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Labor Management: Rally Your Forces

July 1, 2006
Mom was right. Being nice to people pays off.

Everyone appreciates praise for what they do. But does working for a widely admired company, or being told you're good at your job, contribute to greater productivity on the shop floor and a company's overall financial health?

"An employee's performance has a lot to do with how they feel about the company," says Peggy Gardner, a spokesperson for UPS, Atlanta. "How they feel about the company and its future; and how they're being treated by the company, all translates into productivity and performance."

UPS has been rated one of "America's Most Admired-Companies" in the annual survey conducted by Fortune magazine-numerous times. Fortune conducts its annual survey in cooperation-with the Hay Group, which this year surveyed 8,645 executives, directors and securities analysts. Each was asked to rate companies on nine attributes that contribute to a corporate reputation.

Gardner can make statements like these because UPS measures productivity and performance on a daily basis.

"For us," she says, "it's relevant because [measuring productivity] matters not only to the ultimate service you give, but to how you'll fare in the marketplace."

How does being named one of America's Most Admired Companies impact where the rubber meets the road?

"When our drivers, all employees for that matter, hear about this recognition it makes them proud to work for the company," she says. "And we know they're proud because in our annual employee relations index survey [ completed by more than 300,000 employees on a volunteer basis] that's the one response that stands above all the rest."

UPS has a culture that recognizes achievement and promotes from within. Gardner says the measure of success of this program is reflected in terms of service. Currently the average tenure of drivers is more than 15 years. All of the top management came from the inside ranks of the company. Even CEO Mike Eskew started more than 30 years ago in an entry-level job.

Does external recognition mean anything to the customer? It certainly does says Gardner. "The customer wants to know you're hitting on all cylinders and what you say is going to happen, will happen, today and the next day."

She adds that in today's business climate, many customers and companies are holding businesses accountable for how they conduct business. "If they are going to use you as their vendor, they want to be sure you are meeting or beating their standards in terms of environmental issues or employee relations."

Investing in people
Investing in employees is more than a buzz phrase. There's an actual standard for investing in employees that is better known in the United Kingdom and Europe than it is in the United States. TNT Logistics North America (Jacksonville, Fla.) is one of few companies in this country to have achieved certification from the International Quality Centre, London. The Investors in People (IiP) Standard is an internationally recognized standard in training and human resource development.

Certification for this award, which took about 18 months of work on TNT's part, is company wide, not site specific as with quality, safety or environmental certifications. Assessors did face-to-face interviews with 336 employees, and surveys of another 123 in 22 company locations.

Just saying employees need training is not going to make the plant a better place to work. Nor will it inspire much activity. The first part of investing in people is an assessment of what the company has in place and what is needed. Tying the needs, or goals, of the employee to the company's overall development is critical.

"The importance of the individual," says Mark Johnson, vice president shared services for TNT, "is more easily recognized by the employee when he sees how the company is addressing his needs, and how his role fits into the company's overall plans."

Aligning the company's objectives and the development needs of the individual has to be done on a one-to-one basis, and that's what the IiP standard emphasizes.

"The [certification] process asks, 'Are you training now for the future? Is there a strategy to your training now that will take employees to the next level of their own development as well as the company's development?' " He explains.

Johnson says achieving the IiP certification was not as complex as going through some ISO certifications. This certification is about concepts and commitment-business objectives and improving employee skills-not about paperwork. "It starts with an honest assessment of the company's performance, current programs and behavior in training and development of people," he says. "Then a gap analysis against the written standard shows where the company is lacking and what needs to be done."

Johnson says working toward this certification brings an overall awareness to the management team. " Certainly the company and employees gain skills and knowledge in the process [of working for certification]," says Johnson. "In addition, we now have a more clear direction and priorities across our global organization."

Making time for fun
"Taking time out of the work day for fun is short-term pain for long-term gain," says Amy Carovillano, vice president logistics and distribution, The Container Store, Dallas. Getting the message that's it's okay to have fun on the job, is one of her tougher tasks with line supervisors and managers. "It might seem like you're losing an hour of productivity to celebrate Fancy Socks Day, but you're gaining incredibly loyal employees when you do."

Many of the things Carovillano advocates seem almost counterproductive, yet The Container Store has been a perennial favorite on Fortune magazine's list of Best Companies to Work For.

"Having fun doesn't mean you can't make money," says Carovillano. "In fact, if you look at the companies on that list, you'll see that those 100 companies perform about three times better than the average company."

Carovillano notes that having fun in a warehouse and creating a climate where employees enjoy coming to work was unheard of as recently as five years ago. Now, there seems to have been a sea change as more companies discover the true cost of hiring, educating and retaining employees.

"Companies have to be competitive for the shrinking labor pool," she says. "And younger workers are more demanding. They no longer feel grateful just to have a job as generations before them felt."

Carovillano says such accolades in and of themselves have little impact on workers on the floor. It's the things management does to win those awards that matter. Still, the awards instill a sense of pride in people— to be recognized as part of a company that is known as a great place to work. And that goes a long way in employee retention.

Carovillano brags about enjoying going to work. "We have a lot of fun in the warehouse, and we work hard." The distribution center also uses labor management software (LMS), not for incentive measures (it does not have incentive pay for employees), but as a tool to help manage various tasks.

"We use the LMS to help predict our labor needs," says Carovillano, "and quantify the work for us. It also helps refine our preferred methods of order picking."

Words to work by
On the 13-acre campus of ODW Logistics (Columbus, Ohio), the words of the day, every day, are "passion" and "candor." Then there are "spirit" and "delighted" and a whole lot more. Operations manager Jon Petticrew is open and enthusiastic when he says he wants employees to speak their minds because then they'll begin to think and behave like owners.

"If employees see something they think is bad business they speak up and we consider changing that process," he says.

Petticrew's formula for success is to interject large doses of laughter and enjoy celebrating success with employees. ODW offers a plethora of programs and fun activities for its employees because hanging on to talent is an active part of management's strategy.

"It's costly to get good people in, and more costly when you lose them," says Petticrew. "Every company can have a good material handling systems and great equipment. Great companies separate themselves with people."

Currently ODW serves more than 60 customers in its 1.5 million square feet of space. "Our customers look for how well our management interacts with the people on the floor," he says.

When asked how great companies get great, Petticrew says it takes total commitment from top management. He uses the sports metaphor of fans doing the wave in the stadium. "The first few people standing up, waving their arms are the odd balls," he says. "But eventually, when that wave is rockin' and rollin', the odd balls are the people still sitting down."

In pursuit of greatness
LXE Inc., Norcross, Ga. was a recent finalist in the "Best Customer Service" category of the American Business Awards program. This is the only national, business award program honoring performance in the workplace. It was the company's second time in the finals—and the second time it went home empty handed.

Trying to be as philosophical as possible, Mark Dessommes, marketing director for this wireless products manufacturer, says, "We are competing against the world in this category. We obviously put a lot of emphasis on customer service. Everyone around here believes that's what you have to do to be successful in this market."

And in a marketplace where customers find it tough to see much differentiation in products, agility in customer service is what can lead to success, says Dessommes.

He says the company is currently undergoing some minor "tweaking" to improve it's ability to respond to customers' concerns. He feels customers see more value in a company by how the company performs the processes it has in place, rather than in any awards the company might receive.

"You can't be too rigid in your application of [customer service] processes," says Dessommes, "because every customer service problem is not the same. Flexibility is the key. And empowering the guys in the field to make decisions and not having to seek approval-in solving the customer's problem-is an important aspect."

Work hard. Have fun. Make money.
How employees are treated can make or break a company.

As the Investors in People Standard notes, this is not rocket science. To find out what difference investing in employees—in terms of education and goal-setting makes—managers have to talk with their employees. As Joe Scarlett, chairman of the Tractor Supply Company (Nashville) told the audience at the Warehousing Research Education Council annual conference, "Work hard. Have fun. Make money." And while that might sound like conflicting goals to some, Scarlett said any company can do it when it puts people first and follows the simple principle of treating others as they themselves would like to be treated.

"At Tractor Supply," says Scarlett, "we hire hard. We want the employment relationship to last, so we put a lot of effort into the hiring process. We're tough to come to work for. But then we can manage easy. Recognition is the number-one motivator, so we share our employee's success stories."

The Container Store's Carovillano uses a sports metaphor to describe how a company becomes an employer of choice: "If you're going to be the coach of a successful team, you need to tell the players the rules, show them the goals, give them the right equipment and tell them how to score."

Factoring in Fun

Labor management software (LMS), which helps define optimum work practices and reports key labor performance indicators, can tell a manager at a glance what's happening on the shop floor. But software that minutely tracks how people are working sounds like it might filter out things like having fun on the job. Not so says John Murphy, vice president labor management for RedPrairie (Waukesha, Wis.).

"We're measuring from clock-in to clockout," he says. "In there you have personal time, fatigue time and delay time. You account for 'fun' time because you factor in employee meetings that do not count against the employee."

A major benefit of LMS programs, says Murphy, is that they change the culture of a distribution center from one in which managers run around, making sure everyone is busy, to an atmosphere in which the manager can become a mentor.

"The closer to real time a manager can give an employee feedback," he says, "especially if it's negative, the better the result."

An advantage of an LMS is that it creates preferred methods for performing tasks in a safe, efficient and repeatable way. These are things that can be measured, and thus improved upon.

"While labor standards are unique to every building," says Murphy, "the ergonomics of how to lift a box, for example, have been with us for decades. The standard becomes: what equipment will be used to lift the box or travel time the employee requires to move the box from point A to point B."

A labor management system improves visibility and control of what is happening inside the building. People are measured against the work. All individuals can be measured against how fast an average employee does the task, not how fast a co-worker does the task.

"A lot of technology and process transformation is being applied to logistics," he says. "Managers are looking for the critical metrics of what runs the business. The seat-of-the-pants methodology is going by the wayside."

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