Why have seasonal hiring surges stopped working?

Why have seasonal hiring surges stopped working?

Previously when demand rose, and expectations climbed outside the norm, warehouse-utilising businesses responded with seasonal hiring surges. But now, that strategy is showing strain.

With more and more pressures mounting, many are starting to wonder if the sector is resembling the frog in the metaphorical slowly boiling pot of water. Factor after factor is revealing a freighting truth. Seasonal hiring surges aren’t working, and by understanding why, the alternative becomes clear.

Scarce workers, soaring costs

Following the COVID-19 pandemic and the subsequent lockdowns, ecommerce experienced a dramatic acceleration of its already seemingly inexorable rise. This pushed demand for warehouse workers into the stratosphere, which in turn put pressure on salaries, benefits, and overall employment packages. The temporary agency warehouse work sector experienced a boom as more and more workers with warehouse operative experience found themselves able to collect higher wages working for multiple businesses in the short term, rather than staying in one place for an extended period.

Despite the slowing acceleration following the relaxation of pandemic-induced restrictions, the ecommerce bubble does not appear to have burst. The available pool of warehouse workers are still expecting much higher wages, since there seems to be no danger of their work not being needed in the foreseeable future.

As this trend persists, seasonal hiring spikes will only become more and more expensive. Pushing the costs of pursuing this strategy to the point of unsustainability.

Expectations of employment

The COVID-19 pandemic has also been the cause of what many economists are calling “the great resignation”. A trend that is described by Wikipedia in the following terms:

“The Great Resignation, also known as the Big Quit and the Great Reshuffle, is an ongoing economic trend in which employees have voluntarily resigned from their jobs en masse, beginning in early 2021. Possible causes include wage stagnation amid rising cost of living, long-lasting job dissatisfaction, safety concerns of the COVID-19 pandemic, and the desire to work for companies with better remote-working policies.”

Data from the Bureau of Labour Statistics places the average warehouse business employee turnover rate at 43%. This is almost three times the 15% experienced by most businesses more widely.

You could be forgiven for thinking that this is not a concern if you are only looking to hire people on a short-term basis as part of a seasonal hiring surge. However, the same trends that are making fewer and fewer people see warehouse employment as a long-term option will impact the short-term market also. Furthermore, those who do enter the short-term market will have even less experience than previously, with fewer and fewer people wanting to look into warehouse work to begin with.

These trends will increase employee scarcity, which will raise the wage levels needed to attract workers, which will in turn compound all the other problems related to your business’s ongoing operations.

Struggling giants

This trend of fewer available workers, and the subsequent unsustainability of normal hiring models are already being seen. The mightiest of the mighty ecommerce giants, Amazon, has been discovered to be expressing serious internal concerns about their ability to meet necessary hiring targets.

A recently leaked Amazon internal memo, examining the broader hiring situation was quoted by Vox.com as saying the following “If we continue business as usual, Amazon will deplete the available labour supply in the US network by 2024…”

The dramatic difficulties Amazon faces are clear from the overall statistics. In 2019 Amazon’s employee turnover in the US had reached 123%, and then in 2020 these numbers reached 159%. That’s approximately 3% per week.

This has ended up driving Amazon to pursue outlandish policies such as $3,000 sign-on bonuses, and $3 per hour bonuses for employees in specific locations. Policies that could be available to giants, but are far out of the reach of businesses of other sizes.

The broader picture is clear, and far from unique to the United States. If even Amazon is struggling to operate in the current environment to hire the 150,000 extra staff it needs on a seasonal basis, how can other businesses be expected to cope?

A perception problem

The perception of warehouse work among the wider population, and among graduates specifically, is one which is making it more and more difficult to draw people in. Warehouse work is either poorly understood or poorly viewed by the wider public, both of which lead to smaller labour pools and more of a struggle to hire people seasonally.

Thomas Insights points out that many warehouse-utilising businesses are facing trouble because of the widespread belief that warehouse experience does not translate to medium-to-long term career possibilities. This is translating into the idea that the sector is of limited worth entering into, even on a temporary basis. This is further compounded by the idea that warehouses will not offer on-the-job training or professional development, but will rather expect people to be able to learn as they go.

This concurs with a number of myths that were found among potential warehouse employees by the online banking provider suits.me. Many people apparently believed that temporary warehousing work was primarily unskilled labour that was poorly paid, lacking in training prospects, and provided employees with fewer benefits than were on offer with permanent employment. With views like this being widespread, warehouses will continue to find hiring seasonal staff more difficult.

To counter this, many warehouses have been pulling certain conditions and support levers to change the situation, but there is only so far this can supportably go. As the expense in hiring new staff rises, so the unsustainability of hiring surges gets even worse.

Competing against those who automate

As the seasonal hiring surge strategy continues to accumulate problems and obstacles, there is one above all that makes this model of warehouse operation ultimately unsustainable. The businesses that pursue this method are increasingly competing with the businesses that don’t.

As problem after problem arises with the normal seasonal hiring surge system, more and more businesses are looking into warehouse automation as a very attractive alternative. With an automated warehouse, rather than hiring new staff to deal with a demand surge, you can simply deploy more robots. This can increase your overall speed without the dramatic spike in costs, inaccuracy, and HR difficulties normally associated with seasonal hiring surges.

This allows for a far smoother solution, even in the midst of the most dramatic of demand surges When your warehouse can work that much faster, without any of the associated problems, competitiveness is inevitable. Operating in opposition to such businesses, burdened by all the problems of seasonal hiring surges in the 2020s, is increasingly approaching levels far beyond impractical, and much closer to impossible.

Discover modern warehouse automation

Once you’ve come to the view that you need to abandon seasonal hiring surges, the next step is to see the alternative for yourself. Speak to OrderWise today to learn more about warehouse automation. What it is, what it means, and how your business can benefit.