Manufacturing Institute releases study on best practices to retain workers

The Manufacturing Institute released Thursday (July 15) a study that examines best practices for worker retention among manufacturers and the factors that affect retention. Amid the COVID-19 pandemic, manufacturers have faced labor issues that have limited sector growth, according to reports from the Institute for Supply Management (ISM).

The Manufacturing Engagement and Retention Study was completed by the Manufacturing Institute’s Center for Manufacturing Research and the American Psychological Association (APA) and featured leadership and worker perspectives. The study analyzed why manufacturing workers stay with their employers and what contributed to that decision. Link here for the study.

“With 814,000 jobs open in manufacturing, there has been a great deal of attention on recruitment, but part of the equation is also retention,” said Carolyn Lee, executive director for the Manufacturing Institute. “We partnered with the APA to provide manufacturers a deeper dive into the forces affecting retention — what works, what motivates employees and where employers likely can improve. And as the study shows, not all employees are motivated by the same factors. It’s important to understand key differences among employee groups so that we can continue to foster the most engaging, productive and inclusive workplaces possible.”

Following are some of the key findings:

• Eight in 10 workers said they stay with their employer because they enjoy the work
• Employees under age 25 said they stay with their employer because of training and development (69%) and career opportunities (65%)
• Employees who feel valued were more than four times as likely to report high levels of work engagement (59% vs. 13%) and less likely to feel stressed out (16% vs. 66%) or that they plan to leave the company within the next year (2% vs. 12%)
• While competitive pay and benefits are important, designing work in a way that increases positive experiences can improve retention
• The most sophisticated retention efforts include ensuring all employees understand how their efforts contribute to the company’s success and equipping frontline managers to support workers.

Manufacturing leaders cited addressing the following areas to improve retention:

• Employee recognition programs
• Internal communication
• Clear career paths
• Better management training, especially soft skills.

Manufacturers have continued to cope with labor and materials shortages amid the pandemic, according to the June Manufacturing ISM Report on Business.

“Worker absenteeism, short-term shutdowns due to parts shortages and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.

In June, the manufacturing purchasing managers’ index (PMI) fell 0.6 percentage points to 60.6% in May. A reading above 50% indicates the manufacturing sector is expanding. Fiore noted the employment index limited sector expansion and contracted by 1 percentage point to 49.9% after six consecutive months of growth as manufacturers and suppliers remain challenged to attract and retain employees.

“Panelists’ companies and their supply chains continue to struggle to respond to strong demand due to the difficulty in hiring and retaining direct labor,” Fiore added. “Continued high backlog levels, too low customers’ inventories and record raw-materials lead times are being reported. Labor challenges across the entire value chain continue to be the major obstacles to increasing growth.”