October 25, 2018

By Shelly Gary, President of ProManager

Most manufacturers focus on delivering a quality product––investing in the technical skills employees need to do their jobs while overlooking critical soft skills. However, a manufacturer’s bottom line is ultimately tied as much to its people as its product.

The age-old adage “time is money” is truer in manufacturing than virtually any other industry. Time spent away from the manufacturing line is often perceived as time––and money––lost. Manufacturers may question the benefit of using valuable time to build core management skills. But from the ability to effectively interview job candidates and make good hires to properly onboarding new employees, the American Management Association has identified 14 core competencies that leadership should integrate into their efforts to build and retain a healthy workforce. A short-term investment in building these competencies across the workforce will reap long-term results.

Reduce Turnover

From my experience, employees don’t leave bad companies; they leave bad managers. Retention is especially critical in the manufacturing sector which in 2017 saw a turnover rate of just over 30 percent. The issue of retention comes down to a company’s commitment to provide its supervisors and managers with the tools to become professional and relational leaders. Often companies fall into the trap of throwing employees into management positions based on tenure without equipping them with the skills and knowledge they need to succeed. Unfortunately, the skills that make a star employee typically do not translate into becoming a star manager.

Properly trained managers play a key role in reducing turnover. Studies have shown the first 90 days determine whether a new hire will stay and how productive that hire will be. Ultimately, managers set the tone for that individual’s first 90 days and longer.

When you invest in developing effective managers, the trickle-down effect is better employee performance and productivity, reducing employee turnover. One of the chief reasons people leave a company is greater opportunities to grow—not necessarily higher pay. It’s a simple principle: Investing in an employee’s professional development incentivizes that employee to invest in you. If your company doesn’t make an investment in developing people, chances are your competitor will––serving as a critical differentiator for job-seekers.

Boost Your Bottom Line

Economist Bill Conerly indicates the key to improving employee retention is knowing what turnover costs your bottom line. While this cost differs from company to company, general estimates suggest the turnover cost of an entry-level position at 50 percent of salary; 125 percent of salary for a mid-level position and more than 200 percent of salary for a senior executive. It is far more expensive and disruptive to replace an employee than it is to invest in the employees you have.

By investing in management training, we have seen companies improve their turnover rate by 3 to 4 points and reduce their overall absenteeism, translating into significant savings. With this in mind, don’t let the short-term cost of professional development programs blind you to the long-term benefits to your bottom line.

Improve Employee Productivity

When it comes to improving productivity, an employee’s own motivation is a powerful factor. When employees feel appreciated, heard and valued, company morale improves, which often leads to a more engaged, energized and efficient work performance. Cultivate a company culture that people want to be in, and they will stay, they will work, and they will invest their time in you and your product.

Effective leaders are your greatest asset in accomplishing this. A company’s managers are your hands, your mouthpiece and your face to your employees. Management skills like setting goals, building teams, managing change and conflict, actively listening, conducting reviews or corrective action and other core competencies are the foundation of a well-performing company.

Conclusion

Investing in professional development is a critical element in building a culture that attracts and retains good employees. What you give is what you get––putting time and money into developing managers boosts morale and retention in ways that positively impact your balance sheet. Bottom line, it pays for manufacturers to invest in their people as much as their product.

People Over Product, Industry TodayShelly Gary is president of ProManager, a Nashville-based provider of hands-on management training that increases company profits by reducing turnover, absenteeism and legal exposure. Targeting the 14 essential management functions recognized by the American Management Association, ProManager services a wide range of industries including healthcare, IT and manufacturing. Learn more at ProManagerInc.com.

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