The Manufacturing Executive
The Manufacturing Executive

Episode 97 · 7 months ago

How to Retain Your Manufacturing Workforce w/ Dan Johnston

ABOUT THIS EPISODE

It's never been more costly to watch your people walk out the door.

Today’s guest is Dan Johnston, Co-Founder and CEO, WorkStep

WorkStep is a software platform that empowers companies to find and keep frontline employees for the long run. Dan has seen first hand how workforce retention can make or break a company and I’m thrilled to have him on the show.

Join us as we discuss:

  • How supply chain disruption and labor shortages are connected
  • Why the manufacturing labor force looks different today than it did a decade ago
  • The opportunity cost associated with turnover in workforce populations

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Listening to your friendline teammates, caring what they think, ensuring they feel her, making sure they are supported, providing them with growth opportunities, managers support, strong team dynamics, a safe workplace and other support that fits around their life like that's also just you as a company, helping five hundred thousand, ten thousand Fiftyzero people have a better life. Welcome to the manufacturing executive podcast, where we explore the strategies and experiences that are driving midsize manufacturers forward. Here you'll discover new insights from passionate manufacturing leaders who have compelling stories to share about their successes and struggles, and you'll learn from be tob sales and marketing experts about how to apply actionable business development strategies inside your business. Let's get into the show. Welcome to another episode of the Manufacturing Executive podcast. I'm Joe Sullivan, your host and a cofounder of the Industrial Marketing Agency guerrilla seventy six. This episode is brought to you by prolific, an account planning solution that enables manufacturing sales teams to log key information and build account plans right inside of sales force, rather than resorting to sticky notes, spreadsheets, white boards and slide decks. MORE AT PROLIFIC DOT AI. That's pro L IFIQ DOT AI. We hear a lot these days about how difficult it is to find frontline workers or workers in general, but what about retaining the people you already have? The truth is today's workforce wants something different than the workforce of a decade ago or even the workforce of a pre pandemic world. More than ever before, manufacturing leaders need to understand what makes their employees tick at a personal...

...level, how to help them grow in their respective careers and what will motivate loyalty from them, because it's never been more costly to watch your people walk out the door than it is right now. As my guest today will tell you, all of this starts with one simple task listening. Let me introduce him. And Johnston is co founder and CEO of WORKSTEP. Worksteps software platform empowers companies to find and keep frontline and employees for the long run. Prior to Workstep, Dan managed a third party logistics warehouse and cofounded Insta Edu and education technology company. Dan, welcome to the show. Thanks for having me Jo I'm excited. Yeah, my pleasure and Dan. You know, the two biggest issues that I just keep hearing time and time and time again from manufacturers over the past couple of years are one supply chain disruption and to labor shortage issues. You're here to talk about the ladder from your perspective as a leader of a company that's all about hiring and retaining frontline workers. What's the problem here and how bad is it? Well, first of all, it's interesting you set up the question that way, because those two topics, supply chain disruptions and supply chain labor shortages, might not be as disconnected as one might think. Right when you see the headlines about, you know, container ships waiting outside the ports, often really what's happening is the drivers aren't there to pick them up. The where houses are full of talent to unload those trucks when they get there, and so this supply chain labor challenge is really impacting the rest of the supply chain and in many cases causing or prolonging those broader disruptions. So, to answer your question, though, in terms of what's happening and how bad is it in terms of the Labor side specifically,...

...right it's been a long time since I've taken an economics course, but when demand goes up, right, we've seen an acceleration ECOMMERCE, ten years of ECOMMERCE growth in a year during covid. We now have almost three times many warehouse roles in this country today as we did a decade ago. So you've got this skyrocketing demand for supply chain talent. Consumer spending is still high, jobs are moving from retail to distribution, so every company's growing it, of course Amazon being the elephant to the room. But supply is stagnant. Right. You've got turnover higher than it's ever been, you've got companies unwilling to invest in upscaling their workforce because of that constant turnover, and you've got a rise in your flexible work alternatives and other things that people can be doing with their time. And this mismatch between the demand for supplied shade talent and the supply of it is causing all sorts of headaches for manufactures of all sizes as well as logistics companies. Yeah, it's interesting to hear you talk about those things more hand in hand. I've had a lot of conversations on this podcast and with clients and prospects about both of them, but not as much as they relate directly to each other. But I mean, everything you're saying is right on the money. Yeah, you know, I don't. I don't mean to sort of labor, I mean the supplied Jay. It's all interconnective, right. I mean, anybody who's listening your podcast knows that. And so you know when the trucks aren't there at the port of long base to pick up the container because of a driver shortage, that ripples all the way through the rest of the chain of very meaningful way. Sure. Well, Damn, let's talk a little bit here about turnover specifically. You know, at this point everybody is familiar with the term the great resignation. That sort of characterizes this moment in time. Why do you think turnover is such a...

...problem right now, and what do you think's driving that? Yeah, I mean I think you you, you hit the nail on the head, Joe, in the sense that they're great resignation is being reported thoroughly nationally. Right. This isn't just a supply chain problem. Right workers are quitting their jobs in the United States at rates that we've never seen before, at least in measured history, though I would imagine prior to that as well, they're quitting their jobs at more than two extra rate they were a decade ago. So this isn't just supplied chain problem. But when you look at turnover annualized in manufacturing, transportation of warehousing, it's up basically every year of the last decade in all of these industries, and so you've got this real sort of acceleration of the rate of which workers are entering and leaving given employers in this space. Now the reason why? I mean, obviously there's not a clean statistical breakdown, but what we're seeing broadly is a change in sietal norms. Right, whereas decades ago expectations might be to align one's career to an individual employer, that's just not the way. That's not what society necessarily expects anymore. But I think you know more prominently this rise of flexible work, big work. Right. So today you could leave your job in a factory and drive for Uber Tomorrow or deliver for inst cart or door DAPP and get paid tomorrow, whereas a decade ago, twenty years ago, if you left your job today you might not see another paycheck for four weeks, give or take, application processing, payment delay, etc. And that enables workers to have a little bit more ownership over their own outcomes and their own satisfaction. So dangs...

...societal norms, rise of flexible work alternatives and finally, the decreasing relevance of labor unions. Right, if you look at Labor Union penetration and manufacturing, it's down decade after decade. And one of the values of labor unions historically provided are these wage and sort of other job benefit scales tied to tenure. They gave you a very meaningful incented to stay. Right, if staying meant you knew you'd make ten percent more next year than last year. If staying meant you knew that it would mean that you move from night shift to day shift or from Tuesday Wednesday off to Saturday and Sunday off, that provides a real incentive for you to stay with your current employer rather than leave to a new one. And so as all of those factors change at once, you're just seeing a workforce that is more mobile and really less time to their individual employer across both manufacturing and logistics. So you know what I'm hearing from you. Is that, you know, maybe what matters to employees is probably a lot different than it was, you know, a few decades ago, or even a decade ago. What do you find that frontline workers specifically are looking for from their employers at this point in time? That may be different than in the past. Yeah, it's a really interesting question. You know, I think first and foremost most humans, you myself, we're looking for this same thing right we're looking for meaning in our time. We're looking for growth and change, we're looking for financial security for ourselves in our family and we're looking for meaning for relationships. Right now, that could be true of hobbies,...

...it could be true of your job, it could be true of mine, it can be true of driving a truck, working in a factory, working in a warehouse. Right the humans are conditioned generally to be looking for similar things as relates to jobs. Now, one thing that we do, and John, I don't think we've really talked about work separately at all in this certainly isn't a pitch, but yeah, we provide retention management software for companies and manufacturing transportation in the just sticks. And what that software does is it automates the collection of feedback from these distributed frontline workforces at scale. It's surfaces issues and real time to management so they can get ahead of individual turnover outcomes. But I think most importantly, it ties that feedback to workforce outcome to show every level of leadership not just we are workers unhappy, but what is actually driving turnover within your workforce population? As an outcome of that model, we are able to look across the industry and say what is driving workers to quit these jobs? What is different about the feedback being provided by a worker who stays versus a worker who quits? And consistently what we're seeing is a number one driver of turnover is career growth. So, to put another way, the employees in the supply chain and manufacturing who don't see growth potential within their company for themselves are the most likely to quit. And those workers who do understand the growth pathways available to them and feel like their companies willing to invest in them to say same way they invest in the company, are those who are staying with the same company for longer periods of time than their peers. And that's really powerful, because everybody assumes it's pay or it's schedule,...

...but you know, consistent. What we see is is carew growth. Yeah, it's onboarding, it's manager relationships, it's a lot of these other sort of softer themes. Yeah, I would absolutely believe that it's really the same thing. In my world, as you know, a marketing agency owner, is people want to know that they're what the future looks like for them, not only within the organization but, you know, are is the organization helping them get onto the career path they want and sort of supporting that. So it's not surprising to hear that, but I to me at least, but I think that I think a lot of companies are sort of overlooking that and making assumptions about you know, that people just sort of care about the same stuff that people cared about ten or twenty year thirty years ago. Yeah, I think that's I mean that's the danger of operating a business at scale, making critical decisions based on opinion right, which is to say, you know, in most manufacturing companies, labor, Labor attention, is number one or to concern on the mind of the CEO Today. And when it comes to why are people leaving our organization or why are people leaving our organization more frequent than they ever have? Or why are people working here for a week and then quitting? Normally that conversation coming down from the sea suite basically yields up opinions like the environment, it's too physical, it's our frontline managers, it's our you know, it's but schedules. It's something we hear again, again again from our partners. Is Everybody has an opinion about what's driving turnover, but we don't have the facts, and typically people don't have the facts because a lot of their turnover is no call, no show. Basically. I'm sure you're hearing this from operators everywhere, but employee doesn't show up one day to never return, get their last paycheck, doesn't respond to an exit survey phone call and you know their manager might add a reason to their his...

...but that's a guess to and so really what's important is for companies to say, okay, we are losing twentyzero employees a year, tenzero employees a year, one dozen employees a year. We need to be able to understand the why so that we can start to make headway on this rotating door of turnover. Because just applying our efforts to a guess might have absolutely no impact, of course, on whether we're turning over forty percent of our work first next year or sixty five percent of our workforce next year. So if assumptions are being made or opinions being offered by whether it's c suite or managers or whoever, and and I can totally see how that would be, you know, it's a gas right. We're trying to figure out what we think's causing out. How do you get closer to a fact? Is it the words coming directly from the mouths of people who are you know, who are still working for you? Are Those who leave? Tell me how you get closer to you know, knowing what the true reason is? Yeah, I mean I think you you hit on the the first step is, of course, to listen, which some companies do well, some companies do less well. Eighty nine percent of frontline workers are more likely to stay at a company that they feel encourages and listens to their feedback. Right. So the first step is to ensure that you have the processes and channels its scale, that your frontline workers feel like they have a voice at the company that is heard in that second part is important. Now the next step is really to be able to analyze that feedbacks understand what is actually the drivers of turnover before it happens. And so I think there's this idea in the industry, at least historically, where it's like, when somebody quits, ask them why they quit and that...

...is your data, and that's well, hey, it's really hard to reachos people, typically after they've already left. But be what they say when they quit might not really be the experiences that drove them towards that openness to quid. And that's where you a data central platform like works that comes in, is the ability to have the algorithms in the background. That's say, okay, looking at across your work force in your production associate role, here is what the workers were saying at their seventh day for the population that stayed, and here is what the workers are saying at their seventh day for the population that left. And if you're able to address these challenges for this leading population, you could expect this improvement in overall turnover. And so it's starts again with listening to your friendline teams. That is sort of the base case, engaging with that feedback. The next step is really understanding what's driving turnover and then taking the right actions to improve on those challenges or themes, measuring the impact of those actions. And then you're sort of back at the start, right. It's okay, let's collect more data, let's find the next best opportunity, let's invest there, let's collect data and sort of around the fly, will goes. Let's take a quick break for a word from our sponsor. Sticky notes, spreadsheets, white boards, slide decks. For many manufacturers these are the places where key account details are stored. But the most effective manufacturing sales teams today are leveraging technology for strategic account management and for maintaining customer relationships. Two of those tools, prolific relationship map and prolific crush, allow for real time visibility into key account growth, new business pursuits and which customers...

...are at risk and all right inside of sales force. Learn more at prolific dot AI. That's PROLIFIQ DOT AI. And you've mentioned to me that there's a set of signals that often precede turnover events. Can you talk about what some of those signals are? Yeah, it's a lot of what we've sort of already been discussing Joe. It's your dissatisfactory of misunderstanding career growth, it's your feeling of this is a company that doesn't invest in my physical safety. It's challenges with manager or team dynamics or a feeling that your voice isn't either heard or the companies not providing you with any feedback, and and these are that's an number of themes and it can really differ based on the roll the company and the job type in terms of which of those themes end up being sort of the best forward indicator of turnover and how do you go about calculating the true cost of employee turnover? So I think this is a place where a lot of companies right now are sharpening their pencil basically as the annualized turnover rates go up and as companies can tell that the cost is also going up. Right, cost of losing a supply chain workers up approximately fifty percent over the last two years. Have to talk about why. But as the cost per Turner van goes up and the number of turnover events go up, every finance CEA sweet operation team and sort of sharpening their pencils here and saying how much is this costing us and what can we do to move the needle here? So you, of course, the most obvious is somebody quits from a maidence segnition role. You start asking questions. What does it cost us to go and find a new maintenance technician for that role in this market job advertising?...

Maybe you want to go tempt a perr by. That's would be more expensive. Like what is the financial cost of sourcing and replacement? But that's really just where this begins, right. There's also okay, what is the cost of those talent acquisition resources and hiring manager resources to manage that process of find this new maidenance technician? Right in the meantime, while we wait for that new hire, are we using ot to brace the gap because we probably didn't have an extra maidens tech in that building at that time? What is the cost of that ot when we do finally bring in this new hire? WHAT IS OUR COST OF TRAINING? Basically, how long does it take them to be fully productive? What do they cost in the meantime, you know, at a maybe fifty percent productivity level? What are we paying our trainers and managers who are helping them get up to speed? And so those are sort of all of the hard costs that sort of go into this broad coast of turnover calculator. And what companies find is in the supply chain they're seeing that nets out to anywhere between eight and Fiftyzeros, depending on the role type and the company specific circumstances, per turnover event, which is not cheap, especially if you're operating a company at scale. And that's not even considering, you know, the softer costs, right it constant turnover reduces team. We're all right, if you see all of your coworkers leaving, it decreases really your satisfaction in the job. I mean we've sort of all been in a situation similar where you're like, hmm, maybe there's something that our else else better out there. It seems like everybody else isn't happy here. Maybe I shouldn't be either. You know, we pro tem we've talked about safety.

Right, the lower your turnover goes, the less safety incidence you have. New Employees are the most likely to have safety incidents. And Yeah, I mean at the end of the day that you know, it's just, you know, accuracy, margins, were quality, like all of these things are tied in there as well. I imagine there's an opportunity cost in a lot of cases too, especially during a time like this when finding labor is this hard, and you talked about front and workers, and when you have a mass exodus of people on the front lines, you may have machines that don't have people on them and now you're not producing at full capacity, and so it's it's probably a lot of related opportunity costs that can tie in your to I imagine. Yeah, I think that's a really important point. You brought a Joe, whereas a few years ago, really, when we were talking, I mean we've been working on this problem of frontline turnover in these sectors since this company was found in two thousand and seventeen and a few years ago it was all about cost reduction, right, what are the costs of losing people? How do I create a more stable, lower costsper higher, higher attention workforce? Today, it really in the last twelve months, I would say, much more. You're hearing about top line impact as well, which is, you know, Oh, we can deliver or we can do as much business as we can deliver. Right. So if we lose a driver that takes a route offline which is revenue straight off our top line, or it used to take. You know, in the in the case of like a third part of the just is coming, used to take us a month to get a new customer live, and now it takes us three months. So you're pushing out revenue from cl you've already made. Of course, in the manufacturing context, maybe it's just you can't deliver as many units based on your Labor availability, and so you're sort of getting hit on both sides,...

...where it's creating bottom line expense pressure, but it's also, I would say, suddenly impacting top line performance as well, and you're seeing that, you know, you're seeing across the board and even earnings reports of large manufacturers and the gistics companies where they're saying, you know, this is how Labor and labor turnover is impacting our piano performance. And what do you think are some of the smartest things that manufacturers can be doing right now to create work environments that make people want to stay? There are all sorts of investments that companies are making right you're hearing so much more about education, benefits, on site, daycare, flexible scheduling is very high right now, just there. The the list goes on and on and on, which is which is great. Let me be very clear. You know, a few years ago there were some companies that basically had this attitude that was like, I don't really care right like we're comes, worker goes new worker in their place. That is not sort of like our core focus right now, and we're not really investing in being an employer of choice. Now everybody cares because everybody sees this bottom and top line pressure that work for shover's creating, which is great, because the things that have come company does to improve their turnover are also the activities that make their company a better place to work. Allow worker to have a better job, which allows them to have a better life. Right the program who's mentioned education, daycare, flexible scheduling. That means or can move forward, or more money, they have better home life balance, they can see their kids more, they can get better sleep, like, whatever it is. These actions by companies are good for workers and that's just great to see...

...from a human perspective. But I think that the first step for a company that wants to improve this challenge again is to listen to their workforce like and to really understand what are the pain points they are feeling? How does that differ by building by roll new employees versus tenure and employees, and how is that impacting their outcomes? And then using that data to say, okay, it really is all about scheduling, right, it really is this for so tee, it really is these split schedules, whatever may be. or Oh, it's really not about scheduling at all. Right, because if your employees who are happy with your scheduling and your employees who are unhappy with your scheduling are retaining at the same rate, going and investing in a massive scheduling program isn't going to move the needle. Right, you might get positive feedback, but you might not get the end state out comes that you're hoping for. So, really, what a company needs to do first and foremost is build the programs to listen to their frontline teammates at scale, objectively and in real time. Right. So objectively means you're not just asking each manager to talk to their employees and then let you know what they said, because that's going to be filtered and if you let it get filtered a few times up to chain, it's going to be wildly different than reality, and it also needs to be real time, meaning you can't do this thing that manufacturers used to do, which is, Oh, we run a survey and August the results populate. We talked about in November and in the new year we brought some chains. It's like, well, in two thousand and twenty two between the time of that survey and the time you start doing change is thirty five percent of your work forces quit. So actually a lot of that feedback is not...

...even valid anymore. So you need something that is objective, where workers feel like they can speak their mind honestly and it can't be translated on the way up and down. And real time, meaning the moment of worker experiences a paint point, provides feedback. Leadership can see, rally around and understand that sentiment from the front lines. Really smart insights and well said. Dan. Is there anything you would like to add to this conversation that I didn't ask you about? You know, I think the most important thing for us, which is something we touched on somewhat briefly, is just that this is both a business opportunity for manufacturers and the justice companies. Right if you can improve frontline workforce turnover, you can do more business and you can save costs. Right. So every company is way up to the fact that being an employer of choice is good business. I mean even, like I mentioned, Amazon Ze left in the room, like they just restated their company mission statement from being the most world's most customer center company to being the world's most Customer Center Company and best employer or something among those lines. And that's because they know that to deliver those outcomes for their customers, to get you that packet same day, they need to have a gage and retain frontline team that makes that possible. Right. Otherwise it's impossible for them to do that. But critically, it's also the right thing to do. Right, so it's good business, but also listening to your friendline teammates, caring what they think, ensuring they feel heard, making sure they are supported, providing them with growth opportunities, managers support, strong team dynamics, a safe workplace and other support that...

...fits around their life. Like that's also just you as a company helping five hundred thousand, ten thousand Fiftyzero people have a better life, and that is a really great human opportunity as well. Like forget about the dollars and sense. It's like you have the opportunity as a leader to positively impact the lives of everybody within your organization. That's an opportunity you should want to take, regardless of the dollars and sense. It's just nice that are also has a very clean ro I case. Nice way to put a bow on it. Dan, this was a really great conversation. Can you tell our audience how they can get in touch with you and also where they can learn more about work stuff? True thing, I mean, we're easy to find online, worksptcom. If anybody is any questions, my emails also just Dan a workstep, so that's also easy as well. Beautiful Dan, thanks for doing this today. Awesome. Thanks for having me, Joe. I appreciate you. Bet As for the rest of you, I hope to catch you on the next episode of the Manufacturing Executive. Before we go, I want to say a quick thank you to our sponsor, prolific. Prolific is an account planning solution that enables manufacturing sales teams to log key information and build account plans right inside of sales force, rather than resorting to sticky notes, spreadsheets, white boards and slide decks. Learn more at prolific dot AI. That's pro L IFIQ DOT AI. You've been listening to the manufacturing executive podcast. To ensure that you never missed an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about industrial marketing and sales strategy, you'll find an ever expanding collection of articles, videos, guides and tools specifically for B Tob Manufacturers at gorilla seventy sixcom learn. Thank you so much for listening. Until next time,.

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