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Logistics Employees Not Up to Snuff?

Employees in the logistics, transportation and travel industries don’t measure up in one important area: accountability, according to McKinsey & Company.

Accountability means workers’ can understand what is expected of them, exercise authority and take responsibility for delivering results.

This stems from McKinsey’s Organizational Health Index measures the performance of companies in regard to such factors as leadership, coordination and control, capabilities, motivation, external orientation, culture and climate, and innovation and learning.

When it comes to these measurements logistics and transportation companies are at or are very near the median, except when it comes to direction, where they are superior, and promoting employee accountability, where they are substantially worse.


This low score is important given the capital-intensive nature of businesses that move goods and people, McKinsey says. In the best companies, employees play important roles in reducing costs and increasing efficiency while creating a positive experience for customers and ensuring their safety. Without clear accountability, employees have difficulty rising to these challenges.

“The problem is most acute in the way companies in the sector create and communicate performance goals and explicit definitions of what employees are expected to deliver,” the company observes

It urges these companies to focus harder on the other three management practices that promote accountability: role clarity, personal ownership, and consequence management.

McKinsey says data shows that what it calls role clarity (clear organizational structures) and personal ownership (a culture of personal responsibility) strongly correlate with improving accountability and overall organizational health.

Furniture Orders Are Off, Inventories Up

Residential furniture manufacturers and distributors reported new orders in March fell 2% from the same month in 2015, according to the most recent survey numbers released by the Smith Leonard accounting and consulting firm.

Orders also were down 1% in the February-to-February comparison. February orders were off at about 56% of the survey participants. For the year-to-date, new orders were slightly under the first quarter of 2015.

Shipments were up 4% in March 2016 versus March 2015 following a 3% increase reported for February. Shipments were up for approximately 61% of the participants. Year-to-date, shipments rose 2% over the first quarter of 2015, and 47% of the participants reporting increased shipments.

With shipments increasing and orders decreasing, backlogs fell some 5% from February results and were down 8% from March 2015, Smith Leonard reported. In February, backlogs were down 3% from the same month last year.

Receivable levels fell 4% from March 2015 in spite of shipments being up 4% over the same period a year ago. Receivable levels were up 1% over February even with the 15% increase in shipments (the 15% increase in shipments over February was due partially to the additional days in March versus February).

“We expect some of these results related to some timing issues,” Smith Leonard observes. “So we will see if these are more in line next month.”

Inventories were 5% higher in March versus March last year, but were down 2% percent from February this year. “With declining orders and higher shipments, the inventory levels appear to be moving in the right direction,”  the company says. In February inventories also were reported to be 5% higher than they were in February 2015.

Strike Replacements Policy Is Changing

The National Labor Relations Board took a major step towards overturning a 75-year-old policy regarding hiring of permanent strike replacements.

On May 31 the board ruled that statements made by American Baptist Homes of the West during a strike were evidence of an “independent unlawful purpose” for hiring replacement workers.

The NLRB has long differentiated between the hiring of permanent replacement workers during an economic strike, which is defined as employees striking over wages, hours or working conditions.

This is distinguished from an unfair labor practice strike called in protest against allegedly unfair practices by an employer, where returning strikers must be rehired and replacement workers let go to make room for them.

Under current law, returning economic strikers may be placed on a preferential rehire list but are not entitled to be automatically rehired after the strike ends, while long-term replacement workers are entitled to continued employment.

Before the ABHW strike ended in 2010, a company spokesperson told a union attorney the company intended to permanently replace the strikers “to teach the strikers and the union a lesson” and to prevent future strikes.

The union ended the strike without convincing the company (which operates under the name Piedmont Gardens of Oakland) to accept its demands, and the company permanently replaced 44 of the strikers.

The board majority said the employer’s motivation in hiring replacement workers is an “independent unlawful purpose” occurring when the hiring replacement workers is “unrelated to or extraneous to the strike itself.”

Board Member Phillip Miscimarra dissented, stating the majority decision is not only a “deformation of NLRB precedent” but also serves as “a substantial rearrangement of the competing interests balanced by Congress when it chose to protect various economic weapons, including the hiring of permanent replacements.”

EEOC Targets Ethnic Discrimination

The Equal Employment Opportunity Commission issued a lengthy and highly-detailed proposed enforcement guidance for enforcing prohibitions against national origin discrimination.

It is widely known that federal law protects individuals from employment discrimination and retaliation based on their race, color, religion, sex or national origin.

However, less widely known is that the law also bans employers from treating individuals unfavorably because of their national origin This includes being from a particular country or part of the world, because of ethnicity, or because they appear to be of a certain ethnic background.

About 11% of all 89,385 private sector charges filed with the EEOC in fiscal year 2015 alleged national origin discrimination, according to the commission.

The proposed guidance tackles several broad issues employment decisions made regarding recruitment, hiring, promotion, discipline and harassment.

But where it gets problematic for employers is when the guidance addresses in detail workplace issues relating to different languages – such as accent discrimination, fluency requirements and English-only rules – and citizenship status.

Also providing ammunition for tort lawyers seeking to bring future discrimination suits against employers are extensive best practices (which EEOC now calls “Promising Practices”) employers are urged to adopt.

The Discrimination Hit List

At 57 pages long (not including appendices) the proposed guidance covers a lot of ground, notes attorney Robin E. Shea of the law firm of Constangy Brooks Smith & Prophete.

In the eyes of EEOC, “national origin” extends to the “physical, cultural or linguistic characteristics of a particular national origin group,” which includes

Hispanic, Arab, or Roma (Gypsy). But it also pertains to Native Americans and other non-Native Americans facing discrimination.

“Discrimination based on national origin, including perceived national origin (for example, refusing to hire that Italian-American because you mistakenly thought he was from the Middle East) is unlawful,” Shea observes.

“Intersectional” discrimination also is banned, defined as discriminating against someone because of national origin plus something else, like their gender.

Joint liability once again rears its head: Staffing companies can be liable for national origin discrimination, and may be jointly liable with the company hiring them.

English-only policies are allowed if they are job-related and consistent with business necessity — if use of English is necessary for workplace safety, service of customers or efficient job performance. Even then the policies can be no broader than is necessary to accomplish these goals.

“It’s okay for an employer to comply with federal requirements regarding U.S. citizenship,” Shea warns, “but don’t go a fraction of an inch beyond what is actually required by law.”

Keep in mind that an individual’s immigration status is not relevant to the merits of a national origin discrimination claim, although EEOC fails to mention that the law limits financial recovery.

“EEOC will like you if you use a variety of recruiting methods and advertise that you are an equal opportunity employer,” Shea says.

She points out that the commission also “likes clearly defined criteria for hiring, promotion, job assignment, discipline, demotion and termination. It also likes progressive discipline.”

And make sure that your company’s policies and training are communicated in languages that employees can understand, Shea adds.

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