The manufacturing industry is on the brink of its next great leap. New technologies such as additive manufacturing, robotics and digital design are creating opportunities for success — now and into the future — that are affordably realistic for small and medium-sized manufacturers. But even the most advanced technology still relies on one thing to maximize ROI: its workforce.
According to the U.S. Department of Labor, United States manufacturers experienced a 32.6% turnover rate in 2018, which is the highest rate since 2009. If you’ve invested in new technology — or simply want to maximize your traditional systems — employee development and retention can have a massive impact on your bottom line.
It’s estimated that small and medium-sized companies spent approximately $1,000–2,000 on training for each employee in 2018. Investment in longtime workers, and their continued employment, is connected to customer retention, production expertise and even company morale. So how can you best engage these valuable human resources?
A Gallop “State of the American Workplace” report reveals that only 25% of manufacturing employees feel engaged, the lowest figure of all major occupations. This is alarming, especially considering that Forbes reports that effectively engaged employees not only contribute to lower turnover rates, but deliver 21% greater profitability, 17% higher productivity, and 10% higher customer ratings than their disengaged counterparts.
This is an area where small and medium-sized manufacturers actually have an advantage over large manufacturers: Employees in large companies often feel their work ultimately doesn’t matter because they’re such a small cog in the corporate machine. On the other hand, small and medium-sized companies can directly engage their employees more easily. And engaged employees are more likely to:
- Practice safety in the workplace and be more productive
- Stay with an organization, reducing associated hiring and training costs
- Build strong relationships with customers
- Be more effective brand ambassadors
If your workforce is engaged in their jobs, that engagement can likely be traced to the top. Gallup identifies the “cascade effect” in many companies, where employees who are supervised by highly engaged managers are 59% more likely to be engaged themselves.
Much like a coach on a sports team, managers set the tone in the workplace. Ask yourself:
- Do your managers care about maximizing their employees’ abilities, or do they view their group as easily replaceable parts?
- Do they take the time to motivate and inspire?
- Even if your managers ultimately choose another way, do they consider input from their workers?
- Are they clear about responsibilities, expectations and goals, and do they provide clarity when fielding questions?
This type of reflection will help assess whether your team has the right leadership and managers in place.
Tools to Succeed
Aside from the obvious, such as supplying your workforce with sufficient resources to perform their jobs well, involvement in meaningful and well-defined improvement activities has proven to increase long-term employee engagement and empowerment.
Education is often overlooked in these efforts. Successful companies effectively train their workers so they can do their jobs well — and without micromanagement.
Education should be an ongoing process. By encouraging employees to learn about aspects of manufacturing outside their immediate work, they will feel empowered to solve problems and make informed decisions when challenges arise. For example, plant tours of other non-competitive manufacturers can help employees see that there are other ways of doing things. Work with your local chamber or economic development organization to coordinate tours. But also be ready to reciprocate, if asked.
Learning new skills not only increases the value that an employee can offer a company, it also reduces complacency and boredom, and will help your workforce look forward to the next day.
Conduct a Manufacturing Advantage Assessment
Even in the most technically advanced manufacturing fields, company success still comes down to its people. An engaged workforce creates a competitive advantage in productivity, one that will pay off now and into the future. But are your employees engaged in their jobs? You don’t have to answer this critical question on your own.
Organizations such as Ohio’s Manufacturing Advocacy and Growth Network (MAGNET) — part of the MEP National NetworkTM of state-based Manufacturing Extension Partnership (MEP) Centers — can help you build on the areas where your company is excelling in workforce management and retention, as well as determine how to address critical weaknesses.
For some expert advice, contact your local MEP Center and let the trusted advisors there help you appraise how well your human resources are being positioned for success — now and into the future.
Robert Schmidt, Senior Growth and Innovation Advisor at MAGNET, has over 30 years of hands-on experience in diverse manufacturing environments. Since joining MAGNET three decades ago, he has been responsible for the management and delivery of growth services for manufacturers. His specialties include market diversification, product development, process innovation, and operations improvements.