"...We
are a small labor intensive manufacturer located in an urban area where there is
competition with other industries. We have high turnover and are continually hiring and
training new machine operators. How can we develop a screening and testing program that
will help us choose the best potential operators? Also, once we hire new operators, how do
we know what operations they will be best suited for?" B.T., Philadelphia, PA
THE INDUSTRY ADVISOR
FINDING AND KEEPING
THE BEST MACHINE OPERATORS
Gene Levine - www.genelevine.com
PART 1
Because of the universality of your turnover dilemma, I will fill
in some of the blanks you had in your questions. My first concern is your statement,
"we are continually hiring and training new operators." On the basis of
that statement, it appears you have an adequate number of applicants from which to select
qualified operators. So, I won't address the problem of finding applicants, but rather
ask, why are you continually hiring? Why are
you not hiring the best ones, the dependable
ones, the ones who really want to work? At least you want an answer, most companies don't
even ask the question.
Without singling you out, suffice it to say, it has been my experience that those companies that now cry the loudest—about the unavailability of good applicants—are the ones that brought that problem on themselves. Perhaps yours is one of those companies. For example, look at your continuous turnover record. You are already having trouble holding on to people you hire. Someday, if you leave that problem unchecked, you may exhaust the available labor pool in your area. What will you do then, write a letter saying you can't even attract any labor? It appears you finally realize that your only hope is to scrap and replace your entire hiring process. Congratulations, you are correct!
Before I offer my answer, I first need to qualify the costs associated with turnover. Getting a handle on your present costs will better enable you to evaluate the ideas I will offer.
Any turnover above 30% per year is too high, demoralizing and very
expensive! Years ago, AAMA issued a report that outlined, among other things, a
formula for determining the dollar cost of turnover. Their "SCARE"
(Separation,
Cost,
And
Replacement Expense)
The negative impact of turnover becomes even clearer when we view profit—the reason for being in business. A few strategic numbers will help develop my case for your committing to programs to reverse your present trend. Assuming your company has a net profit of 6% before taxes, has a turnover of 50 operators per year, and using the "SCARE" model suppose, for example we use a fictitious minimal replacement cost per operator of $2,000. The annual cost for your turnover is $100,000 ($2,000 per operator X 50 operators). Since most firms are sales oriented, and if you agree with the $100,000 figure, you would have to generate over $1,667,000 in sales (with all the associated costs and problems) to cover your turnover expense ($1,666,000 X 6% = $100,000).
"In the long run, hiring mistakes cost far more than mistakes in purchasing the wrong machinery".
Proper, proven techniques are available to ensure that you hire only the most dependable, productive employees, and then develop them at minimum cost. These techniques fit into five general areas;
1. Selection: Includes meaningful, legal application forms, and a formal screening, and testing, procedure.
2. Hiring: Includes a truth oriented, motivationally structured, interviewing and hiring process.
3. Orientation: Includes the formal, step by step process trainees go through during their trial period.
4. Training: Includes the hands-on program to develop the required skill, dexterity, knowledge, and earnings in the fastest possible time.
5. Monitoring: Includes knowing about the trainee's progress and why people stay or leave your employ.
All of the above areas are equally important. Your letter will be answered in two parts. This month I will limit my suggestions to the basics of a proper selection procedure. Next month I will try to provide you, and another person who sent in a similar question with additional suggestions.
So you don't feel that your urban area location makes you unique, I hasten to add, that the proven ideas that follow can work, providing you want them to work. Your goal once again is to stop high operator turnover.
"What the mind can conceive and believe it can achieve".
I. SELECTION:
A. How Things Are Changing:
Today's managers are required to view applicants from a new perspective. It is no longer prudent to hire just warm bodies. There are tremendous changes happening to those people who comprise the workplace. The elevation of workers to the newest management level it is the wave of the future. The need for better trained people – at all levels – is a given. It is therefore imperative that you now rethink your entire hiring strategy, beginning with selection. Your future survival depends upon it.
B. Learn Why People Leave:
In my opinion, the process of hiring the most suitable person begins prior to handing out an application blanks to prospects. It begins with having the facts to make more knowing hiring decisions, and using those facts to solve your problem.
Most firms I visit have no facts (reasons yes, facts no) on why people leave their employ. So, you'll first need to know exactly why employees are constantly leaving you.
The most meaningful way to obtain that information (surprisingly enough), is to ask those employees who have not yet left. I suggest a professional attitude survey be conducted using your existing workforce. Done correctly, you will learn your worker's perception of you and your firm. You will certainly learn the real reasons for your turnover. A word of caution; do not take the survey unless you are truly prepared to act on the findings! If you do not want to hire a professional psychologist, you might contact a local University with a Management, or Psychology Department requesting they take such a survey for free.
C. Learn When They Leave:
Next, you need to know when employees leave. This information is easy to get. Simply make a list of the last 12 months on a pad. Divide it into 3 columns. The first column will be a list of the past 12 month's names (MARCH, APRIL, etc.). The second column will be entitled "HIRED," the last column "TERMINATED."
Now, by month, count and post how many people came and went. Usually, most turnover happens in the first three months (which is an indicator of poor training and orientation procedures). If you find that most of your turnover happens in the first month you have more serious problems than can be answered here.
D. Design a More Meaningful Application Blank
Knowing exactly why and when people leave gives you facts. Use those facts to first design a more meaningful application blank with a specific purpose—to pre-determine "washouts" and potential problem employees. Therefore, you need to incorporate the following very important information requests into your application blank . . .
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