Tom Andel

Your work force is your life force
October 1, 2008

Hard costs get our attention. Those are the ones with a clear price tag. In a way, those are the most comfortable costs for businesses, even if they’re high. At least they’re predictable and can be put in a budget.

Unfortunately, that mindset makes it easier to ignore softer costs that eventually end up hitting us hard across the face. Hiring and retaining talent in the plant or distribution center is one of those costs. It was also the topic of a webcast I hosted this week. On our panel to discuss it were Jim Tompkins, president and CEO of Tompkins Associates, a leader in global supply chain services and strategies; Kevin Gue, Professor in the Department of Industrial & Systems Engineering at Auburn University; and Brian Eddy, of SubCon Industries, a non-profit organization that provides employment opportunities for people with disabilities. All three built a solid case for investing in employee hiring and retention.

“You may eat more up-front costs now to satisfy employees, but that will provide ROI later by reducing turnover,” said Kevin Gue. “It costs $4,000 to find, keep and train one entry level employee. These costs are hidden but they do show up on the bottom line. Workplace context factors form a base level of satisfaction. That’s a hurdle you have to clear. Then you go to a high-jump: how much will the employee be satisfied with this job? I won’t reach that high-jump until I get over the minimal requirements on the context side.”

Some of those elements that add satisfaction to the job include skill variety, a sense of accomplishment, having a say in when and how the job gets done, and regular constructive feedback.

However, if your focus in doing all this is getting an ROI, Jim Tompkins says that’s naïve.

“This is a business constraint,” he stressed. “You don’t have a choice. You’re competing for the best workers, and the company that gets the best workers will win. If you can do something that will help you retain employees, it will make a tremendous difference in how successful your company is.”

Brian Eddy suggested employers consider an untapped resource in the labor market: the disabled. This is a demographic that has ten times the national average unemployment, yet according to a study by Disabilityworks.org, on-the-job attendance among the disabled is as good as if not better than that of the traditional workforce, productivity is nearly the same, and because they stay on the job, productivity is higher and turnover cost is far less.

“Most entry level workers don’t like doing labor intensive, repetitive types of tasks,” Eddy explained. “The disabled love those operations that might be causing turnover in some operations.”

I’ll leave you with this statistic from the Bureau of Labor Statistics: Workers between 25 and 40 will decline by 1.7 million this year. Those workers remaining will represent a wider variety of age groups and backgrounds. Managers will need to adopt different sets of skills to deal with the four generations that will be entering the workplace. Hope you’re ready to welcome them.

Posted by Tom Andel on October 1, 2008 | Comments (0)