“Supremely frustrating.”
That’s how Flexport Inc.’s Director of Ocean Trade Lane Management Nathan Strang described current shipping backlogs. Citing the mounting pressure to clear congested terminals, Strang said, “Everybody wants to find a relief valve and all of the relief valves have been plugged.”
Managers like Strang aren’t the only ones feeling the pressures of a clogged terminal; frontline workers are also experiencing more stressful working conditions. COVID-related concerns, higher productivity demands, worker shortages, and burnout are all contributing to a high employee turnover at terminals — and the cost is adding up.
As a technology company in the Pacific Northwest, Tideworks has firsthand experience competing for top talent against some of the most successful high-tech companies in the world. Lessons learned in the last two years about what it takes to attract top-tier individuals, and help retain them in a competitive marketplace, only made us stronger.
Tideworks also has a rich history with a diverse set of leading terminal operators, third-party terminal vendors, and business relationships around the globe. Here’s a look at the causes and costs of high employee turnover from the IT and operations side of terminal life, what some are doing to prevent it, and how Tideworks specifically can help reduce the pain of employee churn.
Employee Turnover Trends in 2021
The terminal and freight industries aren’t the only ones wrestling with high employee turnover. COVID-related health concerns, stress at home, wage dissatisfaction, employer-employee disconnect, and a host of other reasons have caused many employees to look for work elsewhere. The Bureau of Labor Statistics estimates that a historically high 47.8 million people quit their jobs in 2021 — up from 36.3 million quits in 2020.
Also known as “The Great Resignation,” the massive labor outflux has resulted in greater demands on employees that chose to stay. With more tasks to complete and fewer workers to complete them, the remaining workforce feels added strain at a time when employee morale is already low. This has several costs, including even more employee turnover. But what does employee turnover really cost terminals?
The Cost of High Employee Turnover
When employee morale is low, profitability suffers. From lost expertise to other colleagues becoming discouraged at the loss of a workplace friend, high employee turnover carries multiple costs with it. A study by Built-in shows just how expensive losing a single employee can be:
- $1,500 to replace an hourly employee
- 100–150% of an employee’s salary if they hold a technical position
- up to 213% of an employee’s salary for C-suite positions
Some costs associated with higher employee turnover are a direct result of the time and money it takes to find someone to fill the open position, but others are incurred downstream, as new workers gain proficiency.
Recruitment
Even in the best of times, finding the right employees takes time and money. Whether a terminal chooses to utilize a recruitment agency or tackle hiring internally, it should expect costs for factors like:
- Position advertisement
- Internal recruitment time
- Administrative work (reviewing applications, filling out paperwork, corresponding with applicants, etc.)
- Interview time
- Drug screenings
- Background checks
- Pre-employment assessment tests
Recruitment costs aren’t the only expense related to finding new hires. Training fresh talent takes time and resources that will cost terminals in the long run.
Training
Once terminals find the right fit, they still have to train new hires for their new job and company. While recruitment costs consist mainly of the time and energy it takes to attract new talent, the cost of training lies in lost productivity as workers climb the learning curve. Training-related expenses can include:
- Productivity loss
- Learning curves
- Certifications
- Worker errors
Mistakes, severed ties, and a higher workload all carry financial costs to terminals with a high turnover rate, but they also have a significant impact on company culture as a whole.
How High Employee Turnover Hurts Company Culture
In addition to the financial costs of recruitment and training, a high employee turnover rate and consistent changes in terminal management personnel can directly impact company culture. Here’s how.
Impacts Employee Morale
Maintaining and widely evolving company culture is a vital part both of attracting new talent and retaining devoted employees. Losing a worker can make it difficult to maintain the sense of camaraderie a terminal has worked so hard to establish.
Company culture is further damaged when employees lose a colleague that has become their friend. One study showed that 70% of employees stated that having a friend on the job is the most important way to have a satisfying work life. Employees with a workplace friend also show a 35% higher commitment to quality performance on the job. As people begin to leave your terminal, you may see a shift in the quality of work and employee morale.
Dampened employee morale can have several impacts, including:
- Lower trust: Employees are at their best when they “buy in” to company values, and the resignation of one worker can signal to others that something about the company is amiss. When suspicion or distrust starts to creep in, other employees may wonder if they should leave too.
- New employee discouragement: Not only do incoming workers often fret as they struggle to acquire their skills, but inexperienced workers may lose a mentor that they look up to when seasoned employees leave.
- Recruitment difficulties: A high turnover rate can signal to prospective employees that the company has a hard time keeping its workforce happy and may not be a good place to work.
High employee turnover rates can damage productivity and employee trust, but it can also jostle team dynamics and change the way workers interact within the team.
Changes Team Dynamics
Teamwork is an essential part of any successful workplace environment. Whether it’s collaborating on a project or filling in for one another’s shifts, employees thrive when they feel their workplace fosters teamwork and synergy.
High employee turnover on a container terminal can hinder team dynamics in several ways. First, long-standing relationships mean clearer communication, and starting fresh with new employees will inevitably cause changes in communication. This can lead to frustration among new and veteran employees.
Taken together, changes in team dynamics can disrupt the way employees interact and how new employees perceive their new company.
Causes Employee Burnout
The loss of relationships coupled with a downward trending company culture can quickly lead to employee burnout. This is especially true at a time when terminals need to ramp up volume and productivity, and there are fewer hands on deck to complete the workload.
For instance, the pandemic has caused a spike in online ordering, which has placed greater demand on terminal operations as they handle an increased number of containers and freight. At the same time, health concerns have caused many to feel more stress than normal, making them consider quitting their jobs.
Loss of Institutional Knowledge
When seasoned employees leave, they take their experience with them. The institutional knowledge that long-time employees possess is one of a company’s most valuable assets, and losing it can set terminals back until replacements recover that expertise. One study showed that enterprise-level organizations may waste roughly $4.5 million dollars in productivity costs due to lost institutional knowledge, and failure to create a space for accessible learning material can slow down the onboarding process too.
How Terminals Can Attract and Retain Talent
Thankfully, there are several things that employers can do to reduce employee churn and attract talented workers. Things like creating talent pipelines, asking for employee recommendations, and updating benefits packages can all help attract new talent and retain existing workers. Here are a few action steps that terminals can take to improve retention and recruiting.
1. Create a Talent Pipeline
Talent pipelines deliver qualified candidates into pools or communities, giving employers a smaller pool to draw from when a similar position opens up. By staying in touch with these prospects, companies can reduce the time it takes to fill the next position, as well as the cost of recruitment.
2. Evaluate and Improve Company Culture
If terminals are experiencing a high employee turnover, they may need to evaluate their company culture and find ways to improve it. This can take several forms, including:
- Eliminating favoritism
- Publicly recognizing employee achievements
- Showing receptiveness to new ideas
- Encouraging open communication
The best way to cultivate a healthy work environment is to earn employee trust through honest, two-way dialogue. Terminal managers and leaders should be open to receiving feedback from frontline workers and express a clear commitment to loyal employees who have chosen to stay to earn that vital trust.
3. Evaluate and Improve Benefit Offerings
A complete benefits package is as important to many workers as their salary, and up to 49% of employees may consider leaving if they’re dissatisfied with their benefits. Meanwhile, 78% will stay for a package that they like, so offering quality benefits may not only improve retention but attract other employees too.
Conventional benefits packages consist of medical insurance (health, vision, and dental), 401k, and paid time off, but a modern-day workforce may be more motivated by other offers. Whatever they offer, terminals must re-evaluate their benefits packages to make sure they align with the interests of a modern workforce.
4. Leverage Employee Recommendations
While talent pipelines help terminals keep in contact with qualified former applicants, employee recommendations give them access to new talent referred by trusted workers. Employees are more likely to recommend someone they know and trust, and this can help foster smoother team dynamics, as workers already have a prior rapport.
5. Have Better Hiring Gates
One way to prevent high employee turnover is to ensure that each new hire is the right fit. Hiring gates are tests that HR professionals can use to measure the potential of prospective employees, so terminals don’t waste their resources on workers that don’t fit their needs. Some hiring gates include:
- Aptitude tests, to ensure workers have the necessary skills.
- Emotional intelligence tests, to measure teamwork, cooperation, and ability to handle stress.
- Personality tests, to assess an applicant’s behavioral traits.
Soft skills like interpersonal communication and organization can also be measured with hiring gates. By leveraging these tools, terminals are more likely to select the best applicant on the first try.
6. Invest in Leadership Training for All Levels of Management
Leadership development is essential in maintaining retention.
Many terminal operations have a high percentage of their workforce dedicated to working on-terminal, yet leadership training often goes to managers higher up in the company, rather than frontline managers. If frontline managers aren’t equipped to manage a workforce well, their direct reports will get the brunt of it.
While there is still a need for leadership development for managers presiding over administration and sales, those working with employees at terminal sites must not be overlooked.
7. Upgrade Your TOS Tech
Sometimes, the best way to reduce workloads and combat high employee turnover is by giving employees better tools for the job — and better software does just that.
A more modern terminal operating system (TOS) can help new and current terminal employees in several ways. By making data collection and analytics easier, terminal operators can make better decisions and plan more effectively, thereby decreasing wait times and boosting productivity. Modern terminal operating systems should also utilize intuitive user interfaces which help new employees learn the software and get up to speed faster.
The efficiency improvements that a top TOS provides help to reduce worker stress, make communications smoother, and result in superior performance that will increase stakeholder satisfaction. All of these result in a happier working environment employees want to be a part of.
How Tideworks Can Help
The problem of high employee turnover at container terminals may be improved by boosting company culture or restructuring benefits packages, and it is true, people may find the most relief when they have better tools, including better software.
Tideworks offers a suite of TOS solutions for marine terminals and rail terminals that they can use to optimize terminal efficiency, speed up employee onboarding, and facilitate better team collaboration.
Your TOS software should be built for the demands of today and tomorrow’s terminal operations and workforce. Contact us to see how Tideworks can make a difference for your employees and operation.
