Nothing affects the overall health of a company like work culture.
While a toxic work culture can discourage workers, a positive culture gives them the freedom to achieve their full potential, which is ultimately crucial for the company’s bottom line. A negative work environment leads to job dissatisfaction with leads to poor work quality and difficulty retaining employees.
Unfortunately, the culture in the majority of companies in the manufacturing industry is suffering. Grant Thornton conducted a study called “Return on Culture: Proving the Connection Between Work and Profit,” and he found that of all industry executives, manufacturing executives were the most likely to say that their culture is unhealthy and does not facilitate innovation. In order to stay relevant, attract and retain talent, and be more profitable, manufacturing companies need to evolve their work culture.
As a whole, it’s a challenge for manufacturing enterprises to stay relevant, particularly in the race for digital transformation. A recent study by Deloitte revealed that many manufacturing companies are falling behind when it comes to human resources and customer-centric innovation. The use of “legacy systems” or technologies that have become outdated is a significant part of the problem.
Some of the outdated technologies that are still used in many manufacturing enterprises include CRMs, network infrastructure operating systems, ERPs, and hardware.
When a company is resistant to adapting and evolving, they may face many issues such as:
Issues with maintenance
Incompatibility with current technological systems
Lack of updates and patches
An impact on the customer experience
In the 2019 Cognitive Sourcing Study from Levadata, over 200 senior procurement and supply chain leaders from global manufacturing companies were surveyed, and 58% of respondents said individual commodity managers were still managing their supply management sources as opposed to central systems for storing insights and data. 44% of respondents reported that they didn’t use a cost management tool for NPI (New Product Introduction).
This year's survey shows that a surprisingly high number of enterprise NPI and sourcing teams are still using the same analog systems and processes that they have been using for more than 20 years: Individual category managers with spreadsheets. The lack of centrally located data alone exposes these companies to significant risk.
Rajesh Kalidindi, the founder and CEO of LevaData
Organizational culture has a significant impact on a company’s ability to stay relevant.
It takes a lot of time, effort, and energy for a team to modernize their technology and learn new systems. A positive work culture encourages the workers and gives them the space to do what is necessary to improve their processes and implement new tools. Workers are also more likely to be innovative in a positive work culture. If the environment is toxic, they may not feel they are at liberty to express their ideas.
Enterprises in the manufacturing enterprises have a challenge to attract and retain talent. As more and more Baby Boomers reach retirement age and exit the workforce, the demand for highly skilled workers overtakes the supply. The main issue with the manufacturing industry in its inability to attract and retain new talent is the fact that there is a major perception problem. The industry is associated with a “lower status stigma.”
Culture is one of the main keys to being able to attract and retain talent.
When the culture is elevated, it’s easier to attract employees that align with it. When an employee doesn’t align with the company culture, it creates personal conflict and job dissatisfaction. When that occurs, it can be difficult to retain talent.
Unfortunately, many manufacturing enterprises are at risk of losing money. In late 2019, the Institute for Supply Management’s (ISM) manufacturing index showed that manufacturing was shrinking. When combined with the data from the Federal Reserve from earlier in 2019, it was concluded that the manufacturing sector is in a recession. It’s becoming more and more of a challenge for a company in manufacturing to be profitable.
A company’s culture can greatly affect profitability. There will be less employee absenteeism in a more positive environment as employees will be more excited to come to work, and they’ll be less likely to use sick days when they aren’t actually sick. If culture is elevated and talent is retained, it will save the company money as turnover can be costly.
So how can a manufacturing enterprise improve the organizational culture?
There are many different strategies for elevating your company culture such as:
Running cross-functional and fun team exercises
When people from different areas of the manufacturing floor are connected, creativity and teamwork will be encouraged. One way to do this is to have the team play cross-functional and problem-solving games regularly. One example of such a game might be where a fictional problem must be solved. Have one person write a solution, and then have them pass the paper to the person on their left and have that person expand on the solution. The exercise will not only force your team to think of solutions to problems, but it will also show how everyone’s ideas are valuable.
Engaging employees in process improvement
One way to demonstrate what the above game shows is to solicit ideas for operations improvements from your team members. You could have monthly or bi-weekly meetings in which all employees are heard and appreciated.
Going the extra mile with training
Make an extra effort to groom employees for other positions, develop a stronger talent pool, and to minimize skill gaps. You also might want to implement cross-training so that manufacturing team members can be trained in different areas. This will allow them to move between workstations and cover for employees who are absent. This is another good way to fill open seats faster or to avoid losing talented employees when other opportunities arise.
Communicating in a clear way
Communicating openly and clearly is a great way to get employees to be more engaged. There are many ways to accomplish this. Companies can have town hall-style meetings or start a company newsletter.
Keeping it fresh
Strategies and motivators should constantly be reevaluated and updated. If the culture is going to be elevated, it needs to start at the top. The leadership team needs to find a way to keep culture and identity on everyone’s radar.
Enterprises in manufacturing are undergoing quite a few challenges, and they need to shift the organizational culture. This is the only way to stay competitive, recruit the best talent, create more job satisfaction, and see a positive impact on the bottom line. To learn more about improving this aspect of your company, have a look at our page on operational culture.