by: Dustin Raber
CPA, CMP, Senior Manager & Lean Six Sigma Green Belt( Millersburg Office)
212 N. Washington St. Millersburg, Ohio 44654
( 330) 674-6055
Why the Decline?
A few years ago, the Fabricators & Manufacturers Association reported that 52 percent of teenagers in the United States said they had little or no interest in a career in the manufacturing industry. When asked to explain their answer, most of the respondents said that they believed a career in the industry was unreliable. The FMA also noted that American teenagers often associate manufacturing with an“ unprofessional career,”“ dead-end jobs,”“ dirty factories” and“ frequent layoffs.”
If these numbers are still accurate today, it is no wonder why young workers aren’ t jumping to apply. An aging population is also a problem for the manufacturing industry. The Stanford Center on Longevity reported that the U. S. Census Bureau found the aging workforce is retiring faster than the positions can be refilled. The population of younger Americans is significantly smaller than the population of older workers. By 2020, according to the Bureau, the population of those 55 and older will increase 73 percent, compared to the minimal increase of younger workers – 5 percent – over the same period of time.
So, What’ s The Solution?
Here are five ways business owners and industry leaders can help combat this issue:
SPOTLIGHT ON MANUFACTURING
The Great Employee Shortage
I recently sat down with owners of several manufacturing companies to discover what they need to feel more secure in their business endeavors. It didn’ t take long for a theme to emerge. Overwhelmingly, these owners said they are looking for talented workers – a lot of them.
As the economy continues to pick up steam and production increases, business owners say their talent-pool of young, skilled workers is dwindling. The decline of potential employees could not only have long-term implications on our companies, this dilemma could impact local economies too. Many communities count on the sustainable growth manufacturing companies can bring. But if these enterprises are unable to fill their vacant positions, their ability to meet increased production demands and growth expectations will continue to be unobtainable.
1. Develop more meaningful relationships with schools in their communities and have more frequent and in-depth talks to school administration and students about the industry.
2. Understand how the company and the industry affect the local and regional population and talk to various groups of people about issues and concerns they may have, as well as the many benefits manufacturing companies provide.
3. Provide training and career development programs to young employees entering the industry and develop a map for their long-term success within the company.
4. Abandon high-stress deadlines in lieu of better employee engagement practices. This will result in an increase in short- and long-term productivity as well as greater employee commitment to the company.
5. Pay closer attention to wage distribution and how your manufacturing company stacks up against other industries. Sometimes, it might feel like the decrease in skilled workers is strictly a result of limited workers, though it is more likely that workers are less inclined to take a manufacturing job because the wages offered are not as competitive as in other industries.
As baby boomers retire, the shortage of young, talented workers is only going to increase. Any planning that can be done now will only solidify the manufacturing industry’ s ability to fill positions in the long-term.
TRANSITIONING YOUR COMPANY TO A NEW LEADER
by: Gene Spittle
CPA, PFS, CGMA, Principal & Lean Six Sigma Green Belt( Wooster Office)
545 N. Market St. Wooster, Ohio 44691
( 330) 264-0791
As you approach retirement age, it’ s important to plan ahead for transitioning leadership of the company you’ ve worked so hard to build. You may have more options than you realize.
How far in advance should I begin my succession plan? You’ ll want to begin your succession plan as far in advance of your retirement as possible. Three to five years is optimal. The plan has a better chance of succeeding if it is formalized and put into a written document.
How do I determine if it’ s a better choice to transition my company to someone internally or to sell it? A detailed analysis of exit strategy options can be provided by a CPA who specializes in this area. Succession planning involves very complex issues including family dynamics, personal finances, business planning, business valuation and estate taxes; therefore, outside counsel can be beneficial. There are different strategies and tax consequences involved in both options, so a detailed written review can reveal the best choice for you and the company.
What steps must I take to ensure a smooth transition? First, you must make sure you’ re ready to leave the business – both financially and emotionally. Are you ready to let go? Are you financially stable enough to retire? Second, create your exit strategy. Your exit strategy should be properly communicated to all those involved.
Internal Transitions
How do I decide which family member / employee is best suited to run the business? Look for a strong leader with maturity, decision-making ability, and passion for the business. You may have more than one family member or employee interested in leadership. Pick a single leader, and don’ t try to equalize responsibilities.
How do I avoid hard feelings when naming a successor? If you’ re in the difficult situation of having to choose between children, the worst thing you can do is to avoid discussing the feelings involved. You should have a process for selecting which one will become the leader, and you’ ll want to hold one-on-one meetings with each family member before the decision is made to discuss the process. Once you make the selection, explain why and gather support from family members.
I want to leave the business to a family member, but I’ m not sure he or she can handle it on his or her own – what options do I have? There are three options to ensure the new leader is prepared for the job. First, transfer power one year before you leave so that you can be there to guide the individual. Another option is to hire a temporary outside manager to oversee the new leader for a term of one to five years. Or, you can create a board of advisors to meet monthly to act as a sounding board for the new leader. continued