that play a major role in the interviewing process.
First impressions, our personal biases, the competency of interviewers, and how each person measures competency are different. And most of the time what is being measured is not even relevant. I heard someone say once that "we use a clock during the interview to determine competency but a calendar when the person starts on the job." Another reason the first interview can’t determine subsequent performance because we overvalue presentation with performance. Here is one last thing to think about: How often are you hiring warehouse personnel? What is your turnover rate? If it is anything like the rest of the country, it’s time to make a change.
So the focal point of this article with hiring warehouse personnel is again, "In order to identify top performers in our warehouses, we have to first identify top performance within our warehouse." Because if we don’t know the job, then we will substitute our personal biases, perceptions, emotions and frustrations, depending on how long we have been searching. I hope we all know this does not apply just to our warehouses.
Now, once you get them, how do you keep them? This is the million-dollar question. Everyone wants to know how we can reduce turnover in the warehouse. I can tell you it all starts at the top --with your warehouse supervisor. Let me say that again, "It starts with your warehouse supervisor." He determines the fate of your warehouse. He determines how organized your warehouse will be. He determines whether you have good or bad processes. He determines whether your warehouse personnel will like coming to work.
If your warehouse supervisor is not competent, then how many shipping errors do you think you will have? How accurate do you think your inventory will be? Do you think your warehouse will perform a day’s work in a day? What does that mean? Let me explain the term, "a day’s work in a day." That means if it comes in today, it gets received today. If the order is placed today, it gets shipped today. If it is returned today, the credit is processed and put into stock today. All while the warehouse remains clean. How many people have this philosophy of a day’s work in a day and stick to it on a daily basis in their company? If you do, you need to give yourself a pat on the back.
Your warehouse supervisor is the one who makes a statistic out of your warehouse personnel. The statistic says warehouse people will leave for less than a quarter. That’s a $10 a week increase. Again I ask, how much turnover do you have in your warehouse? Is you company really that bad? Of course not! But how long can you continue to hire, train and lose people in the most critical area of your business?
Keeping them also means paying them! If you go to our Web site www.ahninc.com. you will see an article there titled "When You Pay Peanuts You get Monkeys." As humorous as that may sound, how many times have you thought how did we make that mistake? How did we ship a piece of pipe but the customer ordered a tank? And your customer said to your salespeople, "You must have a bunch of monkeys working there." Well, if you are paying peanuts, then you probably do. According to WERC in 2002 the average orderpicker earns $11.43 an hour. The average supervisor earns $39,212 with a bonus amount of around $3,000. Ask yourself, "Are you paying peanuts?"
The climate is changing. It’s no longer sales force against sales force. It’s no longer who gets the best tickets to the best games. It’s who’s going to deliver what I ordered, on the date I was promised at a competitive price. If you cannot do that, on a consistent basis, then your company will become one of the casualties we read about in the paper every morning.
A fair salary is something everyone needs to do the job he is paid to do. Such factors include adequate work space, light and heat, a telephone -- if you do not have any of these items, you will be demotivated and unable to do the job you are hired to do. If you have all these items, you will be able to do your job, but having them will do nothing to help you to do the best job possible. Getting people to do their best job is more a function of what Herzberg calls "motivators." These include praise and recognition, challenging work, and growth and development opportunities.
In the book, This Place Sucks! (What your employees think about your company and how to change their perceptions!), it says, "Perception is reality!" Because we look down on our warehouse personnel we treat them as underclassmen, second-class citizens or undereducated people. When there is a shipping mistake we yell, when the inventory is inaccurate we yell, when product is not received fast enough we yell. When things go right, which they rarely do, we do not even acknowledge them.
School House Rocks tell little kids to accentuate the positive! Someone else once said, "If you want to keep getting what you are getting, then keep doing what you are doing!" So, if you want to keep getting monkeys in your warehouse, then keep paying peanuts. If you want to continue having an inaccurate inventory, then continue not sending your warehouse supervisor to any courses or seminars on best inventory practices. And, last but not least, if you want to continue having problems selecting and keeping, not just warehouse personnel but personnel in every position of your company, then continue flipping the coin and not identifying what top performance is within your company.
Rene Jones was the founder and president of Total Logistics Solutions Inc. Jones is now president and CEO of AHN Corp., a warehouse management system provider. With more than 18 years of experience in training, warehousing and logistics, he has used his knowledge to assist and turn around small and large companies alike, making them more efficient and profitable. He has been published in several industry magazines and is the author of This Place Sucks (What Your Warehouse Employees Think About Your Company and How To Change Their Perception) and Inventory Control Workbook (A Complete Guide To Uncovering Your Inventory Control Issues). Jones can be reached at 818-353-2962 or by e-mail at [email protected].