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Manufacturing Companies Must Elevate Their Organizational Culture to Improve Employee Retention and Operational Performance

Manufacturing Companies Must Elevate Their Organizational Culture to Improve Employee Retention and Operation Performance

Manufacturers: Nothing Can Impact Your Overall Operational Performance and Bottom Line Like an Unhealthy Organizational Culture.

The “Great Resignation” and persistent labor shortages over the last few years in manufacturing and many other sectors of the U.S. economy have revealed a simple truth. An unhealthy company culture hurts your bottom line. It can turn your performance metrics upside down and spread to every department.

These “toxic” workplace cultures can discourage workers, lead to high absenteeism and high turnover, and create havoc with performance metrics. A negative work environment also makes it much harder to attract and retain top talent, the kind of employees you want to maintain or improve your competitive advantage.

On the other hand, a positive and productive company culture gives your employees the drive to achieve their full potential in alignment with your company’s performance objectives, ultimately crucial for your bottom line.

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. To stay relevant, attract and retain key personnel, and be more profitable, manufacturing companies need to evolve and optimize their organizational culture.

Lagging Innovation is an Extra Burden on Frontline Leaders and Your Entire Workplace Culture.

As a whole, it’s a challenge for manufacturing enterprises to stay relevant, particularly in the race for digital transformation. Many manufacturing companies are falling behind in 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 The use of “legacy systems” or technologies that have become outdated is a significant part of the problem.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 these outdated systems and processes underpin the entire MOS (Management Operating System) and reveal that the business is shaky at its foundation. The stress of dealing with dated technologies falls squarely on your frontline leaders and other key personnel. Coping with the daily firefighting of poorly optimized systems and processes, equipment failures, and more can lead swiftly to burnout, resignations, and spread like wildfire through your organizational culture.

When a Company is Resistant to Adapting and Evolving, it May Face Many Issues Such as:

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.” 

A Healthy Company Culture is Vital to Attracting and Retaining Talent.

When the culture is elevated, it’s easier to attract employees that align with it. When an employee doesn’t align with the organizational 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 Organizational Culture?

Play Fun, Cross-Functional Team Exercises

When people from different areas of the manufacturing floor are connected, creativity will flow and teamwork will be encouraged. Have your 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 upon the solution. The exercise will not only encourage your team to brainstorm solutions, but it will also portray how everyone’s ideas are uniquely valuable.

Engage Employees in Process Improvement

One way to demonstrate your team's unique talents and value is to solicit ideas for operations improvements from your team members. You may also consider holding monthly or bi-weekly meetings in which all employees are heard and appreciated.

Go 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.

Communicate with Clarity

Communicating openly and clearly is a great way to get employees to be more engaged. Some ways to accomplish this are holding townhall-style meetings or starting a company newsletter.

Keep it Fresh

Strategies and motivators should constantly be reevaluated and updated. If your culture is going to be elevated, it needs to start at the top. Your leadership team needs 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

The POWERS Difference.

POWERS management consulting’s unique Culture Performance Management™ methodology connects the dots between optimized company culture and your desired operational performance outcomes.

POWERS has helped global leaders across many industries operationalize their culture for rapid and sustained performance improvement, increased competitive advantage, greater value, and a stronger bottom line.

To put our experienced team and proven track record to work for you, schedule an initial discovery and analysis by calling +1 678-971-4711, or emailing us at info@thepowerscompany.com.

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About the Author

Dr. Donte Vaughn, DM, MSM, Culture Performance Management Advisor
Dr. Donte Vaughn, DM, MSM

Chief Culture Officer

Dr. Donte Vaughn is CEO of CultureWorx and Culture Performance Management Advisor to POWERS.

Randall Powers, Founder, Managing Partner
Randall Powers

Managing Partner

Randall Powers concentrates on Operational and Financial Due Diligence, Strategic Development,, and Business Development.