Finding answers to today's worker shortage: Survey

  • Jerry Murphy

    Jerry Murphy

By Jerry Murphy
Posted10/2/2022 1:00 AM

While Illinois and other U.S. manufacturers are gleeful about rising demand for products, they have seen record-setting inflation, supply chain snags, high material costs and employee shortages, which have triggered a decline in optimism this year over 2021, according to an industry report from professional services firm Sikich.

Inadequate labor has consequences. Employee shortages can prevent manufacturers from adding new customers. In some ways, labor is a lead domino up and down the supply chain. When the labor domino tips over due to ineffective recruiting, insufficient pay or poor retention practices, other dominoes can fall.


To examine reasons for the decline in optimism, consider findings from the "Sikich Industry Pulse: Manufacturing + Distribution."

In midyear 2022, just 58% of manufacturing executive respondents rated their optimism through the end of this year at a seven or higher on a scale of one to 10. At midyear 2021, more than 80% had scored their optimism at a seven or higher.

Although buyer demand has increased among two-thirds of manufacturers surveyed, they are struggling to keep up. Half whose revenues are under $100 million said they are unable to keep up with their current demand. And among those with revenues above $100 million, 70% lamented they cannot keep up.

An equal number of respondents (40%) said both supply chain challenges and employee shortages are chief reasons. Still, most understand the need for fully staffed teams to fulfill demand.

Additionally, 100% of respondents said they have grappled with materials cost increases in the last 12 months, and all but 1% passed those price hikes on to customers. Most respondents (69%) are passing along 50% to 100% of their increased costs.

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In response to cost increases, strategies have included diversifying material suppliers and challenging logistics providers to tighten delivery times.

Labor: Take proactive steps

The first step toward a solution to employee shortages is implementing comprehensive recruitment and talent development strategies. Both must be competitive. While there is no magical cure, consider these ideas.

• Revisit compensation.

Have you implemented hourly rate surveys? Have you taken other steps to determine whether your starting pay for shift workers is one that your candidates will find competitive? If your hourly pay rates are less than similar jobs, yet you cannot match or exceed those rates, consider other initiatives. Some include offering flexible hours, adding benefits and amenities, and improving the work culture itself.

• Offer sign-on bonuses -- and pay for them in a timely fashion.

The report found fewer than three in 10 manufacturers offer sign-on bonuses, but 45% said they are helping attract more talent. The majority offer bonuses between $500 and $1,500 and require new hires to stay with the company for four to 12 weeks before receiving it. Sign-on bonuses can help attract more qualified applicants to a role that requires high-demand skillsets and tip the scale in your favor.

Yet they are no "quick fix." Only when paired with a comprehensive talent retention strategy will sign-on bonuses have a meaningful impact on a company's labor shortage. One rule is to pay the sign-on bonus you promised and when you promised it.


• Create robust new employee training.

Training which explains procedures, best practices, and where to get help creates benefits for the manufacturer and workforce ranging from higher morale, team building and stronger retention rates to improved job satisfaction and worker safety.

Make compensation reviews, sign-on bonuses, and training a bigger part of employee recruitment and retention, as the survey shows. Each demonstrates your appreciation for your candidates and new hires and your goal to help them make a great start.

• Jerry Murphy, partner-in-charge of manufacturing and distribution services at Sikich.

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