How to Improve Employee Satisfaction and Retention AND Reduce Labor Costs

April 2, 2012 at 5:47 pm 3 comments

Human capital in particular is a critical part of a plant’s success, and needs to be nurtured through leadership, training and other education programs. Ineffective monitoring and mentoring of employees through the lean process negatively impacts the entire process and product quality in particular. The employer has to constantly create enthusiasm with all employees and always pat them on the back for their contribution, no matter how small or how large. Lean always works when the proper leadership strategy is used to implement it. As manufacturers use their new cost efficiencies to wring more output from fewer employees, care must be taken to select the correct labor reduction.

This became a severe issue at one company where the increasing rate of returns due to production quality issues was negatively impacting sales growth. The return rate of product measured in credit dollars was 6% of net sales. The Best-in-Class industry average was 3%. Due to the recent sales revenue decreases, management decided to offset the decreasing sales by reducing the labor force. Unfortunately, the first trims included most of the QA/QC personnel because they were considered to be not directly involved in the daily production throughput of product and thought of as a cost center. Upon joining the company, one of my first assignments was to address the quality issues. By building and leading a cross-functional team which developed, implemented and maintained a successful quality control program based on newly established employee and supplier performance metrics, the team resolved the poor product quality issues. Sales increased 12% in less than 1 year without any increase in labor headcount. Our efforts also resulted in the unanticipated recognition of the flagship facility, by the corporate executive committee, as Quality Factory of the Year for two consecutive years. The program was recognized by the corporate office as a Best Practice and rolled out to the licensee facilities; and I was awarded the Manufacturing Manager of the Year.


Entry filed under: Customer Loyalty, Dan Trojacek, Eco-Friendly, Empoyee Satisfaction, Environmently Friendly, Furniture Manufacturing, Green Manufacturing, Labor Costs, Leadership, Lean Six Sigma, Manufacturing Costs, Material Costs, P&L, Production initiatives, Profitability, Raw Materials, Sales Revenue, Supply Chain. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

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3 Comments Add your own

  • 1. Chris Bakunas  |  April 5, 2012 at 8:55 pm

    Good article – Thanks! Your analysis and reaction to the knee-jerk reaction to cut labor that was deemed non-productive though in fact essential was spot on.

  • 2. Christoph Engels  |  April 7, 2012 at 1:53 am

    Interesting spot on this subject. Thanks’; what is your exact understanding of “returns”? How do you survey your employees satisfaction and perception of their work environment?

  • 3. Mike DeHart  |  April 9, 2012 at 12:36 am

    “Lean always works when the proper leadership strategy is used to implement it.”
    Having led several Lean classes and Process Improvement Events, I have found that the education and working the process really does work. The largest detraction always tended to be when middle management smirked at the concepts, touting that using the Lean Processes is a waste of time if Constant Improvement Processes are in place.
    In the military, the detractors were normally mid-ranked officers and non-commissioned officers, unfortunately these are the same people that retain a majority of corporate knowledge.


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