Korn Ferry: Employee turnover at DCs skyrockets

As the launch of the holiday shopping season approaches, U.S. retailers are having significant issues in ramping up distribution center staffing.

Nearly two-thirds (64%) of respondents said turnover at distribution centers has recently increased, according to a survey of more than 50 major retailers by global organizational consulting firm Korn Ferry. That’s more than double the percentage (31%) of those who cited increased turnover in late 2019, pre-pandemic Korn Ferry survey. Nearly half (44%) of the surveyed retailers said current turnover rates are running at 40% or more. 

With workers often receiving multiple offers, employers are finding that many workers are not showing up to the job, with only 15% saying 90% or more of distribution center employees make it to work on their first day. More than a third (35%) say that only between one-half to three-quarters of employees show up on their first day.

In light of many retailer’s growth plans, distribution center worker shortages could get worse, warned Korn Ferry. Nearly three-quarters (69%) of respondents said they plan on increasing the size of their distribution center workforce in 2022 and 46% plan on opening additional distribution centers.

In terms of compensation, the most common minimum start rate is $14 to $15 an hour, according to the survey. More than a third (37%) of respondents say they offer sign-on bonuses for hourly associates, with the most common bonus range being between $500 to $999.  

“Distribution center worker shortages are endemic of broader labor scarcity trends, but coupled with severe supply chain issues, this could be a very difficult holiday season for retailers,” said Korn Ferry senior partner and supply chain specialist Marc Wallace. “To remain competitive as an employer of choice, retailers need to create and communicate an atmosphere of safety, respect and loyalty to workers.” 

The Korn Ferry survey of more than 50 major U.S. retailers, with annual revenues between $50 million to more than $20 billion, took place in Late October 2021. 

[Read More: Survey: It’s not just stores — retail DCs caught up in big labor squeeze]