Last month’s article, “Better Profits with Effective Employee Retention and Growth,” got a lot of attention. The labor shortage issues that companies are experiencing, despite the high unemployment numbers, are having a negative impact on many companies’ manufacturing capacities. There is not much one can do about the coronavirus and government policies, but there are steps every company can take to improve their current employee hiring and retention position.
At the very heart of lean principles are effective and healthy employee policies that attract, retain, and grow the skills of all employees to maximize a company’s growth and profits. During each consultation, we spend a lot of time teaching better employee and management practices. Too many in our industry have a haphazard employee program. If a company is experiencing labor shortages both in talent and physical bodies in any department, which includes production, then it will seriously affect sales negatively. If a company states they are practicing true lean principles, labor shortages should never be an issue.
Let’s start with the number one problem many are complaining about right now: attracting competent employees to fill the vacant positions within any department. Client: “Todd, it just doesn’t seem to be the same as it was years ago when people wanted and were willing to put in a good day’s hard work. We can’t get enough people to apply for the positions that need filling.” TDC: “So, are you getting people to fill out applications, or are they not showing up at all?” Client: “No, they are not. We can’t even get them to stop in so we can talk to them. Our shop foreman says we are too low for our starting wage, but we can’t afford to raise our starting wages.” TDC: “Are you able to convince your lumber broker that your company cannot afford to pay market pricing and that you should somehow be offered lower pricing for lumber? Do you think that the labor market wages (costs) or the lumber prices are any different when it comes to the idea of market changes and varying costs?”
If Amazon, McDonalds, or any other employer is advertising higher wages than a manufacturing company, why would any potential new employee want to take a pay cut to work for that company? Yes, it can be a hard pill to swallow, but the simple fact is everyone is willing, because they have no choice, to pay higher costs for material such as lumber, and the same thing applies to labor. Attracting talented, hardworking, and dependable employees starts with paying true market wages to fill the needed positions.
When it comes to lean principles, employee competency and consistency are paramount for obtaining higher standards of both productivity and quality of work being performed. Employee retention is essential for higher-performing companies and is a cornerstone of lean principles. Too many companies waste too much time and resources on employees who are not going to stay with the company long enough to make a real positive impact.
Warning signs for any company, if experienced in any department, are the following:
- 1/3 of employees have been with the company less than 1 year
- 1/3 of employees have been with the company only 1 to 3 years
- Only 1/3 of employees have greater than 3 years with the company
TDC has witnessed this same problem with too many companies. Simply put, companies who have high employee turnover are the least productive and have the most significant quality issues. Inversely, the companies with the highest employee retention inevitably have the highest profitability and quality of work. If a company wants to improve productivity and quality of work performed, they must retain competent employees; it is that simple.
For companies with a high rate of employee turnover, one of the major problems is that they do not recognize good employees and are unable to retain them. Otherwise, if they did indeed retain the right employees, such as 20% retention of the new hires, then the open positions would diminish as time moved forward. The math is simple, and yet so many do not recognize the fundamental truth about retention and the need for new hires. Lean practices require companies to identify and keep good employees and weed out poor performers.
The training process and the developing and adhering to best practices – lean principles can and should be used to simplify these critical areas. One of the most often repeated remarks to TDC is that most never realized how cumbersome and unrealistic their company’s practices have been for training new employees. Once they go through the process of how to employ proper lean methods in training and project processing, new employees get up to speed so much quicker, existing employees can follow best practices far easier, and the results are always higher output with better quality control. Having an excellent training process for the existing and new employees directly ties into retaining good employees. It happens every time.
Implementing and using lean principles does not have to be complicated or cumbersome. Lean principles can and should be applied in every aspect of a company, not just manufacturing. When groups are shown just how much the project processes can be improved and how much easier it is to train new hires, they wonder why in the world it was never done before.
Whether it is employee issues or manufacturing improvement, change that usually takes months and years can be accomplished in weeks and months with TDC’s assistance. TDC is your best source for learning about proven and practical lean manufacturing best practices combined with industrial engineering principles to keep your company at the leading edge of competitiveness. The implementation of the suggestions produces an average gain of three to six points in net profits. With over 30 years of experience, TDC has proven real-world expertise that goes far beyond what many expect. Included in TDC’s services are proven wood truss labor time standards (Man-minutes, R.E. or S.U.) that have been refined over almost two decades and used in over one hundred different companies. Many save tens of thousands of dollars by trusting TDC for unbiased vendor and equipment recommendations because TDC does not receive referral fees from any equipment or plate vendors, which are formed only by customer experiences. Please don’t take my word about TDC’s services, though. Read the public testimonials many current and past clients with decades of expertise and experience have been willing to give: https://todd-drummond.com/testimonials/.
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