Factory managers used to brutal cyclicality don't scare easily. Shell-shocked workers are a different story. Too often they've seen colleagues come and go in a matter of months.
Recent economic weakness may not do much to erase their fears. According to the Institute of Supply Management (ISM), U.S. manufacturing activity fell to 50.2 in September from 51.1 the month prior. The reading is the worst since May 2013 and teeters on the brink of contraction. In Canada, the RBC Purchasing Managers Index (PMI) fell to 48.6 from 49.4 in August, signaling the second consecutive month of declines and sustained deterioration in factory conditions throughout the region. (A score below 50 signals industrywide contraction.)
Managers can hardly be blamed for pruning in this environment. And yet there's a difference between cost management and keeping employees in the dark, wondering when the ax is going to fall. Don't let that happen to your factory. Here are five signs your operation is running scared:
An unsafe culture that punishes risk also stifles experimentation.
1. Competitors consistently take your best workers. Every business suffers attrition and bad times can magnify the turnover. And yet there's a difference between losing some employees and your most tenured and expert line workers. If they're fleeing for competitors, it may be because of better offers -- or, just as likely -- a better environment. Gallup research finds that managers account for roughly 70% of the variance in employee engagement scores in business units across measured companies.
2. You can't change quickly. Scared workers tend to be paralyzed workers; they're afraid a mistake will cost them their jobs. Growth grinds to a halt in these sorts of environments, mostly due to calcified business processes that are accepted as gospel because the underlying culture doesn't support or encourage change.
3. Experiments are rare, if they exist at all. An unsafe culture that punishes risk also stifles experimentation, encouraging line workers to stick to the status quo. Innovation may still exist in these situations but it's likely to be the byproduct of one or a series of accidents. Research and development gets low priority and a meager budget. And workers remain pessimistic because no one has given them a good reason not to be.
4. Productivity lags. Employees do their best work when they're highly engaged. Returning to the Gallup survey, the researcher found that companies with highly-engaged workers tend to produce 147% higher earnings per share than their competitors. Think about what that floor must look like. Is it filled with scared workers paralyzed into maintaining the status quo, or risk-takers willing to make smart, productivity-boosting bets? You know the answer; we all do.
5. Profits are elusive. Again, look at the Gallup data. Factories that lack engagement simply don't perform as well, and the problem is sure to be worse in a tight economic environment that's defined by a narrowing margin for error.
Where does that leave managers? In a pickle: Tough economic conditions can make experimentation dangerous, but failing to try -- and worse, berating those employees who do dare to try -- is a sure no-win scenario.
For the moment, production is down and output is stalling. Yet that won't last. Check your habits to make sure you're retained as many of your best workers as possible for when growth returns. After all, winning the talent war starts with the talent you already have on staff.
John Mills is executive vice president of Business Development at Rideau Recognition Solutions, a global leader in employee rewards and recognition programs designed to motivate and increase engagement and productivity across the workforce.