This article appeared in the August 2019 issue of MiMfg Magazine. Read the full issue and find past issues online.
Manufacturers face a people problem. Whether it’s the rapid retirement of the Baby Boomer generation (estimates indicate 10,000 people a day turn 65, with that number expected to rise as much as 20 percent in the next 10 years) or the reduced rate of Generation X and millennials entering the industry workforce, talent is becoming an even more coveted resource.
However, it’s not just the people themselves who are becomirng a precious commodity, it’s the crucial intangible they possess — knowledge.
“The organization itself doesn’t have the knowledge, it’s the people within the organization that have the knowledge,” explained Ken Mall, managing director of workforce consulting for EDSI Consulting. “While it can be difficult to define the cost of losing this knowledge, there is a real cost to the organization.”
Mall continued, saying that “the costs could be as simple as taking longer to perform a task than it used to (the added cost of labor) or the impact can be more dramatic. When skilled trades people with specialized knowledge retire, he or she takes that knowledge with them. If a machine or a process breaks down and the person best-equipped to fix it is gone, that can have lasting financial impact along with real and dramatic consequences.”
Tacit, tribal or institutional knowledge is incredibly valuable to a company’s long-term success. As people become better at the jobs they do, much of the “secret sauce” behind that effectiveness isn’t fully understood. It’s a mix of experiences gathered through months, years and decades of doing the job and it’s almost always something not written down or well-documented. Until they are asked the important questions of how they do the job or why do process X that way, that knowledge is always one retirement, one career change or one death away from being lost.
Today’s manufacturer faces two critical problems:
- The retirement of the Baby Boomer generation the manufacturing industry has come to depend on and one which represents the majority of current leadership positions within a company. Loss of their knowledge represents more than just the loss of experience on the facility floor; when they retire, they take with them skills accumulated across many positions and the relationships and networks they’ve developed over decades.
- Multiple generations, Generation X and Millennials in particular, who are less likely to favor industry jobs than past generations and, this is key, far more likely to switch jobs and careers over the course of their lives. According to a Gallup poll, 36 percent of millennials say they would look for work somewhere else within the next 12 months.
For manufacturers struggling to retain the knowledge of employees — and MMA’s annual manufacturing survey suggests general talent retention as industry’s most pressing business challenge — they are facing the double-edged sword of losing it both from their longest-tenured workers and their newest hires.
While companies who fail to retain the irreplaceable knowledge of its workforce could fall by the wayside, it’s not all darkness for the well-prepared manufacturer.
“The Baby Boomers’ aging out of the workforce is creating new opportunities to capture knowledge and has certainly increased the need for knowledge retention,” said Mall. “It is true that employers continue to have problems hiring new employees, and those issues will likely continue through in the near term. However, implementing a knowledge management program can actually help retain employees by engaging them. Through the process, they might also find new and better ways to get the work done.”
With as many as five generations working side-by-side, now is the perfect time for employers to work to secure the institutional knowledge and the legacy of the workforce while providing younger generations with a sense of trust and career confidence that will encourage them to stay in one place.
Developing Your All-Encompassing Knowledge Retention Strategy
The specific how behind each manufacturer’s knowledge retention will vary based on everything from the type of business to the company’s size and location to even the minutia of which positions they focus on. Generally, however, there are six steps a manufacturer should go through to implement a viable strategy:
- Organizational analysis
- Job task analysis
- Skill assessment survey
- Skill gap analysis
- Next step identification (e.g. training plans and opportunities for mentorship)
- Continuous improvement
“Like every other aspect of manufacturing, it’s not the companies that do something on a whim that succeed — it’s the businesses that develop a strategy, communicate the purpose and importance of that strategy to their talent, and stay committed to implementing the strategies that tap into the long-term rewards,” said Chuck Hadden, MMA president & CEO.
Step 1: Organizational Analysis
Before you change everything, it’s important to identify current states of practice where you could be doing things very well or areas where slight tweaks to a process are better than starting over from scratch.
“Leaders should identify the existing governance, support methods, technological applications and tools used to perform the work,” Mall suggested. He continued, offering that manufacturers could avoid the “redundancy in both data storage and data entry” that tends to arise within siloed departments and ensure a more sustained process for knowledge sharing and retention.
During this step, it is important to assess existing procedures in preparation for the initial efforts to develop a company-wide survey tool.
Step 2: Job Task Analysis
As you go through step one, you’ll discover which jobs should be prioritized for deeper analysis. At EDSI, they use a Skills Balance Sheet as a visual representation of skills, responsibilities and tasks assigned to each position. Whether you use this or something similar, a deeper dive into each job can help employers learn what parts of a job are understood and can be replicated if a new person is hired and what tasks are more intuitive. The less concrete the process is, the more important it is that further analysis — surveys, interviews, mentoring — would be required to secure that knowledge in the event of an employee leaving the company.
Analysis can be done one-on-one or through broader department or company-wide conversations. The larger the business or the more facilities a company has, the more likely the job task analysis process should be segmented out.
Step 3: Skill Assessment Survey
Like any other process, you don’t know what you don’t know and a skill assessment survey can paint the big picture of where knowledge is missing.
A ranked survey with a scale from no knowledge >> awareness >> limited ability >> acceptable ability >> expertise will help identify not only the level of knowledge each employee has about a given task but also the amount of knowledge necessary to achieve a desired outcome within the task.
Step 4: Skill Gap Analysis
Once your survey results are compiled, you can record them in a database for analysis and comparison across departments. The Skills Balance Sheet of EDSI is one way to provide your full team with a comprehensive accounting of what gaps exist and can set the stage for deeper conversations on what needs to happen to close those gaps.
Step 5: Next Step Identification
This is the step in which true knowledge sharing and retention begins. How you proceed will vary from company to company but mentorship tends to be the most common technique (see additional methods below).
Manufacturers are uniquely positioned to make knowledge sharing fun, exciting and interactive. With anywhere from three to five generations under one roof, opportunities for mentoring are all around.
“Having a company culture which embraces and sees direct value in mentoring elevates our experienced employees and provides the nurturing environment for knowledge and skills to be passed onto our apprentices,” said Kelly Victor-Burke, majority owner and CEO for Burke Architectural Millwork. “Mentoring is a vital, daily activity at our company.”
Mentorship can happen in a variety of ways. What it should never be is a last-minute addition to an anticipated change. Unless you are first building a mentorship-based culture, avoid asking retiring employees to, for the first time, mentor the less-experienced employees. Mentorship should never feel like you are being pushed out the door but rather as a way for the wealth of knowledge you have to continue. It’s not just C-suite leaders who care about the legacy they leave behind. Mentoring is a great way to help ensure the work and knowledge of dedicated talent remain intact long after they retire.
Wherever you can, make mentorship part of the culture and, remember, it can absolutely be a two-way street. Just as experienced employees can help new employees learn and develop their skills, younger generations can impart important knowledge to older generations not ready to retire. As technology and innovations advance, some positions may be changed, adapted or eliminated altogether. This means you will either lose employees or have to retrain them for modern positions. Employees in their 40s, 50s or 60s who have learned high-tech skills from Generation X and Millennials could adapt easier to new training opportunities.
Finally, time is another finite resource and intensive mentorship efforts can negate an employee’s ability to work as efficiently as they could otherwise. Consider hiring recently retired workers part-time to serve as mentors.
“We’ve restructured some of our operations to better foster mentorship, including bringing in retired milling experts and to work alongside our younger apprentices,” said John Barnett, president & CEO of Reed City Group (learn more). “Our full-time operators have full-time jobs. We can bring people in to ensure mentoring happens without having to sacrifice time and production.”
Some companies are also utilizing staggered retirements so rather than being there and then being gone, your close-to-retirement workers may reduce hours or days on the job. As they do, they may already anticipate the importance of mentoring their replacement and companies should do what they can to encourage that act.
Additional Knowledge Sharing Methods
There are plenty of other ways to improve company-wide knowledge of individual job tasks:
- Interview employees either through written, audio or video testimonials
- Create training manuals
- Make a point to assess existing processes and procedures either annually or quarterly (and using this time to develop processes for new tasks as they are created)
- Develop new apprenticeship and training programs (and funding exists — check out mimfg.org to learn about the Going PRO Talent Fund)
- Make succession planning a priority not just for leadership roles but across all positions. You can address it with employees as a way to ensure stability as they move up within the company so they see it not as an attempt to replace them but as a way to ensure smooth transitions as they advance in their career
- Locate innovative and new technology that can help modernize old tasks or increase efficiencies
Step 6: Continuous Improvement
Never assume you’re done. Knowledge sharing should be a continuous process. Someone will always be retiring or moving to a new position and someone else will always be starting out.
Quantifying the benefits of knowledge retention can be difficult but its importance cannot be overstated. It remains more cost-effective to retain an existing employee than it is to hire someone new. Sharing knowledge can bring a sense of importance to someone’s day-to-day job. Seeing your employer have the confidence to train you in new skills can increase your company loyalty and reduce the likelihood of looking elsewhere. And never underestimate the bonds that can be created between coworkers when they work side-by-side and learn from one another.
With talent more coveted than ever, the benefits of knowledge management and retention are clear:
- Greater ability to maintain effectiveness even as employees retire or move on
- More confidence and loyalty from employees as the company shows its trust in them and the important role their knowledge has toward company-wide success
- Deeper bonds between employees
- A happier, more connected workplace that can lead to more talent wanting to work there and less talent looking to leave
- A better overall sense of what makes the company successful, where gaps in talent exist and a greater ability to develop long-term talent plans
For details on developing a reliable knowledge sharing and retention plan, check out the resources available from EDSI Consulting at www.edsisolutions.com or contact MMA’s communications department at 517-487-8533.
- U.S. Census Bureau, www.census.gov.
- MMA’s Annual Membership Survey, 2019.
- A Strategy to Capture Tribal Knowledge, Michael Collins, Industry Week, May 23, 2016.
- How To Keep Hold Of Your Institutional Knowledge, The One Brief.
- Preserving Employee Know-How, Deborah A. Peluso, Society for Human Resource Management, May 1, 2010.
- The Value of Retaining Institutional Knowledge, A.J. Heightman, Journal of Emergency Medical Services.
- Millennials: The Job Hopping Generation, Amy Adkins, Gallup.
- You Don’t Need a Crystal Ball to Plan for the Future — Why Your Organization Needs to Implement a Knowledge Management and Retention Strategy, Ken Mall, EDSI