As an Operations Leader, you’re tasked with keeping products moving efficiently through your operation. But, half the time you are putting out fires related to missed deliveries, extended lead times, and rework - which probably originated with workforce issues related to turnover and callouts.
You know that as soon as a few individuals don’t show up for work one morning, you’re thrown into scramble mode to cover their shifts and redistribute the work. Unfortunately, this can lead to missed deadlines, and your key performance indicators are shot for the week.
This happens all the time to businesses in the manufacturing and logistics space, and I am all too familiar with the effects that turnover can have on a business. I have seen these issues often in my career as a consultant working with Fortune 50 companies. Now as VP of Operations for Veryable, my primary objective is to help businesses improve operations with our on-demand labor solution. Veryable’s platform is a great way to reduce turnover, and works alongside other strategies your business might choose for improving labor productivity.
In this article, I’m going to share the effects turnover has on your business, what causes turnover, and a few ways you can reduce turnover in a manufacturing business. After reading, you’ll be able to get off the turnover treadmill and start focusing on other goals, like growth.
The impact of turnover on your business
According to the Center for American Progress, it costs companies about 20% of a worker’s typical yearly earnings to replace that person. Whether employees aren’t showing up or they’re being fired in rapid succession, the results can be disastrous for your bottom line.
High turnover rates can lead to increased costs related to hiring and training, decreased productivity, low morale in the workplace, and lower quality output.
Simply put, you do not want a high turnover rate. It is both a symptom that something isn’t working and a cause of additional headaches.
Top causes of turnover
There are causes of turnover within your control and some that are not, such as employees’ attitudes and personal reasons for leaving. Here we will focus on what is in your control, so you can take action now.
The top causes for turnover that you can control are:
- Overworking employees
- Ineffective communication
- Lack of feedback and recognition
- Hiring the wrong people
When employees feel overworked, they are more likely to start searching elsewhere for work. When they consistently are being asked to miss seeing their favorite sports team play or show up late to a family event, employees naturally want to find a way out of that work arrangement.
Ineffective communication can push workers away as well. Think of how often you currently talk to your employees.
If the only time you are talking to your employees is to tell them to do something, they will start to think you don’t take them seriously and leave. You need to take time to understand the issues they are facing in their work.
Lack of feedback and recognition
On that same note, a lack of feedback and recognition is detrimental to employee retention. If workers do not feel that their work matters, and if they aren’t rewarded for working hard, why would they keep giving their best effort?
Hiring the wrong people
Finally, hiring the wrong people is often the source of many turnover woes. Getting the right people through the door in the first place is exceptionally hard. Businesses who do this wrong end up finding out the hard way that every employee matters. The saying goes that it only takes one bad apple to spoil the bunch, but these bad apples paint themselves up so well that you don’t realize what a rotten deal you’ve got until it’s too late.
How to reduce turnover
There are many ways to reduce turnover, but you should prioritize the ones that directly address the root causes mentioned above. These methods are:
- Flexible schedules
- Building an on-demand labor pool
- Finding the right people
Offering incentives to reward hard work and motivate employees can help you meet company goals, and will make employees feel heard and valued. These incentives should be proportional to the level of effort required to earn them. A hard accomplishment, like far exceeding the weekly output goal, should be incentivized more strongly than doing a little more than the minimum.
Incentive could be recognition on a leaderboard, a one-time bonus, or some privilege that would motivate the employee. It’s important that you make it clear when the incentive will be given and the exact conditions required to earn it.
You don’t have to find a perfect incentive, because the commitment to recognizing great work is the most important aspect of creating incentives.
Offer flexible schedules
Flex work in manufacturing? Before you leave, hear me out.
SHRM studied manufacturing companies and found that some businesses are making flexible schedules work for them with positive results.
Some ways to make the workplace more flexible include:
- Define a core of the workday and allow the swapping of startup/cleanup tasks between employees. This allows employees to start and stop their shifts at slightly different times if needed.
- Encourage shift swapping that employees manage, including any required paperwork and approvals.
- Split shifts, allowing employees to create a break between the two parts of their shift so they can tend to personal matters.
Build an on-demand labor pool
An on-demand labor pool is a great way to cut down on overtime and build reserves for your workforce. Integrating on-demand labor as part of your operations strategy means relying less and less on full-time employees (FTEs). Instead, you’d staff the minimum number of FTEs required to meet forecast demand, and use on-demand labor to address all incremental demand from that low point.
This means that you could stop asking your employees to work overtime. You’d be armed with more labor capacity from your on-demand labor pool when you need it. If someone couldn’t show up for a shift, you could post the work opportunity for your labor pool, where workers bid on opportunities. Then the workers you choose come in, do the work, and leave until the next opportunity.
As you repeat this process and integrate more on-demand workers into your facility, you begin to build a network of familiar operators that do not require training and can work only when needed.
This is a win for your both you and your current employees. Employees are no longer overworked and you don’t have to worry as much about scheduling overtime or missing an order due to callouts and turnover.
Find the right people
Find a reliable source for vetted candidates with background checks, or conduct the interviews internally if you have the time and resources. A proper interview will include a few open-ended questions that give insight into a candidate’s experiences and traits, good and bad.
If you don’t have the time to conduct interviews, most staffing agencies have a way to vet candidates for you. However, staffing agencies will typically conduct the interviews and send you candidates, meaning you’re less involved with the hiring process.
Internal recruitment is another option. You could post the opening for a role where anyone in the company can apply for it, which opens the opportunity for reliable workers to try a new role. Maybe you will discover that someone who was doing just okay in one role could do excellent in a different one.
How you can reduce turnover today
First, start by identifying which causes of turnover are present in your company . Once you’ve found the likely causes in your company, pick one or two causes to tackle, and get started with one of the solutions mentioned above. Rinse and repeat until you have addressed all of your causes for turnover.
If you are experiencing trouble keeping employees and finding the right workers, Veryable’s on-demand labor solution can help you today. You can start posting work opportunities in front of vetted workers to build your labor pool, reducing your reliance on overtime. See how our on-demand labor marketplace works and you could be posting work opportunities before the day is over.