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