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Darcy Grabenstein: Hello from SmartLinx! In today's podcast, we'll talk about the human resources challenges and opportunities in today's manufacturing sector. Our guest today is Bill Looney, principal and co-founder of Signature HR Solutions, which provides human resources solutions for small and mid-sized businesses. Bill has 20 years of human resources management experience. Bill's partner, personally and professionally, is Carol Looney, who has also shared her long-term HR insights with us on our podcast. Welcome, Bill.
Bill Looney: Thanks Darcy. Great to be here. I appreciate the time.
DG: Good to have you. So, in 2018, recruiting represents a unique challenge for both exempt and non-exempt positions, whether you're in the manufacturing industry or the healthcare sector. Bill, what makes it particularly challenging this year?
BL: Well, there are a number of different challenges, Darcy, and I think it starts essentially with the market conditions. This is an extremely challenging market to try and find top-level talent, and all organizations are suffering with that. And, as a result of the shortage of labor, many organizations hire people who are less qualified than they'd like for many critical positions. Now, when we talk about manufacturing and we talk about non-exempt positions, these are your hourly positions that often are the ones on the front lines doing the work and, as I said, there's competition for that pool of talent. And especially where manufacturing has been reduced throughout the United States in the past 10 to 20 years, there's fewer qualified individuals for those positions. So that makes it challenging. On the exempt side, finding employees who can move into managerial roles or supervisory roles is even more of a challenge because often what happens is you take the best employee, or the best mechanic, you move them into a supervisory role, and you essentially weaken two positions. So, there are a lot of unique challenges that face manufacturing or healthcare or any of the service industries like that when it comes to finding qualified help.
DG: Sure. You mentioned hourly employees. What other ways would you say that that manufacturing is similar to healthcare in terms of staffing? You also mentioned the front line, which is what we in the healthcare industry often refer to those on the floor.
BL: Sure. Again, a number of issues. And I'll start with the wages that are paid. It's challenging to meet the demands of the labor force, especially in a tight labor market, when hourly wages are only at minimum wage or slightly above. Employers are being forced to pay more in order to find talent that will stay with the organization, that they can retain and they can train and find dependable.
This is especially true when you're facing multiple shifts — evening shifts, overnight shifts, weekend shifts. Organizations that face 24/7 operations are finding it extremely challenging to maintain the staffing levels over the course of their entire week and provide quality service, in healthcare to their patients, or to meet the demands of their customers if it's manufacturing.
English as a second language is another issue. You know, in this market, it's getting more and more difficult to find employees who are able to speak English or are able to communicate in a language that the supervisor or the manager communicates in. So, accommodations are having to be made for different levels of skillset, different types of employees as the market gets tight.
And finally, you know I mentioned earlier, promoting supervisors into roles where they don't have experience poses a unique set of challenges as well, everything from communication to leadership to making critical judgment decisions on employment issues. Just a whole host of issues that manufacturers and healthcare companies are facing when it comes to talent acquisition and talent retention.
DG: All good points, Bill. I didn't even think about the ESL issue, but that definitely is something that comes to the forefront in this industry. So, Bill, wouldn't you say that the type of manufacturing organization that we just discussed, you know, the assembly line, hourly paid positions, is more of an old-style organization? And what do these types of manufacturing organizations focus on from an HR perspective?
BL: Yeah sure, that's an excellent point, Darcy. If you go back 20-30-40 years, these types of old-style, as you refer to them, manufacturing organizations were commonplace in the United States. Many large metropolitan areas had them. Many towns thrived off those types of manufacturing organizations, and a lot of people who lived in a town all worked at the same organization.
That's just not the case anymore. These types of organizations now face more modern HR concerns and issues. Employee relations, being able to satisfy employee concerns and retain employees who would otherwise leave for better opportunities with higher wages. Worker training, employees want to be trained, they expect to be trained, and in cases they need to be trained. And we're finding that lots of organizations don't have the budgets within their HR scope to be able to support the level of worker training that's necessary to provide that quality service. We talked about supervisory growth patterns, that's a challenge in and of itself to find the right person for the right job at the right time. And being able to put employees on a trajectory for advancement and growth requires HR perspective and funds and time and planning.
And finally, as I said, recruiting the minimum- to moderate-wage employees is very challenging in a tight labor market. You can't drive down the street without seeing "Now Hiring" signs up in retail and restaurant organizations. And so for a manufacturing organization to be able to attract and retain talent requires a certain amount of planning and HR involvement in that process in order to be successful.
DG: Bill, would you say that today many manufacturing organizations are more technical, with a heavy engineering focus, and using college recruiting that's slanted toward the exempt roles? And how do employee expectations and experiences differ in this type of organization versus more the old school?
BL: Yeah, I would say that absolutely, Darcy. Organizations that I've worked for, including recently, are certainly experiencing the need to find what we call early career talent. And that in many cases includes on-campus recruiting and finding the talent at the start gate, so to speak, where the employees just coming out of college. And the competition for those types of employees and that level of talent is getting high as well. And you know, hiring young people, who are early in their career or just beginning their career, poses a unique set of challenges as well.
Generational differences in the workplace is real thing that human resources professionals are discovering, especially over the last 10-15 years. And you know, millennials who were born in the last 15 to 20 years are expecting different things from their employer. They're expecting to work for a socially responsible organization, an organization that takes care of employees but takes care of the environment and is aware of the needs of the community and aware of the needs of the world. And many young people, many early career hires, ask about that during their initial recruiting process. They expect flexibility in their new employer, whether it's telecommuting or the ability to work flexible hours, the ability to come and go as they need to, versus when the employer expects them to. As well, they expect a rapid increase in responsibilities and compensation.
And you know, where it used to be a person, even an engineer, who worked for a tech company, would come and work 10-15-20 years, it wouldn't be completely unusual for them to spend their entire career with one organization, now if they work for the organization for three to five years, the organization has to look at it as a success. So, you know, that changes the mindset and HR has to be on the front side of leading the understanding of that change within the organization, because it's a real challenge and a real change.
DG: Sure. Bill, you mentioned engineers, so that brought to mind another question. My husband, in a former life, was a mechanical engineer and had trouble finding employment when he moved for his then-spouse. So how are organizations and manufacturing dealing with outsourcing of these functions, say, overseas or other types of positions overseas. How do they compete with that?
BL: Yeah especially in tech organizations, Darcy, a lot of companies are developing technical centers in different locations overseas. I'm familiar with one organization that has a design center in Argentina, another one in Scotland, perhaps one in Asia, Japan area. You know, not just because the compensation levels are maybe not at the level that they would be in the U.S., but the amount of talent, the talent pool so to speak, is more plentiful, and you know, where maybe you're not able to find those types of employees as easily in the United States anymore, you know, the idea of offshoring some of that work and opening up design centers or technical centers in different locations around the world is becoming very, very commonplace now. It's a global market in the technology sector. And that is starting to spread to the manufacturing sector as well.
DG: Thanks, Bill. Our listeners know that employee relations and employee engagement are hot topics. Can you give us some concrete examples of how manufacturing facilities can increase employee engagement?
BL: Sure, sure. Well, I think it comes down to a fairly simple concept. And you know, in my experience, those old-style manufacturers really have to appreciate the fact that employees want to have a management presence in their facility, they want to know that management cares about the work they do and about them personally.
Employee engagement, as you're aware, Darcy, is more than just a positive work experience. It's looking forward to coming to work every day, it's having a best friend at work, it's perhaps feeling valued and trusted as part of the success and growth of the business. And that can't happen if employees don't see managers and have the ability to communicate with managers.
I would always advise senior leadership to communicate the mission and the business plan of the organization to all levels of employees. The goal of any organization, especially one that relies so much on the product and the output of the frontline employees, has to engage the employees in the mission of the organization. Without that, the work becomes mundane, the employee becomes less engaged, the employees don't care as much about the product they're producing or about the quality of the work they're doing, and the organization suffers. So for the management team to engage the employees in the growth plan, the growth strategy, and show them that they care about them professionally and personally, goes a long way towards creating an environment where employee engagement is commonplace and the culture of the organization.
DG: Definitely. At SmartLinx we do that, and we also provide technology that helps with recruitment, on-boarding, and employee engagement, among other things. Bill, what role do you see technology playing in these aspects of HR?
BL: Yeah, great question, Darcy. It's really developed over the past 10-15 years. Technology plays an enormous role in the human resources function in any organization. And organizations that are slow to embrace technology from an HR perspective are falling behind quickly. And that can happen in a number of different ways.
Certainly from a recruitment standpoint, you know, employers that don't utilize an applicant tracking system or an onboarding system are really risking a poor candidate experience and a less efficient hiring manager experience. Obviously, the ability to manage that entire recruitment process through an online system is extremely valuable. My career goes back to the point where those didn't exist, and in my most recent role I was able to help deploy an applicant tracking system, an onboarding system, and the benefits were immeasurable. And the candidate experience. We had so many candidates come on board and say, that was a seamless experience, it was easy to work with. And ultimately what it does is it leads to faster contributions by the employee, once they come onboard.
Certainly from an employee engagement standpoint, employers want to consider technology on the HR capital side from a performance review and talent management process. You know, we talked about succession planning and moving people into managerial roles and moving employees into more responsible positions that they're qualified for. The best way for that to happen is to utilize technology to the employer's advantage and understand that performance reviews and talent reviews contribute to that process significantly.
DG: Sure. Bill, you've mentioned several times about development and succession planning and that it's a high priority for many organizations, especially in manufacturing. But do you think they're really doing enough in this area? And how can HR help?
BL: Well again, Darcy, a lot of organizations prefer to take the simple approach. And I've seen it happen where a management team will say, you know, "Let's write a position on a whiteboard and let's fill in three or four names underneath that position of people who we think are qualified, either now or in the future, for that position." And they call it a succession plan. And that's not. That's writing a few names on a whiteboard, that's not a succession plan. And a lot of employers don't understand this, and this is where HR can play a critical role in this process, because it is truly interactive between management, HR, and the employee base.
It starts with a robust performance review process. If employers aren't utilizing a system and coaching managers on how to provide honest and valuable feedback to employees on their own individual performance, then they're not doing the employee or the organization any service. That's just part one of the process, though; there's additional steps.
And that includes talent review process, which really is the method in which you ask employees what they want to do further down in their career, what are their aspirations. What is their ability to relocate, what types of functions within the organization do they find interesting that they want to work for, and what skills do they have that the employer may not already be aware of? It then involves assessing potential of employees, having a manager sit down and determine, can this person advance one, two, three levels within the organization? What is their retention risk? What is the impact of their loss, should they leave, to the organization? That's a big one. Many organizations don't measure loss impact. And that's, again, running a great risk for the organization.
Finally, it's identifying key positions for succession, putting a few people that they have the data to support into those succession plans, and then creating the development plans, which helps bridge the gap for the employee from the role that they're in, and giving them the skills that they need to succeed in a future role. And it's really, as I said, a lengthy process, it's an interactive process. Many organizations don't want to take the time to do it, don't want to put the resources in line for it to be successful, and as a result they often fail in this process of developing their employees.
DG: Definitely. Bill, as a rule do you think the HR function has enough influence in the future of organizations? In other words, how can HR influence, say, an organization's advancement and growth beyond human capital management? Can it impact business development? Can it impact product development or other areas?
BL: I think so, Darcy, I really do. And I don't think in many cases HR is utilized as fully as it can be. I think, you know, the common phrase 10-15 years ago became "Does HR have a seat at the table?" And a lot of organizations think that if they include HR in their management practices, that they're doing enough. Well it's more than that. HR is a key player in the growth of any organization, and that's really what most organizations, whether they're in the manufacturing sector or the healthcare space, that's what they want to do, they want to grow, they want to increase their presence and hopefully their revenue and their profits as well. Well, HR can certainly impact that on a number of different levels, certainly from a talent management perspective, as we've talked about, but also from a workforce planning perspective.
You know, if a company is going to grow, and they expect a larger presence and the need to serve more clients or produce more product, there's a certain amount of planning that has to go into that from a workforce standpoint. So, it's identifying key positions, identifying the need to fill those types of roles, developing a recruiting strategy to do that, and preparing those employees to contribute to the organization.
HR can also influence, as we've talked about, employee engagement. And they can also influence risk management. And employers need to have a risk management plan in place to mitigate any concerns that may come along in the future. So you know, do I think the HR function has enough influence in organizations? Currently, no. I think that human resources, the practice is developing and the field and function is developing to the point where true HR professionals can have a broader influence in most organizations.
DG: Bill, you've probably touched on this a lot in your last answer, but we've talked so much about the challenges that HR is facing in manufacturing. But what about the opportunities that exist?
BL: Great question. And I think there are a couple of ways that HR can impact those opportunities. And, not to sound repetitive, technology is a big one. You know, having an HR professional advance the need for an applicant tracking system or a talent management system or an onboarding system makes the process more efficient. And it's a great opportunity area. So many employers don't utilize those types of systems. And they've become more affordable, they're truly advanced in their capabilities now, and they're becoming more advanced every day. And HR professionals are wise to learn about those systems and work to sell their organizations on the need and the value of those systems going forward.
Also from a training standpoint. So many organizations don't take advantage of training opportunities for managers or employees to make them more efficient, to make their jobs more professional, to advance their skillset within those roles, and again, HR can help lead the charge to advance those causes within most organizations. Every organization needs some type of training. Most don't put the training in the right place.
And finally I would say, Darcy, being involved in the planning process, whether it's strategic planning for the business, whether it's growth planning and how that impacts head count and training needs and technology, HR faces the challenge and the opportunity of becoming more involved in the planning phases of the organization.
DG: Thanks Bill. And I just have to tell our listeners that Bill received no compensation for this interview, even though he did promote the technology aspects! So thank you.
BL: You're welcome.
DG: Thanks Bill, for sharing your expertise with us today. And to all our listeners, thank you for tuning in. For more information on Signature HR Solutions, visit SignatureHRSolutions.com. And if you'd like to learn more about SmartLinx and our fully integrated suite of workforce management solutions — including our schedule optimizer, and time and attendance modules designed to help manage multiple shifts, and our applicant tracking system — visit us online at SmartLinxSolutions.com.