The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, tracks CFO optimism and top concerns. According to the survey, labor quality and availability was the second most pressing concern (after monetary policy) in the third and fourth quarters of 2023. Indeed, it’s no secret that the labor shortage has been a major concern among CFOs for years.
The struggle to find and retain qualified workers is especially pervasive among manufacturers. Across the country, job openings — for positions such as assemblers, machinists, technicians and engineers — often exceed qualified applicants by a wide margin. The good news is there are strategies available to help manufacturers attract and retain the best employees.
Financial incentives
In today’s competitive labor market, one way to attract and retain workers is through financial incentives. These may include signing bonuses, stay bonuses (awarded to employees who stick around for a prescribed period) and above-market wages.
While employee compensation packages can be costly, employees also value traditional benefits, such as health plans and 401(k) plan matching contributions. Negotiate with providers to see if you can reduce the costs while still offering them to employees.
You also might consider offering “voluntary” benefits, including consumer goods purchasing services, life insurance and disability insurance. Employees usually pay for these benefits, although they might be payroll-deducted. Employers may be able to provide these programs to employees on a more economical basis than employees could obtain via traditional channels.
Intangible benefits
Remember, the goal is to make your company as attractive a place to work as possible — without breaking the bank. Therefore, before increasing your compensation and benefits budget, check your employee value proposition (EVP). EVP refers to everything that employees appreciate about working for your company. It may surprise you, but pay, while important, isn’t always at the top of an employee’s list.
When evaluating your EVP, talk to employees to find out what they value most about working for you. Intangible benefits such as respect and concern for employees’ well-being, an upbeat corporate culture, learning and training options, and professional growth opportunities are what many employees most desire.
Take a closer look at training and growth opportunities in particular. Cross-training, for example, can both provide an intangible employee benefit and mitigate a labor supply shortage by making better use of the workers you already have on staff. Also consider whether an apprenticeship program is right for your manufacturing business.
Something else employees may be looking for is a flexible work arrangement. This can include flextime (altering starting and ending times of the workday) or compressed workweeks (working the traditional number of hours in less than five days).
Finding the right fit
Survey your workers to learn which financial incentives and intangible benefits they value the most and identify gaps. Creating a workplace that provides a strong EVP will help you assemble and maintain a skilled, motivated and productive workforce that, in turn, will help your manufacturing business thrive.
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