Improving Employee Retention in the Manufacturing Industry
Employee retention in the manufacturing industry is a serious issue.
Within 5 years, we'll be facing an estimated shortage of 2.5 million manufacturing employees. In a competitive playground like that, it's best not to give your workforce any reason to develop a wandering eye. They'll likely be snapped up pretty quickly – particularly if they're top talent.
This article is a practical how-to guide of employee retention strategies for the manufacturing industry. It covers how we got here and how to get ourselves out. You’ll get actionable tips for employee retention, including advice on how to use technologies like talent intelligence to stay ahead of the curve.
Employee retention in the manufacturing industry: What’s the state of play?
Employee retention in the manufacturing industry is a three-headed beast: our aging population, the industry's widening skills gap, and of course the crowd favorite among employers: the Great Resignation.
A lot of Baby Boomers are retiring and leaving their jobs empty, and the younger generations aren't exactly rushing to fill them. Among the new generations, skilled labor jobs are considerably less popular.
As the Boomers leave the industry, they take their skillset and honed expertise with them. This is part one of the skills gap issue.
Parts two and three come from the rise of technology: with new tech comes different, more advanced machinery requiring the skills to work it. Those who hold the skills are thinly spread over the understaffed industry; hiring them, let alone retaining them, is tough.
This is particularly true in the climate of the Great Resignation. People are leaving their jobs in a flood of anxiety, discontent, and peer influence, looking for meaning, purpose, and more happiness. This snowballs – hence the waves of attrition and sky-high talent shortages manufacturing employers face.
What is a good turnover rate for manufacturing?
Currently, a good turnover rate for manufacturing is around 3% to 3.5%, seasonally adjusted. According to the US Bureau of Labor Statistics, the average turnover rate for manufacturing in 2022 was 3.3%. This number has been steadily on the rise since 2014, when the annual turnover rate for manufacturing was only 2%.
As with any employee turnover rates, these numbers fluctuate depending on the geographical area, the company, and the specific manufacturing sub-sector. Because of this, you’re better off focusing on how to reduce the number you’re currently working with, rather than comparing to other companies.
Reducing turnover in manufacturing: The big picture
In the next section, we’ll give you four specific ideas for reducing employee turnover in manufacturing. But first, let’s zoom out to look at the big picture.
Reducing turnover in manufacturing is more than a one-time intervention. It's a deeper, more fundamental shift in company culture. To create a flourishing, long-term team, your strategy will need to be constantly evolving to support the different employees who walk through your door.
Since your turnover issues are dependent on your current talent, start by looking into the root causes at your specific company: why your employees came to work for you, why they're staying, and why they're leaving. This will give you a company-specific breadcrumb trail to improve retention.
Tracking and assessing
Add to your approach some concrete ways to frequently measure and reassess how things are tracking. A culture where constructive feedback is welcomed from all your employees is the easiest and most effective way to keep things on track and constantly improving.
Incremental, positive changes
The thing is, reducing turnover is a symptom of overall company health, so most positive changes you make will help. It's not rocket science, but it is individual and unique to your company, so trust yourself and your employees to figure out the right changes to make.
4 ideas for employee retention in the manufacturing industry
Beyond the general approach to employee retention we just discussed, there are some key must-improve areas that will significantly reduce your manufacturing turnover.
1. Take a hard look at physical and psychological safety
Needs must be met in succession: safety first before higher-level needs like meaning and purpose. It’s unlikely your employees will be surging with satisfaction and fulfillment if they're spending all their energy concentrating on dodging safety hazards and dealing with emotional stressors.
Establishing strong psychological safety starts with having a sweep through for any:
- Interpersonal issues
- General negativity
This may be dealt with through a simple conversation, or it may need more significant action. Regardless of the steps that need to be taken, ensure these issues have been resolved before moving forward, because they will fester and undermine any further retention measures you take.
Physical safety is the most basic need we have. And in manufacturing, employees deal with physical safety hazards on a daily basis. Therefore, keeping your employees protected is your first order of business.
Thankfully, the industry is not facing a shortage of safety tech. So, go above and beyond the required minimums and put into place any safety measures necessary to keep your manufacturing employees as physically safe, comfortable, and healthy as possible.
While technology resolves the bulk of issues, things still crop up. Make it as simple as possible for your staff to report when this happens. Ensure they know who to notify and that they won't face any repercussions for doing so.
Lastly, shorten the response time in addressing these issues to a minimum. Nothing should be more important than your employees' safety. Responding to any potential hazards as fast as possible will prove this to them.
2. Take a proactive approach with talent Intelligence
Remember how we mentioned that your retention strategies will need to be targeted as much as possible to your unique company and workforce?
Technology like talent intelligence helps you do just this.
Talent intelligence data focuses on these five areas, which have proven to be key early indicators of an employee’s attrition risk:
Praisidio, the leading talent intelligence platform on the market, takes the data you already have on hand and uses it to proactively identify your specific retention challenges.
Praisidio is able to identify specific employees and teams who are at the greatest risk of attrition. Using proven methods of success, the platform identifies attrition risks in the earliest stages, before they become a bigger problem.
You get all the targeted information you need to be proactive about attrition, plus customized strategies to retain specific employees, based on their individual risk factors.
3. Keep the lines of communication open
At the end of the day, all issues are interpersonal issues. Most can be solved via communication.
You cannot spend too much time or energy fostering an environment where employees and managers have open, transparent, respectful, and easy lines of communication.
This may all sound good and well, but in practice, we know, it's not so simple. Everyone has different communication skill levels depending on their background, so ensuring that everyone feels safe communicating can take some juggling.
Fear of repercussions can very quickly jam up communication lines. It’s crucial for you to make sure your managers and team leaders set the precedent that communication is accepted and encouraged.
Establishing clear communication is a constant process. But take note of the following key moments. These moments are times when good communication is not to be missed:
Hiring and onboarding
During the hiring and onboarding process, you want to make sure potential employees know what they're signing up for. Advertising yourself accurately and transparently is going to save everyone time and resources.
Don't dilly dally around only to realize after all the sugar coating comes off that you're not a good fit after all. This means clearly stating what you want from your employees and asking them what they expect of you from the get go.
Conducting interviews, seeking feedback and sending out surveys on why people are staying at your company will show you what you're doing right and what you can do to increase retention.
These are important because this more formal feedback setting might encourage your employees to air some issues that seem too small to bring up out of the blue. Or, if you're still establishing a culture of communication, this is a good chance to encourage it.
Of course, exit surveys are useful to figure out why people have decided to leave and how you can mitigate it moving forward.
If you're struggling to get accurate feedback from your employees in the early stages of opening communication lines, try using external, third-party sources. An objective outsider will enable your employees to speak more freely.
4. Emphasize career development
A lack of growth, direction and meaning is a great way to fizzle out an otherwise excellent employee retention plan, especially in the manufacturing industry, where work on the floor can easily be reduced to a set of repetitive daily tasks.
Employees need to be motivated with new, exciting opportunities to advance their careers, otherwise, what does their future with you look like? If it's bleak and barren and repetitive, would you stay?
Inspiring career pathways are case dependent, so sitting down and figuring out individual pathways is your best bet for making sure everyone feels heard and excited about the future.
For some of your employees, it might mean working under a mentor in their dream position or exploring options for leadership development.
If your employees aren't sure about the direction they'd like to take, you can provide study options to introduce them to career development ideas or cross-training systems for your employees to experience future positions within your company.
Retain employees in manufacturing with talent intelligence
Employee retention in the manufacturing industry requires a 180-degree change up. A shortage of 2.5 million workers is simply not feasible, and technology is the only solution to drive significant change at the pace we need.
If your current system isn’t working, it's likely because of one of the retention drivers: burnout, bias, disconnection, stagnation, recognition deficits and compensation deficits.
Praisidio’s talent intelligence platform gives you real-time insight into all of these, so you have all the information on hand to resolve any employee retention issues early, before it’s too late.
The financial translation of this: Praisidio clients regularly save up to $10 million per 2,000 employees in attrition costs.
Book a demo to learn more.