How Distributors Reduce Employee Turnover and Beat the Silver Wave

The rising, unprecedented disruptions seen in the past few years have faced the distribution industry with several detrimental challenges. Inflation, supply chain issues, a persistent labor shortage, and the pandemic, have changed how we do business. While many difficulties have eased or been combatted, distributors are struggling to retain employees. The high turnover rate might be the most pressing issue currently facing the construction industry.

Employee retention in 2022

The labor shortage is pressing, but if talent is not staying with your organization, your talent pipeline will offer little relief to this ongoing crisis. And statistics are displaying that employee turnover has been increasing recently. This leaves employers not only losing valuable workers, but having to deal with hiring, training, and replacing those lost - all with a shrinking talent pool. 

According to Apollo Technical Engineered Talent Solutions, in 2022, one-third of new employees quit after about six months. According to the Job Openings and Labor Turnover Survey (JOLTS) each month in the USA, 3 to 4.5 million employees quit their job. 

In construction, this rate is exceedingly high. There is reportedly a 21.4% industry-wide construction employee turnover rate. For employers, this high retention rate is not only inconvenient but incredibly costly. 

Paying the consequences: the cost of employees leaving

The cost for business owners when an employee leaves have reached up to 20% of the individual's salary. A leaving workforce saddles distributors with many expenses including: 

  • Exit Paperwork: this includes closeout documents, benefits, paperwork, as well as any customer-related filing that the employee was responsible for.
            • Workflow interruptions: This is a slowdown due to gaps in the workflow. Gaps in employment could force you to close when no one can cover shifts or pay overtime for existing employees filling shifts.
  • Training: Training in the construction industry can be demanding and costly. With every new employee, there will need to be onboarding, which includes paperwork, certifications, and more. Some companies who opt to internally hire HR and recruiters may spend upwards of $50,000 per year to do so. 
  • Decreased Productivity: Training new employees takes time away from regular business functions, which means fewer sales are being made

For a number of reasons, steadily losing employees poses a huge hindrance to distributors trying to grow their businesses. Without a consistent workforce, organizations can’t continue to grow and business owners will be stuck repeating the cycle of training staff, keeping them for a short period of time, then losing them and having to start over. 

What is causing this high turnover?

There are many factors aggravating the high turnover rate within the construction industry. Workers are often unhappy, citing emotional exhaustion, poor compensation, conflict with management, and other things. 

In distribution specifically, employees attribute many things to the high turnover, including misaligned expectations, long days, low pay, and no opportunities for growth

For a long time, many people thought that younger generations did not want to work. Studies are disproving this and indicating that young people today want to work if their workplace offers opportunities for growth and a future for them within their company. According to this 2021 report, many millennials want to pursue career advancement and work beyond their job roles. This generation of workers is motivated by personal and professional development rather than just a higher salary. In order to better retain younger employees, you need to invest in their skillset and provide them with opportunities to learn. 

How to combat the high turnover rate

When faced with many factors contributing to a high rate of employee turnover, distributors need to use more than one tactic to combat this. There are a few strategies distributors can take when addressing this persistent issue: 

Invest in your team

Investing in your team is investing in the longevity of your employees. Studies show that up to 40% of employees who receive poor training end up leaving their jobs within the first year. This can mean giving employees higher wages, better training programs, or working towards a culture that values them more. Many young candidates are looking not just for a job, but for an opportunity to advance themselves and their skill sets. 

Create a culture that values your employees

A poor work culture can almost certainly ensure that you will face difficulties retaining employees. Creating a positive culture can include collecting employee feedback and acting upon it, valuing employee input, and keeping a constant line of communication.

Creating a positive work culture includes transparency of company goals, offering employees growth within the company, and investing in their education to better prepare them to advance in your organization. A good work culture is one where employees feel their input and presence is a benefit to the company, not that they are a number or position to be filled. 

Invest in technology that better supports your business

Optimizing workflow will allow your employees to work efficiently and without stress, creating a better work environment. With a more streamlined workflow, job functions will become more efficient and decrease workforce burnout. Better providing your staff with tools to work systematically will create a culture where time off is respected and work conditions are less stressful. 

Technologies like ERPs, payment software, or communication platforms can streamline your employees’ tasks and allow them to better do business. A younger workforce is more likely to be accustomed to using technology to work efficiently. Having these tools available will help your employees feel accommodated and create a less taxing environment.

A communication platform specifically will also connect employees to each other, breaking down silos and creating a better sense of community. If employees don’t have a means of communicating seamlessly necessary information will be lost and work will become stressful. Using a communication platform opens a centralized channel where employees can instantly reach eachother, breaking down siloes and creating an environment where each worker feels their contribution to the organization. 

How Prokeep can help

Prokeep is a communication platform built for distributors that text enables your main phone line. With Prokeep you can create a seamless stream of communication for your employees, making it easier for them to do business with customers as well as reach one another internally. Creating an effective workflow contributes to a positive work environment and helps your employees feel supported and able to do their jobs well. 

Want to learn more about how Prokeep can support your workforce and help grow your business? Book a demo today!

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