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Component Manufacturing dverti$ dverti $ er
Don’t Forget! You Saw it in the
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September 2020 #12254 Page #40
Better Profits with Effective Employee Retention and Growth
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n the almost 20 years of my consulting services, TDC has witnessed that the highest performing companies with the highest profit as a percentage of sales, generally in the high teens to mid-twenties, are the same companies with very low employee turnover. However, it is far more than just retaining employees.
Todd Drummond
When most people think about lean manufacturing, they think about the lean tools such as 5S and just-in-time, but that is only one side of a coin when implementing lean principles. Lean practices require best-in-class employee practices. In other words, lean requires great employees to implement the better methods of lean to obtain the gains that lean promises and delivers. Sadly, too many companies talk a good game about good company employee management practices, but the reality is so many fail miserably. How can any company possibly be at its most productive when they are always hiring and training new employees? So often, too many managers will state, “We treat our employees very well, and it’s not the company’s practices causing these issues.” Usually, people will then list several things, such as the local unemployment rate, wage inflation, and so on. But none of the things on that list are solutions, only other challenges. The first step in solving any problem is recognizing there is one. So many companies claim that employees are the most important part of their business, but too many have staffing shortages and high employee turnover in different departments, which severely impacts output. Industrial engineers are taught that most skilled positions take an average of three years of experience to reach full potential. Typically, a three-year-experienced worker is usually twice as productive as a new hire. Even what some perceive as the most menial of manual tasks requires hand and eye coordination that does not happen overnight. Experienced workers produce not only more units per hour but also higher quality with fewer mistakes. So how can any department within a company reach maximum output if they have a high percentage of new employees with minimal experience? The answer is simple: they cannot.
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