Blog

Hiring and retaining workers has been a struggle for manufacturing and distribution businesses for years, even decades. But the Covid-19 pandemic has greatly impacted the skilled labor shortage, heightening the challenge.

Gilmore Jasion Mahler’s most recent Manufacturing Financial Executive Roundtable event examined the role compensation packages play in staff recruiting and retention. Held at Brandywine Country Club on September 29^th, the event, hosted by GJM’s Manufacturing Specialist Team lead Wes Beham, featured guest presenter Bob Bethel, director of HR services for the Employers’ Association in Maumee. Bethel offered up a reality check for manufacturers and some suggestions on how to stay competitive and attractive to potential new hires.

He pointed to the reality of 2022: help wanted signs everywhere, starting hourly rates are higher than we’ve ever seen, such as $22 an hour at McDonalds. On top of that, Bethel says, statistics show a projected significant population decline in the US in the decades to come. And Ohio has its own challenges. Bethel’s presentations showed the state has seen a decline in young people in the last two decades and isn’t attracting international or domestic migration. US Census Bureau numbers show the south and west are growing in the US, but the Northeast and Midwest are shrinking in population.

Compensation

Bethel noted that we saw higher pay increases for hourly production workers, for example, between August of 2021 and July of 2022: over four percent increases. But pay increases for that same group were anticipated to be between 2.8 and 3.8 percent from August of this year through July of 2023.

We know entry level wages are up in 2022 from 2021. We also know inflation is eating into those increases for workers. Bethel says there may be ways to restructure your compensation package rather than just keep raising hourly rates. Here are some strategies he offered up for attendees to consider:

• Offer lump sum payments rather than pay increases
• Create multi-tiered positions based on skill level. For example: Warehouse Worker I, Warehouse Worker II, Warehouse Worker III, compensate accordingly
• Higher pay for your better performers
• Regularly review your compensation package

Bethel noted that remote workers bring additional challenges. Do you pay them based on their work location? Or is compensation based on their contributions/impact on the business? Do you require all workers be on site? Or do you allow some remote work where appropriate?

Bethel also challenged the manufacturing executives and human resources managers in the room to consider their retention strategy, citing these quotes from “Getting Engaged: The New Workplace Loyalty.” 

“The most important factor in employees’ willingness to engage is their feeling about their relationship with their supervisors.” 

“You can’t afford to have poor managers.” 

Recruiting/Retention

Bethel challenged manufacturers to ask themselves: How engaged are your workers? He says we know employee engagement is down since the pandemic. Gallup says engagement started slipping in late 2021 and cited these issues/needs from staff:

• Clear expectations
• Right materials and equipment
• Opportunity to do what they do best every day
• Connection to the mission or purpose of the company/organization

Bethel says the numbers show employees working fully remote or hybrid had higher levels of engagement than those on site. Among the groups to see the biggest drop in engagement were managers.

Can you do anything to improve the situation? Bethel says you certainly can. His recommendations:

• Examine your candidate experience: is web application submission easy? Is it mobile friendly?
• Are you keeping the candidate informed through the process of applying?
• Interview process needs to be quick
• Use of technology for applications
• Put yourself in the candidates’ shoes and remember they talk to each other
• What is your onboard process like?
• Would you be viewed as an employer of choice?
• Did you adapt during and post-Covid?

Onboarding tips:

• Structured process in place for onboard
• Clean workspace, technology in place, welcome swag on desk
• Remember new hires are looking at other jobs
• Give them something to rave about

Employee experience tips:

• Treat them better than your best customer
• Periodic check-ins: three-month, six-month, one-year, three-years, etc.
• Give them benefits they care about
• A 25-year-old new hire wouldn’t view 401k as an exciting benefit, but student loan repayment, yes!
• 35-year-old new hire would be interested in healthcare for their kids, etc.
• Examine your culture
• Opportunities for personal and professional growth
• Work-life balance
• Compensation
• Flexibility
• Social responsibility
• Transparency

Recruiting: Where are you looking for new hires? How are you finding them? What should you consider?

• Recommendations from your own staff
• Advertising
• Social media
• Recruiters
• Increasing wages, flexibility, offering bonuses

Bethel offered these other considerations for finding potential new hires:

• Prison population
• Diversity in your workforce is important to attract new staff
• Disabled population
• Retirees as people to rehire for certain roles
• Remember: Internships are very valuable

Bethel’s presentation ended with some sobering reminders. He says this current people crunch is a big deal and it isn’t going away. He says the businesses that adapt will be the winners. All talent is not equal. Don’t pay them that way. Never let a good person go. Circle back with them to determine how you can get them to stay.

Roundtable attendees also had the opportunity to discuss these challenges with each other as part of the event, circle back and share those thoughts with the entire room, a valuable exercise to learn where others are finding success.

GJM Financial Executive Manufacturing Roundtable events are held about three times a year for local manufacturers to come together and share best practices and challenges with each other. The events are open to financial decisionmakers within manufacturing & distribution companies. If you’d like to sign up to receive invitations to future roundtables, click here and note that you would like to receive GJM Manufacturing Financial Executive Roundtable invitations.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business & transaction advisory, healthcare management & advisory, outsourced accounting, and risk advisory. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution, nonprofit, private equity and utilities.