Conclusions and Recommendations: Managing Skills

Employee retention is really an element of a more general concern that might be best termed ‘skills management,’—i.e., everything that has to do with recruiting, maintaining and developing the necessary mix and levels of skill required to achieve organizational and business objectives.

When a business loses employees, it loses skills. The magnitude and nature of that skills loss is an important management issue, affecting productivity, product and service quality, profitability and a host of other key concerns. The cost of replacing workers can be high, the problems associated with finding and training new employees can be considerable, and the specific workplace-acquired skills and knowledge people walk away with can take years to replace. It is therefore within this broader notion of skills management that employee retention assumes such great importance.

This study has highlighted examples of Best Practices in Employee Retention using both the human resource literature and actual case study examples of Canadian plastics firms. We would like to draw on this research to offer a set of conclusions and recommendations in two areas. First, we provide some observations on our experiences carrying out this Best Practice research. These methodological considerations may be useful for sector councils and their funders. Second, we present some conclusions from the case study research and recommendations about the kinds of strategies companies might consider that they might improve retention.

Conclusions and Recommendations

1. Our research found many good examples of successful Plastics firms with high levels of retention, low employee turnover and employee commitment. In many of the case study examples presented in this report, turnover was virtually absent, or well below the industry averages. Our case studies also suggest that SMEs can be just as successful as large companies at keeping their workers. Firms should understand the nature and magnitude of their turnover, why it is happening, how it affects the skill requirements needed to achieve business objectives and performance targets.
    

2. In the cases we studied, low turnover was not necessarily the result of a formalized “retention strategy.” Nor was there a “cookie cutter” approach to employee retention. Instead, many of the firms were using their own knowledge and creativity to develop innovative methods, practices, and programs that were appropriate to their own unique environment and circumstances (i.e. product sector, firm size, workforce characteristics and interests, and so on).
    

3. This is not to say that there are no common principles or fundamentals upon which good retention practices are built. The firms we examined all had a strategic understanding of their workforce skill requirements, and of the role and importance of skills in meeting business objectives. All stressed the importance of responsive and open communications and the importance of understanding the needs and interests of employees. All worked from the principle of treating people fairly. These fundamentals may seem like “soft” approaches to employee retention, but they were repeatedly cited in our interviews as the most important factors affecting employee commitment.
    

4. Outside of these fundamentals, our case studies revealed considerable variation in the approaches and initiatives taken by different firms. Approaches to compensation levels and systems, benefits, training and career development, recognition and rewards, and communications all varied by firm size, industry segment, skill composition of the workforce, and so on.
    

5. While there is no guaranteed set of practices that will work in all firms, there are “best practices” identified within the HR literature, and highly effective examples as described in our profiles of Plastics sector firms. Firms looking to improve their retention or improve their skills management more generally might consider the applicability of these strategies and initiatives to their own unique circumstances. Such strategies can also be modified to reflect individual company circumstances. Many of the companies profiled in this report have developed their own innovative approaches internally, which have evolved over time into effective strategies.
    

6. All of the low-turnover firms we examined felt it important to be competitive on wages. While not necessarily the only factor in retention, it is an important starting point. Some of the companies profiled in this report have done very well by pegging compensation levels against ‘middle of the road’ wage benchmarks rather than trying to out-pay their competitors.
    

7. All of the companies we interviewed were very active in the area of skills training and professional development. Training appears to be an effective retention factor because it is a visible investment that the company makes in the worker, and it provides new skills that are intrinsically rewarding. Combined with some communication about how an employee’s efforts at developing skills will lead him or her to more challenging and meaningful positions within the company, training encourages workers to make longer term commitments to their workplace: it permits them to see a future with the company. Finally, as a retention measure, training is enthusiastically embraced by employers because it is in any event fundamental to the ongoing survival of manufacturing companies working in an increasingly competitive and innovation-driven market.
    

8. Cross training appears to be a widely-used practice among the Canadian plastics firms we examined, and with respect to this particular report, it appears two serve two valuable functions: (a) it creates flexibility within the workforce which, when employee turnover is high, can be effective in offsetting the negative impacts of knowledge loss resulting from the departure of workers, (ii) as with other types of training, cross-training enhances skill levels, employability and job challenges and, as such, it can be a useful tool in building employee commitment.
    

9. A number of our case studies suggest that while compensation, personal and professional development opportunities, and other incentives are important in attracting people and keeping them happy, their decision to stay with the company depends vitally on how well they fit in to the company’s way of doing business, how it treats employees, what it expects of them, and how people relate to one another in the workplace.

10. The design or use of various compensation systems, type of benefits offered, rewards and recognitions, etc. should all should reflect the interests and needs of one’s employees. Our own observations of Canadian plastics companies suggest that recognition and rewards are strongly tied to the ‘culture’ of a particular workplace — they support that culture, and they are consistent with that culture — whether or not that culture is something consciously managed or iterated by the company.
     

11. A number of companies make considerable efforts to communicate with employees for purposes beyond what is immediately necessary for them to do their jobs. Our case studies suggest that many companies — particularly small companies — have little or no formal communications practices, but are nevertheless extremely effective in speaking with, and listening to, their employees.

A final note on retention, skills development and international competition

It is clear from our consultations with Plastics Sector stakeholders that one of the outstanding issues facing the industry is competition with lower cost producing countries. Many of the firms we examined were actively seeking to move their businesses into higher value-add and niche markets in the face of emerging international production patterns.  Many felt that such strategic re-orientation was one way to remain successful in the context of lower-cost competition, and to seize new growth opportunities.  Generally, the strategic re-orientation to higher value add products and services also means new and higher workforce skill requirements. For individuals firms, the development and management of these skill requirements, including strategies to retain employees and transfer knowledge, is an essential part of this strategic re-orientation.