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Seeking an Engaged Workforce? Don’t Forget about Contingent Workers

Posted By Jeff Moad, June 08, 2017 at 3:28 PM, in Category: Next-Generation Leadership and the Changing Workforce

wm_d99e387b86d870a245642af2ba8bbe57.jpgIn a recent “Factories of the Future” study, we asked manufacturing leaders how their factories would be managed five to 10 years from today. The largest group—39%--said the predominant management approach will be collaborative, “with greater emphasis on involving employees, customers, and suppliers in processes and decision-making.”

(By the way, very few of those manufacturers surveyed—9%--said their plants are managed collaboratively today.)

It’s no wonder that manufacturers foresee plants that are more collaboratively-managed and that feature a more engaged workforce. As digitization transforms factories and as technologies such as advanced analytics enable decisions that are driven by real-time data, operators on the plant floor will need to be empowered to make decisions quickly, based on data. They won’t always have time to check in with supervisors first. And that means they will need to understand the upstream and downstream implications of those decisions, and they will need to be able to collaborate effectively with others on the line, sharing insights into what they are seeing and how they are reacting.

As a consequence, we see leading manufacturing companies investing in and innovating with programs designed to empower employees and help them become better at collaborating and communicating. One prime example is The Dow Chemical Company which, next week, will be honored as a 2017 Manufacturing Leadership Awards winner for its unique Talent Development Initiative which uses unconventional methods to uncover in employees latent skills, motivations, and ambitions, and provide clarity of purpose through a guided process of self-discovery.

But, even as companies such as Dow invest more in developing the capabilities of full-time employees, we see a countervailing trend that may complicate the transition to collaborative cultures: the increasing reliance on a part-time or contingent workforce. In response to tighter employment markets in some regions and to increasingly unpredictable demand, some manufacturers are making greater use of contingent workers who may be called on for a few days or a few weeks at a time. The use of contingent workers has become more common at some companies following last decade’s Great Recession.

While an on-call contingent workforce presents some advantages such as greater flexibility and even lower fully-loaded labor costs, it also comes with complications. Much greater turnover and absenteeism are common, for example. And contingent workers usually don’t receive anywhere near the training and preparation that full-time workers do.

Which raises the question: How can manufacturers increase the engagement and collaborative capacity of their workforces when a significant percentage of their workers are temporary or part time?

Recently, executives from one large automotive manufacturing company shared with members of the Manufacturing Leadership Council how they are working to address the growing challenges of managing a workforce that includes a significant percentage of contingent workers.

After calculating that contingent worker turnover, absenteeism, and unavailability accounts for over $2 million in annual losses in a single plant, managers at this company assembled a team composed of officials from production, logistics, staffing, and human resources functions to come up with solutions. The team concluded that the company was paying contingent workers below local market rates, failing to match contingent workers to the right job, failing to adequately prepare or train contingent workers before they showed up for work, and failing to provide contingent workers with planned time off options.

Perhaps most importantly, this company also found that it needed to do a better job of communicating its challenges and expectations to the contractors it works with to find contingent workers.

So far, this company has already made several changes in how it manages contingent workers, including raising the hourly wage rate. The company has also created a new supervisory role on the plant floor. Staff Performance Managers are now in place on the plant floor, focusing on onboarding, engaging, and supporting contingent workers and supplementing the guidance workers get from existing supervisors.

The company also is considering several other new steps, including a tiered classification and pay system for contingent workers that is based on experience and knowledge and intended to improve retention and provide a path to full-time positions for contingent workers.

The company is also beginning to work with its contractor to conduct testing and training of contingent workers before they show up on the job and to provide limited planned time off. These steps are intended to improve retention and help insure that contingent workers are prepared and matched to the right jobs when they show up.

The upshot is that, as manufacturers seek to engage better with and empower workers, they can’t afford to forget about the contingent folks that make up a significant chunk of their workforces. These workers, too, should be treated as valued members of the team. And manufacturers should work internally and with their contractors to find ways to engage these workers and make sure they are prepared to contribute on day one and willing to come back to work on day two and beyond.

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit

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