On Thursday, June 18, 2015, Marlin Steel had the opportunity to make a presentation before a crowd of more than 500 business professionals at the National Fund for Workforce Solution’s fifth annual meeting at the Hyatt Regency in Baltimore, MD.
The second day of the three-day event, Thursday was set aside as the “Employer Day,” with events centered around giving employers tools and advice to optimize their business by developing their workforce.
The employer-focused day was a first for the NFWS annual meeting, making the invitation to speak at the event a unique honor.
For those who didn’t get the chance to make it out to Baltimore for the NFWS fifth annual meeting, here’s a recap of what you missed from Marlin’s Employer Day presentation:
People are a Fixed Cost, Not a Variable One
Even in a manufacturing process that makes heavy use of automation, people are still the backbone of your company. Having dedicated, engaged employees working your production line can mean the difference between meeting production goals and missing them.
This is why it’s important to invest in your employees. Giving workers the training they need to do their jobs effectively not only improves productivity, it helps you establish a positive employer/employee relationship that can last for the next thirty years.
The need for investment in employees to motivate and engage is outlined in Shigeo Shingo’s Study of the Toyota Production System, as it tells us that: “Higher labor productivity is achieved by improving work methods & increasing worker motivation & involvement. No matter what the level of automation, people will always be an essential & vital part of production.”
Loyalty Works Both Ways
Beyond simply investing in people to earn loyalty, it’s necessary for employers to treat loyalty as a two-way street. One of the teachings of Eliyahu M. Goldratt is that “the success of a company is determined by the harmony of human relationships within it.” When employers find themselves with excess productivity, that extra capacity should be used to build the business, not to lay off the workers who made it possible.
If employers don’t treat their workers fairly, then what reason do the workers have to respect their employer?
Investing in Employees Produces Results
When Marlin Steel was first purchased by Drew Greenblatt in 1998, the company had 18 employees who were on minimum wage with no benefits. The company was riding high on the bagel craze of the mid-90s, producing commodity baskets where the pass/fail criteria was “would a bagel fit in there?”
However, soon after acquiring the company, a perfect storm of problems soon arose that would nearly annihilate the company if it tried to keep doing things the old way.
First, the introduction of the Atkins Diet, with its emphasis on cutting carbs, gutted the bagel market nearly overnight. All of a sudden, basket orders were drying up as bagel shops around the country started closing their doors.
Next, steel companies from China started to muscle in on the American market, selling bagel baskets for less than what Marlin needed to pay for the steel to make them. With such an enormous price advantage, Marlin simply couldn’t compete on cost alone anymore.
Hemorrhaging cash, Marlin Steel soon got a fortuitous call from a Boeing engineer who was looking not for a commodity basket, but a precision-engineered product to hold delicate parts for aerospace applications.
This sparked a major change, as Marlin Steel had to completely rework the way it did business, investing more in manufacturing automation and employee training.
The results have been remarkable, to say the least. By shifting focus from trying to compete by being cheap and selling commodity products to making investments in workers and basing sales on quality of results, Marlin grew its sales several times over. Now, Marlin Steel exports to over 39 countries, including China.
How Marlin Motivates, Engages, & Empowers Employees:
To get employees involved in the change in Marlin, it was important to rethink the way that employees were handled. No longer would minimum wage, no training, hard labor, and no benefits be an acceptable way of doing business, not it Marlin wanted to compete based on quality.
Instead, Marlin needed to get employees motivated and engaged with their work, and then empower them to make smart decisions on the factory floor for themselves. To do this, Marlin implemented eleven new strategies for its employees:
- Providing Cash Bonuses. Implementing bonuses based on meeting big, hairy, aggressive goals (BHAGs) gives employees a strong, short-term motivation to work hard. It gives them some skin in the game and keeps their eyes on the prize so that they don’t become passive.
- Setting Training to be 5% of Labor Budget. Knowledge is one of the most important tools you can give your front-line workers. With the right training, your employees will be more knowledgeable, making them better able to talk with clients. Also, trained employees tend to make fewer mistakes and can better optimize production processes for efficiency.
- Paying Well. Beyond supplying cash bonuses to provide short-term incentives, providing great pay based on employee skills and abilities can further promote productivity. As suggested by Nucor Style, “Hire 5 talented people, pay like 8, produce like 10!” Manufacturers really do get what they pay for.
- Investing in Automation. The addition of manufacturing automation to Marlin’s production line has helped to ensure consistent results for production. Machines don’t get tired or distracted from the task at hand, ensuring that each part they produce can meet very tight production tolerances that handmade custom metal forms simply cannot match.
- Posting a Skills Matrix. Marlin posts a skills matrix in the lunch room for all employees to see. This way, everyone knows who has what skills, and which ones are in the most demand by the company.
- Paying for Learned Skills. For each new skill an employee learns from the skills matrix, he or she can earn a raise on their regular pay. This incentivizes the acquisition of new skills and ensures skills redundancy in Marlin’s workforce so that one employee’s absence won’t cripple productivity.
- Being Picky about Hiring. You want to get the best people? Be picky about hiring. Only take exceptional workers. Check to see if they’re compatible with your company by using personality tests. Also, show prospects what they’ll be doing before they take a job with you so that there are no surprises. Hiring the right talent is an employer’s most powerful tool for ensuring business success.
- Hire Fast, Fire Fast. No matter how careful you are, there are bound to be one or two bad fits that get through your hiring process from time to time. Once you’ve identified a bad fit, get rid of him or her quickly, as they can negatively affect others, becoming a poisonous influence on your company’s productivity.
- Starting a Big Push for Safety. Time-lost factory floor incidents are a tremendous waste of time and money, and can cost you far more than that. By creating a safety committee with employees who are empowered to effect change, Marlin Steels has dramatically cut the occurrence of factory floor accidents. Using production automation has also helped increase safety for workers.
- Creating Repeatable, Clear Processes. Employees need consistency. Creating a repeatable, step by step methodology for your production gives employees a stable bedrock on which to base expectations. Shooting for ISO certification helps you create a consistent process.
- Be Transparent. In the end, it all comes back to respect. Part of treating workers with respect is to be open and honest with them. Making promises that you can keep, being candid about why some things simply cannot be done, and making sure that others in management positions are also honest is a daunting task at times, but one that is necessary to keeping employees invested in their work.
Using these strategies that were shared at the NFWS meeting, Marlin Steel has grown considerably as a business. Learn about how Marlin can help you build your business’ productivity with custom-designed steel wire baskets for your production process today by checking out the link below: