How to align your incentives with your values
I challenge you to point to any business that doesn’t deal with labor, technology, and process in some form or another. Even a one-person startup has to figure out how to pay themselves, and every business has had to build out and streamline its process, and decide what technology to invest in. When facing these challenges as a business, you need to decide what you value and make the decisions about labor, technology, and process with that in mind.
From a third-party logistics perspective, valuing speed is top of mind in the industry at the moment. In the days of next-day, same-day, and same-hour delivery, warehouses are fighting tooth and nail to ramp up the speed of their picking, packaging, and shipping — sometimes at the cost of accuracy and long-term efficiency. Investing in robots and automation to improve speed seems to be everywhere, but it’s not the only way to do things.
However, that doesn’t mean that this is the new industry standard. Speed at all costs may seem like the new paradigm of the industry, and automation may seem like the only way to get there — after all, what human can work 24 hours a day without a break? However, the reality is that there are so many different types of warehouses that it can’t possibly be a one-size-fits-all. With that in mind, it’s important to understand how your values and incentives affect the labor, process, and success of your warehouse.
Invest in People
Wherever you look, you see how technology and automation has affected our lives, both in your warehouse and in the workforce as a whole. More jobs are being automated and outsourced to robots, and companies are cutting costs and getting ahead by doing so.
Or are they?
It’s a common misconception that automation is cheaper than human workers in all scenarios. This is actually frequently not the case. There are many specialty warehouses that cannot automate due to the types of products they ship — like extremely heavy or strangely bulky packages that would be too difficult for a robot to handle.
It’s also a common vision of the future of jobs to imagine a fully inhuman workforce, filled only with robots, software, and automation. This is also not the case. In fact, it is much more common (and successful) for companies to invest in collaborative robotics — the types of robots and automation that work alongside humans, taking on repetitive or difficult parts of the labor and enhancing existing jobs, not replacing them.
That begs the question: Why are we leaving our human workers out of the equation? If, at the very least, the near future involves collaboration between technology and humans, why are we not balancing our values?
The bottom line is that for most warehouses, your workforce is an invaluable part of your business. In the short term, you may see that offering extremely fast shipping increases your conversions and makes you more money, but when you value speed over everything — including your workers — it will cost you in the long term. The cost of turnover when employees get burned out, and the cost of mistakes when employees feel forced to cut corners to make deadlines, is often not worth it in the long run.
Take a good, long look at what you value in your warehouse. Is it possible to shift your values so that you prioritize something other than speed? Do you spend all your time promoting and rewarding speed when you actually value something else? Are you finding that you’re losing money on mistakes, returns, and turnover?
Values and Incentives
Let’s take a look at valuing accuracy.
Accuracy over everything means it’s okay if it takes a little longer. It’s okay if it costs more in the short term if it brings long-term accuracy. It means that investments into higher accuracy are always more important than investments in speed, efficiency, and automation. However, what does that look like in practice? How do you align this value with your incentives?
Look at how you’re incentivizing your workers. Requiring your workers to hit certain numbers each hour does not communicate to them that you value accuracy, only that you value speed. Instead, reward them for accuracy, like giving a bonus based on the number of accurate picks in a row. This communicates that what you care about most is being accurate, and you will reward them for it.
If you value longevity at your company (to save costs on turnover and stave off burnout), promote from within and provide a clear path up the ladder to workers who value what you do. If you value honesty and accountability, don’t punish it — if someone owns up to their mistakes, work with them to prevent the mistake happening again in the future (and punish mistakes without responsibility taken).
You can value anything, including accuracy, longevity, accountability, and quality. Structure the rewards and incentives within your warehouse so that they reflect your values.
Automation Versus Humans
So with all this talk about the human workforce, is it automation versus humans? Are they doomed to be locked in battle, with automation eventually winning out?
At least for the foreseeable future, no. Until we reach that glorious time period of utopia when robots have taken over all our menial tasks and we don’t have to work (before the inevitable robot uprising), humans and robots will be working in tandem.
Some things can and should be automated, like repetitive tasks. However, other things shouldn’t, and can’t, like tasks that require flexibility or are unique. It’s better to find a path forward for your warehouse where the two can be combined, while still investing in good workers and incentivizing them properly.
Conclusion: The Passage of Time
The more time passes, the more obsolete your equipment and software become. It is an unavoidable part of the integration of technology. However, the people in your warehouse are the most value-oriented investment you can make. You can adapt your workers to learn new processes, programs, and equipment without replacing the whole person, and the same cannot be said of a robot arm or AI conveyor belt system. New technology can help in the right scenarios, but with the right people behind your business, you’re sure to come out on top.
Written by: Jake Rheude
Jake Rheude is the director of marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.