Retaining Skilled Labor in Manufacturing: Solutions for Workforce Unhappiness

In previous articles, we’ve navigated skilled labor shortages and looked at ways manufacturers can do more with their current workforce.  Today, we’re looking at the costs and causes of losing workers, and options for retaining skilled labor.  After all, it’s difficult to maintain productivity if businesses are experiencing high turnover.

Employee satisfaction continues to surface as a critical component of productivity, safety, and profitability in the manufacturing industry. At this point, it’s not news that an unhappy workforce has substantial consequences, affecting both the bottom line and workplace culture. But it’s worth revisiting as it continues to be a major factor in the success and growth of businesses.  According to recent research from Gallup, unhappy workforces cost U.S. companies an estimated $1.9 trillion in lost productivity last year (Gallup 1/23/24.).  

This week’s article breaks down three key aspects of manufacturing workforce unhappiness: the financial costs, the role of outdated processes, and how technology like PrismHQ can help retain skilled labor. We’ll dive into each area in detail, to arm you with the information you need to take actionable steps to improve workplace morale and boost operational efficiency.

See where your specific strengths and opportunities for improvement are with our FREE Technology Wellness Scorecard.

1. The Financial Costs of an Unhappy Workforce

Employee dissatisfaction isn’t just a morale issue; it carries direct and indirect financial costs as well. Unhappy employees are more likely to be disengaged, unproductive, and prone to absenteeism and turnover. Workforce unhappiness also erodes profitability significantly.  On average, this cost can range up to $4,500 per hourly worker, according to reports from organizations such as Employbridge and SHRM. For manufacturers, where labor costs are high and skill shortages are common, retaining skilled labor is paramount.  

• Increased Absenteeism: When workers are unhappy, they’re more likely to take unplanned time off. High absenteeism disrupts production schedules, causes delays, and often requires costly overtime pay for replacement workers.

• High Turnover Rates: The turnover rate within manufacturing is notably high—close to 40%, according to the Bureau of Labor Statistics. Replacing employees is costly. In manufacturing, turnover can lead to recruiting expenses, training costs, and productivity losses as new hires ramp up, leading to higher operational costs.  

• Decreased Productivity: Unhappy employees are often less engaged and motivated, leading to lower output per hour. This inefficiency can require more workers or overtime to meet production targets, increasing labor costs.

• Increased Safety Incidents: Unengaged employees may be less attentive to safety protocols, increasing the likelihood of accidents. Workplace accidents lead to insurance claims, compensation payouts, and potential regulatory fines, all of which impact the company’s bottom line.

• Higher Error Rates: Dissatisfied employees may lack attention to detail, resulting in a higher incidence of errors or rework. This increases material waste and impacts quality control, potentially leading to increased customer returns or warranty claims.

Related:  Top 5 Risks of Manual Data Entry in the Manufacturing Industry

2. How Outdated and Manual Processes Contribute to Workforce Unhappiness

Nobody likes feeling held back from doing their best – particularly your top-performers.  Manufacturing processes that rely on outdated machinery, manual data entry, and paperwork can be especially frustrating for employees. Manual processes are also often repetitive, prone to error, and can make jobs feel tedious. Outdated tools not only make work harder but also create bottlenecks and inefficiencies, further adding to employee stress and dissatisfaction.  Addressing these issues head-on is critical to retaining skilled labor. 

• Excessive Paperwork: Manual data entry and record-keeping can be time-consuming and frustrating, especially when employees could be focusing on more engaging tasks. It also increases the chance of errors, which can lead to frustration and the need for rework.

• Lack of Real-Time Information: When systems are not integrated, employees don’t have access to real-time information, making it difficult to make informed decisions on the shop floor. This lack of visibility often leads to frustration as workers feel they are unable to do their jobs effectively.

• Difficult Communication Channels: Outdated communication methods, like paper memos or bulletin boards, slow down the flow of information. This can create misunderstandings, missed updates, and frustrations over ineffective communication.

• Inflexible Shift Management: Without modern scheduling tools, shift management is often rigid and can overlook employee preferences or personal needs, leading to burnout and dissatisfaction.

• Limited Training and Development Opportunities: Outdated processes often mean that employees don’t have the chance to learn new skills or advance in their roles, leading to stagnation. This lack of growth potential can contribute to a sense of unfulfillment and low morale.

3. Technology Solutions to Improve Workforce Happiness

As manufacturing charges towards Industry 4.0 standards, embracing technology is a critical step to retaining skilled labor by addressing the factors causing workforce unhappiness. Digital tools and software solutions can streamline tasks, improve communication, and empower employees with real-time information. Implementing the right technologies can boost productivity, increase job satisfaction, and foster a sense of value among workers.

• Automated Data Collection: By digitizing data entry and collection, employees can spend less time on repetitive tasks and focus on higher-value work. Automated data collection also reduces errors, making workflows smoother and reducing stress.

• Real-Time Analytics and Dashboards: Providing employees with access to real-time data can improve decision-making and empower them to manage their own workflows more effectively. For example, digital dashboards allow employees to monitor performance metrics and identify bottlenecks, leading to a more proactive work environment.

• Digital Communication Platforms: Implementing platforms with communication tools, keeps everyone informed and reduces the need for manual updates or meetings. This can foster a more connected, collaborative workplace.

• Flexible Scheduling Tools: By using modern scheduling software, manufacturers can offer employees more control over their work hours, allowing for a healthier work-life balance. Many platforms allow employees to trade shifts or request time off, reducing stress and increasing job satisfaction.

• Continuous Training Platforms: Offering access to online training and development resources can help employees upskill and advance in their careers. E-learning platforms can provide training in new tools, technology, and safety practices, boosting engagement and providing opportunities for growth.

Conclusion

An unhappy workforce is not only a barrier to employee well-being but also a significant financial burden for manufacturers. By understanding the causes of dissatisfaction, especially the toll of outdated processes, manufacturers can take steps to retaining skilled labor, and begin to see the value of investing in software and digital tools. Leveraging technology to create an efficient, communicative, and flexible workplace can drastically improve employee satisfaction. In turn, this creates a happier, more productive workforce that drives profitability and builds a stronger, resilient business.

We Can Help

If you’re ready to take the first steps towards a faster and easier way to manage your business, PrismHQ provides a simple and flexible solution to streamline production, increase visibility, and improve communication across departments. Our mission is to serve growing manufacturers by providing a single, affordable solution that automates inventory management and integrates it with daily business processes for increased productivity and lower overhead. Contact us today to learn more!