The manufacturing industry is having a particularly challenging time finding and retaining skilled workers. Global pandemic burnout and the Great Resignation have led to unprecedented employee turnover rates across the U.S. In this turbulent market landscape, attracting and retaining the right employees is more important than ever. More and more organizations are looking for ways to adequately address the concerns of on-site, remote, and hybrid workers.

Studies have consistently shown that a rich company culture leads to greater financial performance and lower employee turnover for organizations. This means lower training costs for new hires and improved efficiency within the team. Let's take a closer look at how organizational culture impacts employee retention and how it can be utilized to boost productivity in the current manufacturing industry.

The Current State of Hiring in the Manufacturing Industry

The pandemic has caused an extraordinary shift in the way workers relate to their jobs and workplaces. Simply put, people aren't willing to work with inflexible constraints, poor compensation, a toxic work environment, or grueling tasks that they don’t enjoy. Data from the Labor Department reveals that 6.9 million people quit their jobs in 2021 — a record number in the U.S. This has further amplified the “Skills Gap” that was already a critical issue for the manufacturing industry. A 2021 study from Deloitte and The Manufacturing Institute projects that the manufacturing skills gap will result in 2.1 million unfilled jobs by 2030, causing an astonishing $1 trillion loss for the U.S. economy. 

This change in the workers’ mindset, combined with the increasing skills gap, gives employees incredible leverage in the marketplace. As businesses struggle to retain employees and find qualified candidates for open positions, skilled workers are very aware of the ample opportunities and better pay elsewhere. Workers across the U.S. are committed to finding a workplace that offers greater flexibility and more engaging, fulfilling work.

In the manufacturing industry, this outlook has caused a sense of inequity between people working from home and those who have to be on site. Employers now have the challenging responsibility of addressing and mitigating this inequity successfully. A strong, cohesive company culture is one of the most effective tools that employers can use to achieve this goal. Having dedicated, happy employees can transform day-to-day business operations and improve performance (and profits) from the inside out.

Factors of Company Culture that Impact Retention

At its core, company culture defines how an organization interacts with its employees and how the employees interact with it. This includes elements like the company mission, leadership style, values, goals, expectations, and work environment. Taking proactive steps to work towards “culture fit can greatly increase employee engagement, productivity, retention, and profitability.

First-line Leadership

When employees quit, they usually want to leave their managers more than their company. The 2022 Global Culture Report from O.C. Tanner shows that leaders and managers play a central role in shaping the employee experience. The research indicates that when leaders proactively connect with the workers and advocate for employee development, it creates a stronger workplace culture. Employees feel more deeply connected to one another and the company's mission, strategy, and values.

It's a universal experience that people who have a good functioning relationship with their first-line manager or supervisor tend to stay in their job and even have higher productivity. Gallup recently found that it takes more than a 20% pay raise to lure most employees away from an engaging manager, and hardly anything to poach most disengaged workers. When leaders can act as dynamic mentors, employees feel more motivated and work with a strong sense of purpose. 

Employee Engagement

Another crucial factor that dictates worker retention is employee engagement. Employees who feel valued in the workplace are able to develop a personal interest in their job. They get greater satisfaction from their role and are more invested in the organization’s purpose. 

Businesses need to reflect on what they are offering to keep employees wanting to come back to work every day, especially in the manufacturing industry. The goal should be to create a workplace culture that treats employees fairly, recognizes their value, and is respectful of their personal time and engagements.

More Than a Job

Modern workers demand more than just a paycheck from their employers. They want to grow, take care of their families, meet their own goals, and secure a better quality of life. The bottom line is employers must make efforts to improve the attractiveness of their company if they wish to thrive in this evolving industry. Businesses that have seen the most success in attracting and retaining skilled workers are the ones that have embraced this reality and taken steps to improve working relationships.

How Can Manufacturers Improve Their Company Culture?

The manufacturing industry is gradually shifting towards less rigid work environments to propel business growth. A flexible, collaborative manufacturing culture is now crucial for businesses to attract and retain talent and gain a competitive edge in the evolving job landscape.

Prioritize Leadership Training at All Levels 

Ultimately, it is the workers who actually create the product and produce value for an organization. Therefore, it only makes sense to emphasize the leadership training of frontline leaders who manage the majority of the workforce. 

Businesses in the manufacturing industry often overlook frontline leadership roles in favor of higher manager-level functions, creating a critical leadership gap. In most of these cases, companies don’t provide professional support to the supervisors that actually oversee the majority of the people that make up the company. 

Timely management training is imperative for establishing continuity of leadership throughout the organization. Consistent leadership can directly increase employee engagement, productivity, and satisfaction. For this reason, a manager who is well trained in leadership principles can effectively lower the turnover rate of the company.

Ensure a Safe and Respectful Work Environment 

A safe and respectful workplace is a key element of an organization's efforts to improve employee retention, engagement, productivity, and ultimately financial performance. Safety has always been a central concern in the manufacturing industry; and, now, social distancing norms have added to these manufacturing organizations’ long list of health and safety responsibilities. As businesses adapt to the changing guidelines, they should be prepared to provide workers with the equipment, skills, PPE, and support they need to do their job well.

In this new landscape, organizations must also keep in mind that their employees have a heightened need to balance traditional work obligations with at-home responsibilities, new health and safety changes in the workplace, and their own well-being. As a result, organizations should consider helping their managers, leaders, and coworkers to refine their listening skills and practice empathy in the workplace. 

Right now, businesses can greatly benefit from empathic leadership and respectful workplace training. Organizations that prioritize employee support and advocacy during challenging periods increase their chances of being viewed as an attractive employer.

Offer More Scheduling Flexibility 

Modern manufacturing organizations need to look for ways to offer more flexibility and accommodate workers’ needs, while still meeting organizational targets and goals. Organizations should start with acknowledging and mitigating the disparity between those employees whose jobs can be done from home and those that require employees to be physically present on the plant floor. This requires a new way of looking at physical operations and more adaptability with scheduling options. Scaling up the company's continuous improvement efforts and breaking down jobs into distinct process flows can help organizations identify areas where they can be more creative with scheduling workers. 

Company policies should also be updated to incorporate a human element and allow for certain accommodations as long as work objectives are being fulfilled. Take the time to evaluate if your current policies prematurely set people up for failure. For example, working parents might need extra personal days or the freedom of having flexible hours in case something unexpected comes up. In such cases, modern workplace policies should allow for some accommodations, while still finding ways to balance company needs. Management strategies like lean thinking and adaptive project frameworks (APF) can help guide these novel company policies.

Invest in Current Employees with Educational and Training Opportunities

The purpose of continuous training and learning activities is to empower employees with new knowledge and skills. When employees have the opportunity to learn and grow within the workplace, they are less likely to look for professional development elsewhere. 

Apprenticeships and workforce development programs boost the "what's-in-it-for-me" factor for employees. This directly translates to greater day-to-day productivity, higher job satisfaction, and a deep sense of belonging in the company. To improve engagement rates, it is important to maintain clear, frequent communication about the purpose of the training and how it impacts the employees as individuals.

Educational and training programs also provide employers with stability and security in the labor market, improving the organization's status and appeal.

Conclusion

The ability of the manufacturing industry to sustain and grow in this time of transition has a huge impact on the nation's economy. When people go home and have dinnertime conversations about work, they're setting an example for younger generations. If the person's experience at work is exciting, engaging, and rewarding, the effects of the positive workplace culture are shared with the entire community. And that experience at work is driven by how well the employer has fostered and encouraged a productive workplace culture.

From HR compliance and recruiting to workforce development, CMTC serves as a trusted advisor to small and medium-sized manufacturers (SMMs) in California. Whether you’re looking to recruit top talent or develop a custom training program, CMTC advisors tailor their approach to your organization’s needs, preferences, and goals. 

Interested to learn more about what CMTC can do for you? Contact us today.

About the Author

Gregg Profozich

Gregg Profozich is a manufacturing, operations and technology executive who believes that manufacturing is the key creator of wealth in the economy and that a strong manufacturing sector is critical to our nation’s prosperity and security now, and for future generations. Across his 20-year plus career in manufacturing, operations and technology consulting, Mr. Profozich helped manufacturing companies from the Fortune 500 to the small, independents significantly improve their productivity and competitiveness.

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