Leaders tuned into manufacturing’s supply and demand economics know all too well: The sector’s current — and projected — labor shortage is dire. After losing roughly 1.4 million jobs during the pandemic, the manufacturing industry has made strides, but as of January 2024, the U.S. Chamber of Commerce reported that more than a half-million manufacturing job openings remained unfilled.
Between retiring baby boomers and the demand for new skills to keep pace with the advances in technology — automation and AI chief among them — the gap between needed employees and available employees is likely to grow wider.
If you’re one of the many small- and mid-sized manufacturers hungry for new employees and determined to keep the quality workers you already have, consider focusing first on these five recruitment and retention strategies:
- Review Wages & Benefits.
Pay is one of the most pressing concerns for employees, so it’s critical to regularly review — and consider revamping — compensation and benefits packages to ensure they’re competitive with the market for similar positions in the region. Here are a few methods you can follow to ensure you’re compensating employees fairly:
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- Research wages. Every one to two years minimum, research and analyze salary data for similar positions. Resources like the Bureau of Labor Statistics, industry publications, and salary comparison websites can help. But to more accurately drill down with the timeliest intel possible, consider outsourcing a compensation study to a third-party human resources team. An experienced team will look at data based on your company’s industry, employee headcount, geographic location, revenue, and job descriptions. Some, like Rehmann, can work with you to not only create competitive compensation plans but also assist with due diligence and compliance efforts, retirement planning (for you and/or your employees), and benefit package design (alongside your licensed insurance broker.
- Consider incentives. In addition to a base salary, consider offering performance-based bonuses, profit-sharing programs, or commission structures to motivate employees and reward high performers. For example, if the average salary for a CNC machinist is $22 per hour in your metropolitan area, you may offer that base salary plus a bonus of up to $2 per hour based on individual performance and meeting production targets.
- Seek employee feedback. Conduct employee engagement surveys and hold focus groups to review the results and understand what benefits are most valuable to your employees. Younger generations might prioritize student loan repayment assistance, while others might value wellness programs or flexible work arrangements.
- Improve Your Employees’ Work Environment
Some professionals in the job market, especially the younger generation in the workplace, avoid manufacturing because of what they perceive to be unsafe or undesirable work environments.
Here are a few ways you can address these concerns:
- Offer training. There is a target market entering the workforce who are prime candidates for on-the-job training in skilled trades. Create a training path or apprentice program, setting milestones to achieve with monetary adjustments when those goals are achieved during the program. Explore state and federal programs that incentivize employers with grants and funding for creating these types of training initiatives.
- Invest in safety. Implement proper safety protocols, provide adequate personal protective equipment (PPE), and prioritize regular safety training to minimize workplace hazards. Remember that a safe work environment is also less costly in terms of workers’ compensation injuries and lost-time wages, in addition to equipment damage.
- Maintain a clean and organized workspace. Ensure all work areas are well-maintained, clean, and free from clutter; assign and schedule personnel to handle these tasks. Establish a kanban or 5S system, to keep the work environment and workflow organized. This will promote a sense of well-being and professionalism.
- Upgrade facilities. Consider upgrading outdated equipment, improving lighting, and providing clean, comfortable break rooms and well-maintained bathrooms to enhance the overall work experience for your workforce.
- Upgrade Your Company Culture
If you want to attract more talent and foster engagement within your workforce, the key is building a company culture that’s inclusive, collaborative, and considers employee needs. Consider these approaches to modernize your company culture:
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- Offer flexible work arrangements. If possible, consider offering flexible work schedules, compressed workweeks, or remote work opportunities. Staggered start times can work very well for working parents, who are balancing school drop offs or day care pick-ups, and working students who have morning classes, for example. This allows employees to manage personal responsibilities more effectively — a rare perk in the manufacturing industry that many of your competitors simply don’t consider.
- Encourage collaboration. Kick off cross-functional projects, team-building activities, and knowledge-sharing initiatives. For example, you can organize brainstorming sessions where employees from different departments can share ideas and work together on solving company problems. Solutions that consider multiple perspectives are more inclusive, comprehensive, and tend to have great success. They also do a lot in making employees feel heard, engaged, and valued — the factors that, more often than money, drive employees’ decisions whether to stay at a job or look elsewhere.
- Be communicative. Establish clear and open communication channels between management and employees. Encourage regular meetings, feedback sessions, and anonymous surveys to address concerns and foster a sense of transparency. Once you receive their feedback, report back on what you are doing to address it, or provide a response to acknowledge what may not be feasible to implement and why.
- Upskill Current Employees
Investing in skill development is essential to address the skills gap and retain a qualified workforce. It can also help attract new employees when marketed as part of your employer brand. Consider a few types of skill development programs you can establish:
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- Apprenticeship. These structured programs combine on-the-job training with classroom instruction, allowing individuals to earn industry-recognized credentials while gaining valuable practical experience. For example, you might partner with a local community college to develop a program in CNC machining where apprentices also receive hands-on training in machine shops.
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- Upskilling and reskilling. With these programs, you target existing employees and equip them with the skills needed to adapt to changing technological advancements and industry demands. For example, you could offer in-house training on new software you’re implementing in the production process, or partner with a third-party institution to learn about robotics and automation.
- Micro training. On a much smaller scale, you can implement brief, highly tailored training modules or hands-on sessions that can be easily integrated into the workday to address specific, minor skill gaps. For example, you might develop short video tutorials to address new safety protocols, process changes, or software functionalities.
- Tuition reimbursement. A time-honored tradition to provide financial assistance for employees pursuing degrees or certifications in relevant fields, which demonstrates the company’s commitment to employees’ long-term development. You can, for instance, cover a portion of tuition costs if courses are relevant to the employee’s current or future role in the company. By investing in your people, you are investing in the future of your company. As the age-old saying goes, “What if we train our people, and they leave? What if we don’t train our people, and they stay?”
- Emphasize Career Growth
While younger generations are less likely than previous generations to stay with one company throughout their career, you can hold on to your best employees longer if you foster and continually showcase opportunities for career growth within your organization. Here’s how:
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- Define career paths. Develop and communicate well-defined career paths for vital positions within the company. Outline the skills and experience required for each level, along with the steps employees need to take to progress in their careers.
- Offer mentorship. Implement mentorship programs where experienced employees guide and support the professional development of less experienced workers. For example, you can pair a senior engineer with a junior engineer to provide guidance on technical skills, project management, and navigating company culture.
- Foster leadership. Establish programs that equip employees with the necessary skills to take on supervisory or leadership roles within the company. This could include offering workshops on communication skills, conflict resolution, and team management for employees interested in pursuing leadership positions. Developing leaders from within can help you not only retain talent but also avoid costs associated with talent acquisition.
The labor shortage has presented a multitude of challenges for manufacturers, but the ability to hire and develop the kind of quality skilled workers your organization needs to keep up with production, remain competitive, and thrive is not outside your control. By implementing any of the strategies above, you’ll be able to build your organization’s reputation as a manufacturing facility known for considering, rewarding, and valuing top talent.
Want to delve deeper into the art of attracting and retaining talent? Click to download our free guide, “The New HR: Strategies to Attract, Retain, and Engage Employees in a Time of Extraordinary Change.”
Would you prefer a free 30-minute phone consultation about your manufacturing company’s needs? Learn more about Rehmann’s HR solutions, then call or email our team [email protected], to see how we can help you attract and retain the market’s limited pool of talent.