The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, tracks CFO optimism and top concerns. According to the survey, labor quality and availability was the most pressing concern in the second quarter of 2021. The labor shortage has been a major concern among CFOs for years and the COVID-19 pandemic has only exacerbated the problem.
The struggle to find qualified workers has been especially pervasive among manufacturers. In most U.S. cities, job openings — for positions such as assemblers, machinists, technicians and engineers — exceed qualified applicants by a wide margin. Here are a few creative ideas to help manufacturers bridge the gap.
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In today’s competitive labor market, one way to attract and retain workers is through financial incentives. This may include signing bonuses, stay-bonuses (awarded to employees who stick around for a prescribed period) and above-market wages.
While employee compensation packages can be costly, employees value traditional benefits, such as health plans and 401(k) plan matching contributions. Negotiate with providers to see if you can reduce the costs while still offering them to employees.
You should also consider offering “voluntary” benefits, including consumer goods purchasing services, life insurance and disability insurance. Employees usually pay for these benefits, although they might be payroll-deducted. Employers may be able to provide these programs to employees on a more economical basis than via traditional sales channels.
Remember, the goal is to make your company’s compensation package as attractive as possible — without breaking the bank. Thus, before increasing your compensation budget, check your employment value proposition (EVP). EVP refers to everything that employees appreciate about working for your company. It may surprise you but pay, while important, is not always at the top of an employee’s list.
When evaluating your EVP, talk to your employees to find out what they value most about working for you. Intangible “benefits” such as respect and concern for employees’ well-being, an upbeat corporate culture, learning and training options and professional growth opportunities are what many employees look for.
Employees also look for flexible work arrangements. This can include flextime (altering starting and ending times of the workday) or compressed workweeks (working the traditional number of hours in less than five days). Some manufacturers may be able to attract seasonal employees.
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Manufacturers may be able to mitigate a labor supply shortage by making better use of the workers they already have on staff through cross-training. Also, consider whether an apprenticeship program is right for your manufacturing business.
Finding the right fit
Survey workers to help determine which monetary, intangible and noncash components they value the most and identify gaps in your offerings. When employees believe you will do your best to provide jobs with more responsibility and pay whenever possible, they will do more to help your company grow and provide additional opportunities for advancement. Though your company might not have much of a career ladder to climb, few employees get excited about positions they perceive as “dead-end” jobs. Finding cost-effective benefits that your employees value will help you assemble a skilled, motivated and productive workforce to thrive as the economy moves forward.
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For more information, contact Seamus Donoghue at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Manufacturing and Distribution Group.