HR Strategy

A New Era for Manufacturing

By

Aaron Santelmann

| Jul 31, 2014

As baby boomers reach retirement and generations X and Y tweet their way into the workforce, manufacturers face a shortage of skilled workers. No surprise there. Now, if only a small consensus of manufacturers were affected, a simple fix would get the job done: a little less social media and a lot more elbow grease. Unfortunately, the problem is more than hashtag-deep. (#FirstWorldProblems)

Here are three issues the manufacturing industry will need to address, if it hasn’t already.

Issue 1: Qualified workers are harder to find

The committed, hardworking employees keeping your doors open for years are hitting their 60s and starting to retire, leaving a shortage of skills behind. In a recent Deloitte study, 82 percent of manufacturers nationwide reported a moderate to serious shortage in skilled production workers. The same survey indicated that as a result, 75 percent of those manufacturers were unable to expand their business.

In a country where the manufacturing industry by itself could be the eighth largest economy in the world, a lack of solid labor is not for HR to fix alone. If not managed correctly, many vacant positions will be filled with workers whose comparative shortfall in experience and training makes them unable to produce at the same level as their predecessors. If these employees are not brought up to speed properly – and promptly – manufacturing companies will face a vicious turnover cycle.

Because aging is unavoidable, top talent must be recruited or developed.

Issue 2: External hiring may not be the best road

It won’t be long before the older workers in your company start to retire, so it is crucial you take proactive steps now to prevent future problems. Before running to Monster or LinkedIn for hiring, consider the obstacles of external hiring vs. internal mobility. According to a study from Wall Street Journal, external hires were 61 percent more likely to be fired from the new position and 21 percent more likely to leave the company on their own. If your external hire is gone within six months, you haven’t fixed anything. Consider, too, the monetary statistics included in the process.

In a separate study, research showed external hires were paid 18 percent to 20 percent more, yet received lower performance evaluations for several years into the job. To avoid this, consider the workers you already have in surrounding positions. They could produce more in the new position while doing it at a lower cost. When opting for internal mobility, there are fewer distractions and smaller obstacles for the promoted employee, whereas outsiders must deal with new relationships and new scenery while adapting to a high-paced environment. The inside hire is accustomed to the speed, already knows his fellow employees and can focus on learning the position.

Maintain high standards for production and do not pay more for an external hire when a lower-level employee could do it for less money. Looking for an external hire is not necessarily the wrong call, but that road will always be there.

Issue 3: How to leverage talent

Regardless of whether you hire externally, the talent you have still requires development. In the manufacturing industry, this means training and accountability. As manufacturing has evolved, the tools it operates have grown more complex. One tool in particular is Computer Numerical Control machinery (CNC). CNC works alongside Computer Aided Design (CAD) software to convert an image into numbers. These numbers are used like coordinates on a graph for a separate tool to cut a 3D image. Although it can be expensive, continuous employee training, especially with CNC machinery should be in place and up-to-date. One reason manufacturers report a shortage of skills is because managers are frugal in areas where they can’t afford to be. Stay ahead of the game by being mindful of areas where your workers need growth and devote the money to enhance their skills. The cost of frequent trainings will balance out in a reduced amount of manufacturing mistakes.

Second, accountability cannot be underestimated. Many employees go too long without sitting down with their boss and getting feedback on their performance. Regular one-on-ones are an opportunity to keep employees motivated, while challenging them in areas where they need growth. Employees can use this time to ask questions or discuss problems outside the workplace; doing so creates a more positive environment in which they know management cares.

The manufacturing field is vital to the nation and its continued economic growth. By addressing these talent issues, the industry can get the necessary lift to keep producing at a high level. Although they are losing many members of the workforce who helped them reach this point, manufacturers can mold the savvy, social-media-minded millennials into workers who reach heights their parents never could.

About the Author

Aaron Santelmann

A young and enthusiastic writer and researcher, Aaron is an instrumental member of Paycom’s lead generation and reporting team. Aaron is an engaging writer who maintains a strong presence on Paycom’s blog where he focuses on politics, government and compliance, tax guidelines and other employer regulations that impact businesses across the country. Outside of work, Aaron enjoys reading, exercising and spending time with his family.

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