When Pay Is Not Enough: 3 Alternative Currencies Demanded by the Modern Manufacturing Workforce
In a world where the labor participation shortage is real and not going away, manufacturers are looking for real ways to drive productivity, performance, retention of talent, and new strategies for attracting incoming generations. Just paying employees more is not driving major improvements and may not be financially sustainable over time. What else can be done?
The first step is to understand what modern employees view as currencies. This is not just cash and time off, but a range of other categories where they identify value. A partial list:
1. The ability to make an impact every day
2. Flexible and alternative shift schedules
3. Work-life balance and adequate time off
4. Being part of a winning and diverse team
5. Supporting socially responsible brands
6. Option to use earned wage access
7. Feeling valued by managers and peers
8. Structured mentoring opportunities
9. A clear career development plan
10. The right amount of overtime
The list goes on. Everyone is different and values compensation categories differently. The modern salaried and hourly employee requires not just different, but a wide range of compensation categories to become satisfied. Incoming generations especially value flexibility and work-life balance. Companies focused singularly on cash will find that there is not an amount of money they can rationally pay employees to create satisfaction. Frankly, high paying companies often have poor cultures where employees are treated terribly because they cannot measure up to the performance expectations matching the pay. This creates a severe culture crisis.
So, what can be done? If we dig into the list above and work on a few of the alternative forms of compensation, employees get a broader range of “thank you” from their employer. Not having a singular focus on cash creates a more complete level of satisfaction.
Where should you start? Management teams know their employees better than anyone, although there are always some blind spots. Starting with an anonymous survey is always a good idea, especially if you plan to take action. The top three “currencies” from the Ankura survey in the last 24 months have been shift schedule improvement, better communication, and overtime levels.
1. Shift schedules
The shift schedule improvement is often the heaviest lift of all the categories, but may drive the biggest positive results. The right shift schedules can significantly improve morale while also driving performance by having the right people in the right place at the right time. They often don’t cost more when implemented properly but can be very costly when the right work and pay policies are overlooked. However, they directly impact days off and work hours and so are an emotional topic. We know from experience that employees working a schedule they love will not leave for an additional dollar an hour of pay. Their lifestyles would be too disrupted and they would not receive the same compensation based on the quality of life they would need to forfeit.
2. Communication
Only 33% of employees who took the Ankura survey felt that the management team communicated well. This is a huge blind spot for management teams and it ties into other currencies. Employees need to understand how their work impacts the organization and creates value. Communication is a currency that ties to many other topics like feeling valued and making a difference every day. Without communication, employees are often unaware of how the work they do translates into important outcomes. Leadership teams often respond when we share this information with comments like, “Will saying thank you really make a difference?” Employees are telling us that this is absolutely the case, and that leadership is largely missing from the day to day work they do. They are not seen, and they rarely share information. Starving employees of this feedback will cause your best workers to leave and you will be left with the employees who do not care about making an impact – a terrifying thought.
3. Overtime
Overtime is also a major topic as it directly translates into pay. This topic will remain sensitive as a target of cost-cutting and waste. Unfortunately, for high-growth businesses, overtime is an incredibly effective tool. Employees get extra pay and employers are able to satisfy customer demand. To overgeneralize, we are seeing two groups emerge in the workforce today. The older population is looking for a lot of overtime and the 20-40 year old group is looking for something close to 40 hours. Companies that can create two different systems inside one organization are achieving a competitive advantage with the ability to please a broader range of workers. This is harder to manage, but when done right leveraging the right technologies for governance, performance, and engagement improve dramatically.
In conclusion, manufacturers need to look at a broad range of currencies when approaching the modern workforce. It is not acceptable to assume we know what they want or to use past practices to try and satisfy them. The key is to engage the workforce in a real and meaningful way, understand their wants and needs, and work hard to satisfy them where possible. This may mean increasing staffing to reduce overtime – or no increasing staffing to protect it. It may me alternative shift schedules to give them or days off or communicating in new and different ways to finally be effective. In the end, we need to listen. Companies with employees who say their management teams communicate effectively are great at listening. They know that talking less and listening more translates into great communication.
To learn more about how to implement labor strategies that optimize your workforce, watch our latest webinar: What’s Possible in Manufacturing: Proven Labor Scheduling Practices that Optimize Production & Drive Retention.
