A successful transition to M4.0 will require moving on from the old employee management approaches of M2.0 and designing a best-in-class 21st century employee experience. By Danny Smith
The accelerated pace of technological change over the last 10 years has been nothing short of astounding, and the focus of the industry to date has been mostly on understanding the technologies of Manufacturing 4.0 — what they are, how to get them working, and how to realize benefits from them. But the wholesale deployment of M4.0 technologies into production has been slow. Yes, the technologies are new, and there is a cost to invest. But manufacturers are get-things-done organizations filled with career problem solvers who relish evaluating the latest technologies, onboarding them, and putting them into production.
So why the slow adoption of M4.0? It may be that the biggest limiting factor to full benefits from M4.0 is not technology, but the other, mostly forgotten side of manufacturing: people. Despite decades of increasing automation, manufacturing still relies on the flexibility of its workforce to operate the latest technologies to meet and improve production metrics. But the way many manufacturers manage and motivate the workforce hasn’t changed much in the last 75 years. We’re stuck in second industrial revolution practices. We need a complete reboot to acknowledge that the workforce of today and the future is not the workforce of the past. It’s time to honor and value the human element in manufacturing and revitalize our culture.
Talent and Branding Problems
It is clear manufacturing has an ever-widening gap between the demand for jobs and the supply of people to fill them. According to the 2018 Deloitte/Manufacturing Institute Skills Gap Study, 89% of manufacturing executives agree there is a talent shortage and that lack of talent is the reason over 50% of skilled production positions remain empty. And “attracting and retaining a quality workforce” continues to be the most identified current business challenge for the industry1. This reaches the CEO level – “availability of key skills” ranks as the third highest threat and only 4% said it was having no impact on growth or profitability2.
The causes are well documented. Many baby-boomers are retiring in the next 10 years, economic expansion is continually adding jobs, and the changing technologies of M4.0 are requiring different skills, including critical thinking and the ability to operate in digital environments, according to the Deloitte/Manufacturing Institute study.
But overall, the big issue is there is much less talent coming into the workforce. Manufacturing has not been considered a desirable career for many years, a condition that continues to persist despite many efforts to change its image. The push over the last 15 years for more STEM education in secondary schools and college, for example, has helped but manufacturing operations have been mostly left behind. Part of the problem is that engineering is cool, but blue-collar work is not.
The very behaviors and decisions that made M2.0 so successful in the past may be the root causes of the current problem. We have worked to engineer humans out of the production process for decades, and the expectations and requirements for the ones left on the line have more resembled the ability to be a robot in human form than to exercise critical thinking skills. Continuously reducing variability and increasing efficiencies, at the heart of manufacturing culture, has taken a toll since we’ve done it mostly without the active and engaged worker as a partner. The perception of the assembly line worker mindlessly performing tasks day-in and day-out has become ingrained in popular culture, but it does not reflect the reality of today’s dynamics.
We need new terms to replace the old terminology that brings forth the stereotypes – perhaps “industrial artisan” is a better descriptor of the work today. But our approach to managing these workers as robots-in-human-form may still be prevalent and won’t be tolerated by newer generations. With millennials now representing the largest generation in the workforce, a different approach is needed. If we need our workers to be more than extensions of the automation, they in turn will need more than work instructions. Highly skilled workers need to be engaged, and to be engaged requires a different management approach.
We’re stuck in second industrial revolution employee management practices. We need a complete reboot that will value the human element in manufacturing.
Designing Best-in-Class Experiences
Manufacturing operations professionals can learn from their peers on the marketing side, who have been rethinking what it means to engage with customers and differentiate their brands. This movement is commonly referred to as the Customer Experience (CX). All methodologies include the concept of the customer journey, which includes the experiences the customer goes through when interacting with the company and brand. Employees today expect their experience at work to be comparable to that of their experience as consumers, an experience that’s personal, tailored to their needs, and is synced at every touchpoint. Taking a similar approach to improving the Employee Experience (EX) can provide great insights into what’s broken and can lead to obvious fixes that greatly increase employee engagement.
Employee engagement can be measured, using techniques similar in approach to the Net Promoter Score (NPS) that begins by asking, “how likely are you to recommend us to a friend?” or “how many stars would you give our product/service?” The NPS methodology helps identify whether responders are promoters or detractors, and, perhaps more importantly, why.
Research has shown that the impact of higher employee engagement scores on an organization is in fact measurable and can have a profound impact on an organization’s performance. Organizations that score in the top 25% on employee experience report nearly three times the return on assets compared to organizations in the bottom quartile, and organizations that score in the top 25% on employee experience report double the return on sales compared to organizations in the bottom quartile3. Furthermore, companies that invested most heavily in EX were included 28 times as often among Fast Company’s Most Innovative Companies, and 11.5 times as often on Glassdoor’s Best Places to Work list4.
Fairness and Transparency
Manufacturers are very good at specifying in great detail the requirements and work rules of a job. An employee knows what is expected of them. Companies usually know much less about the expectations their employees have of them, and employees notice. Two of the most critical expectations employees have are to be treated fairly and with transparency.
Delivering on fairness is hard. For example, only 64% of respondents to a pay experience survey agreed that they received their pay on time and only 58% agreed they were paid accurately each pay period5. Most executives view the payroll process as automatic, but on the shop floor the execution is much more complicated and error-prone. Getting the basics like pay correct goes a long way towards showing the employee that the company is fair.
Similarly, clarity on rules and transparency is a must as well. Take attendance policy as an example. Most manufacturing operations have formalized rules articulated in points-based systems. These are the norm in union shops covered by collective bargaining agreements but are very popular in non-unionized organizations as well. While the attendance points system is clearly defined, tracking of the points can be opaque at best. Giving both the worker and the manager visibility into status via a real-time self-service delivery method (i.e. their mobile device) can go a long way towards being transparent on expectations and consequences.
Most plants post attainment of KPIs on their bulletin boards or on monitors throughout the plant. But without explaining how the worker’s role fits into the KPI, transparency alone won’t move the needle. A good plant manager treats their workers as valued partners. They explain how the worker fits into successfully delivering on throughput, yield or other metrics, and explain why it matters to the worker, the plant and the company. Workers are trusted to make appropriate decisions and do so when they not only know what they need to do, but why they are doing it.
A great example of how well this can work was seen on the Manufacturing Leadership Council’s late 2018 plant tour at Adient, a manufacturer of seating systems for the automotive industry, that emphasized how empowering the workforce leads to high performance. Each Adient team member understood their unit’s contribution to the process and to the plant’s goals as a whole and could explain in detail the impact their actions had on the key metrics. Engagement was very high and morning briefs were high-energy and positive.
Taking Feedback Seriously
Don’t forget if you empower your employees you also need to listen to them.Take their feedback seriously, and work to reduce or eliminate things that cause them stress. Worker chat rooms are a great way to crowdsource solutions and act quickly on workable suggestions to build engagement. A recent example can be found at a large industrial manufacturer that had an issue with a time clock.
The location of the main timeclock caused a large bottleneck as workers queued up for 15-20 minutes to clock in. The line start was delayed another 15 minutes as workers moved to assigned locations. Locating several timeclocks closer to lineside job positions eliminated the queue delays and greatly reduced the delay in line-start as well. The suggestion came from an internet-based group discussion site that workers were encouraged to use to share ideas.
With this in mind, it’s important to understand that empowerment works best when companies invest in their workforce. Training is key for success with M4.0. Role-specific training is obvious, as is mandatory compliance training, but a less obvious but extremely valuable investment is creating and making easily accessible self-service training. Empowered workers are aware of the skills gap and want to be reskilled. Allowing them to self-select for training will identify potential future candidates with a head-start on needed skills. A great way to close the skills gap is to have the workforce close it themselves. If you don’t have M4.0 skillsets in the plant floor workforce, let them level up.
Manufacturing employees today expect their experience at work to be comparable to that of their experience as consumers.
Takeaways for the Employee Experience
Workers have grown used to disruptors in the consumer world, where customer experiences shine brightly when compared to traditional product and service providers, and they now expect similar experiences in their work environment. Personal, tailored-to-their-need, and synchronized information at every touchpoint is now the standard. As you work to build a new culture of fairness, transparency, empowerment, and investment, there are some key criteria to consider for designing good EX.
Get the basics right. Measure and track employee engagement. Use a good methodology that allows for quick and easy survey participation, but that also captures why respondents might be a detractor or a promoter. Acknowledge valid issues that are surfaced and work quickly to address them. And make sure their pay is correct and timely!
Make things intuitive and simple. Examine your workforce’s employee journey. Is it easy to do everyday tasks like clock-in or ask for days off? Working to simplify administrative work and reduce or eliminate complications for the employee shows you value their contributions and can add to the bottom line with less line-stops. A key test is: can you figure it out without training?
Allow employees to self-serve. Give them easy access to training and work instructions. Make it personal for them with tuned training suggestions based on current skills assessments, their declared interests and goals, and progression along training paths.
Use technology to help. Surprisingly, moving to digital platforms for plant-level workforce management (and human capital management in general) is often not top-of-mind for the manufacturing executive. But it should be. Moving to a digital platform may not only improve the employee experience, but it could help smooth the way for faster acceptance of M4.0 technologies as well. John Foley, Vice President of Human Resources at Builders FirstSource, a manufacturer of structural building products and components, pointed out recently at Ceridian’s 2019 NYC HCM Summit that his function’s rollout of a digital platform for time, attendance, and pay was the first digital platform “out of the gate” for production workers, and that overall comfort levels with digital projects for production planning and quality increased significantly in the workforce. They saw that the digital system linked tightest with functions core to their compensation worked and actually made life easier for them, which in turn brought a different perspective to the other in-flight projects.
At the core, the move to M4.0 brings many exciting changes to manufacturing – both from benefits to the organization as well as to the manufacturing workforce. But, like the technology transformations of M2.0 and M3.0, the hard part isn’t the technology, it’s the change management challenge of getting active buy-in from the workforce, the often-forgotten critical participants in the process. Let’s change our approach and instill a M4.0 culture – one that empowers our workers. We have what we need to make this happen: an approach and tools to measure and improve employee experience. It’s time to act. Culture begins at the top. M
1 National Association of Manufacturers’ Outlook Survey (2018Q4 and 2019Q1)
2 2019 PWC Annual Global CEO Survey
3 2019 IBM Financial Impact of a Positive Employee Experience Report
4 Harvard Business Review: Why the Millions We Spend on Employee Engagement Buy Us So Little, May 27, 2017)
5 2019 Ceridian Pay Experience Report