Industry Voice: Engage employees, reap rewards

By Michael Watkins and Dave Capkowitz | Jul 05, 2020

The answer is stronger and better-trained managers.

The question? What are the primary keys to engaging and retaining employees with a war for talent upon us?

The Department of Labor says that labor force churn, the number of people that leave jobs and start new jobs, is at all-time lows. Generally speaking, more churn signals a healthier labor market.

Labor force churn, baby boomer exits, and the Millennial propensity to change jobs, places a tremendous amount of pressure on managers to be as productive as possible. Unfortunately, Gallup also reports that 71 percent of the workforce is not engaged or actively disengaged, and therefore not productive. In the foreseeable future, all indicators point to a very tight, transient, and fluid workforce. How does a company get any leverage out of its workforce in an environment where it is easier to find a new client or customer than it is to find a good employee?

Gallup reported in a study that only 29 percent of employees are engaged at work. Our theory is that across industries there will always be roughly 29 percent of the population that is engaged. It has nothing to do with the quality of an organization, or its managers. Statistically, there will always be 29 percent of the workforce that is engaged.

At the other end of the spectrum, the study revealed that approximately 16 percent of employees are actively disengaged at work. Actively disengaged employees are typically out to damage their company. They monopolize time; have more accidents; account for more quality defects; contribute to "shrinkage" or theft; are sicker; miss more days; and quit at a higher rate than engaged employees do.

The real battle is for the middle 55 percent of the workforce that are not engaged. These employees are generally satisfied but are not mentally and emotionally connected to work; they will usually show up to work and do the minimum and will quickly leave their company for a slightly better offer. However, all these not engaged employees have the potential to become engaged!

Gallup estimates that the manager accounts for 70 percent of the variance in employee engagement. 70 percent of the time, those that are sitting on the fence unengaged are doing so because of their manager. The good news from the research is that the manager represents an amazing opportunity for machine shops. Get the right manager in place, and they will provide the leverage necessary to move thousands of employees that are not engaged to being engaged.

Research indicates that engaged employees deliver:

  • 3X profit growth
  • 2X customer loyalty growth
  • 2X productivity increases
  • 2X less turnover

Only 16 percent of managers are naturally good managers. The remaining 84 percent of managers have to be trained in order to be effective. Unfortunately, most managers at SMB manufacturers are not receiving any management or leadership training. As a result, their managers tend to micro-manage with excessive oversight; they lack communication and decision-making skills; they are stubborn and unwilling to listen and adapt; they are unproductive; and they have a bad attitude or lack of honesty at work.

If this sounds like your shop, it is time to act. People don't leave bad companies; they leave bad managers. While the war for talent's perfect storm continues to rage, SMB manufacturers cannot afford to lose good people.

Michael Watkins and Dave Capkovitz are principals of EBITDA Growth Systems (EGS). The mission of EGS is to help business owners and executives substantially increase the profitability and value of their companies. We work with clients that have achieved some level of operational success but have not yet crossed the chasm to reach maximum profitability.

EGS invites you to take part in their "Shop Talk" series. Contact Michael Watkins, at (720) 352-3675.