IPEX

A.        The Company

IPEX designs and manufactures a diverse line of integrated thermoplastic piping systems such as pipe, fittings, gaskets, valves, auxiliary components and tools. Its products are sold to distributors and contractors for the plumbing, electrical, municipal, and industrial markets, and are used by clients in a wide number of applications.

The company is the result of the 1992 merger of two Canadian plastics piping companies, Scepter and Canron. IPEX has 19 plants throughout Canada and the United States. As North America’s largest thermoplastic piping manufacturer, IPEX is a constant innovator of products, and invests substantially in R&D. It is the producer of the world’s largest diameter PVC pressure pipe and fitting, and its continuous innovation has also helped it to bring to market a new composite water service pipe.

IPEX embraces its role as a corporate citizen, as part of a larger community that extends well beyond customers, suppliers, employees and their families. The company is actively involved with government and industry regulating bodies as well as standards development and code organizations. IPEX also shares an ongoing commitment to Recover, Recycle and Re-use (3R) programs by using significant amounts of recycled plastic in its products. The company also helps to sustain several charitable organizations through its support for the United Way.

The company has undergone significant growth over more than a decade. Between 1992 and 1995, its sales increased by 40%, 25% between 1995 and 1998 and another 50% between 1998 and 2000—or a total growth rate of 160% between 1992 and 2003.

Employment Profile

Employment growth at IPEX has also been quite significant. In 1992, the company employed 839 people. By 2003, IPEX staff numbered 1,910, for a net growth of more than 125% over this 10-year period.

The company’s Canadian operations currently include 564 salaried employees and 1,152 hourly wage-earners. Of these, 686 are employed in direct production, 120 in maintenance, 18 in mould shops, 341 in indirect production, 161 in administration, 230 in marketing and sales, and 160 in distribution. The company estimates that around 30% of its workforce is in the ‘skilled’ to ‘highly skilled’ category.

Sixty per cent of IPEX staff is unionized, including some of its principal facilities. IPEX workers are represented by four unions: the Communications, Energy & Paperworkers, the Glass, Moulders, Pottery, Plastics and Allied Workers, the CAW and the Conféderation des syndicats nationaux in Quebec.

Employee Turnover Improving

The turnover situation at IPEX differs somewhat between hourly and salaried employees. However, the company notes it has made significant strides in retaining employee retention over the last three years.

Among salaried employees, IPEX’s “quit rate” (turnover due to resignations) fell from 7.8% to 4.0% between 2000 and 2003, while its overall turnover rate has remained significantly below the industry rate of 22.1% for salaried employees. Among hourly wage employees however, the total turnover rate is higher than the industry average of 26.0%, but has shown consistent improvement in the past three years. The “quit rate” among hourly wage employees fell from a high of almost 27% in 2000 to a low of 17.8% in 2003. The company monitors industry rates to provide a benchmark to gauge and evaluate its own turnover patterns.

The company points out that its turnover rates vary significantly from one manufacturing plant to another, each affected by the local and regional labour market and economic conditions. In addition, turnover tends to be higher among the younger segment of its workforce, and among its ‘plant floor’ employees, which is partly a result of the demands of rotating shift work and the fact that pay rates tend to follow the industry’s average to low starting wages for employees on the plant floor.

On the whole, IPEX does not believe it has a serious turnover problem in comparison to other manufacturing companies. Nevertheless, employee retention and further reductions in voluntary turnover are very important, particularly since more than 50 per cent of its workforce is over the age of 45. As this older workforce retires, IPEX will have to ensure that the necessary skills and experience are in place to carry on. Just as important, turnover is seen by the company as a critical issue to manage because it can create inconsistencies in quality output, impose significant recruitment and training costs,[1] and absorb a considerable amount of management time in dealing with the resulting problems.

The reduced turnover rates IPEX has experienced over the past few years are in part due to the increased focus in each operation.  A new Corporate HR function was added to its administration some three years ago, providing direction and guidelines on dealing with human resource challenges at the company’s many plants, as well as providing managers with the tools and training to address these challenges. In addition, improvements in the way the company recruits, orients, trains, and communicates with employees is having an impact on retention.

B.        Programs and Initiatives Affecting Employee Retention

Organizing for Retention

We encourage promotion from within, and an environment where people can learn and grow. We often get feedback from employees that our environment is one of variety, challenge, and ‘earned autonomy.’ This means that if one wants to get involved in challenging projects, they are there for the taking.

IPEX management has a strategic approach to turnover and retention, and embeds some of its retention principles in its statement of Operational Goals, its Orientation and Training materials, and a number of other programs. The company has no written HR policies that specifically deal with retention, but it does have written policies on recruitment, orientation, performance management, and it actively measures its effectiveness in these areas keeping in mind its overall concerns about retention.

Because the nature and level of turnover varies from plant to plant, corporate management feels that the power to ensure effective retention is appropriately vested with the managers of each IPEX plant. This strategic orientation is part of a more general approach that seeks to preserve a significant degree of autonomy in decision-making at the plant level. Plant managers must set their own goals and objectives in areas of productivity, quality and materials management, as well as good safety records, favourable employee opinion surveys, and low employee turnover. IPEX Vice President of Human Resources, Joanne Rivard explains:

In balancing these elements, the individual manager must determine which programs to focus on, and which ones to invest the most resources in. We have a “Best HR-Managed Plant Award” each year to celebrate the highest level of achievement in all factors relating to retention.

Under this system, IPEX’s Corporate HR department plays a very active role in supporting its managers’ efforts in the area of retention by providing coaching, training, and counselling, and by designing a variety of tools for plant managers to apply.

The “HR Scorecard”

IPEX has developed a unique HR Scorecard system that allows the company to track indicators in a number of areas related to Human Resources. This tool was launched on the principle that “what gets measured gets managed.” Based on this principle, the scorecard system gathers managers’ responses to a series of questions, and uses a rating scale to measure how often they carry out key HR-related functions. The system allows IPEX to measure HR practices, for each of its plants, grouped around a number of key themes: recruitment, orientation, training, performance management, compensation and benefits, legislative compliance and communications.

Employee Opinion Surveys

IPEX also expects each of its plants to conduct employee opinion surveys, a process that is regularly carried out on company time, through each plant payroll coordinator’s office. Employees are surveyed on four key areas: Communication, Employee Relations, Training and Motivation. The results are shared with plant employees.

The feedback IPEX has received from its employees indicates very positive results—4.5 out of a total satisfaction rating of 6—and the survey process has seen very high response rates (92% of workers filled out a survey during the last round). The company has not been able to correlate increases in employee satisfaction with other HR indicators, such as retention. However, some unexpected positive results have been observed. IPEX finds that workers often express an interest in how well employee satisfaction at their plant compares with other plants, and this suggests that the process itself has helped to promote a positive engagement.

The company also conducts exit surveys, and the results of these studies have helped the company to understand the nature of its turnover. A recent survey, for example, indicated that of those who left, 40% did so because of a lack of opportunities for advancement. The company believes that these results reflect the recent slowdown in the company’s growth due to the economic climate, creating a slower pace of promotions in comparison to past years. The company considers itself quite good at promoting its people from within, and continues to provide training and career development opportunities to employees and is looking forward to renewed growth in the upcoming years.

Compensation and Benefits

Given the competitive market in which IPEX operates, management does not feel it can offer higher than industry-average wages as a means of retaining employees. However, IPEX does believe that the quality of the work environment, the career opportunities it makes available to employees and good job security are important and attractive features in terms of retention.

IPEX feels that the benefits it provides are very comprehensive and competitive. The group benefits package includes life insurance, short term income replacement, extended health benefits, dental and vision care, to name a few. Despite recent large increases in premiums for medical, drug, vision and dental coverage, IPEX has managed to avoid passing these cost increases on to their employees.  

The company also offers an RRSP program by which a percentage of an employee’s earnings, based on the employee’s years of service, is contributed to a pension account and matched by the employer. IPEX’s benefits plan also includes an Employee Assistance Program that is free and confidential for all of the company’s employees and their families.

Incentive programs have been in place for many years for both office and plant employees.  These programs vary in their design, to best suit the group who receive the incentive.  For example, some plants offer a bonus program that is paid quarterly when they reach certain targets for productivity, product quality, and health and safety. The bonus also takes into consideration workers’ individual attendance records. The company does not measure direct impact such programs have on retention, but feels confident, based on employee input, they serve as a strong motivator

Recruitment and Integration

The company has recently improved and refined its recruitment process. It does much more pre-employment testing, and is a subscriber to the idea that providing realistic job previews to potential candidates can improve the fit between the company and its new hires, thereby reducing voluntary turnovers that result from a ‘bad fit’ between the work environment and the individual.

In recent years, the company has also concentrated its efforts in providing better orientation and training during the first few months of employment with IPEX.

Training, Career Development and Performance Management

IPEX’s Corporate HR department does not currently set an overall policy for training and development. Nevertheless, the company is actively involved in helping to develop its employees on a number of fronts, and is particularly proud of the quality of its informal mentoring culture. Decisions about providing salaried or hourly workers with formal training rest with the plant managers, who base their decisions on the results of performance evaluations and other factors such as internal promotions.

In the case of salaried workers at IPEX, training decisions are tied not only to performance evaluations but also career development plans provided by the company. For operations management positions, the company has designed a 2–year trainee program that takes newly hired engineers through all of the fundamental elements of processes and culture at IPEX. Such training is closely tied to well-defined career paths that see them going from engineering trainee positions, to plant engineer, maintenance manager and then into higher managerial posts. Employees who happen to fall short of getting a promotion are evaluated for further training and are provided with information about how further skills development will be tied to career development goals targets.

Plant workers are offered extensive cross-training on a number of different machines and equipment. While the company does not currently offer skill-based pay to workers who enhance their skills in such a way, participation in cross-training increases the likelihood that they will be promoted to positions of greater responsibility and remuneration. At the same time, providing cross-training allows it to develop greater flexibility within its workforce.

The company also actively promotes from within its plant-floor operations positions. A typical operator will be promoted through three or four operator roles, then into technician positions, and then into Supervisor positions. This mobility is supported by continuous training. Employees are also provided with the opportunity to move into different departments (e.g., blending, moulding), and so are given the chance to diversify their competencies as well.

Health and Safety

IPEX strongly believes that the strides it has taken in the area of health and safety have had a significant impact on its ability to retain people. The company has made considerable investments over the years in ensuring that its employees work in a safe environment. In 2003, it reduced lost time accidents by 40% from the previous year, to a loss-time accident rate of less than one per cent. Three of its plants have achieved three years of operation without a single lost time accident. These represent dramatic improvements compared to only five years ago, when the plant had a lost time accident rate five times higher than its current level. Similarly, short term disability claims have also gone down by some 20% over the last two years.

C.        Employee / Union Perspective

IPEX actively encourages its plant managers to talk daily with union local representatives, in order to identify and address problems. The company also acknowledges that the Communications, Energy and Paperworkers (CEP) union—which represents IPEX workers in several plants—has in past instances played an important role in re-establishing a good labour-management dialogue when relations became more challenging.

To gain an employee and union perspective on the issue of employee retention, an interview was held with Tom Harroun, a 14-year employee and current union representative at IPEX’s Edmonton plant.

While the Edmonton plant has only had a union for the last couple of years, Harroun feels that relations between employees and the company have been improving significantly. Unionized workers at the plant have been particularly happy with two new plant managers who they credit with addressing employee concerns effectively and dealing with problems expediently. Joint monthly union-management meetings are effective in addressing issues and problems when they surface, and in general, the union feels that the plant’s management has helped to foster an environment of openness, in which employees can feel at ease in approaching plant managers to address their concerns.

Training Programs Valued

According to union representative Harroun, IPEX’s training programs are strongly valued by employees of the company. He credits the company with providing the resources necessary to help a new, semi-skilled recruit to develop his or her competencies in a number of areas (the representative mentioned, in particular, health and safety, WHMIS, and equipment operating). The union also recognizes the value of IPEX’s cross-training program, which allows employees to move into different areas of production and develop a broader range of skills.

IPEX’s CEP local is still on its first four-and-a-half year contract, and the union local will be seeking certain improvements in the next round of negotiations, particularly in the area of benefits. Nevertheless, its representative gives part of the credit for good labour-management relations to the leadership shown by the plant’s management.

[1]       The company estimates that the costs associated with an individual departure amount to roughly 30% of an annual salary.