Personnel issues in logistics
Sergey Lukyanenko, head of Leader Consult Recruiting, shares his opinion on personnel issues in logistics as part of partnership under Translogistics Saint-Petersburg conference.
Just like any other sector, logistics has its specific personnel related issues. Logistics and transport are rather broad sectors, both in terms of their functions and in terms of personnel mix. Here is an attempt to distinguish trends of human resourcing in this segment of economy.
What are the challenges of the recent years?
1. Deficit of low-level staff. That is a problem of all mass-oriented market segments. Compared to high-qualification personnel, representatives of low-level staff are more inclined to change both jobs and segments. As a rule, such jobs feature rather low barrier of entry, hence the possibility of personnel rotation/turnover in any segment, particularly in transport logistics.
With this fact taken into account we understand that the competition for that kind of personnel goes beyond the industry to the entire market. For example, a general-duties man can work at warehouse of a logistic company, at a food store, at a construction site, plant, etc. Therefore, lack of such workers is a general market problem. In pre-pandemic period, it could be solved through attraction of migrants which often sacrificed product/service quality and caused dumping in the labour market. Today, migrants are often more expensive than locals.
2. Optimization of educational programmes. That is a problem in all sectors but it has had the most severe impact on secondary professional education. Such specialists often make the core of transport and logistic companies. Among them are drivers, forwarders, logistics experts, dispatchers, those servicing the equipment, etc. At first, gradual closure of colleges and vocational schools contributes to reduction of budget expenses but later cause deficit of qualified personnel.
For example, shortage of professional drivers is actually a worldwide problem rather than a local one.
3. Programmes for training specialists is yet another problem. They almost never catch up with fast developing sectors and train new specialists basing on materials and methods developed more than 5 years ago while the industry changes from year to year. Digitalization has penetrated into all spheres of life so the market leaders are those able to digitalize their business processes. Specialists are to deal with 4.0 global digital systems, that is something they should be taught. In an ideal scenario, personnel should be trained specifically for a certain segment.
4. Reduction of investments in human capital. Global leaders have already acknowledged that reduction of expenses for personnel is the last step of optimization when it is already impossible to optimize anything else. Any organization is a group of people with a common cause. The higher professionalism of the team the better the result. Professional market players form their own teams inviting foreign coaches and investing in human capital. Unfortunately, not all companies follow modern trends while pandemic-related uncertainty forces top management make premature decisions. It should be noted that internet technologies available today allows for remote development of personnel.
5. Expansion of aggregators. Of course, uberization makes many routine processes easier but it raises the risk of covert monopolization in some spheres. In my opinion, it often goes like that: large investments in response to customers’ requirements, rapid development of a company, optimization of business processes, investments in human resources, lobbying of related interests in the company’s country, entry to the international market, squeezing out of rivals. It is followed by actual monopolization, then comes stagnation, focus on profit maximization and optimization of human capital. Dirty tricks include squeezing out of rivals, involvement of state resources, transition to a covert monopoly. A strong monopoly does not need qualified specialists to develop its market. Instead it needs enormous number of those to execute basic tasks.
What is important?
Let’s recall, what is really important. Not so long ago there happened a notable global incident with a huge container ship EverGiven chartered by Taiwan's Evergreen. Having blocked the Suez Canal of the utmost logistic importance it disrupted for a certain period smooth and efficient processes developed by chain management specialists. The incident was reportedly caused by a human factor, not by technical factors. And it was human resource deployed to resolve the situation.
Therefore, my advice is to develop human capital. In the future, it will multiply the financial capital.
What conclusions come from the above-said? There is no a single point solution and those absolutely sure of what should be done are not good specialists. We can only try predicting likelihood of some consequences of certain decisions.
1. In my opinion, we should not count on migration resources as a key one to meet the demand in the labor market. Migrant policy should be tougher with a focus on visa-requiring or organized format. Finally, the deficit of low-paid and low-skilled personnel is not forever. The labor market will be self-regulated for a good supply.
2. It is a challenging and a comprehensive issue being considered by the brightest minds of Russia. There is no silver bullet but I believe that decreasing the number of educational institutions or their merger with the purpose of consolidation cannot lead to anything good. We have some recent examples of implications caused by optimization in healthcare which was especially evident during the pandemic.
3. Meanwhile, lack of qualified personnel in transport and logistics becomes evident in years. When time comes for fresh blood of highly qualified graduates it is insufficient more and more often because the number of donors was reduced through optimization.
4. Here, in my opinion, the future employers should be involved, especially major market players. They are mostly aware of the recent trends and they can help students adapt faster and select up-to-date courses. There is a dual education system when students work and study simultaneously. For example, 3 days a week are for education and 2 days are for work. Employers cover part of expenses for education and graduates continue working for the company for some time. That lets stay aware of the recent trends, have a deeper insight into a profession, work for a company you want to stay with.
5. It is international experience that shows the best practices. It is essential to keep an eye on positive developments and introduce some of them. That can be educational programmes, additional training, co-working, systems allowing for establishment of remote format for some processes, introduction of material and moral encouragement programmes, enhancement of brand loyalty, etc.
6. One of the state functions, protection of healthy competition gets into a game here. We have a regulator, FAS, which is in charge of such tasks. Its activities directly influence the market in general and its task is to prevent monopolization. For example, market research can be ordered and conducted in the name of the state to reveal covert monopolies and to respond to those revealed.
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