6 HR Functions That Drive Results in Manufacturing

July 23, 2013


Many small to mid-size manufacturing companies have become increasingly aware of how an effective human resource leader can contribute to the success of the business’s bottom line.

The following points discuss how an effective HR leader and HR function can help a manufacturing company’s bottom line, including developing a positive and engaging work environment for your company.

View our complete whitepaper “How an Effective HR leader Can Help Drive Results in Manufacturing” here.

Compensation management

Compensation expense is typically the second largest business expense next to raw materials or purchased goods. Competing for talent on the basis of wages alone is no longer cost-effective, and HR leaders must determine the right mix of base pay, variable pay and benefits that motivates and retains high performers, and aligning the salary program (as well as incentive programs) to performance markers for the Company, teams and individuals.

Benefits evaluation and administration

Managing and controlling the increasing costs of employee benefits while balancing the needs of the employees has become a very sensitive issue, especially with respect to health insurance. There are basic questions to answer, such as whether to offer multiple benefit options, how funding for the plans should be split between employer and employee contributions, and how much of the benefit plan administration should be handled internally. Some other strategic issues to consider are included in our full whitepaper.

Recruitment/talent acquisition

Declining interest in the manufacturing sector among the younger generations is partly due to the perception that manufacturing is not as cutting edge as other industries. The need to balance a permanent “core” full-time work force with temporary workers required to meet seasonal or periodic spikes in demand also makes manufacturing jobs look less secure to young people.

These are industry-wide challenges and it will take an imaginative, well-connected, persuasive HR leader to give your company an advantage. The ability to effectively recruit talent at all levels of the organization in a cost-effective and timely manner is critical.

Training and development

The degree to which employees are “engaged” (that is truly committed to an organization’s success vs. “doing a job”) has a direct impact on profitability. HR leaders need to effectively manage all areas of training and development, whether by mentoring, contracting for off-the-shelf programs and study courses, hiring outside consultants, or leveraging train-the-trainer programs offered by suppliers.

Performance appraisal and management

HR can design and implement the formal employee appraisal programs internally or use outside consultants to assist with the process to insure that the process and tool are aligned with the organization’s goals and draw upon current best practices. In addition HR can provide line managers with the support and skills they need to effectively engage in these processes so the organization can achieve the desired results.

Effective performance management supports employee engagement; in turn, an engaged workforce is positively correlated to company financial performance.

Employee and labor relations

HR leadership in employee and labor relations is especially important in manufacturing companies. If the company is non-union, it typically takes much time and effort to sustain this status. If unionized, labor negotiations and on-going relations with the union have a key impact on company financials as many budget items are items for negotiation (benefits, merit, lay-off provisions, etc.). Company management should evaluate how well their HR function is prepared to deal with such circumstances.

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