With 2023 nearing its final stretch, I’m not exactly going out on a limb to say the same uncertainty and change affecting workplaces will continue into the New Year and beyond. Employers are struggling to overcome challenges in the areas of productivity, safety incidents, and absenteeism – but the most pressing challenge for many industries is employee recruitment and retention.

A recent article by Avetta focuses on the labor shortage in the manufacturing sector, where the National Association of Manufacturers reported that nearly 75% of manufacturers identified employee recruitment and retention as their top challenge. This problem persists even though 90% have increased wages and benefits, and many have increased signing and referral bonuses. Others have increased 401k matching and have begun vesting employees 100% on day one.

Retention Issues and the Impacts of Workforce Shortage

With less-than-full staffing, almost half of manufacturers declined new business last year, which resulted in lost revenue. And with employee recruitment and retention issues continuing, 59% this year stated that the inability to find enough workers has limited investment and expansion plans.

When new employees are onboarded in a workplace stressed by staff shortages, they are more prone to make mistakes, which affects product quality. The Avetta article points out that in Q1 of 2022 there were almost as many product recalls (900 million units) as in the entire preceding year (1 billion units).

To meet production demands, almost 66% of manufacturers have increased their reliance on temporary staffing services. This increase in temporary workers correlates to higher injury incidents because they are less likely to receive adequate safety and operational training. In fact, temporary workers experience nearly twice the rate of time-loss claims (per 100 FTE employees) compared to permanent workers.

What Can Be Done About Employee Recruitment and Retention Challenges?

The Avetta article suggests mobile apps be employed to improve onboarding, education, training, communication, and compliance – and we agree that this can help. However, for long-term results, consider the positive impact of strategic employee recognition. As we mentioned last week, companies that invest in employee incentive and recognition programs have seen productivity increases of 22%.

Research by Gallup and Workhuman found that strategic employee recognition is a critical component in improving employee recruitment and retention. Based on Bureau of Labor Statistics data, Gallup determined the following results when US companies with 10,000 employees doubled current recognition efforts.

• 9% improvement in productivity
• 22% decrease in safety incidents
• 22% decrease in absenteeism
• $91.9 million gain in productivity
• $2.8 million saved due to decreased injuries
• $3.2 million saved due to fewer absences

The Gallup research points out that by making recognition an important part of company culture, those same companies can save up to $16.1 million annually in reduced turnover. To overcome the employee recruitment and retention challenge, drive engagement, and increase productivity – consider the positive impact of employee recognition.