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Tips and Tricks From HR Experts

How to Reduce Employee Turnover in Industrial Recruitment Firms

Ashley Wesley - Aug 17, 2018 9:59:00 AM

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The key to keeping your general labour from leaving your firm is found within the structure of your HR management system.

High employee turnover is a big issue that many manufacturing firms face.

Production workers leaving their companies leads to profit losses of up to 11% annually due to a shortage of skills. That said, turnover is not something you should turn a blind eye to. To reduce employee turnover, you will need to turn upside down the way you've been thinking about Human Resources Management in manufacturing. 

Many manufacturing firms consider their low-wage, low-skill workers as dispensable piece-workers.

As long as you can keep an eye out on the mules and set up a rigorous procedure and performance standards, your piece-workers will produce those parcels just as you expect of them. If they're good, obedient little mules, then you'll finally reward them with that carrot. 

HR systems like this are known as "Control Systems" and are one of the most significant contributors to high turnover. 

 

Control vs. Commitment HR Systems

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When considering the reasons for employee turnover at manufacturing firms, you have to look at the higher level architecture of your HR processes first. 

You want to shift from a control system to a commitment system. 

Control Systems 

As noted above, the driving force behind a control system is to reduce direct labour costs. This goal is expected to be manifested in the use of relatively simple, well-defined job tasks. Because employees with a minimum amount of training and experience can perform such tasks, wages and the costs of employee search, selection, and training can also be minimized. Under these conditions, the costs of employee turnover to a firm are expected to be relatively low.  

Subsequently, employers have little incentive to try to minimize turnover through human resource policies and other policies designed to increase employee commitment or attachment.

Commitment Systems

In commitment systems, the employees engage in higher-level decision making and make better contributions, thus attrition would be disturbing at a higher level than those in a control-system who stick with strict tasks assigned by managers.

Commitment human resource systems are characterized by high levels of employee involvement in managerial decisions, formal participation programs, training in group problem solving, and socializing activities and by higher percentages of maintenance or skilled employees and average wage rates.

By decentralizing managerial decision making, setting up formal participation mechanisms, and providing the proper training and rewards, a commitment system can lead to a highly motivated and empowered workforce whose goals are closely aligned with those of management (Thomas & Velthouse, 1990). 

Click here to download our FREE E-Book “Where Have All the People Gone?” Beat the tight labour market and develop a sustainable staffing strategy for your production firm.

 

Implementing a Commitment HR System

1. Get Management Onboard

Once you've developed a new framework for the HR systems at your company, you will need to get all of your management team onboard. 

 

2. Promote Your New Policies

Outside of making sure your managers are purveyors of the new policy, make sure that the new ways of the workplace are visible throughout the facility. 

Make posters that represent or speak to the high-commitment style of HR management. 

 

3. Change Your Branding 

When it comes to your future workforce, you will want to angle your brand towards that of a high-commitment company. Considering high-commitment businesses often have a strong corporate culture, you will want to describe your culture in depth and make hiring decisions with a value-based recruitment strategy. 

 

Incentives Can Be Used Strategically to Reduce Turnover

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In addition to laying down a strong HR infrastructure, you will need to develop a strategic benefits plan to further your retention efforts. 

 

Employee Paid Voluntary Benefits 

Used strategically, this form of benefits provides a two-fold tactic for employee retention. The first factor is the tangible gain employees feel from gaining access to exclusive benefits and programs only offered through their employer. The second, and intangible rewards factor is the perceived improvement in workplace conditions.

That stated, when providing options for benefits, these were the top 3 voluntary employee paid benefits 

1. Small salary increase ($500)

2. Paid time off (additional week as PTO)

3. Increase in retirement fun ($500 gain)

 

Commitment Is a Two-Way Street

They don't call it an employer-employee relationship for no reason - relationships require mutual respect and loyalty on both ends. 

If you want your employees to be committed to your company, you have to be committed to creating an HR system and company culture that views your employees as valued contributors and not disposable commodities.

Developing a Commitment HR System will require you to let go of outdated micromanagement philosophies and embrace a high-commitment strategy. 

Reducing turnover is a necessary aspect of any talent management plan, but sometimes you need new employees to add to your team to keep operations afloat. 

Trouble is the market for general labourers is notoriously finicky and fickle.

So how do you get high-quality labourers to join your team? 

 

Download our FREE e-book and build a top-notch talent pipeline: 

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Topics: Retention, Industrial Staffing