A Lean Approach to Workforce Development

Despite dire predictions that AI-powered robots will take away jobs and give them to machines, manufacturing job openings have been growing at double-digit rates since mid-2017, according to a skills gap study by Deloitte and The Manufacturing Institute. This workforce gap may leave an estimated 2.4 million positions unfilled between now and 2028, making it three-times more difficult to hire qualified employees in the next three years.

As more industrial baby boomers retire, many small- to medium-sized manufacturers (SMMs), in particular, are struggling to fill the talent pipeline.

• Today’s SMMs are now challenged with:
• Finding the right talent
• Attracting the right talent
• Onboarding talent for long-term success
• Engaging existing employees to reduce turnover

There’s also the added challenge of competing with larger manufacturers who offer more career advancement opportunities and higher pay. How can SMMs compete? What if you’re a family-owned operation with as few as 10 employees?

SMART Talent can provide the competitive edge SMMs need to go toe to toe with larger industrial players by allowing them to develop effective employee training and compensation systems. Backed by transparent metrics, SMART Talent is a flexible methodology that helps manufacturers of any size more effectively hire, onboard, train, and promote employees with innovative advancement and reward strategies.

Developed by the Oregon Manufacturing Extension Partnership (OMEP, part of of the MEP National NetworkTM), SMART Talent is helping SMMs address workforce challenges with a lean, continuous improvement approach to:

• Building manufacturing hiring, onboarding, and training capabilities
• Improving operational bottom lines
• Reducing costly employee turnover
• Developing effective communication skills

Focusing on People Generates Bottom-line Results

As a consultant for the OMEP, I’ve helped 60 manufacturers use this methodology to effectively recruit and onboard employees, skill up new hires quickly, and improve employee leadership skills.

Take, for example, A.R.E. Manufacturing, a family-owned machine shop that used the SMART Talent approach to confidently hire and help employees develop the right skill sets to succeed in their jobs and advance within the company.

A.R.E.’s new approach to onboarding and training:

• Reduced their non-value-added activities by 25 percent
• Increased their entry-level hiring pool by 30 percent
• Let them project a 50 percent reduction in setup time going forward
• Supported projections of a 50 percent improvement in employee proficiency

Cabdoor cabinet manufacturers also successfully created a job skills training system by tapping into the SMART Talent methodology. They were facing high turnover, poor training quality, and long training times. These challenges created unnecessary labor expenses, production losses, quality issues, low employee morale, and constricted Cabdoor’s growth.

By implementing the SMART Talent approach along with continuous improvement initiatives Cabdoor has:

• Reduced their training time by 90 percent
• Grown sales by $2.2 million, by training at a faster pace
• Created 18 new jobs
• Realized $134,600 in bottom-line cost savings

 Cabdoor credits their new workforce development initiatives with increasing their productivity and building a culture that promotes learning, which contributes to a flexible workforce. As the owner, Cliff Stites, states, “[T]he real opportunity is not in what we started and accomplished, but in where we are now capable of going!”

Another family-owned manufacturer, Miles Fiberglass and Composites (MFC), collaborated with OMEP to build development pathways for employees using Structured On the Job Training (SOJT).

Since embracing this approach, MFC has:

• Increased their pool of proficient workers
• Created six new jobs and retained five existing positions
• Reduced training time and rework, and streamlined operations 

MFC has reaped a cost savings of $840,000. Plus, the company was able to take on $4 million in additional sales due, in part, to creating a more efficient pool of workers.

Creating Effective Hiring, Onboarding & Training Programs

By putting in place effective systems to attract talent, engage employees, and enhance training and development capabilities, manufacturers can manage their skilled worker pipeline in a way that reduces overall training costs and delivers long-term workforce ROI. The SMART Talent method focuses on how to attract and keep employees, how to skill them up faster once they are onboard, as well as training and engaging employees with advancement opportunities and rewards.

Working with OMEP, Oregon SMMs have used this system to address their toughest workforce challenges, including:

• Assessing performance objectively and eliminating favoritism
• Tying compensation to skill and competency growth
• Creating a standardized advancement process
• Promoting a fair and ethical hiring process to attract more diverse candidates

Think of SMART Talent in terms of your production ROI. The more money and time you invest in producing a product, the more it costs when you have to scrap it. Talent management ROI is based on the same principle. Every new hire can boost your bottom line — or drain it. SMART Talent can help ensure your talent investment reaps long-term rewards.

Creating effective employee training programs and compensation systems allows you to build positive job postings to expand your labor pool. You’ll be able to offer competitive career opportunities and pay — while actually increasing your company growth. Plus, with a reward-based training program, you’ll create more organizational capabilities, thereby boosting your talent ROI.

Interested in learning how to leverage workforce training to improve your company outlook? Connect with the MEP Center in your state to learn how they can help you resolve your workforce training and hiring challenges.

Russ Gaylor