Most industries have recently struggled to recruit, engage and retain the best talent, and manufacturing has not been immune.
In the recent Grant Thornton State of Work in America survey, 22% of manufacturing respondents said they have switched jobs in the past year.
In the past 12 months, have you joined a new organization
This transition is likely to continue, as 24% of manufacturing industry survey respondents indicated that they are likely, or extremely likely, to switch jobs in the coming year.
How likely are you to switch jobs in the next 12 months
In fact, 49% of manufacturing workers said they “agree or completely agree” that they would take another job if the right one came along, and another 25% “slightly agreed” with that statement.
I am not actively looking for a new job, but would consider a switch if a new opportunity came along.
How can manufacturers retain their best talent and control the cost of continually finding and onboarding new workers? There are a range of priorities to balance for today’s workforce, and some might be different from a manufacturer’s traditional considerations.
More on workforces
Base pay and beyond
“There's definitely an issue with wage compression,” said Grant Thornton Manufacturing Industry Managing Director Joe Ranzau. “When a plant is offering hot work in a difficult environment all day, and someone can make $21 an hour at a fast food restaurant, it’s compelling to look at that option.”
“Manufacturers can also face high turnover within the first 30 days,” Ranzau said. “So, if we do find someone, how are we adequately preparing them for the reality of the manufacturing environment? How are we showing them what their job's going to be day-to-day, so that they're not surprised — and, as we onboard them, they feel confident, engaged and that they have a path to grow within the company?”
It’s also important that manufacturers highlight the value employees are adding, giving them pride in what they are producing. If your people are helping to make the world’s best security systems or appliances, help them remember that.
While production-line employees are often the focus for recruitment and retention, today’s manufacturers need skills at all levels. Grant Thornton National Managing Partner Bob Hersh explained, “There's a need beyond the shop floor. There's a need for skill sets up and down the career continuum, for just about every manufacturer.” Apart from competitive wages and meaningful work, there are a range of strategies that manufacturers can apply.
1. Creatively broaden benefits
Many manufacturers have experienced positive results when they provided wellness options like on-site clinics for both employees and their families. They have also seen outsized benefits from expanding employee assistance programs, especially given the relatively minor cost of such programs. Hersh noted that “We've talked a lot about daycare inside factories, to get the single mom demographic. I think offering a broad-based clinic may be even more valuable.”
2. Consider earned wage access
Another emerging strategy is earned wage access. The concept is simple: Pay an employee every day, rather than every two weeks or every month. Deposit earnings to their bank accounts, or load them onto a debit card. Employees appreciate this because prompt payment can help them avoid late fees or expensive payday loans. Done well, it can help employees catch up financially without increasing their wages.
Such services are currently offered by major HR and payroll vendors. Ranzau emphasized that, “If managed well, it doesn't cost the company much. But we see it helping to retain and actually attract talent. The challenge is logistical: You have to get your back-of-the-house in order.” That often means updating outdated payroll systems. “It doesn't need to be ultramodern,” Ranzau said, “but you need some version of electronic HCM systems and time capture.” At the same time, these updates can have other benefits like helping companies find and reduce payroll leakage.
3. Acknowledge the cost of contingent labor
“In order to meet production deadlines, managers and supervisors often have people work overtime or bring in contingent labor when maybe, based on the order, they could’ve actually had an extra day and didn’t have to do that,” Ranzau said. “Managers are measured on how quickly they get an order out the door, rather than what's required. They're pulling levers that drive up cost when they may not have to.”
Better payroll and planning systems, and better information for managers, can help avoid unnecessary costs. “They might not understand that contingent labor adds a 30% markup, sometimes a 50% markup. Educate managers on the actual cost implications, and help them see if there’s a different option based on the holistic life cycle of that order rather than just what's in front of them,” Ranzau said.
“What we see a lot is that even advanced manufacturers don't do enough of that enterprise asset management, pulling the whole picture together, because they focus on operational efficiency and don't add the labor component,” Hersh said. “Or, they don't add the financial fixed asset component. I think there's a huge opportunity for the industry as a whole.”
4. Acknowledge the cost of commuting
As cities have grown and neighborhoods have changed, manufacturers that once hired nearby residents must now recruit from farther away. This can lead to discouraging commutes. While these commutes have grown, the pandemic also prompted workers to recognize the time and money they spend commuting.
Manufacturers should consider what an hour or an hour-and-a-half commute might mean, to someone starting at one in the morning. Look for ways to lessen that impact.
5. Provide a clear path forward
It’s important to make employees feel happy in their current positions, but many also want to pursue bigger responsibilities, new skills, or simply more money. Clearly set out the steps that employees can take, to help retain these ambitious workers.
This “path forward” could mean in-house apprenticeship programs or arrangements with local community colleges. These could include student stipends with a job upon completion. In just a few years, employees can make significant gains in skills, responsibilities and pay. By promoting these opportunities, you can set yourself apart from competitors that offer similar starting wages but less mobility.
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Show your value
“You're not just coming to work on the shop floor —there's plenty of opportunity to work with new technology and new concepts,” Hersh said. “As an industry, we need to get that message out there.”
New opportunities, skills and technology can have benefits beyond the workforce, including efficiency and reduced total cost as more staffing options open up. More workers with more skills may also reduce the need for expensive overtime.
While manufacturers face some significant workforce challenges, there are some promising strategies to try. By implementing innovative strategies for recruitment and retention, you can send a simple, powerful message that you are willing to recognize work today while creating a path to tomorrow.
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