Workplace Flexibility In Manufacturing & Distribution: The Fractionalized Employee

How to control variability in employee cost, while also giving employees the flexibility to gain employment that fits their work and life requirements.

Howard Coleman
January 9, 2023

It seems that people’s thoughts about work today are like champagne corks. They have swelled with new possibilities, and no longer seem to fit into the 2019 vintage bottle.

After almost 3 years of working differently, with little if any decline in productivity, the scales have fallen off our eyes and every individual is re-thinking work in several ways. In other words, there is no going back to December 2019—only a move ahead in 2023 and beyond.

A plethora of new technologies are increasingly going to enable a more decentralized, open and workable future.

But, this is not a simple issue. Different jobs—at different levels—are involved. The appropriate mitigation efforts may require some different solutions.

Then there is the question as to whether a job actually requires a person to be on site (working at a company facility 100% of the time) OR can they work remotely, as has been evidenced by the growth of what’s now being described as “distributed work”?

There’s been a power shift here that recognizes that we keep in mind the desires of current and future employees. Flexibility has become an essential requirement of the future workforce.

The Fractionalized Employee

Imagine if one could get the continuity and loyalty of long-term employees, the cost management flexibility of part-time employees, and the expertise of freelancers—and do so in a way that both grows employees and retains them in the long run!

This is the fractionalized employee.

Fractionalized employees are given a choice to work 100%, 75% or even 50% of the time, keeping in mind that in the U.S. one needs to be working 50% of the time to be eligible for health and other benefits.

They get the option of flexibility. It could be that they need that flexibility when a life event occurs, like health issues, the birth of a child, or needing to care for a parent. Maybe they have a passion project that needs to be attended to. Half or three quarters of a talented employee is better than zero—particularly as we grapple with worker shortages, including the aging and the declining growth of the population.

There may even be cost savings from reduced compensation, as well as eliminating the friction and cost of severance, re-hiring and training.

The fractionalized employee model—a program to differentiate and attract talent—could allow companies to retain talent, grow talent, and mix and match talent in ways that are truly a winning combination.

What’s Required: A Mindset Change

Companies need to more fully understand the specific needs of warehouse and production employees, as they are different from other job functions. They’ve been deemed essential workers. Organizations that listen carefully to what these workers need will be more competitive in the job market.

The distribution and logistics industry likes to think it has a labor shortage (and it does) but it really has a people problem. Not in the traditional sense of people having poor work habits, absenteeism, tardiness or other performance and non-compliance issues.

If we’re being completely honest, in most warehouses and other facilities, these employees have often been seen as a commodity; something you can load and unload as necessary to meet pressing needs. Suddenly, retaining them has become not merely an important competitive advantage, but an absolute necessity.

Warehouse and production work is tough. Warehouse employees, like many others, are facing unprecedented levels of stress. Because—whether they have to be chauffeurs, care for aging parents, or are the overall caregivers for their families—many reach a crisis point and decide they can no longer come to work. It’s happening on a routine basis.

Wouldn’t it be better to think of warehouse and other types of production work as a marathon, rather than a sprint? Maybe it would be better to stop obsessing about getting through “this season” or “that rush.” Instead, build a business with a reputation for attracting and retaining employees for the long term.

Maybe it’s a matter of being more flexible about work scheduling, or assuring that you have the warehouse technology in place that provides a more attractive work environment.

It sure beats nailing a “We Are Hiring” sign to a telephone pole that exclaims “Warehouse Employees Wanted!” and then follows with $$$$$. That’s not sustainable. It doesn’t address real issues.

Perhaps a greater opportunity lies in looking inward, and rethinking how we can attract people for the quality of the work environment and work flexibility that you offer—rather than just some perceived level of compensation.

→ Related Reading: Workplace Flexibility In Manufacturing & Distribution: The Fractionalized Employee

5 Areas to Focus On

1.) Labor Supply

While attracting talent is key, retaining current employees is of equal (perhaps even greater) importance, as it costs significantly less to retain a quality individual than to find, hire and train a new person. Hiring the best is not out of the question, especially when you bring technology in as a backstop. (More on that in a moment.)

2.) Safety

What about going beyond what is required by law? Believe me, I still see—through my own visitations—too many warehouses that are unbearably hot in the summer and cold in the winter, while the office temperatures somehow remain perfectly livable all year long. While that may only be one example, why not go beyond the bare minimum to demonstrate to employees that their health, wellness and safety matter more than just the bottom line?

3.) Technology

Imagine this: We have two young workers crossing a parking lot in a business park to a choice of two warehouses. One offers outdated technology, the other is more modern. One worker says to the other, “I’m hands-free, I have robots working right beside me.” Which warehouse do you think the other worker will choose?

Reduce the physical burden on your employees by taking inventory of your materials handling and product process flow tools they have available. What needs to be replaced? Embrace the technology and constantly look for ways to get new workers up-and running in hours, not days!

To go deeper on this topic, listen to episode 8 of our podcast, Distribution on the Cusp of Metamorphosis. It speaks to the attractiveness of a technology-centric workplace and explores the many technology-centric actions that can be taken to provide the workplace values that people are looking for.

4.) Good Housekeeping

Take a look around your space. Is it a place of pride? Would you feel comfortable inviting your family or friends over? It says a lot about how much you value the workspace and the employees who work there. For employees, it can start to feel like management has failed to consider, much less prioritize, the daily work environment.

5.) Retain Employees

The loss of key people can strip an organization of its institutional knowledge that can only be accumulated from years of first-hand experience. Those people are the very ones that may make the difference between effectiveness and ineffectiveness of your operations. Don’t make the mistake of letting them walk out the door and never come back.

Don’t allow this situation to turn into a wake-up call. Differentiate your company from your hiring competitors. Just like being technology-centric, you can also be human-centric. In fact, make it part of your hiring and retention sales pitch—your longer term commitment to better hiring outcomes, your commitment to worker retention, productivity, and overall operations costs.

Today, you can access talent from most anywhere. Be able to attract people—even from outside a normal commutable distance—full-time or part-time. This will give you the ability and flexibility to control variability in employee cost, while also giving the employee or candidate the flexibility to gain employment that fits their work and life requirements.

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