How to Reduce High Workforce Turnover in Manufacturing Business?
Such demanding operational requirements require a sufficient and highly-skilled workforce that can cater to the demands of day-to-day operations.
Probably one of the toughest industries for any business to engage in is manufacturing. The complexity and intricacies of this business would compound even more depending on the type of products manufactured are. High volumes, fast turnaround time requirements, 24x7 operations, and stringent shipment demands – all working within the parameters of a stringent requirement to high quality.
Such demanding operational requirements require a sufficient and highly-skilled workforce that can cater to the demands of day-to-day operations. Maintaining such a large workforce presents a new array of issues and concerns that manufacturing administrators would have to face and contend with.
One such issue is the problem of workforce turnover. Recognizing the importance of maintaining an adequate workforce, manufacturing companies are now giving a bigger focus on ways to address and reduce high turnover rates. A skilled workforce member who resigns is difficult to instantly replace with equally competent personnel. The process is costly, will affect productivity, decrease workforce morale, and eventually affect how costumers perceive the business.
The Turnover Situation in Numbers
Turnover refers to the situation where an employee leaves or separates from a company or business, and there is a need to get a replacement. The reason for the separation may come from a wide variety of factors, and can be initiated by the employee himself (voluntary), or is a result of a decision made by the business (involuntary).
Workforce turnover in the manufacturing industry has always been a perennial problem. Other industry verticals experience their shares of turnovers, but on a significantly lower degree to what manufacturing businesses encounter. To illustrate this in numbers, the average turnover rate across the United States is only at 3.6 percent. This is way, way lower than the 37 percent absenteeism and employee turnover rate manufacturing and distribution businesses encounter. In another report from Compdata, workplace turnovers are on a steady rise since 2014 at a 22.9% increase, hitting an all-time high in 2018 at 19.3%.
This scenario is not unique to the US, as other countries like United Kingdom experience the same issues and concerns with workforce turnover. The UK’s Labour Turnover Report 2019 reported an increase in manufacturing workforce turnover from 13.2% in 2017 to 14.4% in 2018. These figures include dismissals, retirements, redundancies, and resignations.
Such high turnover rate can be quite stressful for manufacturing business owners and administrators. These would eventually result in an even bigger impact on the business as a whole, particularly in the reduction in productivity, compromise in quality, degradation of company morale, and increase in costs.
Such costs can set back manufacturers by as much as hundreds of thousands or even millions of dollars, according to the report The True Cost of Turnover: Hidden Cost Go Beyond Financial to Impact Productivity and Culture. Such costs compounds even more when you factor in the additional monetary amount manufacturing businesses may need to spend to look for replacements to separated employees. This cost can go up to $4,129 on the average per hire, and it will take them as much as 42 days to fill up the vacant position.
Workforce turnover is a serious issue that manufacturers would have to contend and deal with to ensure the sustainability of their business. There may be many underlying reasons that are unique to the industry vertical the business is involved in. There are, however general action items that manufacturing businesses can make use of to help them address the workforce turnovers.
Reduce Manufacturing Workforce Turnovers with the Following Ideas:
Now that you have an overview of the impact workforce turnovers have on costs, productivity, and overall manufacturing operations, it is time to consider the following strategies for your next steps towards addressing turnovers, increasing retention, and create a more productive workforce.
Get a Clear Understanding of Why Employees Leave
Before you take on any specific actions to address high workforce turnovers, it would be wise to devout some efforts and resources to first understand why these employees leave the manufacturing company in the first place. There should be formal and comprehensive exit interviews for workforce members who are leaving the company, to gain a better understanding and a clearer insight as to why they leave.
Human resources and administrators should also have regular dialogues with employees to gain a better insight into what they like or do not like about the company and their jobs and what they would like or expect from their work environment moving forward. This may be hard and may encounter resistance at the start, but this may give a good impression to the workforce that you care about and give importance to their opinions and voice.
Set Workforce Expectations
One of the primary reasons that affect the performance and morale of an employee is the lack of understanding of employee expectations. This is often a result of poor onboarding procedures, or the lack of it, during the hiring process. This results in an employee who starts work without a clear understanding of the expectations management have from him, and vice versa. This would often result in misunderstandings in job functions that would eventually impact overall morale and performance.
To avoid this, the hiring process should include a proper on-boarding program where expectations are clearly set and mutually agreed upon. Employees should have a clear understanding not only of their basic job functions, but also on what the company expects from them in terms of quality of work, the exhibition of depth of knowledge in their work, and the roles and responsibilities each member of the workforce have.
Establish an Efficient Training Program for Employees
The success of a manufacturing business relies heavily on how skilled and knowledgeable their production workforce is. Employees who are deployed immediately to the manufacturing field without proper training and certification will result in poor performance and low productivity. Eventually, this will cascade down to employee morale and lack of motivation on the side of the employee.
Manufacturing companies should invest in good training programs that will improve not only their employees' technical skills but also their behavioral, relationship and overall human development. A good mentorship program is also vital, as it creates better rapport and camaraderie between employees, their supervisors, and their managers. Camaraderie begets trust, and trust results in loyalty.
Address Job-related and Safety Risks on a Proactive Basis
One element in a production or manufacturing environment that could directly affect employee performance, motivation and morale, is a lack of a safety and welfare program that protects the workforce from risks they encounter as they perform their duties. It is highly recommended by the Occupational Safety and Health Administration (OSHA) for businesses to be proactive in their illness and injury prevention program, particularly in complicated manufacturing environments were risks and hazards are on a higher level.
One way manufacturing companies can protect the safety of their workers is by ensuring that there are clear signage across the high-risk areas of the facility. To be most effective, these signs must be understandable and readable in real-time so that workers will know what to do to stay safe in different work environments.
To ensure clear safety signage, manufacturing facilities can invest in Electronic Shelf Labels (ESL) that has the capability to display information clearly from any viewing angle, as well as show the information that can help the workers. The ESL solution offered by SoluM can be installed in places where workers will be exposed to certain risks, allowing them to read any safety guidelines they need to follow before they enter a certain work area or use a machine and equipment.
Improve Your Employee-Management Communication Channels
Lack of communication or poor communication channels, particularly between the management and the workforce, is a source of misunderstanding that would often result in employee dissolution, lack of motivation and a decrease in morale. A clear communication channel empowers the workforce, giving the sense of being heard and given importance by administrators and managers. This gives them better self-respect and motivation to perform well. Such channels can be done regularly and in a variety of ways – ranging from company-wide open discussions to one-to-one talks and exchanges.
Be Responsive and Flexible to the Needs of the Workforce
Businesses, particularly in the manufacturing arena, maintain stringent policies and procedures that everyone should follow to the dot. This is good in maintaining discipline and focus among the workforce. However, there are certain aspects that management and administration can be more lenient and flexible about. Classic examples are the usual practice of driving the workforce to work harder, take longer duty hours, lack of time-offs, and lack of incentives. The result would often be greater resentment, lack of morale and of course, higher turnovers.
An open and flexible working environment can address these concerns by the workforce without compromising on their performance and their drive towards excellence and productivity. This would result in a give-and-take relationship that the workforce would greatly appreciate, building a culture of motivation and excellence that would result in better performance, higher productivity, and low turnover rates.
However, it would also be important to note that employees who maintain poor performance, attitudes, and relationships with their peers and managers, despite the leniency you have provided them, should be reconsidered if they are worth retaining – or should be separated.
Make the Manufacturing Environment Easy to Work In
The manufacturing environment, particularly those with complex types of machinery, processes, and products, are demanding on the workforce. Aside from the long hours they spend on the production floor, employees would have to deal with complex processes, movements, and procedures that make the production floor not an easy environment to work in.
It would be to the manufacturing business’ greatest advantage to optimize their work environment, production processes, and workflows. It would also be advantageous to optimize floor layouts, use of innovative tools, and leverage on new technologies. One example is with the use of Electronic Shelf Labels with innovative and interactive displays, as well as Internet of Things (IoT) devices, that make it easy for personnel to locate materials, parts, and other items from bins, shelves, and cabinets.
By installing ESLs, workers would spend less time tiring themselves from walking from shelves to supply room each time specific parts or components ran out. With a single push of a button, they can trigger a request for restock from the inventory system, which not only makes their workflow more efficient, but also allows them to focus more of their time on core activities in the production floor.
Such improvements will make it easier for the workforce to perform their job functions without spending excessive effort and energy, waste movements and excessive motions that are physically demanding to the employee. With better work environments, the workforce would be appreciative of their job functions, increase morale and productivity, and establish better trust in the business – eventually resulting in lower turnovers.
The Take Away
The manufacturing business relies heavily on the performance and effectiveness of their workforce. However, the demands of the industry are highly stringent and demanding, resulting in more complicated work environments, process flows, and other factors that eventually create a negative impact on the performance and morale of employees. This would often result in high workforce turnover rates, eventually affecting the bottom line because of higher costs, lower productivity and poor overall business performance.
There are several reasons for workforce turnovers, so you must gain a clear and better understanding first of the reasons behind employee separations. The insight you gain here would give you a better course of action to employ to deal with your workforce, encourage cooperation and communication, eventually increasing morale, productivity – and lower turnovers.
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