The ROI of investing in your workforce
The manufacturing industry is in a constant state of reinvention. Over the past decade, manufacturers have seen their business models disrupted by globalization, technology and shifting employee mindsets.
To survive and thrive in this new environment, companies must continually invest in their people as well as their physical assets. However, sometimes this is easier said than done.
A common misconception is that investing in people is a "soft" investment — something you do if you have the time and money. But, as many manufacturers have discovered, investing in your employees can actually be one of the most effective ways to improve profitability, production levels and organizational performance.
In order to make the case for investing in your people, you need to be able to clearly show a return on investment (ROI). This means calculating the value of your workforce from the moment they walk through your door until they leave. Let's talk numbers.
Lower turnover rates
Investing in your workforce can have a dramatic impact on your bottom line. According to the U.S. Bureau of Labor Statistics, the manufacturing industry has a turnover rate of 39.9%.
This is costly for any company, as Gallup reports that it can take about 0.5x-2x an employee's salary to replace them when you factor in the cost of recruiting, training and onboarding a new worker.
For example, if an employee earns $65,000 per year, it could cost from $32,500 – $130,000 to replace them. By investing in your employees' skills and development through training, you can increase your retention rates and save your company thousands, if not millions, of dollars.
The Journal of Business and Management published that 90% of employees who have been trained and have the opportunity to apply their skills experience a positive impact in their job performance.
For manufacturers, productivity is key. Processes need to be efficient and operations should be flexible enough to scale up quickly when needed. A well-trained, engaged workforce can make the difference between being able to meet demand and missing the mark.
The manufacturing industry is facing a labor shortage, and talent scarcity is one of its biggest challenges. This is well-documented by Deloitte, who estimates 2.1 million manufacturing jobs will be left unfilled by 2030.
This is an issue that shouldn't be ignored. Manufacturing companies need to consider ways to attract and retain talent by offering appealing benefits and compensation packages. Training programs can help build a strong workforce, and they also allow manufacturers to be more competitive in the labor market.
Happy employees are your best ambassadors
Employees who are satisfied by their work are the ones who will tell their network about your company and help you attract more talented people.
Additionally, if they feel valued, they're more likely to stay loyal, which will benefit your company in the long run.
Invest in your workforce today to ensure that your company is strong tomorrow.