In his insightful article The economics of worker retention – creating an environment where future growth outweighs short-term compensation increases Dan Davis discusses the current plight faced by metal fabrication shop owners and managers.
Given the current oil and energy boom in the United States, metal fabrication workers are in greater demand than ever. This is making it increasingly difficult for shop owners (particularly those in the southeast) to hold on to their workforce. The oil and energy industry is more than willing to offer competitive wages and shop workers seem all too eager to jump ship, even for a minor pay increase. This is a serious problem and one that is likely as perplexing as it is worrisome for shop owners and managers.
At the moment it appears that a marginal increase in pay is all it is taking to entice workers (especially the younger ones) to leave their current employers. In theory, owners of metal fabrication shops could respond by slightly increasing their own pay to bring it back in line with the salaries offered by the oil and energy industry. This may keep their workers content for awhile but is by no means an effective or long-term solution.
At the end of the day the oil and energy companies will likely be the ones who can offer the higher salary figure, not to mention trying to hold on to workers solely by increasing pay can have other unintended consequences (which we will touch on later). So besides a pay increase, what other options are available to improve worker retention?
This brings us to Mr. Davis’s key take away from the article; how can managers create an environment where it will take more than a small wage increase to get a worker to jump ship. To begin fostering this environment Mr. Davis recommends practices that open up lines of communication and facilitate interactions between managers and workers on the shop floor.
Managers need to ensure that each employee is informed of the company’s long term plans and understands how their daily activities fit in with the big picture. When this is done effectively, workers feel like a valuable member of the team and the result is a more engaged and productive workforce. Another good way to increase engagement is by investing in more training, which also shows workers they are valued. Now before we discuss anymore strategies to improve worker engagement or retention let’s take a more in-depth look at the nuances of organizational commitment.
Organizational commitment is the relative strength of an employee`s attachment or involvement with their respective company. It is usually broken down into three categories; affective, normative and continuous and it is essential that we recognize that not all forms of organizational commitment are equally favourable.
The ideal type of organizational commitment is affective commitment; which is when an employee feels a strong emotional attachment to their organization. They have likely internalized the company’s values and goals, which means that meeting those goals and upholding the company’s values has been linked to their own sense of fulfilment and accomplishment.
This results in employees that don’t begrudge coming to work and putting forth a lot of effort because they feel a strong personal connection with the organization. Employees that have an affective commitment are also more likely to experience internal versus external motivation. Internal motivation is when the impetus or drive to perform a task originates from within the employee rather than being from an external source. In general it is preferable to have a workforce that experiences some degree of internal motivation because it means a manager doesn’t have to completely rely on external rewards or punishments to inspire action.
The next type of commitment is normative, which is when an employee stays with an organization out of a sense of obligation. This could stem from a belief that the company has invested a lot of time or resources in them (either through training, bonuses, etc. ) and they owe it to the company not to pursue other job opportunities. This isn’t necessarily a negative type of commitment but it would be preferable if employees were staying out of a sense of personal enjoyment rather than from guilty feelings about leaving. To connect this to Mr. Davis`s advice we should ensure that when providing valuable growth or training opportunities to employees we aren’t just doing it for the sake of increasing loyalty, but to actually improve their skills and keep them engaged.
The final type of organizational commitment is continuous commitment and it is the least favourable type for a business. In this case an employee is only staying with the organization because they feel that leaving would be too costly. Continuous commitment basically stems from a fear of loss; an employee doesn’t want to risk leaving their job and losing out on the level of benefits they currently experience. This is actually the reason why we said earlier that metal fabricators shouldn’t attempt to solve their worker retention issues solely through a pay increase. Such a strategy would likely increase continuous commitment but would not facilitate that strong emotional connection, between employee and company associated with affective commitment.
This strategy also relies solely on external motivation and doesn’t seek to appeal to or increase an employee’s internal driving force (their internal motivation). There is nothing wrong with offering a competitive wage but employees need more than a big pay check to keep them motivated and satisfied with their current company.
Other ways to increase affective commitment include; giving employees plenty of feedback on their daily work, linking personal and organizational goals and making sure employees experience plenty of positive emotions at work. To conclude when employees are viewed as valuable strategic assets rather than costs, managers can cultivate a positive work environment which breeds motivated and productive employees with high levels of organizational commitment.
Link to original article: http://www.thefabricator-digital.com/thefabricator/201501?sub_id=BRfTL6LYBw0LM#pg10
Source on organizational commitment: http://www.mindtools.com/pages/article/three-component-model-commitment.htm