How Much Does Employee Turnover Really Cost the Manufacturing and Distribution Industry?

Four years ago, employee turnover in the manufacturing and distribution industry averaged 13.7 percent. While this number might not ring any alarm bells, the resulting $840,700 spent on turnover costs per company surely does. Three years later, DC Velocity found the numbers haven’t improved. In a 2017 survey, only 39.2 percent of respondents reported having a turnover rate of less than ten percent. The larger the company, the more turnover it saw.


Aside from recruiting costs, companies face a significant loss of productivity after an employee leaves. However, the real cost of employee turnover lies somewhere in between the quantitative and qualitative. Things like potential customer dissatisfaction, reduced or lost business, stress on employees to pick up the slack, and lost expertise often go overlooked when evaluating the cost of a turnover. One thing is for sure: turnover is expensive. Fortunately, there are ways to mitigate employee turnover and the negative impact it can have on your business.
Employee engagement is an important factor when it comes to turnover. Generally, the less engaged an employee population is, the higher the turnover rate is likely to be. Considering that the manufacturing industry has the lowest engagement among any occupation in the United States according to a recent Gallup report, increasing employee engagement should be the focus of manufacturers across the nation.


Not all is lost, though.


Right out of the gate, employers can boost employee engagement and satisfaction by hiring the right people for the right positions. Putting people in a position to thrive is the first step of developing a highly skilled, engaged employee. Next, explore ways to give control to your employees wherever you can. This is where technology comes into play.


Discover the advantages of implementing self-service programs that allow employees to take care of tasks that previously required a chat with a supervisor, such as requesting time off or switching shifts with another employee. Employees will also appreciate being able to check their paid-time-off balance at the touch of a button. Additionally, think about offering a robust employee intranet that contains company policies and procedures, FAQs, and a variety of online training programs – both required and elective.


Another way to increase employee engagement is to forge clear paths for professional development for as many positions as possible. In the current starving labor market, finding skilled talent to fill open positions may seem nearly impossible. Developing the employees you already have not only fills these gaps, but also keeps your employees challenged and motivated to progress to the next step in their career. Skills development is proven to increase retention and improve the quality of leadership down the road. Never underestimate the importance of your “bench strength” as it relates to succession planning and the future leaders of your business.

Finally, improving and increasing communication is an effective way to boost employee engagement each and every day. Take the time to express the daily, quarterly, and annual goals for your organization and how each employee plays a role in the achievement of those goals. Reminding employees how their individual contributions affect the overall success of the organization can foster a sense of pride in the work they do and increase their level of engagement.


When it comes to your communication efforts, it’s important to remember that just as each employee is unique, so are the ways that they digest information. Communicating through one medium or on one schedule will not be effective for your entire population. Commit to providing the same message in a variety of ways so as to better reach each individual in your workforce. Additionally, make sure employees have more than one channel to express their opinions and concerns.


The bottom line is that improving employee engagement may be a solution to the turnover epidemic, but it isn’t something that happens overnight. It’s an investment in every individual in your workforce and an ongoing commitment to the development of your people and your practices. You can create a workplace culture that employees actually want to be a part of by hiring the right people for the right positions, implementing technology as a means to give control back to the employee, forging paths for professional development at every level, and dedicating yourself to utilizing a variety of communication methods.


Be an employer of choice, not the employer employees choose to leave.