Transforming the shop floor to boost retention

Originally published by People Matters here.

Manufacturing is undergoing a renaissance in India, driven by an influx of new high-profile investments and growth in key sectors such as pharmaceuticals, automotive, and electronics. Currently the manufacturing industry accounts for 17% of the country’s GDP but this number is expected to grow as multinational corporations (MNCs) continue to shift their production away from China in a bid to diversify their suppliers. Furthermore, high-profile global companies like Tesla and Apple are making significant investments to create strategic manufacturing hubs in India. In addition, the country also benefited from the latest lockdowns in other countries, due to the ongoing pandemic.

These shifts are reinvigorating the ‘Make in India’ initiative and associated employment programs, ensuring that manufacturers can modernize their operations effectively and retain workers to keep up production. As the shop floor undergoes continuous transformation, automation and technological advances are reshaping the production line.

Running Talent Management as well - oiled machinery

Keeping pace with automation, production line jobs now require special set of skills to operate the complex machinery and workers across generations need to acquire the same. These shifts have created a need for more skilling programs to either reskill current employees or help new employees acquire the necessary skills to perform their duties. To facilitate this change, many manufacturing organizations are taking advantage of the National Employability Enhancement Scheme. This initiative aims to develop a competent workforce by enabling trainees to understand the nuances of real work atmosphere through on-the-job training to work on the redesigned shop floor. The scheme provides these workers with the upcoming skills they need while providing government assistance to manufacturers as they reskill and upskill their workforce.

Many organizations are also employing job rotation to cross-train employees. These programs encourage employees to learn and grow, allowing them to gain valuable experience and new skills. Job rotation and multiskilling programs not only boost an employee’s personal development but help them feel more connected to the business and its output. This boosts employee engagement. There is also continuous focus on engaging contractual talent. By helping organizations smoothly mitigate skill gaps, we expect the contractual workforce to increasingly be seen as a real talent channel.

Emerging Trends on Employment Model

Organizations have changed their employment models to reflect higher contractual and outsourced workers. The percentage of contract or outsourced workers varies from 35% to 55% of the total shopfloor workforce. The rise of contractual and outsourced talent also reflects the need for greater flexibility in the workforce, allowing organizations to reduce fixed payroll costs.

The change in the employment model, along with the increasing availability of manpower with varying degrees of skills, have resulted in a hierarchy of skills deployed at the shopfloor. The outsourced manpower reflects unskilled and semi-skilled jobs whereas the baseline skills within an organization are of a much higher order. The greater focus on automation now requires the blue-collar workforce to have greater knowledge of automation tools and basic analysis consequently, there is a clear shift towards hiring ITI and Diploma Engineers perhaps outside the purview of the union settlement. Furthermore, there is a need for them to be equipped with enhanced skills and the potential to be groomed for supervisory and management roles easily.

Impact on Rewards

There is a revolution on factory shop floor across manufacturing plants and it is only gaining momentum with the recent thrust of the Make in India initiative. The increased demand for “fit for purpose” talent also has organizations rethinking how they structure pay and benefits to better match this new mindset.

Over the last decade, and now more visibly today, the profile of blue-collar workforce has changed, requiring a shift in traditional compensation structures and policies. Traditional compensation and benefits plans that provide canteen services and statutory leave are still commonplace. However, organizations are complementing these benefits and offering more robust rewards and recognition programs. These programs range from monetary in nature, from incentives for hitting productivity quotas, to non-monetary recognition programs, such as employee of the month awards, best department recognitions or thank you rewards programs*.

With new manufacturing setups taking place, the retention of employees will require not just commonplace rewards but specific value proposition with specific benefits and practices customized to employee needs. There is a clear focus on improved insurance coverage, better provision of healthcare, new and different leave types (including leave pooling mechanisms), improved gender inclusion, focus on hygiene, shop floor safety and so on.

More progressive companies have already started implementing common policies and benefits between their blue collar and white-collar workforce. Clearly, we are moving away and making place for top-ups for statutory prevalence as more MNCs invest in manufacturing hubs throughout India and the need for highly skilled shop floor workers grows.

Now more than ever, there is a real case for India being one of the world’s key manufacturing hubs! But, the key will be understanding the nuances of building an agile workforce and customizing pay and benefits that not only meet salutatory requirements but also provide opportunities for employee growth, progression and engagement.