Question: How a UPS Manager Cut Turnover

In 2002, Katriona Roeder was promoted to district manager for UPS's operation in Buffalo, New York. She was responsible for $225 million in revenue, 2300 employees, and the processing of some 45 000 packages an hour. When she took over in Buffalo, she faced a serious problem: turnover was out of control. Part-time employees-who load, unload, and sort packages, and who account for half of Buffalo's workforce-were leaving at the rate of 50 percent a year. Cutting this turnover rate became her highest priority. The entire UPS organization relies heavily on part-time employees. In fact, it has historically been the primary inroad to becoming a full-time employee. Most of UPS's current executives, for instance, began as part-timers while attending college or university, then moved into full-time positions. In addition, UPS has always treated its part-timers well. They are given high pay, flexible work hours, full benefits, and substantial financial aid to go back to school. Yet these pluses did not seem to be enough to keep employees at UPS in Buffalo. Roeder developed a comprehensive plan to reduce turnover.

It focused on improving hiring, communication, the workplace, and supervisory training. Roeder began by modifying the hiring process to screen out people who essentially wanted full-time jobs. She reasoned that unfulfilled expectations were frustrating the hires whose preferences were for full-time work. Given that it typically took new part-timers six years to work up to a fulltime job, it made sense to try to identify people who actually preferred part-time work. Next, Roeder analyzed the large database of information that UPS had on her district's employees. The data led her to the conclusion that she had five distinct groups working for her-differentiated by ages and stages in their careers. In addition, these groups had different needs and interests. In response, Roeder modified the communication style and motivation techniques she used with each employee to reflect the group to which he or she belonged. For instance, Roeder found that college students are most interested in building skills that they can apply later in their careers. As long as these employees saw that they were learning new skills, they were content to keep working at UPS. So Roeder began offering them Saturday classes for computer-skill development and career-planning discussions. Many new UPS employees in Buffalo were intimidated by the huge warehouse in which they had to work. To lessen that intimidation, Roeder improved lighting throughout the building and upgraded break rooms to make them more user-friendly. To further help new employees adjust, she turned some of her best shift supervisors into trainers who provided specific guidance during new hires' first week.

She also installed more personal computers on the floor, which gave new employees easier access to training materials and human-resource information on UPS's internal network. Finally, Roeder expanded training so supervisors had the skills to handle increased empowerment. Recognizing that her supervisors-most of whom were part-timers themselves-were the ones best equipped to understand the needs of part-time employees, supervisors learned how to assess difficult management situations, how to communicate in different ways, and how to identify the needs of different people. Supervisors learned to demonstrate interest in their employees as individuals. For instance, they were taught to inquire about employees' hobbies, where they went to school, and the like. By 2006, Roeder's program was showing impressive results. Her district's attrition rate had dropped from 50 percent to 6 percent. During the first quarter of 2006, not one part-timer left a night shift. Annual savings attributed to reduced turnover, based largely on lower hiring costs, are estimated to be around $1 million. Additional benefits that the Buffalo district has gained from a more stable workforce include a 20 percent reduction in lost workdays due to work-related injuries and a drop from 4 percent to 1 percent in packages delivered on the wrong day or at the wrong time.

1. In dollars-and-cents' terms, why did Katriona Roeder want to reduce turnover?

2. What are the implications from this case for motivating part-time employees?

3. What are the implications from this case for managing in future years when there may be a severe labour shortage?

4. Is it unethical to teach supervisors "to demonstrate interest in their employees as individuals"? Explain.

5. What facts in this case support the argument that OB should be approached from a contingency perspective?