If you are like many small and medium-sized manufacturers, finding good help has been a pain point for many years, and it has become even more difficult during the Covid-19 pandemic. The market forces driving that dynamic are not likely to change soon.

Your shop has had to become more adaptive and responsive in operations during this uncertainty, facing many challenges but also opportunities. You can take a similar approach to hiring and developing your people. The same principles that apply to lean manufacturing and continuous improvement in production processes also apply to recruiting, management, and performance of people. If you could improve your system, you can improve your performance.

What is systems thinking?

Systems thinking is a toolkit, or a type of language that describes how systems interact through various connections and feedback. Systems thinking is a holistic way to see connections through:
• Feedback loops
• Relationships (direct and indirect)
• Interactions and influences
• Systems within systems

Barry Richmond was a leader in the fields of systems thinking and system dynamics. He emphasized that people embracing systems thinking position themselves so that they can see both the forest and the trees, with one eye on each.

What does this look like? Let’s consider a common example of how a manufacturer experiences a higher attrition rate in one department than others. A natural inclination is to assign blame to the hiring process or to the failure of the talent pipeline. We might even look at what’s different about the frontline oversight or working conditions. But there could be many other factors that influence the negative outcomes, such as:
• Feedback loops are inadequate, lacking clarity between what the training programs are capable of and what the recruiting efforts should be looking for.
• The onboarding process is informal and takes too many shortcuts; opportunities to engage new employees early in their career journeys are missed.
• The interview process fails to identify what makes a good match because the definition of a “good” employee is vague.
• The job postings aren’t compelling enough to attract the raw talents that the training program can transform.

A systems-thinking approach is holistic and will look at how people and systems communicate with each other. What signals does training send to recruiting? Or vice versa? The reality is that people working within systems frequently miss the signals these systems rely on. They may not be as apparent as one machine’s impact in a production line.

Is there a systematic approach to filling a staff position? Does the training program establish a common understanding for what kinds of mindsets and skill sets make for a good match? Does the onboarding process (which actually begins during recruiting) leverage the training program to ensure that new hires are actively engaged from the start? What data are being collected and reviewed on the recruitment or onboarding?

Address long-term issues to solve short-term challenges

Systems thinking will help you grapple with persistent challenges. Here is how common challenges for many small and medium-sized manufacturers break down.

Operational challenges
• Difficulty training people
• Can’t train fast enough
• High turnover
• Soft skills lacking
• Poor technical skills
• Weak leadership skills

Strategic challenges
• Can’t find “good” people
• Aging workforce
• Succession planning
• Ineffective culture
• Retaining key people

Systems thinking and culture change are long-term plays. It’s important to understand what affects daily operations (operational) and requires more immediate attention vs. what is less tangible, although still important (strategic). Addressing the strategic challenges will help solve the operational challenges.

Continuous improvement in the five areas of your people development system

If a culture of continuous improvement exists in your company’s operational side, it should be easier to break down the silos and look at your people-development system as a system. Just as you collect data on the operational side, you can identify feedback loops and system structures for your people-development system and begin collecting data to help improve it. There are five functional areas in a people-development system, and they are interdependent and influence each other:
1. Training
2. Recruiting
3. Onboarding
4. Performance management
5. Retention

A well-structured training program will allow you to generate development pathways. If you give your people, both new recruits and seasoned staff, clearly articulated development pathways and career ladders, there is a common understanding of that road map, which ties into performance management and retention. This will drive demand and expectations in many areas, such as:
• Frequent and consistent, systematic performance feedback
• Support for frontline managers in terms of motivating employees and mitigating issues
• Structured training that drives improvement

Prioritize your actions around what you can control

In the quest to find appropriate job candidates, there are things out of your control, such as the local labor market. They are part of the landscape, but it does no good to blame your plight on circumstances, especially when other employers are dealing with the same challenges.

What you can do is create a culture of learning in which training is foundational. You can create development pathways so employees see themselves on a journey and feel confident that there is a role for them. Among other things, the following is what you can control.

Attracting prospects and candidates
• Positive job postings
• Expanding the labor pool
• Competitive wages
• Robust onboarding

Training
• Job modules
• Standard work
• Developing paths
• Upskilling trainers
• Training tracker
• Effective onboarding

Engaging employees
• Career ladders
• Pay increases
• Promotions
• Performance-based pay systems
• Company growth

Engage employees to tap into their creativity and problem solving

Given ongoing uncertainties, it is essential for all manufacturers to have a culture of problem solving. You can gain competitive advantages through your people, drive employee engagement, and tap into their creativity and innovation.

Given the difficulties in finding good help, you will need to grow your own talent, which means improving your people-development system—recruiting, onboarding, retention, performance, and training. A systematic approach to expanding the talent pool will help, but a good work culture also will encourage staff to bring you prospects that might be a good fit.

Help with implementing a systems-thinking approach

Seeing your people-development system as a whole helps identify actual causes that lead to those long-term pain points and workforce problems. You can provide your people with a systematic approach based on data, as opposed to assumptions and emotions. You can change how you influence the choices people make. The more you can anticipate behavior, the more you can work within systems to reshape things.

Now may be the right time to implement a systems-thinking approach to improve your people-development system using the SMART Talent methodology. SMART Talent was developed by the Oregon Manufacturing Extension Partnership, part of the MEP National Network. It is a great way to implement systems thinking.

For help in taking this journey, connect with your local MEP center to learn more about the SMART Talent methodology and systems thinking approach.