It Pays to be Safe: Three Investments Manufacturing Companies Can Make to Protect the Bottom Line

Below are three innovative ways that organizations are investing in their employees to set themselves up for the next decade, while protecting themselves from the current manufacturing downturn.

• By John Leo Post
• Feb 25, 2020

Staffing shortages, tightening margins and a widening generational skills gap currently threaten the manufacturing sector. Although the industry has historically been a driving force for the American economy, new data suggests the need for companies to look for innovative ways to invest and compete in the next decade.

According to data from the Bureau of Economic Analysis, manufacturing is now the smallest share of the U.S. economy. The industry currently makes up 11 percent of the GDP—a share size that hasn’t been experienced by the sector since 1942. As these trends show little sign of slowing down, protecting the bottom line becomes more important now than ever.

Some manufacturing companies have found ways to reverse these trends. Below are three innovative ways that organizations are investing in their employees to set themselves up for the next decade, while protecting themselves from the current manufacturing downturn.

Minimize Workers’ Comp
Workplace injuries are an abnormally high cost center for the manufacturing industry. According to the 2019 Liberty Mutual Safety Index, injuries cost the manufacturing industry more than $7.62 billion last year. While these costs are staggering on their own, the fact that nearly $2 billion of that can be mitigated through proper employee training should be even more eye-opening.

According to Liberty Mutual, at least $3.48 billion of the injury cost to the manufacturing sector was attributed to musculoskeletal injuries (MSIs) in 2019. In my experience, more than half of musculoskeletal injuries occur because an employee has positioned his or her body in a weak, unsafe position while working. Simply correcting this body position can drastically reduce an employee’s chance of experiencing an MSI.

To be clear, I’m not talking about an ergonomic solution. Ergonomics is about designing the environment for the individual and has been known to decrease injury risk by up to 26 percent. That’s great, but companies can get more bang for their buck by ensuring that their humans know how to interact with the hundreds of different environments they encounter daily.

If your team is already minimizing workers’ comp injuries, then kudos—keep it up. On the other hand, if associates are being hurt on the job, there’s no better time to do something about it. Start with the fundamentals: equipping employees with techniques for preventing injuries will establish a foundation for safety and make it easier to eliminate injuries in the long run.

Engage Employees to Optimize Performance
It’s easy for organizations that invest in reducing workplace injuries to see a direct ROI on their workers’ comp savings. However, if it’s productivity gains you’re after, you’ll be best suited investing resources into employee engagement.

According to a 2019 Gallup meta-analysis, employee engagement has a direct impact on performance. The manufacturing companies that go the extra mile to ensure that their workforce is engaged are able to see additional ROI in the form of productivity and work quality increases. Gone are the days in which employees are motivated strictly by the size of their paychecks. At the end of the day, employees are looking for purpose, recognition, and meaningful relationships in their work.

An engaged workforce has 10 percent higher customer ratings, 17 percent higher productivity and 21 percent higher profitability than a disengaged workforce. Compensation is still important, but companies are finding that it’s not the only way to motivate employees to do their best.

So how do managers begin engaging their employees in meaningful ways? According to Gallup, there are 12 characteristics that highly engaged employees exhibit. Thankfully, leaders can boil down the 12 characteristics into a common theme: demonstrate that the organization cares about the individual. Recognizing and caring for employees will look different for every leader—but making both a priority can positively impact team performance. Properly setting expectations, praising good work, and providing opportunities to train and develop skills are strategies that managers can use to engage and optimize their frontline workers.

Increase Participation by Gamifying
Employee safety and engagement are two key levers that manufacturing employers are pulling to get more out of their workforce. There are various methods for accomplishing either objective; the best one will likely vary based on the needs of your workforce. However, all effective company initiatives have one thing in common: they get employees to participate. If you struggle getting participation, you’re not alone: getting your team to buy-in fully is one of the most difficult jobs for any manager, coach or leader.

Most effective programs use a technique called “gamification” to encourage associates to participate. This method leverages an employee’s competitive juices to encourage him or her to act. Think of an internal leaderboard ranking with a prize for the top performer or a location-wide event in which associates test their knowledge of training material against each other. Or, think about an “X days injury-free” challenge. Incentivize employees with real-world prizes, or ones that hold special company value (a gift card to the company store, etc.) and watch participation skyrocket.

Whether your goals are to reduce workers’ comp costs, give your workforce a performance bump or strengthen company culture, investing time and resources in the employees that do the hard work will help get you there. Despite the manufacturing downturn, studies show that there are still ample opportunities for manufacturing companies to grow in the next decade. According to McKinsey, there’s a $530 billion opportunity for US manufacturers to increase GDP in the next five years. Achieving this growth would create more than 2 million jobs for the sector. As leaders in manufacturing navigate this changing industry landscape, it’s critical to use every resource in your arsenal to protect your bottom line.

John Leo Post is the Co-Founder and Vice President of Product at Worklete.