No Match Found
While the overall labor market remains strong, employment growth seems to have slowed notably this year, particularly in manufacturing. The sector has experienced significant disruptions since the pandemic, including sizable shifts in demand, supply chain disruptions and geopolitical turbulence. More recently, the economic environment has been more uncertain, bringing challenges to production and sales in manufacturing. Yet, this is occuring at a time when the labor market remains very tight. There continues to be more job openings than people actively looking for work, and this skills shortage is a significant challenge for manufacturers of all sizes. We think this will likely continue through this decade. Additionally, according to the National Association of Manufacturers’ Outlook Survey, US manufacturers say that workforce challenges continue to be a top issue.
Compounding the problem, according to PwC’s Hopes & Fears Survey, more than half of jobs that require specialized training are expecting significant change within the next five years. C-suite executives and board members agree with the 71% of leaders who identify talent acquisition and retention as a “serious or moderate” risk to their businesses in the years ahead, according to PwC’s latest Pulse Survey.
Against a backdrop of macroeconomic disruption, high turnover and changing employee preferences among the frontline manufacturing workforce, companies are exploring creative solutions to attract and retain skilled talent that can help propel their organization into the future. PwC and the Manufacturing Institute (the workforce development and education affiliate of the National Association of Manufacturers) conducted a survey in Q3 2023 to explore the workplace needs and preferences of frontline manufacturing employees, how they’ve changed, and what organizations are doing to help improve the overall employee experience of their deskless, frontline workforce. This survey included responses from 108 human resource or operations leaders within the manufacturing industry.
The employee experience is the sum of all interactions, sentiments and perceptions that employees have with their employer and leaders. It includes everything from meaningful work, workplace, career development/progression, total rewards and culture to the quality of snacks in the break rooms.
A frontline employee is an hourly, skilled employee who plays a direct role in production. This typically includes roles in production, warehouse, fabrication, assembly, logistics, maintenance, quality operations, etc. Also referred to as an “essential worker,” “team member” or “deskless worker.”
Manufacturers who expect to expand their frontline workforces over the next year — and 62% say they do — will need to aggressively ramp up efforts and initiatives to attract, train and retain skilled talent. Indeed, nearly half (48%) of respondents rated the overall breadth and quality of their company’s approach to creating a positive frontline employee experience as “average” or “below average.”
Overall, our survey findings strongly suggest that many manufacturers can redouble their efforts to help improve frontline worker engagement by making the workplace more satisfying and meaningful in multiple ways that go well beyond attractive pay.
Given the challenges that many manufacturers face in their efforts to attract and retain talent, business leaders in the sector can look at the overall employee experience to help close their workforce gaps, particularly for frontline employees. Enhancing the employee experience can take many forms, including the offering of increased flexible scheduling, providing broader and more competitive benefits and total rewards1, helping enhance the sense of belonging at work, cultivating a more inclusive culture and offering a clear-cut path toward career advancement. In other words, there can be an opportunity for employers to strengthen their recruitment and retention efforts by improving the frontline worker experience.
Many manufacturers can embrace the opportunity to increase frontline worker engagement. Indeed, nearly half (48%) of respondents in our survey agree that most of their frontline workers are engaged in their job while 70% say most of their non-frontline employees are engaged. Meanwhile, one-quarter of survey respondents do not know if their frontline workforce is engaged due to low participation in employee surveys or to not carrying out an engagement survey. There exists an opportunity for manufacturers to help enhance the frontline employee experience more effectively by capturing more thorough measurements of those experiences.
Many manufacturers continue to grapple with disruptive attrition rates, with more than one-third (36%) saying they have experienced frontline employee high attrition rates2 over the last six months. This rate is starkly contrasted by only 10% of manufacturers reporting the same for their non-frontline workforce. This difference in attrition rates between frontline workers and non-frontline workers is exacerbated by respondents in production and assembly and warehouse.
While absenteeism remains an issue, survey respondents sense improvements. About one-third (34%) of survey respondents described current absenteeism among frontline workers as a “very significant” or “significant” challenge. According to our survey, this figure is down from 45% six months ago.
It can be challenging to address needs around which there is insufficient measurement. What do frontline workers want from a workplace and employer? Seeking direct feedback from employees is the most streamlined way to collect this information. However, just 58% of manufacturers carry out an employment engagement and culture survey and, for those that do, four in ten say that no more than half (or less) of their frontline workers actually participate in them. While many employers are blazing the path forward by incorporating innovative policies that enhance employee experience, these efforts could be optimized by incorporating first-hand feedback from frontline workers. This is an opportunity for manufacturers to take a more targeted approach to employee experience transformation that is supported by data collected from employees directly.
Frontline workers are aware of the constraints that in-person work requires. In addition to a safe environment, interviewees indicated that frontline workers are interested in receiving similar, though not precisely equivalent, benefits as non-frontline workers. These include “soft” (co-worker connectedness) and “hard” (401k benefits) factors. Closing the gap between the frontline and non-frontline employee experience could be the key to improving retention and talent acquisition among the frontline workforce – as well as to reinforcing trust in leadership.
When asked what creates a positive workplace for frontline workers, most respondents (86%), unsurprisingly, say safety. The nature of many manufacturing jobs can be physically taxing, especially for those roles that require repetitive tasks or actions.
To differentiate themselves from competitors, organizations can expand their focus of physical safety to looking at employee well-being more holistically. Manufacturers can go beyond safety rules, protocols, and injury-precaution measures, and offer benefits that focus more on employees’ well-being, such as frequent breaks, mental health resources, on-site fitness centers, and flexible work arrangements. By implementing solutions that view the health, and safety, of the employee more holistically, organizations can reduce the number of workplace incidents and improve productivity and quality.
Knowing which non-financial benefits are most valued and preferred by frontline workers is the first step in improving retention and recruitment initiatives. Most (94%) manufacturers agree that compensation is most valued by their frontline workers, followed by benefits (79%). However, other factors are important as well, such as work-life balance (75%) and well-being (47%). Additionally, there is a clear consensus (68%) around the benefits of flexible scheduling.
Helping enhance meaning to any role is crucial to employee engagement as well as recruitment. According to manufacturing leaders, impactful factors in creating more meaning for frontline workers include instilling purpose (86%), recognition (78%), fostering personal growth (68%) and connectedness to other employees (60%). Promoting a sense of meaningfulness can be achieved through mentoring and upskilling programs and employee-recognition initiatives, among others.
Nearly all manufacturing leaders are providing their frontline workers with benefits – with 95% saying they offer medical and dental insurance and 401(k) plans. Three-quarters (76%) are offering paid time off, with 47% providing paid maternity leave and 36% paid paternity leave. With childcare costs rising and shortages across the country, manufacturers can address this key need by offering paid parental leave, reimbursed childcare costs and on-site childcare facilities. Companies can further differentiate themselves by promoting and providing what employees value – connectedness, well-being and purpose – by offering mental health benefits, exercise facilities and gym membership reimbursements.
Mentoring is another way that manufacturers can differentiate themselves, enhance the frontline worker experience and facilitate knowledge transfer. Manufacturers have identified there are ways to better incorporate or enrich these types of professional development opportunities. The majority of respondents report that they either struggle or could improve their programs that pair new employees with those who have more experience, with nearly one in four manufacturers (24%) having yet to introduce mentoring programs. Given that mentoring can not only help advance frontline workers’ careers but also nurture connectedness, manufacturers can improve their attraction and retention efforts by implementing mentoring programs or expanding those already in place.
With seven in ten manufacturers agreeing that flexibility and scheduling are important in creating meaningful work for frontline workers, half of manufacturers say they’re able to offer dynamic scheduling (i.e., compressed workweeks, shift bidding/swapping, adjusted shift time, etc.). The main barriers to providing dynamic scheduling are inflexible product and shift needs.
While not all types of frontline roles lend themselves to dynamic scheduling, manufacturers that can offer it may well benefit from improved retention and hiring rates – as well as a competitive advantage.
Of those companies that offer dynamic scheduling, most (81%) say they do so to provide workers with a better work-life balance, and nearly half (49%) say they offer it to meet workers’ childcare or elder care needs. Most dynamic scheduling plans (79%) allow frontline workers to work fewer days per week, but more hours each day. Over half (55%) of manufacturers allow workers to take personal time on short notice.
Most manufacturers realize that monitoring the frontline worker experience and promoting initiatives to improve it is no small task. Indeed, 56% already have a designated leader or group focused on the employee experience with 8% reporting that they are considering establishing one in the next year. Having a dedicated leader or group, whether human resources or an operations function, can serve the twin purposes of monitoring frontline workers’ needs and communicating to leadership why and how those needs ought to be met.
The experience of the frontline worker can be greatly enhanced by managers possessing the right leadership skills and traits. Most (88%) respondents say “making employees feel valued” has become increasingly important over the last three years, followed by “making employees feel that they are integral and welcome” (77%) and “being empathetic towards employees’ personal needs and lives” (71%). As companies look to enhance the frontline employee experience, it is important to work closely with — and, in some cases, train — the managers who can most directly shape the employee experience.
Onboarding is one of an employee’s first high-touch impressions of a company. A majority of survey respondents say onboarding of their frontline employees lasts between five and ten days, underscoring the importance of the upfront investment setting up workers for success for their first day on the job. Additionally, according to interviews with participants in the study, having a meaningful onboarding experience is correlated to lower levels of employee attrition in the first 90 days on the job, further highlighting the importance of having an all-rounder onboarding experience. Leaders should design an onboarding experience that makes workers feel a sense of purpose and belonging, develops skills needed on the job, and establishes confidence in their roles and responsibilities.
Our survey shows many manufacturers are willing to try a host of different initiatives to make frontline work a positive, meaningful, and attractive experience for their employees. Successfully improving the frontline experience can help attract new talent and retain existing talent. Doing so can also increase frontline employees’ trust that their organization values and rewards their contributions and roles.
Manufacturers should assess the impact of initiatives that either serve or hold back their employee experience and connections to business outcomes. We can recommend the following six helpful actions:
To improve attraction and attrition for frontline workers in the manufacturing sector, leaders must focus on the underlying cause of these issues – employee experience. From culture, purpose and flexibility to family leave, compensation and benefits, focusing on the holistic experience employees have at work has a strong correlation with how satisfied they are at work, and thus how likely they are to be engaged. Improving the employee experience differentiates companies through building a reputation as an organization that invests in their workforce and, in turn, helping improve recruitment and retention outcomes.
In Q3 2023, PwC and MI conducted a study within the manufacturing industry by conducting interviews and surveys with 108 HR and operations leaders across a range of company sizes and industrial classifications. Results were aggregated to develop insights and themes that serve as the basis for the above recommendations.
1. Total rewards is the combination of benefits, compensation, and rewards employees receive from their employer. This can include wages and bonuses as well as recognition, workplace flexibility, and career opportunities.
2. High attrition rates are defined as exceeding 10%.