‘Underperformance Management’ : – A Case Study in the Logistics Industry

Abstract: The order picking operation is one of the most time-consuming activities in a warehouse and contributes to large operational costs that often exceed 65% of the total operating costs (Coyle, et al., 1996; Thompson, et al., 1997). As order picking is identified as the most labor-intense activity, representing up to 50% of all warehouse labor activities, warehouse operator performance in order picking activities is to be perceived as a key factor for operational excellence (Burinskiene, 2009). Hence, the purpose of this research is to advance the understanding of management related underperformance among employees in the logistics warehouse industry. Given the purpose, the objective is to explore how to manage productivity among underperforming full-time warehouse operators. In-depth knowledge has been obtained by the means of a case study conducted at a case company on the Swedish market of Third-Party Logistics (3PL). The data collection comprise one conducted survey, productivity data depicted from the internal Performance Measurement System (PMS) and qualitative data obtained through open and semi-structured interviews with e.g. warehouse operators and warehouse managers. The empirical contribution from this research can be concluded in three main suggestions:  The performance metrics depicted from the PMS should be used by first line management to lead and develop the employees.  First line management should act pro-actively towards organizational barriers to create a work environment where the employees cannot undermine the system.  Each organization should develop a structured action plan to manage underperformance. The findings of this research contribute to the concept of Performance Management in terms of in-depth knowledge. The results should be contextually reviewed, which also applies for the generalizability of the conclusions. Keywords: Performance management, labor management, first line management, logistics industry, warehouse operators, mixed workforce, order picking