Competition for talent in the logistics industry

Employees identify career opportunities as a key reason behind career choice. In the war for talent, companies within the logistics industry can invest more in a strong HR strategy to improve the 'employerbility' as 'employer of choice'.

Human capital is a company's most important resource. In general, talented people with a strong logistics or supply chain management background are hard to find. Labour markets in countries like the Netherlands and Belgium have become increasingly tight as a result of strong economic activity. Thus, it is difficult to find, attract, and maintain suitable employees.

The strong economic development, resulting in a shortage of quality employees, also applies to the logistics and supply chain labour market. Europhia Consulting's 2007 International Recruitment and Training Survey, recently illustrated this development. The survey confirms that the labour market is tight and in countries like the Netherlands it is starting to 'overheat'. This will result in an increase in competition between companies for talent from within and outside the logistics sector. Therefore, companies should be aware of this situation, accept this as the 'operating environment' of the years to come and find suitable strategies to manage it.

Due to the challenging situation of a talent shortage in the logistics and supply chain management industry, Europhia Consulting's international salary survey compares salaries but also tries to understand which are the decisive factors for an industry professional's career choice.

Besides offering competitive salary packages, there are other factors such as offering employees clear career opportunities, important for an employer to consider as part of its HR strategy. In fact, career opportunities was found to be the most important reason for making a career choice across all regions (Europe, Asia, and North America), while salary was rated number two.

There are clear regional differences when it comes to key reasons for making a career choice. European employees view corporate culture as the third most important factor in a career move. Asian employees look for management recognition. American employees are concerned with reputation of the company in their choice of working for a company.

In a number of European countries career opportunities and basic salary are key aspects in a career choice. In the Netherlands, Germany and Switzerland, career opportunities ranks number one among the reasons for choosing a specific career, while ranking number two in the UK and number three in Belgium. In contrast to these two factors, the third key factor differs between countries. Whereas it is corporate culture in the Netherlands, Belgium and the UK, it is company reputation in Germany and Switzerland.

It can therefore be concluded that offering a high salary is no longer enough to attract and retain talent. Factors such as offering clear career opportunities or having an attractive corporate culture, should be focused on much more in the future for a company to become 'an employer by choice'.

People working in a supply chain position for a manufacturer generally earn more than those working for a logistics service provider. In Europe there is a difference of six per cent, in Asia the difference is the largest at 16 per cent, and in North America the smallest at three per cent.

This is shown by the survey, in which over 1,400 logistics, supply chain, and HR professionals from more than 35 countries participated.

There seem to be no major differences in salary levels of employees in similar positions between European countries. Looking at regional differences, salary levels in Europe and North America appear to be almost double than those of employees in similar capacities earning a local salary package in Asia. However, salary differences appear to be largest in lower-paying positions. Comparing director level salary packages, the regional differences are much smaller.

The importance of certain benefits differs between European countries. In general, pension plans rank in the top three for all of the European countries and are even the most important benefit for four out of five of the European target countries.

Only in Germany, the company car seems to be important to more participants than a pension plan. While the company car ranks number one in Germany, it does not seem to be of equal importance in other European countries.

It is interesting to note that healthcare benefits are highly valued by employees in the Netherlands, UK, and Switzerland, whereas employees in Germany and Belgium do not consider them as very important. This could be due to the structures of the healthcare systems in these countries.

As part of the career development of employees, around 50 per cent of the survey participants would like to develop leadership skills. On industry-related training, they would like to receive training in supply chain fundamentals, technological developments in logistics and service/reverse logistics.

Companies can and should do more to identify what type of training professionals require to assist/enable professionals to make career steps within the company.

In general, investment in training has two advantages for companies. It improves employees' skills, thereby increasing their productivity, and also serves as the main predictor of retention. Employees feel more appreciated and see better career prospects if training is offered. Especially in the Netherlands, training is not yet perceived as a key component of a retention strategy. None of the companies surveyed in the Netherlands mention retention as a goal of training.

Many HR professionals expressed in the survey that they focus on monetary compensation (basic salary, bonus and allowance packages) as the most effective tool to attract talent. The majority of respondents actively benchmark their compensation levels against industry averages.

Only close to half of the survey's HR professionals consider the provision of a structured career plan as an effective tool.

Most companies do not have a clear HR strategy yet to deal with the current market situation, as was shown by the survey. Companies still focus too much on monetary compensation to attract talent. Although it remains an important factor, it is no longer sufficient to only offer an attractive salary package.

Therefore, it is advisable for companies to focus more on the 'other' key factor in making a career choice, which is career opportunities, and thus offer clearer and more structured career plans, as well as opportunities for personnel development. In addition companies should also take further factors, such as corporate culture and company reputation into account.

Companies can do more to communicate their people development strategy out to the labour market to improve their 'employerbility'. A wide range of marketing tools is available to improve a company's exposure in the market place as 'employer of choice'.

Even more than before it is important to recognise human capital as a company's most strategic asset that can provide a competitive edge over other companies in the logistics industry. It is therefore important for companies to understand the current market place for labour, understand what really motivates (prospective) employees and reshape their HR strategy accordingly.

(Source: Europhia Consulting Group)

This article was researched by Alex Borg, MCIPS (Stam), MIM, MILT (UK), who is a trainer and consultant in Logistics and Supply Chain Management. He is also director of Support & Supply Management (SSM) Group Ltd (www.ssm group.org), a training and consultancy firm specialising in logistics and supply chain management, and also represents the Chartered Institute of Logistics and Transport of the UK (www.ciltuk.org.uk).