Managing Quality in a High Turnover Environment

[RosieA]

One of the plants that I am responsible for is in Mexico and has a high (46%) turnover rate. About half of this is due to employees leaving for jobs that pay 50 cents more a day down the street, and the other half is a conglomeration of various reasons. The average time in the job for the hourly worker is 1.5 years.

With so many shifts in the workforce, we have a higher defect rate in this plant than we do in similar ones in the US and other countries. Our strategy has been to keep lower skilled/newer employees on less critical jobs, and compensate the higher skill levels to keep them, but this alone, isn't helping improve the defect rates. We have a particular problem with getting corrective actions to stay corrected.

As is the case with many border community Maqueladoras, there's no lack of local jobs.

Have others of you had similar experiences? Have you found any methods that counteract the constant churn of employees?

 

[Claes Gefvenberg]

Yikes! 46%??? Rosie, I can imagine the problems caused by that rate. Good subject for a thread btw. Ok, I’ll start this off. Not knowing any details the following questions come to mind:

Is the pay really the root cause for people leaving? (Just asking, ok?) How about combined reasons? I suppose you’ll need something that makes them want to stay, and I’m not necessarily talking about higher wages.

Is it possible to reduce the number of mishaps by aiming the corrective (and preventive) actions towards a higher degree of “fool-proofing”?

/Claes

 

[energy]

Never happen

One fool proof way is to lock the doors. No seriously, do you think a company that is searching for cheap labor, no offense Rosie, is going to invest in this type of defect prevention? They may as well have stayed in the states, where they have an acceptable defect rate. Also, my guess is that it (defect) is rarely the same thing twice. You want to cheap. You get cheap. Again, Rosie, nothing personal!

On the turnover rate, we hire uneducated, unskilled laborers all the time. This profession demands it. People with a limited education look at that paycheck, even if it's dime higher, they'll leave. In a couple of months, or even sooner, they want to come back because they weren't as satisfied as they were when they were with us. Laid off, lack of transportation, (we provide it to the jobs), steady work, weather permitting, paid lunch, etc., The reason for leaving? Joe Blow offered them .50/hr more and promised them the moon. Fortunately, we have hired some back and they never leave again. I guess what I'm saying is they don't look hard enough at the whole picture and quite often they find themselves out there wanting to come back. Do you offer them another chance. Or, does that ever happen there? Are the incentives to work there, there?

 

[Sam]

One of the plants that I am responsible for is in Mexico and has a high (46%) turnover rate.... Etc.

If you want to keep people around you need to be competetive in the wage market.
When you only make $2.00 a day, you operate in a survival mode and a 25% increase is hard to turn down.
Of course you could move to China; the day rate is less than a $1.00.

 

[gpainter]

Good thread. Just imagine what it will be like in the far east, I remember reading somewhere that av. labor rate in Mexico was around $2/hr,in China around .50/hr. The grass may be greener over the septic tank, but you still have to mow it. I worked at a US company thet lost over 200 people in a year (average cost to train a new hire $5000) They finally decided to do some exit interviews to see what was going on. People were tired of working seven days a week. End result- no Sundays, Saturdays were optional. After this was done,the following year 2 people left. Mexico and the far east will be where the labor unions have potential to see resurgance. Look to see that you are competitive on wages, fringe benefits are the key try to offer a benefit that others do not give (paid birthday, sign on bonus if they stay 2 years,other incentives (does not need to be cash).

 

[David Hartman]

One of the plants that I am responsible for is in Mexico and has a high (46%) turnover rate..... Etc.

I'm taking a different tact than that presented by the majority so far (Claes being the exception).

What can you do to make your processes more "robust"? Do you need to add more detailto your procedures, so that you can better capture the corrective actions that are being implemented? Do you need to invest in OJT to ensure the transfer of lessons-learned? Do you need to provide each worker with the tools/training that will allow them to personally verify the acceptability of their efforts? Would procedures with more pictures, or the use of sample assemblies, or even videos of the process being performed correctly be of benefit?

Just some food for thought.

 

[Mike S.]

WOW, 46%! Did I say WOW!

I will ignore the fact that it is Mexico because my post might have the potential to offend or look political, so I'll treat this like it was in the US, though I know that might not be addressing a major issue.

First, ya gotta know why they leave, not just think you know, but get the true reason(s). And you gotta really want to fix it -- not just act that way. Sometimes the exiting employee will not tell the truth to a Manager face-to-face. An anonymous survey of existing employees as to why they have/might considered leaving may help, as well as feedback given to non-Managers by exiting employees. A little detective work can help if you really wanna know the true answers.

Once you know the true reason(s) attack them. If the #1 reason is really 50 cents a day in pay, compare that to the real costs of the turnover considering defects, re-training, admin cost, lowered productivity, etc. Heck, it may be better to pay $1 or $ 5 more a day and get the benefits of a stable workforce.

But until you know and rank (Pareto) the true reasons they leave, you're throwing darts in the dark.

 

[energy]

Sure, Claes is always right

Excellent ideas, Dave. Especially pics or samples of like components. The company just has to invest the time and resources to get it done. I think what you are getting from the pessimists among us is the feeling that the company has to do more in the monetary/benefits end to reduce the turn over. We don't know the complexity/configuration/types of components manufactured. Someone has to be assigned to put these defect reduction measures in place and if they are looking at cheap, it becomes a problem. I mean, if Rosie was assigned, it would get done. But, when you make her kind of money, she is probably too valuable where she is for the Company to even consider sending her to Mexico. I'll go. I have nothing important to do. And, I match the prevailing rate there.

 

[Icy Mountain]

Or do both

Good feedback, Mike & Claes. Might I suggest a combination. Better wages/working environment based on a survey of outgoing employees applying statistical analysis and attacking the top reasons first, great idea. Also, analyzing the defects and applying the same analysis, mistake-proof the worst processes first. WADR, D2, improvements in procedures, training, etc. don't do much in a low pay, low education, high turnover enviroment, doesn't matter what country.
My addition: analyze the correlation between an increase in the # of managers/supervisors who understand Spanish (or live in Mexico!) with the decrease in turnover.

 

[energy]

Not you

WOW, 46%! Did I say WOW!

I will ignore the fact that it is Mexico because my post might have the potential to offend or look political, so I'll treat this like it was in the US, though I know that might not be addressing a major issue.

You, political? Puleeeeze!

First, ya gotta know why they leave, not just think you know, but get the true reason(s). And you gotta really want to fix it -- not just act that way. Sometimes the exiting employee will not tell the truth to a Manager face-to-face.

Not to de-rail the thread, but I have to tell this quickly. You're right about being too honest in those exit interviews. One of the questions on a previous employer's form was to give us a negative reason why you would leave. Mine was not. In other words, think of something. I thought about it and mentioned something that I would like to see changed. After I lost my job, I re-applied there and was told, in confidence by my previous boss, that what I said in my exit interview was the reason I would not be going back. You do have to careful. Sometimes it will bite you, you know where.