What Works to Retain Staff: Purdue study finds commonalities in Indiana manufacturers with low turnover

Thursday, October 28, 2021

For the past three years, DCMME (Dauch Center for the Management of Manufacturing Enterprises) at Purdue University have been surveying human resources managers at manufacturing companies in the 10-county area around Purdue. The majority of those surveys—over 100—have included actual site visits.

Eighty-three percent of more than 100 surveyed companies, in the 10-county area, reported staff turnover as their leading concern. The most common figure for staff turnover is 40% per year, with most in shop-floor, hourly paid jobs.

In great contrast to the many, about 5% of the companies have turnover rates at or below 15%, without paying more than other companies local to them (except for one company).

Managers often cite pay as the leading reason for employee-leaving. It is not. The costs of staff turnover at 40% levels is not just financial. Indirect costs are significant in high staff turnover environments; working staff are disrupted and disappointed, with possible effects on morale, safety and quality. Without quantifying these “costs,” we cannot adequately fix them.

Reasons for Quitting

Earlier research showed that many leavers go because of the relationship with their immediate manager/supervisor. At the beginning of our study, only three companies had considered promoting supervisors on the basis of relationship skills rather than predominantly technical skills. More recently there is a small trend toward putting relationship-skills as critical to supervisor appointments. It is still the case, however, that most 10-County area companies promote on technical excellence and not relationship skills. One of the larger companies told us:

“85% of supervisors are promoted from within but lack management skills”

Of the companies surveyed, only three already have, or are, changing to promoting supervisors on a primary basis of people skills instead of technical skills. More-enlightened companies, like Nucor, put the human social-intelligence skills as a first test for the job; if the individual fails this test, they will not be hired.

So, what are the successful 5% of 10-county companies doing differently?

Here are a few examples of intervention-areas that impact greatly on staff retention.

Several 10-County area companies have identified coaching skills as a way to improve the competencies of supervisors. Coaching-skills include facilitation language, asking questions, listening well and using the language used by the worker. To create a general culture change, any initiative will include managers at all levels.

The physical work environment matters. If you would not want to bring your family to your workplace, why would you be happy there? We found massive variations, from work-place safety, order, cleanliness, bathrooms, rest areas and eating areas; workplaces where you could eat off the floor to those that are dark and hazardous; disorganized and filthy due to neglect.

A 2019 European study claims that autonomy is a key component of workplace happiness and productivity. Autonomy happens when workers can choose or change the order in which they perform tasks, their speed of work or working methods. The level of autonomy needs to be close to the desired needs of individuals, not a blanket approach.

Multi-tasking offers flexibility and levels of autonomy for workers when they are organized in teams; it also helps supervisors to plan for productive output when there are challenges, due to increased production needs or because of the absence of skilled workers.

Finally, one 10-county company has offered every worker in their company a career plan, engaging individually with every single worker, at all levels. This company enjoyed zero staff turnover.

Other Initiatives that Work Locally to Encourage Staying in the Job

• Flexible work practices
• Carrot-and-stick motivators – use more carrot and less stick
• Shift overlaps and regular team sharing
• Engineers walking the floor every day and seeking out concerns
• Idea scheme (gift card & quarterly prizes)
• Pay-for-skill program.

In one year, pay has increased in two out of three companies in our poll of 10-county companies, for both new starters and existing staff. Many workers want better lives for themselves and for their families. For example, when and where they work and having a say in new work policies (that affect them).

Here are things that other companies are doing that have met with success:

• Wellness Day/Week plant closure
• Mandated work-breaks
• Wellness personal budgets (for gym etc.)
• Care-giving financial-help initiative
• Paid Time Off initiative  
• Paid ‘Relief Days’ (up to 5 days off per year for unexpected domestic/family situations)
• Vaccinated-only environment (where state-legal)
• Flexible work schemes including remote/hybrid work, where feasible
• Benefit packages.

The pandemic may have stimulated demands for paid sick leave. In 2021, 74% of smaller companies (with 500 people), this figure rises to 88%.

People with families are concerned about their safety. The Delta strain of SARS-CoV-2 is reported (CDC Director Dr. Rochelle Walensky) as 83% of US new infections in May 2021. If we address staff fears for both employees and their families, we should expect an improvement in retention.

Not all staff want training and advancement, but the more developmentally ambitious do. If we fail to offer a pathway for learning, attainment and more money, they may go somewhere else. Some 10-county companies have onboarding and pre-work training. Others offer access to computers and band-width at work (or at home). These pathways enable work choices to be planned closer to their individual needs and contentment.

A people-valuing culture is polite, listens, does not blame. People-valuing is adult and nurturing and calls-out non-conformance to the work-culture’s expected behaviors. Your author (AIM) helped companies including the largest mining company in the world (Glencore-Xstrata) to include behavioral-norms for Personal Development Reviews (in one of five Divisions) and these are used for promotion, pay and bonuses.

Prospective employees should have clear expectations about what it is like in your work culture, to avoid a mismatch between expectations and experience. A number of 10-county companies have produced short videos featuring shop-floor staff to more closely align expectation and experience.

Our manufacturing HR executives underpin the belief that the keys to reducing staff turn-over are several and no longer simply about paying more money.

Thanks to DCMME colleagues who worked with your authors on the manufacturing project: Steve Dunlop and Roy Vasher.

Dr. Angus I. McLeod consults at DCMME, Purdue as well as organizations including Wharton, TransOil & Dales. His books include ‘Self-coaching Leadership – Simple Steps from Manager to Leader’, ‘Smart Manufacturing, The New Normal: A TP3 Strategy’ (with DCMME colleagues). He has held thirteen Company Board Directorships in the UK and USA. {mcleod6@purdue.edu}

Dr. Ananth V. Iyer s the Susan Bulkeley Butler Chair in Operations Management at the Krannert School of Management at Purdue University.