To succeed into the future, manufacturers must learn to manage the turbulence in their supply chains, competitive markets, technology — and workforces, too.
“You have such a dynamic workforce in the industry now,” said Grant Thornton Manufacturing Industry National Leader Kelly Schindler. “There's a lot to be considered when you’re trying to recruit and retain workers. It's not an easy formula.”
“Workforces are changing in various ways, age being one of them, technology adoption and acceptance being another, and then the evolution of the manufacturer too,” Schindler said. “One leader told me yesterday that he has a surprising number of employees in their 70s. We talk about the importance of the culture, and now you have to manage the older and younger generations together — they want very different things.”
Base pay motivation
According to our latest Grant Thornton State of Work in America survey, one common priority is base pay. Respondents in the manufacturing industry emphasized base pay even more than those in other industries.
Manufacturing respondents were even more likely to switch employers for an increase in base pay — at least, in urban areas. “The companies that have the job hoppers tend to be in larger municipalities with a lot of industry around them. So, it's easy to go across the street and get that 10-cent increase,” Schindler said. These locations can struggle with retention, but also with recruitment. “Some of these facilities have been there for 75 or 100 years. They were easy to get to, until the city grew up around them and pushed people out farther and farther. Now, the commute's an hour away and people don't want to do that.”
So, how can manufacturers recruit and retain workers without constantly escalating base pay?
“The younger generation is willing to take less comp if your company is more aligned with their social beliefs and values, so community support and ESG initiatives matter — that's one way of attracting workers apart from salary,” Schindler said. She added that it’s also important for manufacturers to recognize how to recruit female workers. “Demographics are changing to more female labor. But a lot of manufacturers don't have uniforms to fit a woman's body, or the women’s locker rooms are a mile away because they were an afterthought. There's more than just considering the gender of your hire — it's also how are you going to serve that gender. Workers want to feel like they belong and are accepted for who they are. So, making a conscience and noticeable effort in getting to know what is important to them can go a long way.”
To retain workers, you also need to address their biggest concerns. Our survey respondents in the manufacturing industry said their biggest concern was long hours.
“Recently, I've seen some manufacturing clients reduce their work schedules to four-day work weeks with longer shifts, and they have three-day weekends built around that,” said Grant Thornton Growth Advisory Services Director Doug Thompson. “That's a big incentive. People really like that, and respond well to it.”
“I'm also seeing more breaks during the day,” Thompson said. “I spend a lot of time on-site at clients, walking the floor, and I've noticed a big increase in the whistle or horn sound telling people to leave the floor, then they come back 20 minutes later and they seem much happier.”
Thompson said that workforce planning, communication and contract management can be another important way to reduce long hours. “A lot of times, the long hours are predicated by a big order that's coming. I just left a site recently where they're anticipating a big defense order. They communicated it to the workforce. They also communicated that they're going to hire contingent workers to come in and help. They're probably going to ramp up another shift. They're asking people to volunteer to lead different work sessions. That's what I'm seeing —people are doing things to mitigate that resistance to working long hours — they're actually getting creative about ways to mitigate those feelings.”
Schindler agreed, “I've seen a move to four-day work weeks as well, especially in geographies where the commute is difficult or long.” She added that flexible schedules are especially important to younger workers who have other family responsibilities — and there are creative ways to empower that flexibility with technology.
Schedule gamification
“The traditional manufacturer has shifts — whether it's one, two, or three shifts — and historically, they’ve hired shift labor,” Schindler said. “You were on that shift, and that's what you did. Maybe, as you got older or more experienced, you were allowed to get to a better shift, but that was all you were able to do.” However, younger workers want the company to care about what they care about as a person.
That’s part of why some manufacturers are implementing technology that lets workers pick and schedule shifts through an app. “There's an ability for the laborers to pick their time slots online,” Schindler said. “It's like an incentive program where, after six months of perfect attendance or another achievement, you get to be in a pool of workers who can do that.”
These systems can manage the complex calculation of what shifts, for which skills, are available when. “Automation comes into play, where it fills in the rest of the schedule while it’s also timing the production for when an order is going to get to each station — because that's when that skilled laborer is going to be there,” Schindler said. “The automation is scheduling the people and the production, and it gives younger workers gamification — because they're collecting badges that give them privileges, like the ability to manage their schedules or pick a time slot. It creates efficiencies in production, because you're not getting employees who just don't show up for work.”
Many workers of all generations like new scheduling technology, but the older generation might not be as interested in new production technology. New production technology can seem unfamiliar, or even threatening to job stability. How can manufacturers maintain worker engagement and retention while they continue to modernize their facilities?
Related resources
Technology adoption
Production technology, including automation, continues to drive greater speed, efficiency and agility in manufacturing. In our survey, manufacturing respondents indicated that their company has begun incorporating more technology — but they were also concerned that their jobs might be replaced.
As manufacturers integrate new technology, it’s important to remember that the workforce will still determine the success of the technology.
For new technology to succeed, workers must adopt and integrate it into their processes. “Part of the incentivization is to upskill them,” Thompson said. “They might be able to monitor production as it goes through their workstation, but with some help from robotics. Then, people are more excited about how they’ll get to learn to do this.”
Another incentive is to target the top priority of pay — offer to pay workers for skill acquisition. “It’s telling people that, ‘If you get this qualification with the new technology, then we're going to give you more pay,’” Thompson said. He added that sometimes, incentives can be small short-term rewards. “It starts with leadership that has the right things to say, and the right communication cadence, out in front, talking about what’s not just good for the bottom line, but what's going to make you want to stay in your role,” Thompson said. “It's a straight-up awareness campaign, and you have to really dig into what's in it for them and how is it going to impact them. How is it going to make their life better?”
Tech adoption needs to start at the top of the organization, but much of the work often falls on supervisors. Thompson explained, “change management needs to start at the top, but an hourly employee does not really care what the CFO thinks — they want to hear from their supervisor about how this is going to impact them.” New solutions might not save time right away. Sometimes, they can add steps to some procedures that pay off later on. That’s part of why it’s important to get every level on board with an overall perspective about what’s best for everyone.
“Identify who your supervisors or super users are going to be,” Thompson said. “Coach them, and work with them, because they have the hardest job — they have to go through the change and also lead people to change. They have the double whammy. They're the ones that folks are going to look to, and say, ‘Are we really doing this? Is this worth it?’ They have to say, ‘Yes, we're going to do this.’”
To help clarify changes and drive adoption at every level, it’s important to communicate both from the top and from the floor. “We do roadshows with supervisors, coach them, and talk to them about the change,” Thompson said. “Then, they get hands-on training and experience. We set up training on the floor. We'll set up equipment, scanners, everything, and load in a dummy environment — the exact orders they're working on that week. We can say, ‘This is what you're doing today. This is what you're going to do tomorrow.’ They can see the side-by-side comparison, and it really resonates that this isn't cumbersome. They’ll say, ‘I thought it was going to be three extra steps, but it's literally click, click, beep. Those are the steps. This isn't bad.’ That's usually the best way to communicate — they'll buy in, and the buy-in is the key.”
Worker buy-in is key for tech initiatives on the floor and in the back office, too. When manufacturers implement new enterprise solutions, they need the right approach to achieve the expected returns. “We've seen a major uptick in the last five years, where manufacturing clients will not entertain introducing an ERP solution without a robust change management package,” Thompson said. “They've learned that, without it, it does them no good. You can implement all the technology in the world, but if people don't know how to use it — and use it well — you’re never going to see the return on investment.”
As manufacturers drive change internally, they are also being changed by external factors. Mergers, acquisitions, supply chain shifts and new product offerings will continue to affect the workforce skills and approaches required across the industry.
Workforce evolution
“It’s a volatile market,” Thompson said. “Every time we think we're close to finishing a client’s nationwide rollout, they buy another company and add 12 more sites. I see that continuing in the future as well — consolidation of the same type of manufacturers into single entities. I expect to see a lot more acquisitions, mainly by competitors.”
As manufacturers acquire workers with similar skills from competitors, they might also acquire workers with new skills. “I'm also seeing acquisitions in vertical integration of the supply chain,” Schindler said. Beyond acquiring their existing competitors, some manufacturers are branching out into services. “Manufacturing is evolving into more of a service business. It's more of a solution-for-lease rather than just making-the-widget.”
That business evolution, along with other factors, will change the future workforce needs for manufacturers. “That evolves the employee from doing repetitive tasks to aligning more with technology and a service-minded skill set,” Schindler said. “That evolves with more of a service/lease mindset that will come into play.” To recruit new skills, manufacturers will need new approaches, Schindler said. “Getting skilled labor is very difficult. Some manufacturers are putting sites next to high schools, where they can have vo-tech training that high schoolers can attend and then become employees afterward.” Thompson agreed, “we're using AI to target better recruits with the right skill sets. That's helping quite a bit.”
From the front office down to the floor, many manufacturers need to change how they recruit, retain and re-train their current and prospective workers for the future.
“What I see a lot is that companies are still using some 1980s technology — a lot of paper, a lot of clipboards,” Thompson said. While some workers might show resistance to new technology, you can drive successful adoption if you understand their priorities, pain points and concerns. “The older workers are not so keen on it initially, but the younger workers are definitely ready for it, and they have an appetite for it.”
“Once workers understand the change, they understand that this is actually going to be easier for them in the long run,” Thompson said. “It’ll be easier to track and understand what they've done, what the next day is going to look like, and what the next month's going to look like. That's where you really start to see the impacts. Once it goes live, they say, ‘OK, I get it, now.’ That's where it starts.”
Contacts:
Kelly Schindler
National Managing Principal, Manufacturing Industry, Grant Thornton Advisors LLC
Partner, Audit Services, Grant Thornton LLP
Kelly Schindler is the national managing principal of Manufacturing at Grant Thornton Advisors LLC and an Audit & Assurance partner at Grant Thornton LLP.
Saint Louis, Missouri
Industries
- Manufacturing, Transportation & Distribution
- Retail & consumer brands
- Technology, media & telecommunications
- Transportation & distribution
Service Experience
- Audit & Assurance
Joe Ranzau
Managing Director, Growth Advisory Services
Grant Thornton Advisors LLC
Joe is a back-office transformation leader, focused on performance and profitability improvement through; strategy design, operating model re-design, cross-functional process improvement, post-merger integration, and organizational change management.
Austin, Texas
Industries
- Technology, media & telecommunications
- Healthcare
- Manufacturing, Transportation & Distribution
- Not-for-profit & higher education
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