When labor turnover rates grow, industries feel the strain, both financially and operationally. According to research from Compdata Surveys, manufacturing turnover was relatively manageable in 2016. With a total turnover rate of 16 percent and a voluntary turnover rate of just over 10 percent, the industry fared better than the cross-industry average for both assessments.
But the historical data tells a different story. Turnover across all industries, voluntary or otherwise, is on the rise. Every business must now consider how best to achieve long-term retention. A little turnover is beneficial, as it provides room for companies to take in new talent and evolve carefully. As manufacturing knows all too well, however, high turnover costs their production lines a lot:
Loss of tribal knowledge
Sometimes vital proprietary information isn't stored on a server, but in the minds of seasoned workers. Unfortunately, manufacturing facilities, struggling to record all of this data, will accidentally let employees go without tapping into their in-house expertise fully. The results vary from low morale to operational confusion to outright equipment failure, and there's no telling which of these will strike until it does.
Devalued training investments
As important as their decisions are, manufacturing plants that invest in career development for their workers must heavily consider the countervailing force of turnover. Such resources spent on a staff with a high voluntary turnover rate can add up quickly. Nobody wants training on the chopping block come time to craft a 2018 budget.
Leadership drought
For those businesses that prefer to hire from within, high voluntary turnover depletes the pool of viable candidates and, in some cases, sends them into the waiting arms of competitors.
Wondering why your voluntary turnover rates are as high as they are? Consider these four possible causes:
1. Insufficient compensation
Money matters, but so do affordable health care, retirement planning, paid leave, and fringe benefits. According to the Bureau of Labor Statistics, the average cost relationship between wages and benefits in private industry today is about 2:1. Drill down to the specifics of your industry to find out whether your current offerings are competitive enough to retain key talent.
2. Lack of recognition
Too often, manufacturing plants recognize one half of the accountability mantra and not the other. From a strictly operational perspective, it is just as important to understand what went right as it is to understand what went wrong.
3. Absent leadership
When left to their own devices, workers can create false impressions about their supervisors. That said, plant managers or directors who fail to make themselves available to staff, who lack a presence on the line, who only show up when something's broken or chaotic deserve every rumor and the resultant high turnover.
4. No granular organizational insights
Causes of turnover have two distinct profiles: They're either large, few in number, and looming, or they are small, numerous, and insidious in nature. Are you paying attention to one more than the other?
IT business analyst and consultant Chet Mitchell wrote an unconventional and enlightening case study from the perspective of a fictional new hire, Bob Jones, going to work at a real flocking division of a manufacturing plant that Mitchell worked to improve. Mitchell takes readers through Bob's daily duties, the overlooked challenges he faced during his onboarding process, and what would drive him to quit. Although the study is nearly 40 years old, Mitchell's exercise is one that all manufacturers should try to truly comprehend their unique turnover pain points.
Don't let high turnover turn your company over to lost productivity and disengagement. Talk to the experts at USC Consulting Group, a leader in organizational management and continuous improvement.