The manufacturing industry is plagued with one of the highest turnover rates of any U.S. industry. In fact, two in five manufacturing companies (43%) report an annual turnover rate of over 40%, while the average turnover rate in other sectors is just around 2.5%. The financial drain associated with this attrition is debilitating to a manufacturer’s bottom line, as training can start at $5,000 per hire, with an additional $1,500 per employee each year. Which means when that hire leaves, so does that investment. Of course, that’s only a portion of the drain. The production loss associated with that employee’s function needs to be factored into the deficit, as does the overworked staff temporarily tapped to fill in for that person, which can impact morale and perpetuate further attrition. And the bleeding doesn’t stop there, as hiring a replacement can cost, on average, $5,159 before the aforementioned training investment starts all over again.
The disparity in exodus rates between advanced manufacturing and everyone else is complicated. ZipRecruiter reports an average annual salary of $76,318 in advanced manufacturing in California today, who simultaneously reports 1 million unemployed residents. Yet many of the 7,724 advanced manufacturing jobs listed on that site alone don’t require a four-year college degree, and, as we know, offer training. According to The Fabricator, however, one welder states that the lack of interest is about more than money, but earlier exposure to what these trades entail in middle and high students. “Let them discover the joy of running a bead or fabricating a catwalk or milling a hub as a kid. Or let them find out they hate it,” says Josh Welton. “Either way, you’re going to attract people who want to be where they are, instead of being everyone’s Plan B.”
This lack of exposure when it counts is directly correlated to the “dirty hands” stigma of advanced manufacturing, which – while shifting – still persists among parents and teachers today. Put frankly, the same sectors that keep us warm, fed, safe and well-traveled, are the same ones we put a less-than value on compared to a doctor or a lawyer. This is why so many employers are suffering from the ‘warm body syndrome.’ Out of sheer desperation to meet consumer demand, many are forced to recruit quantity over quality, accepting – and budgeting for – a six-out-of-ten-left-standing workforce.
Consider these two steps in mitigating costly attrition:
1. Optimize Candidate Sourcing
Not to be confused with recruiting, candidate sourcing is the process of searching for, identifying, and contacting potential candidates for roles you are recruiting for in the future. Recruiting happens after sourcing, and incorporates the screening, interviewing and evaluating elements of the recruitment process. This means that proactively searching for candidates, regardless of current vacancies, is paramount in keeping a talent pipeline full with workforce at the ready. 83% of companies report they already do this, however, advanced manufacturing wouldn’t be bracing themselves for 2.1million unfilled jobs by 2030 if this were being performed effectively. “HR departments need to essentially become hunters, running to find hires,” laments one recruiter, “until we can make the perception shift of hires running to us.”
This is because traditional advertising through job banks and boards is not effective at reaching students who are not yet on the job market, but poised to choose a career path that could lead them right to you post-secondary. They are also not effective in reaching those who are already employed, but would not naturally think of manufacturing as a career. Today’s tight labor markets require more innovative and broad-reaching strategies that can both influence perception of these careers early on, as well as provide access to skills development that will make a future candidate employable, and interested. There are 65 million students about to hit the workforce over the next seven years. This scarce talent pipeline issue is not a people problem, but an awareness problem. Access to them is paramount in making the needle move for good.
2. Manage Candidate Expectations
Misalignment of expectations accounts for 60% of turnover in advanced manufacturing. Which is why many employers offer Realistic Job Previews, or RJPs, that offer a realistic look into what a job is actually like – no sugar coating – showing both the positives and negatives. This provides a candidate a feel for what a typical day would look and feel like, the depth of knowledge and skills required, boundaries of their specific responsibilities, work schedule requirements, and the quality of work you’re looking for. While a trusted qualifier in candidacy, logistically and operationally, this is very expensive, especially when you factor the 40% who walk away.
Allowing potential future candidates to “try on careers” in advanced manufacturing is spot on, however. Giving students access to the lexicon, the pathways and skills needed for them to decide for themselves, void of parent/teacher influence, provides them with the agency to intentionally pursue that career, providing you with a vetted pipeline. Doing this at scale means doing it digitally. 97% of Gen Z has access to a smartphone, where they spend seven hours a day. A digitally transformed approach to workforce development = high impact.
Interested in learning how skillsgapp employs a two-step approach to minimizing turnover? Email us here.