New Report Addresses Financial, Business Impacts of Employee Turnover on Manufacturers
Tooling U-SME, the leading provider of manufacturing training solutions, released a new report exploring the damaging impact of the cost of turnover (CoT) to manufacturers. According to the CoT report, voluntary turnover costs organizations hundreds of thousands and up to millions of dollars. The report, “The True Cost of Turnover: Hidden Costs Go Beyond Financial to Impact Productivity and Culture,” highlights the dangers of neglecting to take steps necessary to retain and continually develop their workforce. It outlines:
- The sources and causes of turnover
- Significant financial loss and unwanted business challenges if not managed properly
- Concrete steps organizations can take to reduce their turnover.
Beyond the obvious financial costs of recruiting, onboarding and training, the report also highlights the less obvious costs of turnover to a manufacturer:
- Decreased productivity and customer satisfaction
- The opportunity cost of diminished capacity
- The loss of embedded knowledge
- The impact of frequent turnover on organizational morale
Taken together, the financial and business costs of turnover can be staggering.
Factors driving high turnover rates, the report concludes, include organizational mistakes and inadequate training during the first year of employment for new hires, baby boomer retirements and a decrease in training for incumbent workers. Tooling U-SME advises that looking at people as appreciable resources worthy of ongoing investment provides a return over time as turnover decreases.
Tooling U-SME surveyed senior leaders and management in manufacturing to gain a better understanding of how manufacturers factor in CoT to make a case for training. The training provider revealed that 43 percent of those surveyed reported an average 20 percent or higher annual turnover, which is taking its toll on their culture and finances.
“The workforce is a manufacturer’s greatest business asset, so it’s critical that they continue to invest in the learning and professional development of their teams to help them remain competitive,” said Jeannine Kunz, vice president, Tooling U-SME. “When companies ignore the dangers of CoT, they run the risk of losing money, encountering issues with customer delivery as well as employee issues like low morale and overworked staff. If prolonged, high performers will leave companies to go work for competitors that value and invest in employee development.”
To combat turnover, there are several measures manufacturers can take:
- Set expectations in the hiring process
- Develop a strong onboarding program
- Demonstrate pathways of development
- Make check-ins part of the process
- Develop and assign strong trainers and mentors for new hires
- Provide ongoing development opportunities
- Assess the way leaders “lead”
- Develop cross-generational teams
Manufacturers can differentiate their companies from the competition and create loyal employees by committing to proven action steps that retain and develop a strong workforce.
For additional insights and best practices for developing a skilled workforce, click here.
About Tooling U-SME
Tooling U-SME delivers versatile, competency-based learning and development solutions to the manufacturing community, working with more than half of all Fortune 500® manufacturing companies, as well as 600 educational institutions across the country. Tooling U-SME partners with customers to build high performers who help their companies drive quality, productivity, innovation, and employee satisfaction. Working directly with hundreds of high schools, community colleges, and universities, Tooling U-SME is also able to help prepare the next generation workforce by providing industry-driven curriculum. A division of SME, an organization that connects people to manufacturing solutions, Tooling U-SME can be found at toolingu.com, facebook.com/toolingu or follow @ToolingU on Twitter.