Manufacturing Insights

The Next Era of Manufacturing

Discover the emerging trends shaping the future of the manufacturing industry. In this series, we delve into why these trends are crucial for the survival and success of manufacturing companies and explore how your company culture and performance can be the key to thriving through these transformations. Join us every week for fresh insights and stay ahead of the curve.

Mark your calendars! On Tuesday, July 16 at 11:00 AM ET, we will host a webinar to expand on the topics explored in our research. Don’t miss this opportunity to gain deeper insights and engage with industry experts.

Overcoming Labor Shortages and Rising Global Competition

This section explores the critical issues of labor shortages and increasing global competition, providing insights into how these trends impact your business. Discover strategies for maintaining a skilled, efficient workforce by minimizing turnover and enhancing your organization’s appeal as a great workplace. Learn how Denison identifies cultural drivers of turnover and uncovers key aspects that attract top talent, empowering your company to stay competitive and attract new demand.

Read more about Labor Shortages and Global Competition

Introduction
For over 25 years, Denison has driven financial performance and growth in the manufacturing sector. Our research shows a 38% profit gap between companies with strong cultures and those with weak ones, primarily due to safety, quality, and retention issues linked to company culture.11 Richards, J. (2011, September 26). How culture and safety impact your bottom line. IndustryWeek. https://www.industryweek.com/leadership/companies-executives/article/21954539/how-culture-and-safety-impact-your-bottom-line Throughout our history, Denison has ultimately developed solutions designed to pinpoint these issues within any company.

Manufacturing companies with strong cultures have 38% higher profits than those with weak ones.

Since the pandemic, declines in company culture (shown below) have jeopardized financial success, compounded by new pressures like labor shortages, digitalization, and process automation. This series aims to provide manufacturing leaders with insights to enhance financial performance and secure competitive advantages in this evolving industry landscape.

  • In 2019, the Manufacturing Industry performed above average on 92% of our measures.
  • At the height of the Pandemic, the Industry was performing above average on only 33% of our measures.
  • Today, the Industry is only performing above average on 58% of our measures.

Overcoming Labor Shortages and the Rise in Global Competition
Labor shortages have long been a challenge in manufacturing, worsened by the COVID-19 pandemic in recent years. Today, three-quarters of manufacturing executives identify attracting and retaining quality talent as their primary challenge.22 National Association of Manufacturers (NAM). “Attracting and Retaining a Quality Workforce.” NAM Survey.

The aging workforce and lack of young talent hinder productivity, innovation, and growth. Simultaneously, global competition intensifies, further stressing labor markets in the US and abroad. Companies failing to secure and retain skilled workers risk falling behind in this evolving landscape.

75% of manufacturing executives say attracting and retaining quality talent is their top challenge.

Competing for a Talented Workforce
Your company’s culture is critical to attracting talent in this shifting labor market. Younger workers now prioritize company culture on par with salary and benefits33 City Personnel. (2023). Company Culture Vs. Salary: What Matters Most To Job Seekers? Retrieved from https://citypersonnel.net/company-culture-versus-salary/, and this trend is growing across the labor market.44 Employ Inc. (2022). Job Seeker Nation Report. Retrieved from https://web.jobvite.com/rs/328-BQS-080/images/2022-12-2022JobSeekerNationReport.pdf

Company culture also plays a role in how many job offers you extend are accepted55 Employ Inc. (2022). Job Seeker Nation Report. Retrieved from https://web.jobvite.com/rs/328-BQS-080/images/2022-12-2022JobSeekerNationReport.pdf, meaning a weak culture filters out top talent at every hiring stage.

Keeping Your Talented Workforce
Once hired, nearly a third of new employees leave within their first year if the company lacks a strong culture.66 Richards, J. (2020). Do you have a turnover problem? Plant Services. Retrieved from https://www.plantservices.com/workforce/workforce-development/article/11291902/do-you-have-a-turnover-problem When failure to attract couples with failure to retain, hiring and onboarding costs skyrocket, eroding profit margins. Over time, this leads to a stagnant, demotivated workforce, resulting in lower quality, increased safety incidents, and further financial losses.

Identifying Root Causes - To strengthen recruitment and retention, focus on these key drivers found in our research:

  • Flexibility

    Even non-telework roles expect flexibility today, such as compressed work weeks, shift swapping, and flexible hours.

  • Innovation and Learning

    Continuous improvement and learning opportunities keep employees engaged and loyal.

  • Consistent Business Environment

    Stability and predictability in daily operations reduce stress and turnover.

  • Strategic Alignment

    Clear strategic direction from leadership boosts employee motivation, productivity, and retention.

From Deficit to Dominance
Going beyond ‘industry best practices’, we connect your performance metrics to measures of your culture and pinpoint actionable priority areas.

In the case example below, you can see two manufacturing production and office locations with significant differences in retention rates. Deep analytics surface the strongest drivers of retention across the workforce, allowing you to assess positive and negative drivers of retention across groups.

In this example, we see that turnover is being driven by some of the same things we discussed before. However, you can also see that concerns about unethical behavior and uncooperative teams are driving turnover to an even greater degree for this company, highlighting a clear priority area that will maximize return on investment in recruitment and retention.

You also see that the production group with stronger retention rates in 2023 faces similar short-term cultural challenges, suggesting it’s at risk of facing similar turnover problems in 2024 across both plants.

By linking your unique cultural attributes to key performance outcomes like retention, your team can create a robust action plan that directly enhances financial performance through improved recruitment and retention strategies.

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