Dan Johnston: 0:03

You've got this rise of flexible work alternatives, a decline of labor union penetration and changing societal norms, that mean that frontline workers across, really all industries, are voting with their feet more frequently than they ever have before. If a job isn't providing them with the growth potential, with the schedule, with the skills development, with a safe working environment that they need, they leave and they find something else

Tom Raftery: 0:33

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery. And before we start, I'd just like to remind you that if you'd like to become a supporter of this podcast, to help me continue creating informative and engaging episodes, simply click on the support link in the show notes, or go to tiny url.com/d S C pod where DSE is short for a digital supply chain. You can make a small donation starting at just three euros. That's less than the cost of a cup of coffee. But that would really help me with this podcast. Okay. With that out of the way. With me on the show today, I have my special guest, Dan. Dan welcome to the podcast. Would you like to introduce yourself?

Dan Johnston: 1:34

Thanks Tom. Yeah, I'm looking forward to the conversation today. My name is Dan Johnston and I am the co-founder and CEO at Workstep. Now prior to founding work step, and I'll explain what we do in a minute here, I was a warehouse manager at a third party logistics warehouse that was part of the, a large retail supply chain. So I've lived and breathed the frontline challenges in a supply chain context and from that experience Workstep was born. And what we do at Workstep is we're a software company that builds solutions that help large supply chain organizations better engage and ultimately retain their frontline teammates at scale.

Tom Raftery: 2:18

Cool and why, Dan, why did you set up work step? What issues were you seeing that you felt needed to be resolved?

Dan Johnston: 2:27

Yeah, so in the warehouse that I managed, we were basically a 100% temp shop, which means that we had a rotating door of temps. We were running new training groups every single day. Productivity was low or lower than it certainly could be. Safety risks were higher than it could be because of the constant inflow of new talent. From a worker's perspective, we were paying, I believe at the time, our temp agency $18 an hour, and our workforce was seeing 11 to 12 of that. And it just never sat right with me that this system could be so badly constructed for both the company and the worker themselves. And so we looked at this frontline workforce, particularly in the supply chain and said, there has to be a better way. You know, how can we build a technology ally for this segment of the workforce population that is increasingly in need of one? So that's really where this began, is really how can we use technology to help frontline workers have a better job so that they can ultimately live a better life.

Tom Raftery: 3:38

Okay. How did you know it wasn't just your warehouse?

Dan Johnston: 3:42

Well, uh, good question. I mean, first and foremost, you can talk to other people in similar settings. Secondly, you can look at, broader macro data on labor trends, right? Basically every year, the last decade, we've seen turnover rates in these environments, and I broadly defined supply chain as roles involved in making, and moving a physical product, so manufacturing, production, distribution, transportation, warehousing, and in those role types, you're seeing a constant acceleration of workforce turnover.

Tom Raftery: 4:22

Why?

Dan Johnston: 4:23

A few reasons. I mean, I think first of all, important question. A lot of people look at the tight labor market and they think, okay, well that explains a lot of it. And yes, the labor market, especially over the last few years has been historically tight. But there are three broader trends that are making this sort of macro trend a bit more labour market agnostic. So, first and foremost, the rise of flexible work alternatives. So, you know, a decade ago, if you quit your job in a warehouse, you wouldn't see your next paycheck, best case until like roughly three to four weeks later, right? You go find another job. You wait until sort of the next pay period, and then sometimes a week after that you get the next paycheck. But in, the world that we live in today, in 2023, you could leave your job today and, and get paid driving for Uber or DoorDash, or delivering on Instacart tomorrow, which lowers that barrier to role departure, right? If things aren't working out well for you, if a manager frustrates you, if there's some sort of safety issue, you know that you have this sort of flexible work safety net to bridge your compensation to your next full-time paycheck. paycheck So that's, that's one. Two is the decline of labor unions, at least here in the United States where I'm based. There's been about a 70 year trend of labor unions having lower overall representation in the private sector. And that's been a very meaningful downward trend. And so if you think about what the union provided to an industrial worker, often it was around it is still where it exists around basically restructured and, guaranteed reasons why you should stay. Right. Better shifts, better pay, better schedules, better opportunities, right? And so there's this sort of, um, clear hierarchy is as you stay longer, you get these benefits, right? That's not always the case when, uh, labor union or when a workforce is not unionized. So the decline of unions is another one. And then third, there's just been a change in societal norms. Like people in Generation X and Millennial generations just don't think of aligning their careers to a single employer the way that the generation before us did. And so you've got this rise of flexible work alternatives, a decline of labor union penetration and changing societal norms, that mean that frontline workers across, really all industries, are voting with their feet more frequently than they ever have before. If a job isn't providing them with the growth potential, with the schedule, with the skills development, with a safe working environment that they need, they leave and they find something else.

Tom Raftery: 7:17

Okay. And what is the solution that WorkStep came up with to prevent this from happening?

Dan Johnston: 7:26

Yeah, so, so first and foremost, to decrease turnover in a supply chain context, the first question, any warehouse manager, operations leader, or supply chain leader has to ask is, What's driving right? And before you know that answer, uh, it's hard to know where to invest. You know, especially over the last few years, we've seen a lot of companies invest in wage increases, sign-on bonuses, increases in benefits, flexible scheduling tools, but a lot of those are just, just guesses at what might be the underlying cause. And so, first and foremost, you need to create the ability to collect that voice of your associates throughout their journey at scale. So in the old world, a large manufacturer, a large supply chain company, might never ask their frontline workforce for feedback, at least not in a structured way. Uh, a little bit better than that is maybe do a once annual workforce survey where you ask the same questions every year. But of course if you do a survey in September and populate the results in November and make a decision in January, you're missing the employee who joined in April and quit in May. And that might be the person you want to hear from the most. And second of all, all of those issues that existed in September might no longer be what's causing you pain in January. Right? And so it's important that this is continuous and that is throughout each employee's journey. So the first sort of layer of our solution is how do you automatically collect feedback from frontline supply chain workers in a very lightweight, quick to engage with way at each key milestone in their journey. So for example, at the end of their first week, questions relevant to onboarding at the end of their first month, questions relevant to their development within the organization, and then so on and so forth throughout their journey. And so that sort of layer of feedback starts to inform leadership in terms of what is the employee experience within our organization. So that's the base layer. Then we can talk sort of more about how it builds from there.

Tom Raftery: 9:39

Okay. And how is the information collected?

Dan Johnston: 9:42

At WorkStep at our goal is to collect feedback from the frontline supply chain worker in a way that is most natural for them. So we offer feedback collection via text messaging or other chat interfaces via email, or very simple mobile web experience. We also offer via QR codes that could be hung in a building or via tablets that can be installed on site. In each case, what we wanna do is create a really natural engagement mechanism that takes a worker 60 to 90 seconds to provide all the feedback that is relevant to them at that time.

Tom Raftery: 10:21

Okay. And you mentioned that it goes beyond just the first couple of weeks, it goes further into their career development. Can you talk a little more about that?

Dan Johnston: 10:30

Yeah, it really goes throughout their career, right? So it goes throughout their tenure with an employer. And so that first layer is how do I collect feedback my frontline workforce, but feedback collection is just really the start of the battle, right? Second of all, you have to be able to analyze that feedback in real time to understand really two things. One is, where is their individual turnover risk? Right? Where is an employee within my supply chain saying something that could cause him or her to leave our organization imminently, right? And how do we get ahead of that? So safety issues, manager issues, pay issues, harassment issues, right? How do we ensure that the right leader within our organization, whether onsite or at HQ, is made aware of that almost immediately, and can then engage with that associate to solve their challenge or ensure they feel heard? So we can be proactive about addressing that turnover risk before it impacts our operation. But also the ability to analyze that feedback as it relates to outcomes. So it's one thing to say, employees in our supply chain aren't happy about pay. That's interesting. But it may not be useful if the employees who are unhappy about pay aren't quitting at any higher rates than the employees who are happy about pay. So what's important is for your ability to correlate that feedback data to actual business outcome data, for example, turnover. So you can tell, okay, this is what's actually driving employees to leave our organization. Here's what we can do about it. Here's how we can measure the impact of those actions.

Tom Raftery: 12:14

Okay, cool. And do you have any customer wins that you can speak of? Customer success stories that you can refer to?

Dan Johnston: 12:55

Oh, I mean, dozens and dozens I could talk about all day. Um, I mean it specifically, in the third party logistics space, uh, we work with a company called NFI. They have about 15,000 frontline workers spread out across North America. They're a third party logistics firm that works with, large retailers and well, really any other company who, needs to rely on an exceptional third party logistics provider. And we've been working with them for a couple years. They were in leveraging our software, able to increase new hire turnover by 36%. And overall turnover by 18%. And the way that they did that was really taking a building by building a business group by business group approach. So for example, when looking at a theme like leadership or onboarding or career growth, they would identify which buildings in their network had exceptional employee sentiment as it relates to these themes. And then work to understand what are those buildings or segments doing differently than the rest of our population, and how do we replicate those best practices through our network? And in doing that, they've been able to increase employee engagement. They've been able to increase leadership effectiveness and ultimately increase productivity and business outcomes.

Tom Raftery: 14:21

Okay. Any, any other ones? Just, I mean, you said you could, you said you had dozens of them.

Dan Johnston: 14:26

Oh, sure, we actually just published a, a mutual case study with a firm called Animal Supply Company. A bit of a larger, or sorry, smaller logistics company than NFI, but still employee counts in the thousands. They provide logistics for Smaller pet food retailers. And, uh, they saw with the WorkStep software implementation, a decrease in annualized turnover rates of 50%, which is sort of on the high end of exceptional. But they actually saw the number of employees they were losing on a monthly and quarterly basis dropped by half over the first six months using the platform. And that's because a lot of their challenges ended up being, relatively straightforward in terms of once the challenge was known, they knew how to address it to make their supply chain a better place to work.

Tom Raftery: 15:23

Cool and we're now at the start of 2023. What kind of trends are you seeing in the, space? I know you said that, the trends up until now were that the turnover rates were going up. Do you see that continuing? Do you see that leveling out? Do you see that falling and what do you see happening for supply chains for the next 12 months say?

Dan Johnston: 15:45

Yeah, so when you look at turnover rates specifically in the supply chain, you're starting to see a bit of a plateau. We've really seen a continuous increase over the last decade with a spike coming out of Covid where a) you know, in many of these spaces we saw manufacturing turnover is still up about 60% from pre covid levels. And so you're starting to see a bit of a plateau, and I think that's happening for a few reasons. One is it's plateauing at a, at a very high level, right? It can only, you can only go up exponentially for so long.

Tom Raftery: 16:18

Mm.

Dan Johnston: 16:19

And second of all, I think we're all feeling a bit of a, a softening in the economy, and therefore, especially workers on the lower end of the skill spectrum might not feel as safe leaving their role today to go search out for another role tomorrow that they don't have yet than they did a year ago.

Tom Raftery: 16:42

Sure.

Dan Johnston: 16:43

Now with that said, any impending recession isn't going to solve the workforce engagement and retention challenge in the supply chain. For one, the cat is out of the bag to some extent in the sense of like the workforce today in supply chain, in healthcare and retail and technology is just so used to approaching their career more flexibly that we might see turnover rates even start to come down, but you're not gonna see them come down to where they started a decade ago. That's just not how the workforce engages today. But secondly, because there are such stark supply and demand mismatches, especially sort of for the more skilled roles, so, uh, mechanics, technicians, c d l, truck drivers, even a softening of demand for those skill sets still wouldn't bring overall workforce demand down to the level of workforce supply today. And so you're still going to see a ton of opportunity available to workers in the supply chain, sort of on the higher end of the skill spectrum. And those workers will always have a plethora of opportunities available to them, so it makes it as important as ever to ensure that a company is doing everything they can to engage and retain that talent.

Tom Raftery: 18:11

Okay. Fair enough. And for yourselves in WorkStep, what kind of development plans do you have for your platform? You know, what kind of things are you going to be adding on in the next 3, 4, 5 years?

Dan Johnston: 18:23

Wow. 3, 4, 5 years is a, is a, is an interesting time horizon. So, you know, where we started was, you know, how do you automate the collection of this feedback and get it to leaders in real time. And then we developed on how do you analyze it and identify the real issues based on tying it to business outcomes and based on looking at workers are saying in real time. Then we started getting into helping companies actually take action on that data, right? So how do we actually allow you to close the loop with that worker and respond to their feedback, even if it was submitted anonymously? If you have a specific turnover driver in your building, how do we show you what other successful buildings are doing as it relates to that theme, right? So you can sort of get a jumpstart on taking the right step to solve your challenge. Where we're going next is really how do you close the loop with associates in terms of those actions you're taking. So for example, for a frontline worker who is dissatisfied with their career growth potential at my company, how do we immediately follow up with them and let them know, are you aware of these training programs that we offer for your role in your location? Or are you aware of these roles that you could grow into and how you grow into them? So using this sort of intelligence layer to almost automatically change negative sentiment to positive sentiment when there is a program from the company that is available. Cuz oftentimes it's just a, a gap in knowledge, right? Like the, the benefit that you're upset that you don't have actually is one the company offers, but you are just sort of 19 levels below the top and you're not aware that it exists within the organization. So solving that awareness problem. And then over time where we're going is actually helping these companies take the actions that'll be most impactful for their workforce. So whether that be growth and development, whether that be paying compensation, whether that be manager training, how do we use our technology platform to not just identify the challenge, not just facilitate communication around the challenge, but actually help the company take the action that solves the challenge. So that's, that's our long-term vision of how we're working with, you know, many of the world's largest supply chain companies to not only help them decrease workforce turnover, which of course increases productivity, decreases safety, increases profitability, but also makes their supply chain a better place to work, right? Because, that's important too, is just doing the right thing for your frontline workers.

Tom Raftery: 21:13

Okay, fair enough. And you guys are, are you still in startup mode? Are you in scale up mode? You know, where are you on that kind of spectrum?

Dan Johnston: 21:24

I suppose it depends on your definition of each of those phases. So to provide some clarity, we have a little bit more than a hundred large customers. We work with millions of frontline workers in totality, and we are series B company that is growing quickly.

Tom Raftery: 21:45

Nice. Okay. Based out of the US, but do you have customers just in North America or are you in other continents as well?

Dan Johnston: 21:54

We are based in the United States. We have companies really headquartered across North America and are increasingly growing with their demand for our software globally.

Tom Raftery: 22:07

Okay, cool. All right, Dan, we're coming towards the end of the podcast now. Is there any question that I have not asked that you wish I had, or any aspect of this that we haven't touched on that you think it's important for people to think about?

Dan Johnston: 22:21

Yeah, I mean, I think that there's a few things that are important to think about in this space. I think that when people think about, when leaders think about employee engagement in the supply chain, they tend to think of two things. One is how do I decrease turnover, which is important again for all of the reasons we just talked about. Productivity, safety, profitability, right? That's just like ultimately all about running effective supply chain. Companies, also think about how can effective employee engagement allow my organization, if this is our goal to maintain a non-unionized environment, right? How do we ensure that our employees feel heard, ensure that our employees know that we are there for them. Ensure that our employees see that we have their best interests in mind so that they don't necessarily feel the need to bring in a third party union into sort of our company's environment. And those are both really company level goals, but I think the most important thing here is the power that organizations have to positively impact the lives of their frontline workers. Right? We talk a lot about the double bottom line opportunity here, which is, yes, there is a financial bottom line opportunity to decrease turnover by double digit percentage points, save on cost of, talent replacement. Ultimately save tens, or in some cases, hundreds of millions of dollars to the bottom line every year. But there's also a human bottom line opportunity, which is if you as a leader have the opportunity to improve the job, improve the day-to-day, and therefore improve the life of thousands, tens of thousands or hundreds of thousands of frontline workers, that is also an important goal in and of itself. And so we believe that forward-looking companies who understand that winning the war for supply chain talent will mean winning their industry over the long term. See that being the best place to work. See that listening to the voice of their associates, engaging with them, ensuring they feel heard, taking the actions that could be most impactful for them is ultimately how they win in this market, how they do the right thing, and how they capture both of those bottom lines.

Tom Raftery: 24:45

Cool. Cool. Great. Okay, Dan, if people would like to know more about yourself or WorkStep or any of the things we discussed in the podcast today, where would you have me direct them?

Dan Johnston: 24:56

They can visit workstep.com, or they can email me directly if they'd like. Dan at workstep.com.

Tom Raftery: 25:02

Fantastic. Great, Dan, that's been really interesting. Thanks a million for coming on the podcast today.

Dan Johnston: 25:07

Thanks so much, Tom.

Tom Raftery: 25:09

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, simply drop me an email to TomRaftery@outlook.com If you like the show, please don't forget to click Follow on it in your podcast application of choice to be sure to get new episodes as soon as they're published Also, please don't forget to rate and review the podcast. It really does help new people to find a show. Thanks, catch you all next time.