July 7th, 2022
Holding on to Your Workforce
With inflation on the rise and high gasoline prices biting into the discretionary income of working Americans, employers are tasked with ensuring that their wage rates are optimized to attract and maintain a reliable workforce. I recently returned from a road trip and spent time on the manufacturing floors of some of my top customers. I like to maintain a good rapport with the production line workers who use the products that I sell on a daily basis. I touch base with many of them as I conduct quality audits and gauge satisfaction levels on the plant floor. This particular trip was a shocker – many of the people that I knew were missing. The reason this time wasn’t sickness. For once, it could not be blamed on a virus. This time the culprit was inflation. The people I knew left to take higher-paying jobs. As John Wayne once said, “A Man’s Go to do What a Man’s Got to do!”
In order to attract replacement employees, these window fabricators had to raise wages, in some cases up to $3 per hour, to attract workers and fill these production jobs. It’s not easy to find replacements. The available pool of reliable factory workers has significantly diminished. Many employees became disillusioned with their jobs during the pandemic. This has been referred to as the Great Resignation, with a record number of Americans quitting their jobs. In April of 2021 alone, 4 million Americans quit their jobs, and in August, a record 4.3 million workers resigned their positions. It seems the pandemic caused people to re-assess where they are in life, their working conditions, the number of hours spent at home vs. work, their pay, and their work conditions. So, with demand for many types of workers being at an all-time high, a record number of workers decided that the grass looks greener either at home, not working, or in some type of job with more flexible hours. The recent escalation of inflation has exacerbated this situation, and now more fenestration workers are leaving the industry for higher-paying jobs.
Now replacing these employees who leave our industry is not easy! In many cases, it took two or three people who were hired and subsequently quit or had to be fired before a suitable replacement was found. Starting and learning a new job in a hot, humid, and dusty manufacturing environment tends to increase an already high attrition rate. Offering a higher starting wage was a must, especially considering the recent concerns about inflation.
One thing that must be considered when raising wages is to re-evaluate everyone’s wages, not just the wage rate of new, starting employees. If you raise the starting wage rate without re-evaluating those of existing, seasoned employees, then you risk an upset in what is referred to as pay equity. Differences in wage rates are allowed when there are differences in factors such as education, experience, skill level, and especially job performance. However, hiring new employees at a higher wage rate than you are paying your existing employees without a good reason could upset the whole apple cart.
Also, ensure you take care of the front office employees, middle managers, engineers, and customer service people. With the U.S. Rate of Inflation currently running at 8%, you risk losing your best employees if you do not consider this when deciding performance related pay increases. Reward your very best so that the skills they honed and the experience they have gained over the years do not end up benefitting some other company or worse yet, your competitor.
A company is nothing without its employees. They are the lifeblood of the organization. Inflation is not an easy pill to swallow. Costs are rising on every front, and it’s going to be a real challenge to remain competitive in a marketplace that is sure to eventually contract. But your company will be nowhere without its most valuable resource – your employees. So, appreciate them, take care of them, and they will give you the advantage you need to be a leader in the marketplace.