Where is the Sweet Spot?

If you’re responsible for staffing outcomes at your company you know it’s not getting any easier. “Good workers” are getting harder to find. I just did a search in the Utah Department of Workforce Services system. They have active postings seeking 526 “First Line Supervisors of Production and Operating Workers”, also known as a shift lead. Median wage: $25.17 per hour. That’s just in food processing occupations. These are actual job orders scattered around Utah but mostly in the Salt Lake City area. Raising the wages for your production workers is the obvious answer to a difficult labor environment, but who wants to take that message to the boss? That would go over about as well as passing the ball on the one-yard line when you have one of the best running backs in the world standing right there! Who would do that?

 

Lately we’ve been getting calls from prospects who are finding cracks in their staffing strategy. Why? Because “the quality of the workers” is clearly not holding up, and sometimes their current provider can’t fill all the positions. Sometimes they need a staffing partner who has a better model, but sometimes they just need to recognize their staffing approach is underfunded. Does this mean your company is about to take a profit hit? Not necessarily.

 

Automation equipment is expensive to buy, expensive to maintain, and expensive to replace. But we buy it because it actually saves money! It’s not about the costs in the production process. It’s about the production cost per unit. Let that sink in. Spending money equals additional profit when it reduces the cost per unit of production.

 

Here’s an interesting exercise. If raising the wages in your plant costs money, why not save a bunch of money by lowering wages? Wait a minute you say…that wouldn’t save money. It’s already hard enough to find good people, and our production would suffer badly if we lower wages. That would certainly be costly. OK. But if lowering wages doesn’t save money…why does raising wages automatically cost money?

 

The real question is “where is the sweet spot”? Unemployment goes down, the available labor is less productive, employment risks are elevated, supervisors are more engaged in solving problems than making product, re-works go up, production goals start to slip, and profitability starts a slide that’s very difficult to stop. Maybe it’s time to improve your workgroup quality by raising wages and expectations. Improve your selection and screening models. Turn your plant into THE destination for the better quality employees. Produce more units per dollar of staff cost. Improve profit while leaving your competitors with that sinking feeling.

 

When was the last time you evaluated your sweet spot? Has it moved as the labor market has improved, leaving you wondering why your production goals are slipping? If so, you’re leaving profit on the table and teeing up even more problems in upcoming quarters.

 

Click here to access the job posting information I mentioned earlier.

 

We subscribe to a very good wage and labor availability service offered by Careerbuilder. It’s based on actual job postings in our area. If you’d like information from their database send me an email. These reports are specific to industry and position, we can likely dig out some information that will help you evaluate your sweet spot.

Steve Pluim

Steve Pluim is the president of TalentTeam, a Salt Lake City based staffing and recruiting firm.

Steve can be reached by email at steve.pluim@talentteam.com

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