The manufacturing job market is heating up, with U.S. manufacturing employment rising to 12.33 million in January 2015—an increase of nearly 8 percent since 2010.1 Given this, acquiring high-quality talent is the single most impactful decision manufacturers can make, especially long term.
Manufacturing leaders must address two clear “war for talent” implications:
Addressing talent supply shortages: Too often the pressure to fill openings takes precedent over the quality of a hire, and the quick fix is overly focused only on technical skills. This approach is sure to lead to failure on the job from ignoring personal attributes and competencies, such as collaboration, problem solving, and a desire to learn. In addition, technical skills alone quickly become obsolete and reduce long-term productivity, quality, and efficiency.
Holding on to talent: The improved economic outlook has made employees more confident about leaving one job for another. The annual plant labor-turnover rate rose to 6 percent (median) in 2014, and annual plant labor turnover was dangerously higher at many facilities: approximately one-quarter of plants reported annual plant labor turnover of 15 percent or higher.
And remember: Your best employees are the most likely to be poached.2
Unfortunately, hiring and retention are areas where many plant leaders shoot themselves in the feet. Why? Because even though personal attributes and competencies are the top two causes of employee failure or termination (reported by 55 percent and 35 percent of plant executives, respectively), they are less likely to be evaluated during the hiring process (reported by just 31 percent and 30 percent, respectively). A “whole person” view of a candidate in the hiring process achieves the best long-term outcomes.
This hiring/firing disconnect contributes to a less than optimum workforce, and it drains the bottom line. Costs to just recruit a manufacturing employee exceed $6,000.3 Do the math—in a 1,000-person plant with 10 percent annual plant labor turnover, that’s $600,000 in recruiting costs alone, not to mention training and development costs and time invested in those hires. But that’s not the worst of it. A bad hire can inflict damages vastly higher due to incompetence, missed opportunities, and business disruptions (e.g., bad hires chasing away good employees).
How will you make better hiring decisions, leading to improved productivity and cost reductions long term?
The MPI Manufacturing Study was conducted by the Manufacturing Performance Institute (part of the MPI Group) in November and December 2014. The MPI Group received study responses from 319 manufacturing plants, encompassing a range of industries (e.g., 17% computer and electronic products, 14% fabricated metal products, 11% machinery, 10% chemical) and sizes (31% with fewer than 50 employees and 17% with 500 or more employees).
1 Bureau of Labor Statistics, February 2015.
2 2014 MPI Manufacturing Study, The MPI Group, February 2015.
3 Lauren Weber, “For Smaller Firms, Recruiting Costs Add Up.” The Wall Street Journal, Nov. 28, 2011.