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Overcoming the Manufacturing Labor Shortage: How Do You Stack Up?

Posted by Dawn White on Jun 22, 2021 8:49:04 AM
Dawn White
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Female manufacturing workers on the shop floor | overcoming the manufacturing labor shortage

According to a study by The Workforce Institute at UKG, there’s good news and bad news for manufacturers in 2021. While more than half (54%) of manufacturers are seeing year-over-year growth as we come out of the pandemic, a growing skilled-labor shortage could throw a wrench in a full recovery.

The talent gap in the past year has grown significantly wider, creating tough challenges for employers:

  • 54% of manufacturers have trouble finding qualified candidates, up from 38% before the pandemic.
  • Frontline shift-work volume is at 88.5% of pre-pandemic levels.
  • 63% of manufacturing employers struggle to fill critical labor gaps, despite higher than normal unemployment rates.
  • Manufacturing production lines are understaffed a quarter of the time.
  • Turnover is up 15% over the prior year.

These mounting staffing challenges are biting into manufacturers’ bottom lines from multiple directions — including productivity losses (37%), overtime pay (34%), employee burnout (28%), employee turnover (27%), and recruiting (23%). The mounting staffing challenges have serious implications for overtime, absenteeism and turnover, production rates, and profitability.

Overcoming the Manufacturing Labor Shortage

While the labor challenges are significant, proactive manufacturing employers are finding innovative ways to overcome the manufacturing labor shortage — often by investing in the people they already have. For example, some employers offer mentorship programs to foster knowledge sharing between veteran workers and newer employees. Others are investing in their workforce through digital transformation strategies.

But there’s room for improvement. There are several opportunities that most employers overlook, including:

  • Anonymous feedback or suggestions for improvement
  • Flexible work schedules or autonomy to determine availability
  • Predictable work schedules

The UKG study concludes that manufacturers who invest in people-centered technologies will fare better than those who don’t. “Investing in technology that will create a better experience for all employees...is a modern necessity,” said UKG’s Kylene Zenk, director of the manufacturing practice. “Enhancing the employee experience must be among manufacturers’ highest priorities.”

Check out the Manufacturing Industry Solution Guide

Promises and Challenges of Innovative Recruitment Programs

To retain their best workers, a growing number of manufacturers are implementing multi-pronged strategies that include incentive pay programs. These compensation plans reward employees for seniority, the type of work performed, or productivity.

Incentive programs can also help boost your recruiting efforts. Applicants want to know how you care for your employees. Your company will be more attractive if you can show that you use the latest technologies to meet your employees’ compensation needs.

But attractive incentive programs are only as effective as the system that supports them. Imagine this scenario: two top-producing employees walk into your payroll office with questions about their payroll checks. When they see the chaotic state of the payroll office, they’ll know their checks must be wrong. Both employees quit the next day, because they have no confidence that they’re getting paid correctly.

Related: Why Your Incentive Program Isn’t Working—and How to Fix It

No one wants to work for a company that’s held together by outdated technology and manual workarounds.

Your payroll technology is an important part of your digital strategy for attracting and retaining your best talent. And because more and more employers are providing incentive-based compensation plans, it’s more important than ever to have the technology to do it easily, accurately, and dependably — every pay period.

But implementing an incentive program has its own challenges:

  • Managing the different variables that influence employees’ pay rates can be very time consuming.
  • Unique incentive policies have to be in compliance with union pay rules, and running payroll means additional union calculations.
  • Piece rate calculations add another layer of complexity.
  • Accurately calculating overtime earnings to be in compliance with FLSA can be overwhelming.

Most ERP systems don't include a robust time-and-attendance or payroll module to handle shift differentials, overtime, and state-specific rules. But most time-and-attendance systems aren’t designed for these complexities, either.

IDI Calms the Complexities

IDI can help. Our payroll integration solution can eliminate your time-consuming processes and synchronize your disparate systems. Our solution is designed for manufacturing companies that need to integrate ERP systems with time and payroll, and handle complex incentive calculations.

IDI makes it easier to use payroll automation as a valuable part of your recruiting strategy, because your employees can have confidence that they will never be underpaid. In fact, IDI’s automation gives you greater freedom to offer several different ways for employees to increase their pay.

Use best-of-breed technology to create a good onboarding and payroll experience to keep current and future employees happy. Talk to an IDI sales representative for more details.

Check out our solutions for the manufacturing industry →

Topics: Manufacturing Industry Solutions