Over the last 25 years, U.S.-manufactured goods have quadrupled, and in 2016 alone, manufacturers contributed $2.18 trillion to the U.S. economy. In fact, for every dollar spent in manufacturing, another $1.81 is added to the economy, which is the single largest multiplier in any industry.
Yet to protect this foothold and continue to grow, manufacturing needs to become more competitive on a global scale. And to achieve this goal takes top talent. In fact, in a recent survey, many CEOs cited “talent” as the top driver required to successfully increase their firm’s global competitiveness. It is interesting to note that talent ranked just ahead of “cost competitiveness” and “workforce productivity” — evidence of the link between the workforce, its related costs, and how the right talent can help a manufacturing organization achieve its most strategic goals.
Unfortunately, the entire manufacturing industry is losing employees in record numbers, and worse, it’s having a hard time replacing them. This shortage of employees and the growing skills gap make it extremely difficult for manufacturing organizations to use talent as a lever to increase global competitiveness or achieve other critical objectives.
Take a closer look at some of the most telling statistics related to the employee shortage in manufacturing:
- Over 2.7 baby boomers are expected to retire by the year 2025. Two million of those jobs are expected to go unfilled.
- Forty-six percent of top executives report that when they hire for certain jobs, there are too few qualified candidates.
- These same executives report that 43 percent of the candidates they interview lack skilled talent in one or more of the company’s business lines.
- Eighty percent of manufacturing jobs are currently employed by workers between the ages of 45-60 — further evidence of just how dire the impending skills gap may be.
As manufacturers look to the future, the news may only get worse. For example, according to a recent survey, only 17 percent of millennial employees consider manufacturing to be a top career choice, which means the majority of millennial job seekers will look for jobs in other industries first. All of this adds up to a scenario where manufacturers are facing a growing talent shortage, and they may have a hard time attracting the next generation of employees to fill the gap.
Focus on Engaging Employees
So, what can today’s manufacturing companies do to differentiate themselves and create an environment where employees want to work — happily, productively and in ways that contribute to the organization’s larger success? One way is to focus on improving employee engagement.
If the concept of employee engagement seems surprising, there is strong evidence that shows that improving engagement can help manufacturers overcome the challenges related to the growing skills gap by helping these companies improve the way they attract and retain top talent.
To make the connection, it may first be helpful to understand the definitions of the various levels of employee engagement and estimate where U.S.-based manufacturing employees fall in this range. Gallup’s “State of the American Workplace” report recently defined three distinct engagement levels, which consisted of:
- Engaged employees work with passion and feel a profound connection to their work. Twenty-five percent of manufacturing employees are currently in this category.
- Not engaged employees tend to be “checked out” and don’t put any energy or drive into their work.
- Disengaged employees actually undermine the efforts of other employees. This is especially troubling considering that the manufacturing industry has as many actively disengaged workers as it does engaged workers.
With such a high percentage of disengaged employees, manufacturing is clearly facing an opportunity to improve. This opportunity becomes even more significant when you consider the effect engaged employees can have in important areas of the business. According to the same Gallup report, organizations in the top quartile of engagement reap the following benefits:
- Safety: 70 percent fewer safety incidents.
- Retention: 24 percent lower turnover in high-turnover organizations and 59 percent lower turnover in low-turnover organizations.
- Absenteeism: 41 percent lower absenteeism.
- Quality: 40 percent fewer quality incidents.
- Profitability: 21 percent higher profitability.
Focus on The Needs of The Hourly Employee to Improve Engagement
How can manufacturers improve employee engagement and achieve these benefits? First, it’s important to note that there is no “silver bullet” solution. Each manufacturer should first examine its own policies, practices, processes, and technology in order to develop the right strategy. This overall approach should also balance the needs of the business with the needs of all employees, especially hourly employees, a group that represents 77 percent of the manufacturing workforce.
The first step is to understand the needs of hourly employees. In other words, what conditions must exist on the job or in the workplace for engagement to thrive? One framework to consider focuses on the four essential needs of the hourly workforce, which are summarized in the following sentiments:
- “Keep me safe”
- “Treat me fairly”
- “Give me flexibility to maintain a work-life balance”
- “Empower me to make an impact”
Workforce management is an effective, though under-utilized, strategy to help create a workplace that meets the needs of the hourly workforce. Focusing on workforce management is more than just a technology “fix”; instead it should be a holistic approach to improving policies and processes related to key employee-impacting areas such as time and attendance, scheduling, absence management, labor analytics and more.
In turn, the right workforce management strategy can help provide affirmative answers to all of the four things employees need to feel engaged:
- “Keep me safe”: For example, automated labor scheduling solutions can make sure workers are not scheduled for jobs they are not trained for, or make sure employees are not overworked — which could lead to fatigue or other unsafe conditions — by enforcing reasonable shift lengths or appropriate rest between shifts.
- “Treat me fairly”: Time and attendance and payroll solutions help make sure all employees are paid accurately, receive equal opportunity for overtime, and ensure that attendance and other work policies are enforced consistently. All of this is critical in eliminating concerns about favoritism or inequity.
- “Give me flexibility to maintain a work-life balance”: Workforce management solutions can also help employees balance work and life issues by giving them more control over when they work — all via mobile device. For example, scheduling technology gives workers complete visibility into open shifts if they want to pick up extra hours, or it lets them swap shifts if they can’t work, perhaps to attend a child’s sporting event.
- “Empower me to make an impact”: The right combination of management practices and technology can provide transparency to operational performance data — so managers have the tools needed to support and coach their employees. Additionally, employees can see how their work impacts the company and play a more active role in the improvement process by sharing their ideas.
If it’s all about improving employee engagement for hourly employees — and it is — workforce management solutions can help create a work environment that addresses their needs and helps engagement thrive. In turn, this can help today’s manufacturers gain a better way to attract and retain the next generation of top talent — critical to overcome the growing skills gap and gain a new competitive advantage.
Kylene Zenk is Director of the Manufacturing Practice Group at Kronos Incorporated.