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Articles From Lumsden McCormick

Addressing Labor Shortages: Strategies for Manufacturers to Attract and Retain Skilled Workers

The CFO Survey, a joint effort by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, monitors CFO optimism and key concerns. According to the survey, labor quality and availability emerged as the second most significant worry (following monetary policy) in the third and fourth quarters of 2023. The ongoing labor shortage has been a consistent challenge for CFOs over the years.

Manufacturers face a pervasive struggle to find and retain qualified workers. Nationally, job openings for roles such as assemblers, machinists, technicians, and engineers often outnumber qualified applicants by a considerable margin. The positive news is that there are strategic approaches available to assist manufacturers in attracting and retaining top-tier employees.

Financial Incentives

In today's fiercely competitive labor market, one effective way to attract and retain workers is through financial incentives. These may encompass signing bonuses, stay bonuses (granted to employees who remain with the company for a specified period), and wages exceeding market rates.

While employee compensation packages can be a significant investment, traditional benefits like health plans and 401(k) plan matching contributions are also highly valued. Negotiating with providers may help reduce costs while still providing attractive benefits.

Consider offering "voluntary" benefits, such as consumer goods purchasing services, life insurance, and disability insurance. Though employees typically contribute to these benefits, employers might offer them more economically than employees could obtain independently.

Intangible Benefits

It's crucial to make your company as appealing as possible without exceeding budgetary constraints. Before expanding compensation and benefits budgets, assess your Employee Value Proposition (EVP), which encompasses everything that employees appreciate about working for your company. Surprisingly, pay, while essential, may not always top an employee's priority list.

When evaluating your EVP, engage with employees to identify what they value most about their work environment. Intangible benefits, including respect and concern for employees' well-being, a positive corporate culture, learning and training opportunities, and avenues for professional growth, are often highly coveted by employees.

Examine training and growth opportunities closely. Cross-training, for instance, not only provides intangible benefits but also addresses labor shortages by optimizing the skills of your existing workforce. Additionally, consider whether implementing an apprenticeship program aligns with the needs of your manufacturing business.

Flexible Work Arrangements

Employees may also be seeking flexible work arrangements, such as flextime (adjusting the starting and ending times of the workday) or compressed workweeks (fulfilling the standard hours in fewer than five days).

Finding the Right Fit

Survey your workforce to understand which financial incentives and intangible benefits hold the most value for them and identify any existing gaps. Establishing a workplace that offers a robust EVP will enable you to assemble and retain a skilled, motivated, and productive workforce, ultimately contributing to the success of your manufacturing business. Contact us with any questions.

Addressing Labor Shortages: Strategies for Manufacturers to Attract and Retain Skilled Workers

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Jon leads audits, reviews, compilations, tax, and consulting services for manufacturers, contractors, and other commercial business entities. He serves as the audit practice leader for the Firm's manufacturing and construction niches and manages the Firm’s pre-qualification to perform third-party reviews of tax credit applications for the Film Industry according to agreed-upon procedures established and published by Empire State Development (ESD). In addition, Jon serves a variety of exempt organizations. 

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