There are two concerns when it comes to manufacturing staff turnover.
- What is the true cost?
- What can you do to reduce it?
Turnover is going to be expected in manufacturing, and the reason for that is the work itself can be quite challenging or difficult. We have noticed that there is wage compression, meaning that the lower wages have come up. Manufacturing used to have a bigger spread.
It does not have as big a spread anymore.
That means people can look at the work itself and decide, “I could make a little bit less money and have an easier job.” Which means, turnover is going to happen in manufacturing, but remember that the cost of the turnover is extremely high.
A Breakdown of The Numbers
For a typical operator on the shop floor, the minimum recruiting cost is probably going to run you about $1,500. As the position becomes more senior, that evolves at one and a half to two times that person’s salary.
Certainly, when it comes to skilled trades and the people who are supporting those on the shop floor, you are going to find it will cost you one and a half to two times salary. Additionally, you will also see that the learning curve is baked into some of those costs as well. This is because people are not as productive as they could be as they are learning your business or the specifics of your company.
The Great Rotation
Have you heard about the term “The Great Rotation” or “The Great Resignation”? We prefer to think of it more like a great rotation, in that people are leaving one job for another. Perhaps they are getting a bump in their compensation, but does anything really change? In other words, are you leaving one job that was “just okay,” and accepting another job that is the same, but pays me more?
This is a missed opportunity if one of the reasons that people are indifferent to the job that they have, is that there is no emotional connection to the work.
We Have Seen This Before
One of our past client sites (before we had worked with them) had a turnover rate of 125%. This was not just a small workforce. There were several hundred employees and they had to hire an additional several hundred plus more in order to keep the workforce going.
As you can imagine, they were really frustrated. One of the things that they reviewed was how competitive their wages and benefits were. However, even when you match the wages and benefits, the hidden issues were:
- What is the emotional pathway of the employees?
- What kinds of experiences are they having?
They found that after they had made sure their wages were competitive, the next issue is really how the employees were treated.
Were they given experiences that would connect them to the mission of the organization? They did a few things that were very simple, and those are tools that you could also benefit from.
Number One: Provide Emotional Experiences
How does it feel to work in your operation? Some companies, either on purpose or by accident, end up creating this signal that says, “We do not trust you as an employee.” One company had a sign that read, “If you do this, you will be fired.” And that was just coming into the building!
Imagine you are coming for a job interview and it is basically accusing you of doing something that would cost you your employment before even being hired.
Map the experience of the employee from the day that they start at your business (or sometimes even the day that they interview) and you look at that map through the first several weeks or months when people are really making the decision “Did I make the right choice to come and work here?”
You want them to have that sense that this was a good choice.
Number Two: Connect Them To The Team
People need a sense of belonging, and human beings need relationships with other people. As a business, it is important to make sure that they feel this is a good spot for them. The atmosphere should read:
“You are welcome here. These people care about you. I want to introduce you to them. I am going to call you by name. We will make you feel part of the team.”
People need a sense of belonging, and human beings need relationships with other people. Click To Tweet
Number Three: Create Confidence And Avoid Embarrassment
The reality is that when a lot of people start a new job, they end up breaking a lot of rules by accident. They do not do it intentionally, they either were not informed or forgot. As a result, they are made to feel stupid or embarrassed, because they did not know something that they should have known. This creates a very negative experience.
The best way to handle this situation is to give them what they need to know when they need to know it, but also when they do make the inevitable mess up, how do you make them feel about that? Do you go with:
- Option A: “You are not going to amount to anything, and you are not going to be successful.”
- Option B: “We all make some mistakes; it is all part of the learning process. We are still happy to have you here.”
Remember, unless the person is a complete misfit with your organization, it is better to invest some time and energy into them to make them stay. Think about it this way, if the employee experience is better working for you than what they could get somewhere else, even if the pay is different, they will probably look back and even return to your organization because of the experience that you created for them.
Remember, unless the person is a complete misfit with your organization, it is better to invest some time and energy into them to make them stay. Click To Tweet
Continuous Growth of a Leader
After you have realized that you can impact and reduce employee turnover in manufacturing by these simple steps, you are going to want to work on some of your other leadership capabilities. Especially since we already know that people often leave a job because of their relationship or the bad relationship they have with their supervisor or manager.
We can help through the Front Line Leadership Program, which is available in a number of different formats: English, Spanish, and French. This is something that can be done in person, virtually, and onsite for your organization.
No matter how we can help you and your leadership team become successful, it always starts with a conversation. That can happen on our website at uniquedevelopment.com. Do not forget you can also connect with us on LinkedIn, Instagram, Twitter and Facebook, and start this journey with us to exceptional leadership.