March, 2012
CONEXUS INDIANA’S: REPORT OF THE SURVEY OF THE GROW SOUTHWEST INDIANA WORKFORCE AND TRI-STATE MANUFACTURERS ALLIANCE (TSMA), STATE OF THE WORKFORCE IN THE TRI-STATE REGION
BACKGROUND
Grow Southwest Indiana Workforce and TSMA issued a survey in mid-February, 2012 to about 432 employers throughout the Tri-State Region including 47 counties in Southwest Indiana and Northern KY. The purposes of the survey were to understand the state of the workforce from the employers’ perspective and to identify areas that need to be addressed to strengthen the region’s workforce in manufacturing in the region. Of those invited to participate in the survey, 133 employers responded for a response rate of 30.8%. The employers had at least one operation in one of 32 counties in the region.
Manufacturing employers well represented in the survey
Employers were selected to participate in the survey due to their affiliation with TSMA or through their affiliations with other organizations in the region, thus it was not a random survey of employers, therefore, no claims can be made about statistical significance of the results. However, from the information we gathered from the employer respondents we conclude that the 133 employers that responded represent the scope of manufacturing employers in the region both in type of manufacturing and in-size. Therefore we believe the views expressed by the employers in this survey have face validity and can be used to make judgments about the state of the workforce in the region and provide a solid basis to design strategies to enhance the quality of the workforce.
Variety in size of companies
There was varied size represented by the employers: 36.1% had 0-100 employees; 27.1 between 100-250; 12.0% between 250-500 and 24.8% over 500.
Well balanced perspectives from those completing survey
Respondents were asked for their title and there was a good balance in who in the company responded to the survey: 45 were HR related employees; 33 represented operations; 18 Presidents or Owners. The remainder were involved in finance, IT or did not identify their title.
I. SKILLS/ATTRIBUTES LACKING IN NEWLY HIRED PRODUCTION WORKERS
The survey asked respondents to identify the skills and attributes most lacking in newly hired production employees on a scale of 1-5, with 1 being most severe among these categories: work ethic; technical knowledge, workplace attributes and academic competencies.
Ranking of skills/attributes
The average rankings in order of most severe are as follows:
Work Ethic: 2.49
Technical Knowledge: 2.55
Workplace attributes: 2.78
Academic competencies: 2.91
All the rankings were all under 3 which would be considered somewhat severe.
Work ethic was considered the most severe problem with newly hired production workers causing personnel problems. Of the work ethic skills, all were considered at least moderately severe. Employers made the following rankings:
Good attendance: 2.40
Motivated to improve 2.60
Positive attitude 2.79
Respectful 3.02
Drug free 3.19
Lack of technical knowledge was ranked second most severe and includes such things as understanding basic manufacturing principles or skills. However, while this category averaged slightly lower than work ethic, only 47 of the 121 responding to that question ranked the category below a ‘3†suggesting lack of technical knowledge is a significant problem for employers:
Knowledge of basic principles, e.g. profit/loss: 2.39
Knowledge of quality processes: 2.40
Knowledge of basic manufacturing principles: 2.46
Knowledge of statistical applications: 2.48
Understanding of statistical applications: 2.79
Awareness of safety issues: 2.74
Competent in computer applications: 2.79
Workplace attributes ranked third and includes ability to work in teams, solve problems and be creative. Once again, no attribute ranked higher than a ‘3†rank.
Ability to solve problems: 2.40
Applied written communication skills: 2.64
Creative: 2.68
Ability to follow instructions: 2.70
Ability to function in a team environment: 2.84
Academic competencies While this category had the overall lowest average ranking it is interesting that it received no higher than a ‘2’ by an respondent, suggesting it is considered a severe problem with entry level production workers.
Read and comprehend complex technical information: 2.43
Applied math competence: 2.55
Ability to write coherently 2.65
II. RAMIFICATIONS OF UNQUALIFIED LABOR POOL
Employers were asked about challenges in hiring and keeping entry level production workers.
Relatively low turnover rate
Despite the challenges they identified with work ethic, attributes, skills and academic competencies, employers overall reported a relatively low turnover rate: of new production hires in a typical year.
This suggests a couple of theories worth pursuing in further detail, i.e. companies are doing a good job of screening applicants; companies train their employees the first year in areas of deficiency; or respondents did not actually know or were hesitant to indicate their actual turnover rate.
0-25% turnover: 58.3% of employers
25-50% turnover: 27.8% of employers
50-75% turnover: 11.3% of employers
>75% turnover: 2.6% of employers
Relatively low acceptance rate of applicants considered for employment
Employers were asked to identify the percent of their applicants who are suitable for consideration for employment. The results suggest that having a qualified applicant pool is a challenge in the region.
11-30% acceptance: 38.3% of employers
31-50% acceptance: 13.9%
>50% acceptance: 13.9%
Technical knowledge primary attribute lacking in applicants
Employers were asked to identify the primary skill/attribute in applicants. It is interesting to note that technical knowledge is the number one attribute lacking in applicants which was a close second to work ethic in attributes lacking in new hires. This makes sense given it is easier to measure extent of technical knowledge in applicants as there are identifiable criteria, i.e. diplomas, certifications, work experience. There are fewer objective measures available to measure work ethic of applicants.
Technical Knowledge: 41.2%
Work Ethic: 36.8%
Work place attributes: 14.9%
Academic competencies: 7.0%
III. EVALUATING APPLICANT QUALITY
In a previous survey Conexus Indiana conducted it found that employers did not have high educational requirements for entry level production jobs nor did they make much use of credentials as screens for applicants. Employers in the TSMA survey were asked a series of questions on criteria for hiring and ways to assess applicants against those criteria.
Minimum education requirements of entry-level production employees
One reason for the lack of technical knowledge of applicants in the region may be related to the standards employers have set for entry level production workers in the region. High school diplomas and GED credential were the most preferred educational requirement for employers responding to the survey.
High school diploma: 40.9%
GED: 32.2%
No requirement: 10.4%
Associate Degree 7% (representing 8 employers)
Other: 7% (representing 8 employers)
Technical certificates not widely used to assess skills
Technical certificates were not widely used by employers to determine if applicants possess the skills and attributes for production employment though 48 employers indicated they use a company-specific assessment which may involve technical assessment. Work experience was the most valued measure.
Work Experience: 78.3%
Drug Tests: 72%
High School Diploma: 70.4%
GED: 43.5%
Company-specific assessment: 41.7%
Military Experience: 31.3%
Associate Degree: 21.7%
Bachelor Degree: 12.2%
Industry-recognized certification: 12.2% (14 employers)
WorkKeys: 11.3% (13 employers)
No credential: 2.6% (3 employers)
Satisfaction with temporary staffing companies
Since many manufacturing employers use external temporary staffing companies they were asked about their satisfaction with these companies for recruitment and hiring. 43% of the employers indicated they were satisfied or very satisfied with the staff companies; 28% were dissatisfied or very dissatisfied and 28.3 never use them for hiring or recruitment.
IV. TRAINING AND EDUCATION OF THE WORKFORCE
Most employees need additional training and education
Fifty-two percent of employers indicated that most of their employees could benefit from training for their job or further their own education and another 16 % said about half of their employees could. 12 employers indicated less than 10%.
Most employers see room for improvement in how schools and career centers prepare graduates for production work
Employers do not appear to be satisfied with how well schools and area career centers are preparing graduates for work in production jobs. 82% rated the job schools were doing as either ‘fair’ or ‘poor’ while 15.3% indicated outstanding or good, representing 17 employers. Clearly, there is opportunity for greater alignment between education and employers in the region.
Colleges ranked slightly higher in their ability to produce graduates ready for production jobs
Forty percent of employers indicated that colleges did a good or outstanding job of preparing graduates for production level jobs, while 38% indicated a fair job. Only 6 employers indicated a poor job while 14 employers said they did not hire college graduates.
Opportunity for employers to become more deeply involved with schools and colleges
Employers do not appear to have a deep working relationship with schools and colleges. Employers indicated informal contact with schools and conducting plant tours for students and teachers. A little over a third of employers either have no relationship or have never been approached to participate with schools in the area. Only 8 employers indicated they participate on advisory boards and 25 provide internships and co-op opportunities.
V. FUTURE OF MANUFACTURING IN THE REGION
Modest growth in next 1-3 years
The majority of employers, 80, plan to hire between 1 and 50 employees within the next one to three years. 15 employers expect to hire between 50-100 employees. Only 10 employers project hiring over 100 and 20 reported they were not sure.
Employers foresee more difficulty in finding qualified employees over the next five years
61.9% of employers expect the difficulty in finding qualified workers to be slightly or much worse than it is today. 23.9% believe it will be the same and only 6.2% (7) employers think that the situation will be better.
Converging forces create a worsening situation with finding qualified workers
Employers are fairly evenly divided among several forces to suggest a worsening situation in finding qualified workers. The number one factor that will contribute to a worsening situation is lack of good programs to prepare workers. Employers were divided between two other factors: expected increases in skill requirements of jobs and expected growth in the industry.
VI. USE OF SKILLS CERTIFICATIONS TO ASSESS AND UPGRADE THE WORKFORCE
Lack of use by employers of industry-recognized certifications to assess and upgrade workforce
Only 19 employers of the 119 employers who responded the question of use of industry-led certifications responded that they require or prefer industry-led certifications when hiring entry level production workers.
This is consistent with the statewide survey of employers that Conexus issued February, 2010. The most frequently used certification, (9) employers used American Welding Society certification.
Reasons for use relate to ensuring skills; eases screening process and reduces employers training costs
The primary reason for use of these certifications is that they ensure that candidates have knowledge required to perform the job at satisfactory standards. A related secondary reason is because it helps screen unqualified candidates during the hiring process. Six employers perceive that certifications reduce costs of in-house training.
Two certifications are perceived to have the most value
The American Welding Society and the National Institute of Metalworking Skills certifications are perceived to have the most value in that employees possessing these certifications generally are good performers on the job. Most employers believe though that workers holding these industry-led certifications still require on-the-job training to be effective.
Employers believe that the certifications do not reflect job requirements or they do not know enough about them
About an equal number of employers either do not believe that national industry-led certifications reflect requirements of the job or don’t know enough about them to make a judgment.
Certifications employers believe are important to purse as part of a certification system
Three certifications are considered important and very important to a national certification system for manufacturing employers: Safety/Environmental; Lean Manufacturing; and Total Quality Manufacturing.
SUMMARY
Survey results tell a story and in this case the results tell the story of how select manufacturers in the Tri-State area view the state of the workforce today and over the next few years. The results are consistent with a statewide survey of manufacturers that Conexus conduced a year from this one, February 2011 so in that sense there are no unique challenges facing this region that are not faced by manufacturers elsewhere in Indiana.
Overall, the survey reveals that manufacturers in the region are not satisfied with the quality of applicants or new hires for available jobs. Employers envision this situation worsening over the next five years due to the converging forces of an aging workforce, escalating skills and projected job growth creating a shrinking pool of qualified candidates for manufacturing jobs in the region.
The dissatisfaction of current candidates and new hires relate to all attributes of a good employee: work ethic, technical knowledge, workplace skills and academic competencies. Thus interventions or remedies need to address all four factors, though academic competencies were viewed as the least deficient factor among the four.
It is also evident that while employers are not satisfied with technical knowledge they do not seem to require or prefer that in their hiring policies nor do they tend to measure technical knowledge in their hiring process. This is an area that can also be addressed to improve the quality of the workforce. As long as the high school diploma and GED are the dominant preferred criteria for entry-level production workers, technical skills and workplace attributes are likely to be lacking in new hires. Employers might consider raising the bar on their criteria for job candidates and new hires.
Another opportunity to improve the quality of the applicant pool is to involve employers with schools and colleges in the development of curriculum and participation in instruction. Employers did not appear to have deep relationships with education institutions in the region.
Finally, there was very little usage and knowledge of industry-recognized certifications that are part of the National Manufacturing Skills Certification System, which again is consistent with employers across the state. Most employers that used some of the certifications did not rank them as having high value in predicting good employees. However there was fairly strong support for the use of higher skill certifications and the incorporation of these in education programs might be explored.
