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Quitting Time

By David Aquino, CPIM | May/June 2012 | 22 | 3

Engage and retain your employees post-recession

Editor’s note: The staff at APICS magazine is pleased to introduce David Aquino as the new author of “Executive View.” As vice president of operations strategy, planning, and performance, at Houghton Mifflin Harcourt, Aquino brings with him a strong background in supply chain management. We extend a warm welcome to the magazine.

“I resign” is a phrase I’ve encountered too often in the past several months. Many supply chain leaders are facing similar challenges, making it difficult to drive necessary change within organizations.

As we head into the fifth consecutive year of economic difficulties, which eliminated nearly eight million jobs in the United States, it can be maddening to consider that employees have the audacity to leave their organizations’ safe havens for the unknown. The unemployment rate currently is 8.3 percent, which goes up to 15 percent when underemployment is considered. Yet many leaders are losing key staff people and keeping positions open for uncomfortably long times. What has happened?

The bunker mentality
While working at AMR/Gartner, I witnessed firsthand the organizational implications of even a slight drop in annual revenue at hundreds of firms in a large cross-section of industries. Most budgets—and, more importantly, operating expenses—cannot accommodate these revenue reductions. The recession brought with it ripple effects that were swift and painful—and forced many supply chain professionals to make quick, ugly cuts to survive. In some particularly tough cases, few analytics were available to clearly evaluate personnel, but changes were demanded immediately; therefore, companies cut too deeply or eliminated the wrong employees. The effect was that firms relied on the survivors to keep believing they were lucky to hold onto their roles. However, those who remained were ill-equipped to drive business and facilitate much-needed organizational evolution. Supply chain leaders also lost credibility as further cuts were needed and positions languished open and unfilled.

The recession’s magnitude also thrust many supply chain organizations into a suspended state of animation for employee career trajectories. Given the economic situation, a clearly articulated one-to-two-year career path was laughable. Sacrifices were made by many employees as supply chains were forced to become more efficient in the name of survival—not only from using fewer people, but by rapidly implementing improvements across the entire manufacturing and distribution network, focusing on evolving concepts in new product design and launches and creating more precise planning and execution methods in the hope of reducing risk.

Amazing performance improvements have been achieved faster than previously thought possible. As organizations either nominally stabilized or simply lost too many people and began hiring again, many employees rightly felt that surviving the recession would lead to a payoff. Those staff people who weathered the storm became subsequently disillusioned with the lack of rewards and upward mobility given the lengthy period of financial turmoil. Employees increasingly recognize that career development is largely in their own hands and are more willing to solicit and accept new jobs even under challenging circumstances. Their respective skill sets are in high demand, and they believe their firms have perpetrated upon them a career injustice.

Other unavoidable consequences of jobs shedding and relying on smaller numbers of employees to pick up the slack are the deferment, reduction, and—in some cases—the elimination of training. In some disciplines, this wouldn’t immediately be catastrophic. But in supply chain and operations management, the immediate cost savings of removing training translates into many supply chain leaders looking at their benches when needing to drive complex transformation efforts or replacing departing employees and not finding suitable personnel. Additionally, employees become increasingly anxious when they lose valuable time to gain advanced skills. They begin to feel less and less competitive as time passes; in particular, when critical roles are filled externally instead of internally. When training classes do open up—whether in supply chain technology, core supply chain education, or managerial skill development—they are soon oversubscribed, which further heightens employee frustration.

Given the upheaval, forced rapid innovation, and greater volume of activities that supply chain organizations are required to manage, many supply chain leaders are faced with real challenges in keeping personnel motivated, staying clear on priorities, and reducing angst, all the while remaining honest and authentic. But there is little time and, frankly, little interest in engaging in regular, authentic communication to struggling teams. Leaders have the opportunity to recognize success, foster effective two-way communication, and acknowledge hard work and sacrifice, but this often is lost due to the fear of saying the wrong thing and creating backlash. The once-in-a-lifetime crisis has created an aversion to broadcasting uncertainty and doubt. But when employees feel left in the dark, they begin to construct elaborate, largely inaccurate scenarios of impending doom. This leads to key employees leaving after proactively searching for new positions, fearing worse events to come.

Relationships and risks
By understanding the logic behind the current economic conditions and challenges in hiring and retaining key personnel, chief supply chain officers have the opportunity to take corrective actions to mitigate the risk of the bunker mentality. Relationships that were healthier in the past (both group and one-on-one) need to be rekindled and consistently nurtured and monitored. Discussions should be centered on clarifying career aspirations, evaluating states of development, and understanding motivators. Acknowledging the difficulties of the past and soliciting recommendations for improved communication will lead to more frequent discussions, whether written, public, or small-group.

The ability to demonstrate a concrete, mapped-out career trajectory and allowing legitimate options for building up prerequisites to advance are valuable steps in the right direction. In addition, taking the time to create core survey questions and administer them four times a year anonymously provides a baseline understanding of the organization and areas of missed development opportunities.

There is a very limited time during which suspending or eliminating training is acceptable to the broader organization. Employees always want the chance to enhance their skills and prove their worth to leadership. Even limited training and learning opportunities—including sessions conducted by members of the leadership team—will be viewed favorably, as they create lasting relationships, provide insight into employee thinking, and foster respect for leadership. Leaders engaging in training demonstrate not only that they know what they are doing, but that they are willing to take the time and energy to train personally. Training does not have to be formal or ponderous and can be limited in scope, offering quick-hit topics that cover short-term needs and address concerns raised in employee surveys.

One final key to both hiring and retention in an enormously competitive supply chain and operations management market is bridging the short-term operating objectives of the organization with the longer-term goals of employees, who have been worn out by the pace of innovation and the duress of economic circumstances. Few disciplines can claim this level of challenge and responsibility. Supply chain leaders who offer honesty and insight into the enormity of the challenges; provide learning, training, and advancement opportunities to every employee; and give them chances to achieve significant results while building a strong career may find they have done enough to stop a key employee from making a rash decision.

David Aquino, CPIM, is vice president, operations strategy, planning, and performance, at Houghton Mifflin Harcourt. His career as a supply chain executive has spanned many global organizations within the consumer products industry, including PepsiCo, Scholastic, Foster Grant, and Aramark. He may be contacted at david.aquino@hmhpub.com.