May 18, 2021

Attracting and retaining the right talent in the UK's manufacturing industry

As the UK returns to a “new normal,” companies will need to attract, retain, and reskill workers to position themselves for success in the future. Here, Adam Aguzzi, VP Manufacturing, Value Advisory at Ceridian, explains how manufacturers can overcome workforce challenges to acquire the right skills.

In a complex labour market weathering a health tsunami, renovating workplace strategies and considerations presents a broad range of novel challenges for companies in all sectors across the UK. The manufacturing industry is no exception. Stay-at-home orders, furloughs, remote working, supply chain issues, and much more have all added up to a textbook definition of disruption. As Boris Johnson’s administration moves into the next phase of vaccine rollout and things return to a “new normal,” industry experts say that the ability to attract, retain, and reskill workers is a must for optimal success.

The best workers do the best and the most work

A good offence wins Premier League titles. Just the same, superior talent is the productivity “striker” in organisations. According to McKinsey research, so-called high performers are 400% more productive than average performers. The study also revealed that the gap increases with a job’s complexity. High performers in information- and interactive-intensive roles, like managers, engineers, and data analysts – are up to eight times more productive.

Read next: What's your strategy for developing and supporting the workforce you need for Industry 4.0?

Employee turnover, demand, and COVID-19

According to the latest report from MakeUK, the UK’s manufacturing labour turnover rate hit a record high of 17.6% in 2020, driven by levers such as voluntary resignation, redundancies, and dismissals.

Excluding redundancies, the voluntary churn rate falls substantially to 8.1%, down from 13.7% in 2018. This decrease is doubtlessly driven by the pandemic and employers having to make tough choices on employee numbers.

It is no surprise that unskilled positions had the highest turnover due to the transient nature of the work, sitting at 16.6% compared to 13.8% for non-manual workers. There is also a sectorial split. For instance, Motor Vehicles had the highest churn rate at 30.3%, with Basic Metals the lowest at 7.3%. Moreover, this disparity is reflected in regional differences. The West Midlands – known for its automobiles – had the highest churn rate again at 23.8%. Likewise, Basic Metal hubs Yorkshire and the Humber had the lowest churn rate at 10.7%.

Be that as it may, overall turnover dipped slightly by 5.6% in 2020 as workers felt hesitant to leave, given the uncertainty brought about by the health emergency, especially the robustness of medical benefits. However, this had led to a different set of problems around recruiting semi-skilled, skilled, and managerial employees, with companies reporting “up to 50 vacancies at a time, and still struggling to fill them.”

Meanwhile, battling an aging manufacturing workforce is an uphill struggle with baby boomers retiring in the next five to eight years. Adding to this talent drain is a desperate need for STEM graduates to drive innovation. For the first time in 50 years, those old enough to retire now outnumber those just entering the manufacturing industry. Nonetheless, the transition to working remotely has pushed demand for workers in manufacturers’ IT departments, resulting in a fiercely competitive and high-salary labour market.

Retention and the challenges ahead

In early 2021, the MakeUK Roundtable held a discussion on retention with various employers in the manufacturing industry. Participants with lower turnover rates attributed it to a younger workforce, together with incentives recalibrated towards what workers value most today.

While employee engagement surveys are a tool to track this, inductions and line managers are influential in retention rates. Poor induction processes and training can result in poorly run depots and lead to attrition. Some companies are sending out regular pulse surveys to look for warning signs and address workforce leakage. However, participants felt these polls present “only half of the picture as employees tend to avoid being overly critical so as not to burn bridges.”

The biggest challenge facing CEOs is managing the short-term agility required presently with the longer-term aims and strategy. Indeed, companies spent much of last year being reactive at the expense of mid- to long-term planning. One participant articulated that “it is urgent that we rethink the way [we conduct planning] to avoid being caught in a catch-22. The determination of our clients’ employees staying or leaving is really effected by the pandemic, even though pay is better, it isn’t really compensation for people’s anxiety with the pandemic.”

Related: How to make COVID-19-era workforce agility part of your organisation’s permanent DNA

Another challenge is wellbeing, especially in light of the talent leakages. The common consensus was that this problem will only continue to intensify in the coming years. When asked, many manufacturers stated that they are looking to implement hybrid working arrangements even after the pandemic. Common complaints from workers centre on why work can’t be full-time from home, and questions about what happens for those roles that can’t be done from home. While statistics show job vacancies were only down by one percent in February 2021 from the same time last year, one participant said “it is important to plug labour gaps internally without always going to market.” Such themes point to a vital recommendation: companies must implement retention strategies aimed at skilled workers, ensuring that employee job security confidence grows.

How can I avoid turnover?

Humans are creatures of habit, but 2020 broke those habits at large. Now, UK manufacturers have a new opportunity to review their recruitment processes to ensure that they attract suitable candidates for longer retention. Employers can also retrench their workforce by undertaking a longer-term gap analysis to map out succession plans and build employee growth and development opportunities. This proactive approach will improve employee retention and reduce unnecessary recruitment costs, which can then be put back into the business to focus on employee development, ultimately benefiting the company. Of course, managing talent in the current environment is undoubtedly complex, but if there is one thing we have learned from “The Great Shutdown,” it is that technology can help.

How to build a next-gen UK workforce for Industry 4.0

Watch the webinar

Adam Aguzzi

Adam Aguzzi is VP Manufacturing, Value Advisory at Ceridian. Adam helps leaders transform their operations and strategies to make better decisions that drive business value. He has spent the last 15 years directing programs in manufacturing, aviation, maintenance, and mining. He holds a CPA and an MBA from the University of Toronto.

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