Logistics at Company X boils down to three ingredients: a contract for the supply of trucks, a contract for the supply of DERV and a contract for the supply of people. The driver in the cab is as much a commodity as the diesel in the tank.
But treating people as a commodity doesn’t work and if employers are serious about their assertions that people are their most important asset, they will have to try a lot harder.
Two weeks ago The Grocer’s Shopfloor Recruitment Survey published some interesting findings (The Grocer November 27, p32). At first sight, it looked as if everyone else could learn a thing or two from Sainsbury (a rare enough event these days) because it enjoys the lowest cost per head hire.
However, a closer look shows that it also had the fewest applicants per vacancy and the highest staff turnover. By contrast Asda enjoyed the lowest staff turnover but spent more (in fact the most) filling each vacancy. Asda invests in its recruitment because it wants a committed and stable workforce.
Getting recruitment right isn’t easy. But as with everything else in business, the easiest way is not the best.
Ask yourself this simple question - what is the easiest way for anyone to hire staff? The answer has to be toddling down the high street and walking into the nearest employment agency and ordering a dozen (say) shelf stackers. Then all you do is sit back and wait for them to be delivered. The much harder bit would be doing it yourself: attracting the right candidates; having the right staff to interview, motivate and select; and investing the time and resources that such a process demands.
Then also ask yourself this question -- which shelf stacker is more likely to stay and more likely to be motivated to be part of your team? The one who went down to the employment agency or the one who was sufficiently interested and motivated to make the effort and apply to you directly? I hope the answer is obvious.
There is also the question about where the loyalty of the supplier lies. As the M25 lesson demonstrates, it is in the direct interest of the employment agency to ensure that as many drivers as possible become contract drivers, thus increasing demand for their services.
It follows that it is not in the interests of employers for all drivers to be contract drivers - if they were, it would be like a return to union closed shops, except that where the unions used to dictate the availability and price of labour, this time it would be the agencies.
There are employers who tell me they have in fact outsourced all their recruitment to an employment agency. Of course I have to agree that in such arrangements they have control of their costs in being able to predict specific hiring charges.
However, I have yet to meet a single employer who has an answer to the simple but obvious point that an employment agency cannot be genuinely interested in employers’ retention rates as their own earnings increase with higher staff turnover.
Although this may all sound a little anti-employment agency, no-one can deny they have a very real role to play. However, the pendulum has swung too far and, in an apparent bid to control costs, employers are ceding control of labour markets to third parties. That pendulum needs to swing back
The M25 may not often be a source of learning and insight but so it proved just recently. There in front of me was a truck from one of this industry’s major suppliers (we’ll call it Company X) emblazoned with ‘Drivers needed. Call 0800…’. Nothing so odd in that, you might think. Sign of a buoyant economy even. But a call to the toll-free number confirmed my worst suspicions. I wasn’t talking to Company X but a driver agency.