Employee turnover is a constant fluctuation of gain and loss in any industry. Yet, it remains one of the biggest issues, costing U.S. companies about $600 billion annually. Hiring the right people with the right skills promptly is difficult these days, so the need for retention is critical. This week’s #USAMfgHour on Twitter host David Roppo, a manufacturing leadership coach and consultant, talks about How Manufacturers can Reduce Turnover by 50%.
The Society for Human Resource Management (SHRM) President Johnny C. Taylor Jr. says there are more jobs than people to do them. That means labor shortages are likely to worsen. Will a loyal employer beget loyal employees? According to the latest report from the Bureau of Labor Statistics, the number of job openings was holding steady at 9.2 million on May 31. The average turnover rate is about 15% in the U.S. and 10.9% globally. The coronavirus pandemic has put pressure on businesses aiming to thrive and people who need a work-life balance, management support, and growth opportunities.
“Instead of conducting stay interviews to curtain turnover, perhaps we should train managers to engage in stay behaviors,” said Roppo.
What are the top 3 industries in the U.S. with the highest rates of employee turnover?
“Without looking it up, and since we're in the #USAMfgHour chat, I'd guess manufacturing is one of them. Other industries that I see major turnover is food service and recruiting industries,” said Paul Kiesche of Aviate Creative in New Jersey.
“Foodservice, retail, and manufacturing?” said Gina Tabasso, a manufacturing marketer for the Manufacturing Advocacy and Growth Network (MAGNET) in Ohio.
“I'm guessing at this... Retail Restaurant Telemarketing,” said Sue Nordman of Obsidian Manufacturing in Ohio.
“In a recent WSJ article, the worst company for employee turnover is Amazon. I am assuming warehousing?” said Nigel T. Packer of PelaTis in the U.K.
“Amazon’s is over 100% in an industry segment that has 60.7% turnover,” said Roppo.
According to the 2019 Mercer U.S. Turnover Survey, the highest rates of turnover are:
- Retail/Wholesale 60.7%
- Manufacturing 26.7%
- Consumer Goods 21.5%
The average in 2019 was 27%, which is expected to hit 35% by 2023.
Why do employees really quit their jobs? What are the top 3 reasons for voluntary turnover? Hint: compensation is not one of them!
“Lack of appreciation from management,” said Packer.
“Employees quit their boss. When they are unappreciated, not valued, and not given opportunities to grow, the good ones will find a way to make it happen elsewhere,” said Phil Samuels, a marketing and sales expert, in Illinois.
“For me at least, yes, compensation wasn’t my top reason for leaving my job. I just got bored with it and found something else that was challenging. I had great bosses, thankfully!” said Ruby Rusine of Social Success Marketing in California.
“Top 3 Reasons: More schedule flexibility, childcare, lingering coronavirus concerns (especially in client-facing industries),” said GENEDGE in Virginia.
“Their boss, schedule, and another offer? Those are my guesses,” said Kelley of North American Coating Laboratories (NACL) in Ohio.
“Three reasons I think employees become unhappy and leave their jobs: 1. Bad management 2. Bad culture and values 3. No route for advancement,” said Kiesche.
“Lack of training, Poor Management, Lack of Transportation, environment?” said Shannon Simpson of DuraTech in Wisconsin.
“Management/Leadership, culture, and lack of growth,” said John Buglino of Optessa production scheduling in California.
“Great question! Here is my guess: maybe it is because of a lack of culture, not seeing a future at the company for growth opportunities, they don't like their boss?” said StratMg in Illinois.
“Boss/management, no room for promotion/growth, boredom?” said Tabasso.
According to the 2020 Work Institute Report:
- Bad management
- Lack of growth/development/ advancement
- Lack of work-life balance.
“While compensation is important, and must be competitive, employees will accept less when key deliverables are met,” said Roppo.
What does it take to transform job hoppers into happy, productive, life-long, loyal employees? Hint: there are 3 key deliverables.
“Is one a chance to grow within the company?” asked Kirsten Austin of DCSC in Missouri.
“True,” said Roppo. “Opportunity.”
“Recognition, growth/potential, and company vision,” said Buglino.
“The same answers as Q2? Good leadership/management, room for advancement, work-life balance,” said Tabasso.
“I was a job hopper until Obsidian MFG. They didn’t lie to me about "potential earnings" and I feel like I matter. The things I bring to the table are appreciated,” said Nick Rivers of Obsidian Manufacturing.
“Proper training, transparent/fair scheduling practices, empowerment,” said NACL.
“There is a combo of things that make employees happy, productive, and loyal. In my opinion, it starts with a strong leadership team that takes great care of its employees (and then they will take care of customers)!” said StratMg.
“For me it's flexibility,” said JD Allen of Cleveland Deburring in Ohio.
“There are a lot of things employers can do to keep employees happy. Here are some. 1. Honesty, trust, and transparency are huge 2. Kindness and flexibility 3. Setting expectations, goals, and a career path,” said Kiesche.
“I would think the answer would be different for each individual. Having hopped a few times in my career, one thing I’ve observed is some people are not inclined to stay anywhere,” said Samuels.
“Compensation, flexibility (for life balance) and an environment/culture that is both comfortable and offers opportunity for growth,” said Matt Smith at Americorp Financial in Michigan.
“I would say what makes a life-long employee is: work-life balance (flexible schedule), trust (trust that the employee knows what they are doing and can deliver) and learning (employees should feel that there are growth opportunities),” said GENEDGE.
Roppo said employees want:
- To work for superstar managers who engage hearts, hands, and minds.
- Opportunity for personal growth, training, career development, and advancement.
- Work-life balance – flexibility, reasonable schedules, and an exceptional employee experience.
Who is the most pivotal player in manufacturing that can deliver what employees want and significantly reduce turnover?
“Supervisors/Trainers! They are the first to show people the ropes and set the tone for the employee experience. If this person doesn't demonstrate an interest and dedication in their team, people are more apt to walk,” said NACL. “My boss usually goes home for lunch, but on my first day he stayed and had lunch with me to make sure I would have people to chat with!”
“Their first-line supervisor? If your boss is your champion, the company will work to accommodate (within reason) your changing needs,” said Samuels.
“I'd think the Owner/CEO/President would be the most pivotal player,” said Kiesche.
“It all starts with your leadership - go right to the top,” said Buglino.
“It’s ME! I am the most pivotal player! It starts with ME,” said Rivers.
“Leadership and those in HR, since HR hears the good, bad, and ugly and can take the feedback back to leadership to help transform the company culture and understand employees' perspectives and desires,” said StratMg.
“I would say top-down. CEO/President/Management,” said Tabasso.
“Line manager is important as they are the direct link from management to employee. All management should be engaged with all employees,” said Packer.
Frontline managers oversee 80% of the workforce and interact with employees daily. According to Gallup, they control at least 75% of the reasons for voluntary turnover. “I agree,” said Roppo. “They will either make or break your talent retention and company.”
How quickly can frontline managers be trained and how soon can manufacturers realize a reduction in turnover?
“It depends on the job. If it’s not job-dependent, then hire a human with the necessary skills and you’re good to go Day 1. After all, we’re talking about communication and EQ,” said Samuels.
“This is very dependent on the person. Anywhere from a few meetings to a few weeks’ worth of hands-on training and beyond. What's important is to support the time that is needed,” said NACL.
“Start today. Make small changes and set goals. Make it a priority,” said Graphic Products.
“Most frontline managers can be trained to provide the 3 key deliverables and reduce turnover in 6-8 weeks,” said Roppo. “On average, most manufacturers realize a 20 – 30% reduction in turnover within the same time frame.”
“Well-trained and highly skilled managers are, literally, worth their weight in gold. When properly trained and supported by leaders they can reduce turnover by 50% and accelerate productivity by 20%, 30% or more.”
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