by Michael Watkins, MBA/JD, EBITDA Growth Systems
There is a truth regarding talent that is so significant that it is lost on many. Part one of the truth is this – “no single company can hope to address the lack of skilled machinist in America”. And while it is important and useful for individual companies to come alongside trade organizations and federal, state and local governmental agencies in their efforts to address the challenge on a macro level, there will not be a short-term solution to the problem. Part two of the truth is this – “the only thing that a single company can do in their effort to address the lack of skilled machinist in America is to make certain that they don’t lose their current talent.”
Many organizations treat their employees like they’re a dime a dozen. These companies think that even their best workers can easily be replaced, particularly in today’s tricky economy where there’s no shortage of folks looking for work. They are wrong of course. There is a tremendous shortage of Machinist talent looking for work.
Great shops understand the importance of keeping their employees for a long time. In doing so, they don’t have to regularly spend the time and money necessary to replace employees – which could devastate their bottom lines. The three main reasons why employee retention is of critical importance are:
- It is extremely expensive to lose an employee – lose of knowledge
- It is extremely expensive to lose an employee – lose of productivity
- It is extremely expensive to lose an employee – opportunity cost
It is the result of these costs that the largest part of an owner’s brain should be focused on their people. What follows is a list of highly effective ways to boost employee retention. The majority of them require money, but when it can cost as much at $80K to replace a $20/hour resource, that money would be much better spent on all of your existing employees.
The following are 10 ways to boost employee retention:
- Train your Managers
- Onboarding and orientation
- Employee compensation
- Communication and feedback
- Annual performance reviews
- Employee training and development
- Recognition and rewards systems
- Work-life balance
- Flexible working arrangements
- Fostering teamwork
With payroll representing more than 70% percent of a Machine shop’s costs, the owner must closely monitor the success of their employees, the biggest expense of their business, to understand where their business is today and where it can go. Successful owners consider employees an asset to the business and realize that a low employee turnover rate is a crucial factor in their efforts to achieve their targeted profit margins. In other words, “winning the war of talent” is much less about finding more employees and much more about retaining the talent that you already have.