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Turnover — the rate at which employees leave a company and are replaced with new hires — is a challenge for organizations in every industry, in companies large and small. Some amount of employee turnover is normal and expected, but companies that struggle to retain employees long-term may also struggle to keep up with customer demand.

In the manufacturing sector, turnover impacts production, revenue, customer satisfaction and industry reputation. However, organizations that take a proactive approach to reducing turnover find that the solution has just as much to do with people as with profitability.

Employee Turnover in Manufacturing

Turnover in the manufacturing industry has long been a source of concern, with high employee retention being a measure of an organization’s success. Recent shifts in national employment rates have certainly affected the manufacturing sector, but the historic numbers convey a pressing need to address the issue:

  • According to The Horton Group, the manufacturing turnover rate increased from 25.6% in 2015 to 31.3% in 2019.
  • The Bureau of Labor Statistics reports that the average rate of manufacturing employee turnover is currently 39.9% (up from 30.6% in 2017), while the national average across all industries is currently 47.2% (heavily weighted by turnover in the leisure and hospitality sector, at 84.9%).
  • Deloitte projects that 3.5 million new manufacturing jobs will have been created by 2025, but that over two million of these will go unfilled due to a widespread lack of skilled workers.
  • In the same report, Deloitte estimates that the vacancies could result in an eventual $1 trillion loss to the U.S. economy in 2030 alone.

These statistics call for an industry-wide change — starting with supporting the people on the front lines.

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Challenges to Employee Retention in Manufacturing

The manufacturing industry isn’t unique in experiencing significant rates of turnover, but there are certain factors that directly affect employees’ commitment to their jobs.

Scheduling flexibility: Manufacturing plants operate on tight production timelines, so employees don’t get much leeway when it comes to schedule adjustments. This can pose a challenge for those needing flexible, remote or hybrid work schedules.

Lack of benefits: Health insurance, paid time off, vacation time and retirement plans are not guaranteed in every workplace. Some manufacturing employees may be responsible for finding their own insurance or forgo pay if they take time off, which may stretch their finances.

Health concerns: Many manufacturing plants take stringent measures to protect their employees’ health and safety, but those who work with hazardous or potentially dangerous materials may feel those measures aren’t enough.

Other factors that contribute to high turnover in manufacturing aren’t necessarily unique to the industry, but certainly add to the numbers:

Toxic work environment: Supervisors who micromanage, coworkers who are not held accountable for poor behavior and a generally negative workplace attitude can all contribute to employees seeking other opportunities.

Lack of advancement: Employees at any level may feel that they have no future at their company, especially if their employer does not offer any upskilling or development opportunities.

Lack of engagement efforts: Manufacturing companies that make little to no effort to engage their employees risk contributing to their own turnover rates. Engagement efforts can include ongoing training, accessible feedback channels, conflict resolution support and even out-of-work team building activities.

Again, many of these challenges are not specific to the manufacturing industry, but companies who make adjustments to better meet employees’ needs can position themselves as more attractive places to work long-term.

Risks of High Turnover

High turnover in manufacturing affects more than just company culture — the risks extend all the way to the end customer’s satisfaction. Companies with high turnover risk the following:

  • Higher training costs due to more frequent onboardings
  • A lack of continuity in internal processes
  • Loss of “tribal” or undocumented specialized knowledge
  • A decline or degradation of company culture and morale
  • Lower productivity
  • Lower product quality
  • A compromised industry reputation
  • Fewer interested job candidates

Though the immediate effects of turnover are felt by the people in the company, the overall result is a decline in production, profitability and industry standing.

How to Improve Employee Retention in Manufacturing

Reducing turnover starts even before an employee’s first day — it begins with an accurate job description, informative interviews and aligning both employers’ and candidates’ expectations. Once new employees sign their contract, comprehensive onboarding and training programs will show them that their new employer has the appropriate resources in place and is invested in their success on the job.

Training can be implemented in multiple ways:

Not only does training serve newer employees, but continuing development programs support existing employees and communicate that their organization is committed to helping them succeed long-term. Additionally, many companies see a 50% reduction in attrition due to improved training of new hires.

Applied lean management techniques can improve the employee experience, in addition to work processes and safety measures. In lean manufacturing, placing management on the production floor “humanizes” leadership team members and instills trust in frontline workers. This also improves communication between departments and teams by reducing the amount of steps in reporting a problem, submitting feedback or simply relaying a message to leadership. Accessible supervisors and leaders are a major factor in an employee’s perception of their company, as well as their engagement and overall happiness.

If your organization does not currently follow lean practices, embedding lean into your operations takes time, experimentation and iteration. Because of this, you may not see an immediate reduction in turnover when you adopt lean. But a combination of other factors can help turn the tide and keep employees around longer. These include:

  • Maintaining a safe work environment and employee mindset through ongoing safety training
  • Maintaining a company code of conduct that all employees can access and agree to, and enacting appropriate disciplinary measures for policy violations
  • Establishing an employee recognition program or protocol, through which employees and their managers can highlight each others’ accomplishments and contributions in a format visible to all
  • Fostering strong peer relationships by establishing train-the-trainer opportunities, mentorship programs and formal issue resolution training
  • Supporting skills development and career growth through reskilling and upskilling opportunities

Manufacturing companies can also reduce turnover and improve employee retention through indirect means — that is, in ways not directly related to their specific jobs:

  • Offer comprehensive (and affordable) benefits, including healthcare plans, retirement funds, paid time off, and so on.
  • Support employees’ wellbeing outside of work by offering flexible, penalty-free time off policies.
  • Promote work/life balance through community-building initiatives, such as company garden plots, partnerships with local nonprofits, onsite childcare services, food and clothing drives and even happy hours.

If employees are supported by all or even some of the above, manufacturing plants may begin to see the following:

  • Higher employee engagement
  • Greater employee satisfaction
  • More viable job candidates
  • Clearer communication
  • Increased productivityLower absenteeism
  • More organization-wide alignment with the company’s mission
  • More innovation at all levels
  • Deeper trust in each other and in leadership
  • Improved collaboration
  • Higher motivation

At TWI Institute, we take a people-first approach to workplace training and improvement. Our on-the-job training programs help organizations across industries build a foundation that makes employees want to stay for the long haul. To discuss what TWI methods might look like in your plant, reach out to us today.

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