manufacturing & logistics workplace trends guide

Transcription

1 manufacturing & logistics workplace trends guide

2 People are the key factor linking innovation, competitiveness and growth for companies today. But securing skilled workers is getting more complex and challenging, with U.S. companies citing it as the second largest threat to meeting their business performance targets. Based on a survey of more than 2,000 hiring decision-makers conducted for Randstad in late 2015, the 2016 Workplace Trends Guide offers a close-up view of specific talent challenges, their impact on the bottom line and insights for addressing current issues and opportunities. recruitment effectiveness Skills and talent shortage Job vacancies how long is too long? Recruiting manufacturing & logistics talent Expanding the available talent pool Hiring accuracy turnover & retention Hold on tight Get ready for the wage wars Money talks, but are we listening? The bottom line: sample business case Keeping employees engaged workforce outlook Tap into next generation talent Adapt to a Millennial workplace A holistic approach to talent

3 The altered state of manufacturing 56 % of M&L leaders say the lack of skilled workers needed to fulfill production demand is the biggest threat to the success of their businesses. Manufacturers are in the midst of playing a difficult game of catch-up. As a decline in domestic manufacturing plagued the industry over the past decade, employers responded by scaling back. The business outlook for 2016 is bright, however, despite a strong U.S. dollar and poor export growth. Manufacturers added 29,000 jobs in the first month of 2016, the largest monthly increase in 14 months. Hiring was paced by food manufacturers, followed by makers of motor vehicles and other fabricated metal products. 1 Business leaders in the industry know all too well the rapid changes occurring in today s workplace the way work gets done, how quickly and by whom (or what) are forever altering the human element of manufacturing and logistics. Technology presents both opportunities and challenges for nearly all aspects of business, from productivity and management of labor costs to quality, safety and compliance. There is an increasing demand for technology-savvy workers to not only capitalize on the next industrial revolution, but to fill a critical void left behind by retiring workers.

4 The growing influence of talent U.S. business leaders weigh in on the biggest threats to meeting revenue or business performance targets in 2016: Top external factors 64 % increased competitive pressure 47 % inadequate supply of qualified talent Top internal factors 56 % reducing operating expenses 49 % finding the skilled talent needed Figures based on results from all Workplace Trends survey respondents, across all industries The evidence is clear. The need for quality talent remains high, and organizations across the globe now recognize the need to fight for the best candidates. While hiring managers cope with regulatory issues and cost efficiency, they also cite a scarcity of skilled talent and their abilities to source and successfully recruit that talent as threats to business performance.

5 A new set of challenges Less than one in five leaders surveyed (17%) are concerned about attracting the next generation of workers to the manufacturing industry and/or their organizations specifically. As manufacturers quickly work to modernize and staff their workforce, many of the long-standing challenges continue to threaten their success, including: recruitment effectiveness and hiring accuracy high turnover workforce outlook and the next generation of talent However, alongside these ongoing struggles are new-age disruptions that pose their own unique challenges. The rapid adoption of new technologies, innovation and the need for speed have drastically changed the nature of manufacturing jobs. Manufacturers are scrambling to recruit a new generation of tech-savvy workers as long-time, experienced workers are leaving the organization and new ways of working are emerging. While most manufacturing employers acknowledge the significant impact that lack of rightfit talent has on business performance, most rank it low on their priority list. This trend is alarming for a number of reasons, particularly because of the industry s aging workforce.

6 recruitment effectiveness 6 manufacturing & logistics workplace trends guide recruitment effectiveness

7 Skills and talent shortage Today, there are as many as 600,000 unfilled manufacturing jobs in the U.S. 2 Backfilling existing positions vacant due to turnover, in addition to selecting candidates for new positions to support growth objectives, are proving to be difficult endeavors for most manufacturing and logistics employers. The majority of companies agree it is taking more time to find the right talent to fill positions compared to last year. For some positions, the difficulty is higher. Our study found that the most difficult manufacturing and logistics positions to fill are: #1 production supervisor #2 machine operator #3 maintenance mechanic #4 quality control workers/inspectors #5 production workers #6 plant manager The majority of M&L hiring managers are struggling to recruit right-fit talent: When positions become available at my organization, we struggle to find people whose skills match the job requirements. Compared to last year, it is taking more time to find the right talent to fill positions. When positions become available at my organization, we struggle to find people who are a good cultural fit for the department or company. 76 % 71 % 69 % manufacturing & logistics workplace trends guide recruitment effectiveness 7

8 Job vacancies how long is too long? Perhaps the greatest challenge on the horizon for companies is filling vacant positions and decreasing the time-to-fill for those positions. On average, the leaders surveyed report they are currently understaffed by 14 percent. It takes an average of 75 days to recruit and hire non-executive positions. 2.5 months Non-executive positions Unfilled positions greatly erode our ability to operate efficiently. 73 % Lengthy and abundant job vacancies can spell big trouble for companies and demonstrate why business leaders report talent shortages have a significant impact on their abilities to meet customer demand. 70% of hiring managers would be willing to pay slightly more per hour for key manufacturing/production floor positions if it meant fewer or shorter vacant positions. 8 manufacturing & logistics workplace trends guide recruitment effectiveness

9 Recruiting manufacturing & logistics talent What strategies are companies deploying in order to shorten the time it takes to find talent and improve their recruitment efforts? While employers are focused on expanding their range of recruitment channels as a way to improve efforts, most named staffing/recruiting companies as the top method for recruiting talent. In addition, when asked to identify their most effective recruiting method, staffing/recruitment companies ranked the highest. In addition to working with a staffing partner, the increasing availability and capabilities of digital tools for talent management also give companies an opportunity to improve recruiting, screening and other aspects of the employment life cycle. Manufacturing and logistics employers in particular need to harness and leverage innovative social and digital platforms to connect with younger workers who expect such experiences. Measures companies have taken to improve M&L recruitment: using a wider range of recruitment channels (i.e. social media, etc.) developing relationships at local colleges and universities offering higher salaries offering more training and development to potential new hires 51 % 27 % 25 % 20 % Which of the following methods do you use to recruit M&L talent? #1 staffing/recruiting company: 60% #2 traditional job boards: 57% #3 LinkedIn: 53% Which recruiting methods do you think are most effective? #1 staffing/recruiting company #2 traditional job boards #3 LinkedIn manufacturing & logistics workplace trends guide recruitment effectiveness 9

10 Expanding the available talent pool Despite the overwhelming benefits of utilizing a staffing firm to recruit and deliver talent, 40 percent of manufacturers surveyed currently do not partner with a staffing firm. For those companies, the majority stated their organizations feel they have the ability to recruit talent as effectively as a staffing firm. Regardless of recruitment capabilities, what many of these companies may be overlooking is the opportunity to tap into a broader, more robust talent pool and a quicker time-to-fill that staffing firms can offer. During a time when manufacturing talent shortages are being felt across the country, having access to an on-demand pipeline of quality workers can give business leaders peace of mind. When working with a staffing partner, what is most important to you? #1 deep understanding of our company and operations #2 speed in filling open positions #3 a robust database of skilled manufacturing/logistics talent In addition, more and more workers are choosing non-traditional employment, particularly younger Millennials and Gen Y. In 2014, nearly 35 percent of the average company s workforce was contingent or contract-based, and this percentage is predicted to grow to 45 percent by Staffing firms play a vital role in connecting these independent workers with companies that benefit from their flexibility and ondemand skills. 10 manufacturing & logistics workplace trends guide recruitment effectiveness

11 Hiring accuracy HR teams increasingly leverage data and analytics to bring greater accuracy, efficiency and predictability to the hiring process. As employers continue to struggle with turnover, open positions and costly vacancies, they simply cannot afford to take an uneducated guess on whether a job candidate will ultimately meet expectations. 85% of business leaders that use skills assessments say the tools are critical to the hiring process of manufacturing and logistics workers. While skills assessments are a proven method of gauging whether a candidate is a match from technical and communication skills to work ethic and cultural fit more than one-third (35%) of manufacturing and logistics hiring decision-makers reported they are not currently using skills assessments. Meanwhile, the overwhelming majority of companies currently using skills assessments say they are critical to their hiring processes. Hiring the right-fit candidate the first time not only prevents turnover, but typically ensures the new hire will contribute and add value immediately. manufacturing & logistics workplace trends guide recruitment effectiveness 11

12 turnover & retention 12 manufacturing & logistics workplace trends guide turnover & retention

13 Hold on tight 34 % of manufacturing and logistics workers say it is likely they will look for a new job in Beyond finding the qualified talent needed in order to operate effectively, turnover continues to plague most companies. Not only did four in ten business leaders in the M&L sector report that their companies experienced an increase in turnover in 2015, the vast majority (66%) are more concerned about expected turnover in M&L decision-makers surveyed that somewhat or strongly agreed: Our turnover rate increased last year. 39 % 66 % 57 % We are more concerned about turnover this year than last year. My company has incentives in place to keep employees but still struggles with turnover. manufacturing & logistics workplace trends guide turnover & retention 13

14 Get ready for the wage wars As the manufacturing industry continues to rebound, employers will rely on their talent to meet increasing product and consumer demands. This need to maintain staffing levels comes at a time when the labor market is tightening. This not only makes it more difficult to compete for talent, but also makes retention a priority. As our survey results indicate, a primary culprit in higher turnover rates of manufacturing and logistics workers is losing talent to better offers. Companies recognize that their employees are being recruited by competitors, and prudent business leaders realize that proactively addressing compensation may be their best chance at reducing turnover and retaining their best people. Top reasons for companies increasing turnover rates: #1 decrease in overall business performance #2 talent being recruited by competitors Top reasons for employees decisions to leave: #1 received a better offer elsewhere (better pay, benefits) #2 to pursue a different career path Strategies believed to be most effective at decreasing turnover rates: 56 % 42 % 30 % salary increases opportunities for advancement bonuses 14 manufacturing & logistics workplace trends guide turnover & retention

15 Money talks, but are we listening? 61 % 30 % salaries are the same as they were 12 months ago salaries are higher than they were 12 months ago 9 % salaries are lower than they were 12 months ago Even with a low U.S. unemployment rate and robust new job creation, wages among the M&L companies surveyed have remained largely stagnant over the past year. But trends indicate that employers will soon need to address compensation levels for qualified talent. Widespread research suggests that U.S. companies are likely to increase base pay, regardless of function or level, by an average of three percent in Manufacturing and logistics employers are expected to increase base pay by slightly less than two percent, on average % 16 % 15 % provide regular salary increases to keep up with cost of living increases rewarded employees after their organizations exceeded their annual revenue goals believe increasing salaries is the best way to retain workers manufacturing & logistics workplace trends guide turnover & retention 15

16 The bottom line: sample business case Company A Profile Number of employees: 1,000 Average salary: $45,000 Current turnover rate: 15% Number of open positions: 79 Cost of annual turnover: $2.4 million 150 x $16,000 (average cost to replace employee) Cost of vacancies: $2.9 million Average number of open positions x the average cost of one unfilled position for 2.5 months* Company A raises salaries of existing and open positions by 10 percent. Total investment: $675,000 Company A: after salary increases Profile Number of employees: 1,039 Average salary: $49,500 Current turnover rate: 10% (reduced turnover rate by 5%) Number of open positions: 39 (filled half of vacant positions) Cost of annual turnover: $1.6 million 104 x $16,000 (average cost to replace employee) Cost of vacancies: $1.4 million Average number of open positions x the average cost of one unfilled position for 2.5 months* Company A $1.6 million in cost savings plus increased employee satisfaction, engagement and retention *based on average cost of unfilled position per day: $ manufacturing & logistics workplace trends guide turnover & retention

17 Company B Profile Number of employees: 1,000 Average salary: $45,000 Current turnover rate: 15% Number of open positions: 79 Cost of annual turnover: $2.4 million 150 x $16,000 (average cost to replace employee) Cost of vacancies: $2.9 million Average number of open positions x the average cost of one unfilled position for 2.5 months* Company B keeps salaries at the same level and has no increase in salary costs. Company B: no salary increases Profile Number of employees: 962 (38 employees took higher paying jobs with Company A) Average salary: $45,000 Current turnover rate: 17% (turnover rate increased 2%) Number of open positions: 114 Cost of annual turnover: $2.6 million 163 x $16,000 (average cost to replace employee) Cost of vacancies: $4.2 million Average number of open positions x the average cost of one unfilled position for 2.5 months* Company B $1.5 million increase in costs manufacturing & logistics workplace trends guide turnover & retention 17

18 Keeping employees engaged Although research continues to show that employee confidence is much higher now than in recent years, it s fair to say many workers are still feeling the pain of a lackluster economic recovery marked by little to no wage growth and climbing healthcare costs. Only 22 percent of Americans say they have enough savings to pay for at least six months of expenses. 7 Randstad s recent engagement data reveals that 63 percent of employees, across industries and fields, feel they are overdue for a raise. Since 2004, workers average contributions to family medical coverage increased by 81 percent. As a result, 44 percent of workers say they would use a credit card or borrow from a 401(k) to pay off expenses from an accident or unexpected serious illness. 8 More financial stress on U.S. workers means that employers who discover ways to reward workers will find themselves at a distinct advantage over competitors. Not only will wage improvements help to bring in sought-after talent, they will also drive down turnover costs for existing workers who feel valued, rewarded and engaged. Provide clear career development paths. If you don t proactively show an employee how he or she can succeed within your company, another organization will. Consider that employees cite a promotion as the thing most likely to boost their happiness at work, followed by workplace flexibility. Show workers they matter, and that you value their feedback and ideas. Randstad US Engagement Survey 9 Hiring the right people from the start is one of the most effective ways to reduce turnover, but ensuring they remain engaged and satisfied on the job is equally critical. 18 manufacturing & logistics workplace trends guide turnover & retention

19 manufacturing & logistics workplace trends guide 19

20 workforce outlook 20 manufacturing & logistics workplace trends guide workforce outlook

21 Tap into next generation talent Over the next decade, it is estimated that nearly 3.5 million manufacturing jobs will need to be filled, and the skills gap is expected to result in 2 million of those jobs remaining vacant. While economic expansion is likely to create about 700,000 new jobs, the remaining 2.8 million jobs to be filled will result from the retirement of existing workers. 10 According to a recent Thomasnet Industry Market Barometer, more than 80 percent of the manufacturing sector workforce consists of workers aged 45 to 66, with 49 percent of these individuals older than 55. Alarmingly, 65 percent of manufacturers have no formal workforce planning strategy to replace these highly skilled and experienced employees. 11 By 2020, Millennials will make up 50 percent of the workforce, and that number will likely reach 75 percent by Manufacturing and logistics employers will need to become highly intentional and laser-focused on recruiting this generation. Millennials in manufacturing and logistics % 81 %... say Millennials only make up a tiny portion of their overall workforce.... have no plans in place specifically to attract Millennials to their organizations. manufacturing & logistics workplace trends guide workforce outlook 21

22 Adapt to a Millennial workplace The workplace is changing due to the influx of Millennials, many of whom are taking on manager roles for the first time, and a vastly different Gen Z population coming in right behind them. The reality is that these workers have very specific expectations and desires about the workplace. Companies that recognize this and proactively work to address these differences in a positive way stand the best chance for success, while those ignoring it do so at their own peril. What do Millennials want? Millennials expect to work for 4 to 5 companies in their lifetime. More money and more opportunity for advancement are their top incentives to work harder and stay longer. 68% of Millennials say corporate social responsibility is important to them. Honesty is the most important quality in a good leader, followed by exhibiting a solid vision.* *data from global survey Randstad US & Millennial Branding: Gen Y vs. Gen Z Workplace Expectations Study 13 Only 57 percent of manufacturing and logistics decision-makers say their companies make an effort to tailor retention programs to the specific needs/preferences of different generations of workers. Understanding and developing an employer brand helps organizations ensure they can attract and retain the talent required for growth, and it creates an important recruiting advantage. Companies must evaluate how jobs have evolved over the last decade and should consider tailoring their benefits programs and workplace cultures to be more appealing to a wider range of workers. 22 manufacturing & logistics workplace trends guide workforce outlook

23 A holistic approach to talent 84 % 79 % 68 % Our ability to maintain adequate staffing levels directly impacts our efficiency and productivity. Compared to previous years, we are as or more committed today to building a variable workforce to allow for greater flexibility. A variable workforce model, with a mix of temporary and permanent employees, allows us to be more agile and flexible in meeting fluctuating customer demand or peak periods. By 2017, contingent workers including independent contractors, statement-of-work-based labor and freelancers will account for nearly 45 percent of the world s total workforce. 14 It is also estimated that more than 40 percent of the U.S. workforce will be contingent by the year What does this mean for employers? The contingent workforce segment is growing in importance and size. Many companies are focusing on bringing together people, processes and technologies in a holistic approach to accelerate the growth of their talent capabilities. 16 A holistic perspective frees the company to tap into all available resources to address a need without the limitations of drawing from only one worker type. Organizations that leverage an integrated workforce management strategy will emerge as winners. Companies that understand the benefits of contingent workers and how to manage them well, enjoy: improved operational performance lower labor costs informed staffing decisions more organizational flexibility stronger alignment between HR strategies and business objectives manufacturing & logistics workplace trends guide workforce outlook 23

24 about the survey 24 manufacturing & logistics workplace trends guide

25 Throughout this report, the figures represent the findings from a Research Now survey conducted from November to December For the survey, a sample of 2,004 hiring decision-makers working in a variety of sectors was interviewed, including engineering, finance and accounting, healthcare, human resources, information technology, legal, manufacturing and logistics, office and administration, pharmaceutical and sales and marketing. All sample surveys and polls may be subject to other sources of error including, but not limited to, coverage error and measurement error. manufacturing & logistics workplace trends guide 25

26 Participant profile company size by number of employees: Less than 50 (17%) 50 to 99 (10%) 100 to 499 (24%) 500 to 999 (10%) 1,000 to 2,499 (12%) 2,500 to 4,999 (8%) 5,000+ (19%) Manufacturing and logistics hiring decision-makers in this study represented industrial, electronic and consumer products manufacturing industries and perform functions within HR, administration, logistics/planning or research/design. About Randstad US Randstad US is a wholly owned subsidiary of Randstad Holding nv, a $24.5 billion global provider of HR services. As one of the largest staffing organizations in the United States, Randstad provides temporary, temporary-to-hire and permanent placement services each week to over 100,000 people through its network of more than 900 branches and client-dedicated locations. Employing 5,300 recruiting experts, the company is a top provider of outsourcing, staffing, consulting and workforce solutions within the areas of engineering, finance and accounting, healthcare, human resources, IT, legal, life sciences, manufacturing and logistics, office and administration and sales and marketing. Learn more at and access Randstad s panoramic U.S. thought leadership knowledge center through its Workforce360 site that offers valuable insight into the latest economic indicators and HR trends shaping the world of work. 26 manufacturing & logistics workplace trends guide

27 Sources 1 Bureau of Labor Statistics Employment Situation Summary, Feb Deloitte/Manufacturing Institute Report, The Skill Gap in Manufacturing: 2015 and Beyond. media/827dbc a15ef7067a704cd.ashx 3 Ardent Partners, State of Contingent Workforce Management report Year-End Randstad Employee Confidence Index Survey 5 Randstad US 2016 Manufacturing & Logistics Salary Guide 6 National Association of Corporate Directors survey, The Chicago Tribune, September Randstad US & Millennial Branding: Gen Y vs. Gen Z Workplace Expectations Study 14 Ardent Partners, The State of Contingent Workforce Management: The Guidebook for Managing Non-Traditional Talent 15 The Intuit 2020 Report 16 Randstad Sourceright 2016 Talent Trends Report 7 Bankrate s Financial Security Index, Aflac Workforces Report, Randstad US Engagement Survey Deloitte/Manufacturing Institute Report, The Skill Gap in Manufacturing: 2015 and Beyond 11 ThomasNet Industry Barometer Index manufacturing & logistics workplace trends guide 27

28 Visit us online at: Follow us: