Tips for Tempering Higher Turnover Rates
With an aging workforce and historically-low unemployment rates, metals industry companies cannot afford to lose good employees. Turnover hurts. In a new paper, ToolingU-SME offers action steps that will increase employee engagement and help companies keep good employees longer.
Before explaining its recommendations, ToolingU-SME identifies the cost of turnover, noting one in five companies in the manufacturing industry report an average annual turnover rate of more than 20 percent. (More than 15 percent report rates higher than 30 percent and four percent say they lose at least half their workforce every year.)
Losing employees – and difficulty locating new ones (99 percent of manufacturers say their number one challenge is finding skilled new hires) – has significant financial costs. Losing an entry-level employee, for example, generally costs $7,500 or more while the cost of losing of an engineer could exceed $30,000. Turnover also results in the loss of valuable embedded knowledge, a problem that will reduce profitability and productivity.
The report explains how companies can calculate their turnover costs, and how they can determine if they are at risk of seeing their turnover rates rising in the future.
While it is easy to blame Baby Boomer retirements for high rates, “much of the turnover in the manufacturing industry comes from new hires.” The report advises “strong onboarding” will “help get workers successfully through that first year.”
Before onboarding even begins, however, companies need to be transparent about the type of work a particular job requires. Employers also should make it clear how an employee could advance in a company, and identify resources that will be available to help build skills.
Mentoring is important during onboarding, and after, but employers must think critically about their pairings. The reports advises, “Putting the wrong people in front of new hires can be a direct contributor to attrition. Companies must train the trainers, so they have competencies in adult learning, mentoring and delivery of on-the-job training (OJT) sessions.” The report also touches on a concept – building cross-generational teams – that is discussed less frequently. “Allowing new workers to partner with seasoned workers will help build improvements across the company,” the report says.
If the current economic expansion continues, contending with turnover only is going to get more difficult. The report includes this stark statistic: traditionally, there has been about seven unemployed people per job opening.
Today there is just one. In a landscape like that, retaining good workers must be employers’ top goal. Click here to download the ToolingU-SME report.