Attracting and Retaining Top Talent in Manufacturing & Distribution

Attraction and Retention 

The labor market for manufacturing and distribution (M&D) continues to face significant skill gaps due to the need for specialized skills and an aging workforce. 

With the advancement of automation and technology, providing training and learning opportunities to employees to enhance their skills, knowledge, and competencies is imperative. Partnering with local schools has proven to be successful in introducing students to careers in manufacturing and distribution and providing curriculum input to administrators. 

 Common positions that are challenging to fill include CNC operators, quality inspectors, and warehouse workers. Not only is it difficult to identify qualified candidates, but companies also face challenges in retaining employees. The greatest turnover in these positions usually occurs in the first year. 

Compensation and Benefits Beyond the Basics 

Compensation and benefit considerations need to be top of mind for M&D entities, as compensation impacts both the retention and attraction of employees to an M&D company. Equally important are professional development, effective performance management, career coaching and progression, and a deliberate effort to maintain employee engagement. 

Competitive compensation and benefit packages are essential but are not the sole determinants of employee satisfaction. 

 Other determinants include: 

• Progressive Pay Models: Implementing progressive pay models, such as regular hourly increases, can boost employee morale and retention. 

• Performance-Based Pay: Rewarding employees for strong performance, attendance, and communication can significantly impact engagement and retention. 

• Professional Development: Investing in employee growth through training, tuition reimbursement, and career pathing can enhance job satisfaction and loyalty. 

Aligning Sales Compensation with Market Share 

When organizations increase revenue and their sales teams experience significant commission growth, their market share must also increase. In situations with increased fees in a one-tiered approach to commission, where the trigger is revenue growth, the salesperson would increase their commission, but the company would not increase its market share. Examples such as this emphasize the importance of reviewing the outcomes of sales compensation plans annually. 

Strategies for Smaller Organizations 

Smaller M&D companies may face unique challenges in attracting and retaining talent; however, they can implement effective strategies to compete with larger organizations. 

 Strategies include: 

• Competitive Compensation: Smaller companies and those in rural areas may not have access to the same resources and talent pools as their metro counterparts. Offering a highly competitive compensation package that provides above-market pay and rich benefit offerings may encourage the candidate pool to widen. 

• Career Progression: Implementing clear career paths and opportunities for advancement will motivate employees and encourage long-term commitment. 

• Strong Company Culture: Smaller companies should foster a strong company culture by emphasizing teamwork, collaboration, engagement, recognition, and reward. They should also encourage constructive and continual feedback. 

Future-Proofing Your Compensation Strategy 

As the M&D industry continues to evolve, companies must adapt their talent strategies to attract and retain top talent. By focusing on competitive compensation, professional development, and positive work culture, M&D companies can build strong, resilient teams that drive growth and success. 

 The Compensation Resources team is an asset to EisnerAmper and our manufacturing and distribution group. Do you need help assessing attraction and retention in your organization? EisnerAmper professionals can tailor a plan to build and maintain a strong team for your organization. Contact us to discuss how we can support you.