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Recruiting Unskilled Labor. A Specific Issue in the Manufacturing Industry

Research Paper (undergraduate) 2017 17 Pages

Business economics - Industrial Management

Excerpt

Table of Contents

Abstract

Introduction
Challenges faced by today’s manufacturing industries

Problem Statement

Purpose of Study

Literature Review
Factors that cause shortage of getting skilled workforces
Disadvantages of recruiting unskilled people
Pros and Cons of outsourcing
Advantages

Findings and Results
How can we manage these issues?
Why do they leave?
How to retain them?
Hiring motivated employee from other teams
Appointing retired employee to teach new employee
Recruiting skilled employees from outsourcing companies

Conclusion

REFERENCES

Abstract

This research is about the issues relating to the “Recruitment of Unskilled Labors”, a specific challenge faced by today’s manufacturing industries. This theory focuses on the general issues and happenings of today’s manufacturing world. This investigation enumerates the general factors that cause the shortage of getting skilled workforces, based on the work environment, pay scale and position of economy at present. Justifying the general disadvantages in industries because of hiring untalented employees followed by the outcomes of it. A brief discussion in this work representing how the manufacturers avoided such issues through outsourcing their work. With the exception of outsourcing activity, some profound solutions have been explained by considering personal experience in these areas for this specific issue.

Keywords: Unskilled labor, skilled workers/employees, Issues, Manufacturing Industries

Introduction

Work that requires no particular training level or concentrated experience is generally referred to unskilled labor. Unskilled work is a section of the workforce connected with a constrained skill set or lowest level of economical worth for the performed work (Mahuron, n.d.). We can take an example of a fast-food cashier, all he must do is, push the button that says hamburger or pizza. He doesn’t require to go to college or have any special training to do that. According to Robert Hsu (2009) of Money show network, China faces shortage of managerial talent because of Impractical curriculum, training of migrant workers, unmotivated job seekers and Inefficient market. This seems to be the responsible factor that created an effect on people to have such a low skill levels. More profound down however, a high number of employment opportunities raises warnings since it implies organizations aren't finding the right individuals to fill the occupations. It flags a tireless issue in most of the countries, especially America (Zinshteyn, 2015).

Challenges faced by today’s manufacturing industries

Michael Collins from The Industry week reveals that, manufacturing companies might face deficiency of more than 3 million skilled workers in the United states for the next decades. He indicates that, employers who works in these domains seemed to be aware of this issues before 25 years. The corporate was not ready to invest money on training and skill development programs (2015). Lack of skilled labors will impede productivity. This has been a top issue for nearly 10 years. Today, manufacturing is profoundly specialized and requires great knowledge, grasping skills and proficiency in a wide assortment of competencies. Moreover, this interest for highly skilled labors comes during a period when the organization is confronting the large percentage of retirement rate of its workforce and an approaching era of labors who do not have the right skills and specialized learning required for manufacturing activity. Other than getting skilled talents, manufacturers had a hard time hiring employee with good work ethics. It is hard to find a person who is perfect as well as professional in his/her role, employers end up spending more time for finding and providing training for such persons. Countries like India and China compensate this issue by hiring comparatively more unskilled persons for a low wage.

Problem Statement

This seems to be a growing issue in most of the companies. Bigger countries like India and China hire a lot of unskilled people to cut the cost as well as to finish their job on time. They follow these activities in order to avoid paying more to the skilled workforces. Some organizations consider training as an unwanted expense, moreover they expect the new workers to learn about the job from their superiors and more established representatives.

With regards to providing adequate employments to a competitive compensation where individuals live, the global monetary system is coming up short. Offer and demand scarcely coincide in any nation, prompting to high rates of unemployment or underemployment in a few locales in the meantime producing staff-recruiting difficulties in manufacturing related areas where labor force is a scarce and organizations have issues to discover also talented as untalented motivated representatives.

Purpose of Study

The purpose of this research is to:

- Find what causes the shortage of getting skilled workforce in the manufacturing industries.
- Demonstrate the growing importance of skilled workforce requirements as a concomitant phenomenon of globalization
- Analyze and evaluate the potential causes of recruiting unskilled labors with regards to challenges, factors, labor market in the manufacturing sector under the assumption that skilled labor shortage still exists in the primary segment.

Literature Review

Factors that cause shortage of getting skilled workforces

Wage issues. Many manufacturing companies in United states pointed this issue. At present, only 19% of the parents in United states wanted their children to pursue for manufacturing (Panchak, 2015). According to Ruckelshaus and Leberstein of The national employment law project, manufacturing sector workers faces 7.7% decrement in salary as compared to the year 2013. It is evident that more than 600,000 employees in the manufacturing domain are making 9.6$ or less for an hour i.e. only one fourth of the 1.5 million employees are getting 11$ for an hour (2014). Low-wage occupations are not just portrayed by low pay. They additionally include an absence of job stability, few or no benefits, an absence of paid sick leaves and also having irregularity in part-time scheduling. There have been many years of examination on the impacts of the lowest pay permitted by law, and market analysts have utilized three sorts of models to investigate the issue: competitive, Institutional, and monopsony. With each of these models, the cost increment connected with the lowest pay, proceed a change in the conduct of organizations ending with impact on laborers, buyers, proprietors, and others (Ashenfelter, Farber, & Ransom, 2010).

Work environment. Usually, labors working in manufacturing sectors have definite interactions with machines. It is prominent to have a better work environment. Issues originating from a negative job environment gaze upon each other to the weakness of the whole company. The company that I previously worked had the same issues. Starting from safety till motivation, there was a significant lack. Researchers say that, around 50% of the people among 500 were facing stress problems most of their time (Yeow et.al, 2014). Apart from manager’s stress, labors face health issues only because of the work place environment. In India, we can find most of the third-tire labors working in a pretty high temperature workshops without any proper ergonomic furniture nor a chemical protection equipment. It is really rare to find a factory that is equipped with air conditioners for the third-tire peoples. Many professionals in India are afraid to take a step inside this sector.

Position of Economy. Economy plays a significant role in getting skilled labors. US economy was high during 2005 to 2008 (Wikipedia, n.d.). many manufacturing companies were settled with great offers. Famous companies like Jabra and Jabil, hired thousands of people with reasonable wages. During the better economic period, many advancements was carried out, accordingly the requirement for the talented work is unquestionably higher. In that time, deficiency of getting skilled labors certainly eventuated because most of the countries have limited amount of skilled people, who are willing to join in this sector. In 2009 and 10, the drastic economic recession made all the workers to switch jobs from the manufacturing sector. On that occasion, many of them migrated to foreign countries having better jobs in their hand that ensures their income and job security (Orozco, 2009). Furthermore, the employers might face challenge in recruiting skilled labors during the betterment time.

Disadvantages of recruiting unskilled people

Certain manufacturing companies consider employee training an unessential expense and anticipate that new workers will learn the work from their bosses and more seasoned representatives. In any case, this kind of preparing is regularly insufficient and makes issues for the business.

Impact on Quality. Unskilled workers cannot produce high quality products or services. They additionally need sufficient information and skills to give a full satisfaction to the customer. This blend of untalented work and talentless service in manufacturing ends up with a dissatisfied customer and poor quality of the products. The organization will encounter declining performance/sales if disappointed consumers picks the contenders who can give quality items and satisfactory service.

Safety problems. The Occupational Safety and Health Administration (OSHA) expresses that, untrained workers are more unprotected to wounds (OSHA, n.d.). This happens when laborers do not have the training and skills required to utilize hardware and supplies securely. The issue could be lethal in workplaces that contain overwhelming machineries and dangerous materials.

Impact on production. The production rate tends to decrease when workers don't know enough to play out their duties with confidence. Untalented representatives could invest extensive time looking to play out their duties or they might perform known duties to their comprehension, to the weakness of the work procedure. It certainly leads to mistakes and injuries. skilled authorities and more experienced employees have to invest more time in observing the unskilled employees, which minimizes their work and increases the time to finish their job.

Increase in miscellaneous costs. Company that fails to train their staff can expect an expansion in varied expenses. These might incorporate the expense of medicinal consideration for staff in terms of accidents that caused due to mishandling of hardware and supplies, pay to the consumers for flawed items, and the expense of protecting the organization against legal issues.

Pros and Cons of outsourcing

Outsourcing is nothing but the act of having certain job activities done outside an organization rather than handled by company's representatives. Outsourcing can be both domestic as well as foreign (Investopedia, n.d.). Most companies choose to outsource because they can concentrate more on their core businesses. According to Andy Sealock from Forbes, outsourcing might work well for those organization whose requirements and mission are well satisfied with a proper agreement on cost reduction (2013). Some companies don’t agree with it for different reasons. A practical risk to the advantages of outsourcing is the absence of experienced peoples. There is a developing number of organizations looking to offshore their jobs to foreign laborers at a value that is frequently a small amount of what some local worker gets. Indeed, even with broad training and compressed lessons in acclimating to significant quality, workers have a poor skills and knowledge, when it comes to specialty manufacturing. This leads to poor quality and significant rework.

Three main reasons to outsource (Flat world solutions, n.d.).

- The company doesn’t have to worry about the on-time completion of the job.
- Company can focus on their core business without pressure
- Apart from paying low wages to the outsourcers, company can significantly reduce the regulatory cost like Medicare, insurance etc. provided for the employees

Advantages

(Ashley, 2008):

Low labor costs. Outsourcing typically reduces the labor costs. Apart from salary savings company can be benefitted by reducing payroll taxes for over time workers.

Availability of resources. More often, distinct outsourcing companies have access to necessary reliable resources for a better price. Some project needs abundance of resources which most of the companies have no access to it. In such cases, outsourcing has been a real advantage.

Flexibility to scale the demand. Outsourcing companies are helpful for the organization during demand increase, they are very good with in-house manufacturing to meet the company’s demand at the given time.

Better customer satisfaction. Faster deliveries, better turnaround time will surely provide a positive impact towards customers. This is one of the major advantage in outsourcing. It makes the customer delightful by providing quality service to the customer.

Overall increase in business. Outsourcing helps to develop business value, profits, productivity, customer loyalty and so on.

Disadvantage (Ashley, 2008):

Lack of managerial control. After you sign for the other company to do your task, you might hold the contract but you won’t be having your own managerial supervision over the outsourcing company. This seems to a disadvantage. The tasks carried on by the outsourcers will not follow your same company standards.

Security threat. There is no guarantee that any confidential information such as company records, payroll or even trade secrets can be kept secured. Information like these can be easily compromised in outsourcing.

Quality issues. The only way to motivate the outsourcing company is profit, they are fully focused on attaining money through any means. Since the contract holds only fixed amount, the outsourcers increase their profit by decreasing their expenses in either product or in service lines. So, there gives a chance of getting poor quality products or service. In addition, once the product has been delivered making further changes will be charged extra by the outsourcers. So this is definitely a disadvantage.

Hidden cost. You might sign an outsourcing contract covering the details of cost that is required to carry out manufacturing of demanded item. But apart from these, certain services that are not covered, such as shipping cost, lawyer pay etc. have to be paid additionally by the company. This seems to be another disadvantage in outsourcing.

Findings and Results

How can we manage these issues?

Training of existing employee. Skilled job positions in many organizations are going unfilled today. There aren’t enough workers who have sufficient skills and training for the high- demanded positions. Accordingly, more organizations all through the nation, are taking it upon themselves to prepare untalented laborers in the skills workers need. Unskilled workers tend to be typically cost effective, willing to work hard and have the appetite to settle into a career. They are also willing to learn and get trained. Training is a critical part of creating an efficient workforce. Two types of training can be provided to these unskilled workers to make them productive and be cost effective. Focused hands on experience under an existing skilled worker is the best way to get these workers to speed on the required expertise and be productive at a short period of time. Compensating the skilled worker providing on the job training will motivate the trainer and expedite the training process, timelines.

Secondly, soft skill training such as communication, personality development, LEAN principles will enhance the self-esteem, and confidence of the worker. These training also benefit the organization in terms of quality, efficiency and profitability. Overall, the worker tends to become confident and efficient. Ongoing refresher training periodically and training in newer technologies will keep them abreast with the latest and greatest, which will eventually benefit the organization.

Rotating workforce among various departments and sections also provide the workers with an overall knowledge, expertise and induce innovative thinking. Field trips to successful and high performing organizations will motivate the workers and make them understand that there’s scope for improvement in their day to day work.

Employee Retention. It is one of the key things for a successful organization. Employee retention is a procedure in which the workers are urged to stay with the company for the greatest time frame or until the project completion in some cases. Employee retention is gainful for both the company and for the employees (Bansal, 2014). Workers today are distinctive, they are highly demanding, articulate and moreover they have opportunities close by. When they feel disappointed with the present manager or the company, they change over to the competing organizations. It is the responsibility of the manager to hold their best workers. If they failed to do it, there would be left with no great workers in the organizations. A skillful manager ought to know how to pull in and hold its workers. Employee retention would require more of endeavors, energy, and resources however the outcomes are worth in it. Many successful companies understand that a powerful retention activity will help them to manage their leadership and development in the commercial market.

Why do they leave?

Lack of opportunities and growth. Employee usually recognizes the significance of building their aptitudes, refining current ones, getting new experiences etc. If the opportunities aren't available with their present manager or the company, they tend to search for it elsewhere.

Lack of appreciation. Employees who did not feel recognized, that felt that their hard work has not been valued, was not welcomed, that their accomplishments, their commitment to the achievement of the business, was not perceived. Then they might end up leaving the organization to look for a better one.

Lack of pay. If the employee’s pay seems to be tainted, dissatisfied, or insufficient to cope up with the current economy, then, they might leave the concern for better opportunities.

How to retain them?

Clearly explain what is expected from the worker. Many successful companies dictate their goal and mission to their employees. Rather than defining the job, they define their outcomes of the success. In order to make them aware of their conjecture, they should rate, rank, evaluate the possible outcomes and the performance has to be aligned with the company’s saying or doing (Gallup, n.d.).

Opportunity to do best. As a manager, it is necessary to find out the uniqueness of talent in each employee. Managers should redesign a few exercises in the division around the talents of every group to position them better for achievement and ability use. It is necessary to deliberately watch and bring up incremental upgrades to strengthen how ability encourages execution (Gallup, n.d.).

Recognition. Workers are much more concerned to stay with the organization only if the chance that they feel their skills and commitments are esteemed and acknowledged. Recognizing the workers for work is essential to resolve, boost profitability. Putting some idea into the employee's acknowledgment is definitely justified even despite the exertion.

Treat them as a person. There is a saying “People leave managers, not the company”, employers do want a productive result, they really need to consider creating a trustable work environment. Asa manager, gaining employee’s trust is highly necessary, employee must feel safe to share information, challenge, discuss potential matters and support each other. The key here is the employee’s perception, understanding the fair treatment of managers will retain their trust within the organization (Gallup, n.d.).

Motivate them. Highly motivated workers are more inclined to surpass the desires than the least motivated representatives. The initial step to take is, to comprehend what motivates the workers. What drives them to their significant performance will better help for the company to create programs that both motivate and hold the best representatives for the business. While, not each worker will be propelled by the same thing, focusing on the list of key persuading projects can offer assistance. A plan can incorporate everything from fiscal motivations, prizes and acknowledgments, building programs that bolster work-life equalization, making a fun, peaceful office environment etc. Managers can concentrate the bias based on each employee.

Hiring motivated employee from other teams

Organizations having the best-in-class employee were prominently well-known in their industry. There are lots of companies that many employees are dying to enter in. Certain companies like google (Hire me guy) and Samsung placed out a campaign to attract many skilled employees required for the positions. Based on the current economic trend, an organization must be prominent among the competitive industry and should be well known among the marketplace. There are certain best ways to make that happen. They can engage in social media (Current trend) like Facebook, LinkedIn, Google Circles, Twitter etc. to reach out to the people. They could even approach the media and news networks about the achievements of the organizations by questionnaire blogs. Apart from making the concern well known among competitors, they can also run down the best ways to engage these following activities in the company.

Projecting company’s culture.

Whenever a determined employee visits the organization’s website, they should make him/her to think “I wish, I could have joined in such a concern”. Position one of the best web designer in the company to create an attractive website, with a previsioned search engines capable to find whatever the employee is searching for. Determine the organization’s client base in each webpage to show how proud they are to work with them for their products or services and indicate how the company values their employee based on individual’s performance

Attractive benefits. Most talented people look for a better compensation and reasonable benefits. If a company is moreover planning to hire skilled employees for their organizations, they should be provided at least with a profound higher wage for the selected position as compared to the competitive companies. According to the Fortune Magazine – The 100 best companies to work for, skilled worker probably gets their required perks like child care, Medicare, extensive bonuses, More sick leaves etc. (2012). If company can bring about such benefits other than medical insurance and 401K, the talented heads will be pointed at these organization’s direction.

Referral bonuses. Apart from wasting the time in seeking talented people, appoint some employees in the organization as a temporary hiring manager and ask them to look for the talented minds among their social circles. Provide bonuses for each talented referral. Encouraging current employees will be an efficient option.

Approach the talents. It is not necessary to wait till the hiring process; the company can start planting the seeds on the loyal and skilled one’s from their own concern.

Appointing retired employee to teach new employee

As a manager, it is necessary to make sure whether best training has been provided to the entry level employees. Best training retains theses employee for a long term, beneficial for the organization. In such a case, hiring retired employee will be one of the best and cost-effective option. With their definite experience and in-depth knowledge on how to handle things based on situations, will be a best guidance for the new employees.

Providing Idea of positions. A retired employee knows, how each division in the company works with one another. He can be of great guidance for the newly joined employee. They give a clear picture of reporting of staffs and their performing duties, he can provide basic idea of how to approach each project. A retiree can likewise give foundation on how different sectors originated and clarify the desires and commitments of various parts in the organization.

Lead on with a good speed. Apart from providing directions, hands on training and approach, a retiree can also provide some techniques that can help to finish any project at a greater speed. So, a newly joined employee could head start with their work and finish it with a greater pace making the job more productive.

Corporate culture knowledge. Retired employees comprehend the workplace and have a clear thought of what the organization requires apart from the regular responsibilities. A retiree can clarify how corporate society influences the hierarchy of leadership, how major and minor choices are made and what sort of attitudes are more likely common from workers. This kind of preparing can be relatively important to both the entry level workers and the organization.

Recruiting skilled employees from outsourcing companies

Employees tend to slack and get rusty after a period of time unless they are continually challenged, trained and motivated. They set a bad example to their peers and coworkers. If the trend continues for a period of time, it reaches a point of no return. Some companies have adopted a strategy to outsource parts of their workforce to service providers who provide niche trained workforce. These outsourcing can vary from simple workforce replacement at the same work location to outsourcing entire business process to an offshore or an onsite provider. This strategy can be expensive or can even be a cost saving depending on various factors. In the short term, there may be business continuity issues as part of the transition. But in the medium to long term, the biggest advantage is that the company can reinvent themselves and can become nimbler and agile. Some of the organizations which went down this path of outsourcing have insourced these employees after some point of time by adding an exit clause in their contract with the service providers. In a span of 5 to 10 years, there is a potential to convert the inefficient workforce to an efficient and cost effective workforce.

Conclusion

Taking into account of what I have experienced from my previous workplaces and industrial visits, I could give the possible solution to prevent the issue related on hiring unskilled labors. Initially, we must understand the fact that everything depends upon the economy and nothing can be changed within a short period of span. Some companies have already adapted certain methods which are best suited for them. But, in the long run, every business has to consider the cost-effective and efficient way of managing business.

Training employee is a better option but, employee in many organizations tend to leave the company after completing the training, this leaves them with no guarantee that employee will stay in the same organization even after the program. Attracting and retaining the skilled ones will be suitable for certain organizations which receives tremendous net income and GDP. Such type of organizations can provide attractive wages, bonus, and incentives in a regular timeline, even though the company faces recession for some time. Hiring the retirees is also a possible solution to train the employee at a cheaper cost but the organization has to provide health insurance, incentives, continued provident funds as per the labor law. So, which leaves us with the only option, “Hiring employees from the outsourcing company”. This will be the better option based on my opinion. It might be expensive for the short run (Until the outsourcing contract expires) but it will be efficient for the long-term business practice. The company doesn’t require to concentrate on training the employees, they have already been trained by the outsourcing company and all the benefits like, healthcare, 401K have been taken care by the vendors. The company has to outsource initially based on a clear-cut term and the employees can be insourced or hired within the span of the agreement for the long run.

REFERENCES

Ashenfelter, C. O., Farber, H., & Ransom, R. M. (2010). Modern Models of Monopsony in Labor Markets: A Brief Survey. Retrieved from http://harris.princeton.edu/pubs/pdfs/554.pdf

Ashley, E. (2008). Outsourcing for dummies. Hoboken, NJ: Wiley pub.

Bansal, S. (2014). Employee Retention Strategies. Retrieved from http://www.empyreal.co.in/ downloads/IJRMSS%20Volume-2-Issue-2(II)-April-June%202014.pdf#page=63

Collins, M. (2015). Why America has the shortage of Skilled Workers? Retrieved from http://www.industryweek.com/skilled-workers

Economy of the United States. (n.d.). In Wikipedia. Retrieved July 15, 2016, from https://en.wikipedia.org/wiki/Economy_of_the_United_States#2000s

Flat world Solutions, (n.d.). Top ten reasons to outsource. Retrieved from https://www .flatwo rldsolutions.com/articles/top-ten-reasons-to-outsource.php

Fortune Magazine, (2012). 100 best companies to work for. Retrieved from http://archive. fortune.com/magazines/fortune/best-companies/2012/full_list/

Gallup, (n.d.). Retention. Retrieved from http://www.gallup.com/topic/retention.aspx

Hsu, R. (2009). The Shortage of Skilled labor in China. Retrieved from http://www.moneyshow.com/articles.asp?aid=guru-17385

Investopedia, (n.d.). Outsourcing. Retrieved from http://www.investopedia.com/terms/ o / outsourcing.asp

Mahuron, S. (n.d.). Skilled labor vs Unskilled labor. Retrieved from http://smallbusiness.chron.com/skilled-labor-vs-unskilled-labor-46154.html

Orozco, M. (2009). Migration and remittances in times of recession: Effects of Latin American economy. Retrieved from https://www.oecd.org/dev/americas/42753222.pdf

OSHA Law & Regulations, (n.d.). United States Department of Labor. Retrieved from https://www.osha.gov/law-regs.html

Panchak, P. (2015). Manufacturer’s Wage and Job Security Problem. Retrieved from http://www.industryweek.com/compensation-strategies/manufacturings-wage-and-job-security-problem

Ruckelshaus, C., &Leberstein, S. (2014). Manufacturing Low pay: Declining wages in the jobs that built America’s middle class. Retrieved from http://www.nelp.org/content/uploads/2015/03 /Manufacturing-Low-Pay-Declining-Wages-Jobs-Built-Middle-Class.pdf

Sealock, A. (2013). Why some US companies are giving up on outsourcing. Retrieved from http://www.forbes.com/sites/ciocentral/2013/01/16/why-some-u-s-companies-are-giving-up-on-outsourcing/#6e2c7ffd51ba

Yeow, A. J., Nq, K. P., Tan, S. K., Chin, S. T., & Lim, Y. W. (2014). Effect of stress, Repetition, Fatigue and work environment on human error in manufacturing industries. Retrieved from http://scialert.net/fulltext/?doi=jas.2014.3464.3471&org=11

Zinshteyn, M. (2015). The skills Gap: America’s young workers are lagging behind. Retrieved from http://www.theatlantic.com/education/archive/2015/02/the-skills-gap-americas-young-workers-are-lagging-behind/385560/

Details

Pages
17
Year
2017
ISBN (Book)
9783668438316
File size
1 MB
Language
English
Catalog Number
v356430
Institution / College
University of Central Missouri
Grade
Tags
labor unskilled labor skilled workers manufacturing industry management

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Title: Recruiting Unskilled Labor. A Specific Issue in the Manufacturing Industry