11 Ideas for Employee Retention in Manufacturing

There's a growing silence in many factories as aging employees retire and fewer young workers step in to take their place. This trend, combined with the competitive job market, has made employee retention a top priority for manufacturing companies.

Finding and holding onto talent feels like trying to catch smoke with bare hands. But below we'll reveal several ideas for employee retention in manufacturing to help you keep valuable employees happy, engaged, and committed to your company's success.

Understanding the Core of Retention Concerns

Before diving into employee retention strategies, it's important to understand the root causes of employee turnover in manufacturing. According to the Bureau of Labor Statistics, the average manufacturing turnover rate is nearly 40%, making it a significant challenge for the industry. The impact of this turnover isn’t just felt internally—it affects production efficiency, profitability, and even customer satisfaction. A high turnover rate also means that valuable institutional knowledge is lost, as experienced employees leave without passing on their skills.

Additionally, Deloitte estimates that by 2025, 3.5 million manufacturing jobs will be created, but 2 million will go unfilled due to a lack of skilled workers. This looming talent gap makes retention even more critical. This skills gap is being driven by multiple factors: an aging workforce, a lack of interest among younger generations in manufacturing careers, and the increasing complexity of technology in modern manufacturing.

The Manufacturing Institute’s Center for Manufacturing Research identified several key factors that influence an employee's decision to stay with their company:

• Passion for their work: 83%
• Job stability and security: 79%
• Valuing a family-centric workplace culture: 69%
• Job compatibility with personal life: 68%
• Training and career growth: 42% overall and up to 69% of employees under 25 years old

Beyond these factors, a study conducted in partnership with the American Psychological Association found that leadership perception of retention does not always align with the reasons employees stay. While leaders emphasize competitive pay and benefits, employees place higher value on feeling valued, having meaningful work, and strong relationships with their supervisors and peers. This disconnect suggests that manufacturing companies need to shift their focus beyond wages and benefits to improving workplace culture, recognition, and career development opportunities.

Challenges Unique to Employee Retention in Manufacturing

Manufacturing has specific workforce challenges that make retention difficult, including:

• Aging Workforce: With Baby Boomers retiring in large numbers, companies are losing seasoned talent faster than they can replace it.
• Skills Gap: New manufacturing technologies require specialized skills that many workers do not yet have, making hiring and retention more challenging.
• Scheduling Inflexibility: Unlike office jobs with remote or hybrid options, manufacturing employees must adhere to strict shift schedules, limiting work-life balance.
• Limited Advancement Opportunities: Many workers feel stuck in their roles due to unclear career pathways or insufficient training.
• Workplace Culture & Leadership Accessibility: A micromanaging environment, unapproachable leadership, or a lack of accountability among coworkers can drive employees away. Ensuring that management is visible, accessible, and engaged with employees on the shop floor can foster trust and a positive work environment.

The Financial Implications of Turnover

When an employee leaves, it costs your company in more ways than one.

From a practical standpoint, turnover can cost a business anywhere from 20% to 250+% of that worker’s annual salary. This includes costs related to recruitment, onboarding, and training for a new employee.

Beyond the direct costs of hiring and training new employees, turnover can lead to operational inefficiencies. Frequent onboarding disrupts workflows, reduces productivity, and leads to quality control issues that affect customer satisfaction. These disruptions also lead to:

• Loss of knowledge and experience
• Decline in employee morale and productivity
• Disruption to the workflow and team dynamics

Why Do Manufacturing Employees Leave?

Voluntary turnover represents a significant chunk of the turnover rates, accounting for about 75% of all departures. Why do these employees choose to walk away?

• Lack of Career Development: Many employees leave because they seek better career development opportunities. They may feel stagnant, unchallenged, or see limited growth potential in their current roles. According to a study by the American Psychological Association, 69% of workers under 25 cited career development as a critical reason for staying in their roles.‍
• Poor Manager Relationships: The saying "People don't leave jobs, they leave managers," rings especially true in manufacturing. Employees might leave due to a lack of leadership or support from their managers, or if they feel their efforts go unrecognized.‍
• Inadequate Recognition and Communication: A significant number of employees express dissatisfaction with how their contributions are acknowledged. Studies show that only 66% of workers are satisfied with their employer’s recognition practices, and just 63% are happy with internal communication.
• Safety Concerns: Both physical and psychological safety impact retention. Employees who feel unsafe—either due to hazardous work environments or a toxic culture—are more likely to leave. Manufacturers must go beyond meeting safety regulations by creating a workplace where employees feel both physically protected and psychologically supported.

Understanding these reasons can help your manufacturing company devise a plan to retain your workforce, reducing the costly cycle of hiring and training new employees. To keep a pulse on employee sentiments, Team Engine's text messaging feature allows for quick communication with employees, ensuring that their concerns are addressed promptly and effectively.

The Best Ideas for Employee Retention in Manufacturing

The video above goes into great detail about recruiting & retaining a strong manufacturing workforce, including a few of these employee retention ideas for manufacturing companies:

1. Improve the Onboarding Process

A structured, engaging onboarding experience sets employees up for long-term success. Research shows that companies with a strong onboarding program improve new hire retention by 82% and productivity by 70%.

To optimize onboarding:

• Ensure job expectations are clear before day one.
• Automate paperwork to focus on training and integration.
• Assign mentors or buddies to new hires.
• Provide hands-on training with documented best practices.
• Conduct regular check-ins throughout the first year.

2. Build a Safe and Positive Work Environment

Safety is a top priority in manufacturing, and employees who feel unsafe—physically or psychologically—are more likely to leave. Manufacturers should go beyond compliance by fostering a culture where safety is part of daily operations.

• Conduct regular safety training and refreshers.
• Encourage open reporting of safety concerns without fear of retaliation.
• Address workplace culture concerns like micromanagement or favoritism that may make employees feel unsupported or undervalued.

3. Provide Competitive Compensation and Benefits

While the satisfaction of a job well done is rewarding, it doesn't pay the bills. Competitive wages are crucial, but equally important are the benefits that contribute to an employee’s overall well-being. Companies that offer any of the following see higher retention rates:

• affordable healthcare options
• retirement savings plans with employer contributions
• childcare assistance
• transportation support
• tuition reimbursement for upskilling
• paid time off policies that support work-life balance

Additionally, some manufacturers are exploring ways to improve work-life balance in an industry that traditionally offers little flexibility. While remote work isn’t possible on the factory floor, offering alternative shift options, paid sick leave, and personal time off without penalties can improve job satisfaction.

4. Strengthen Leadership & Management Training

Employees don’t just leave jobs—they leave bad bosses. Investing in leadership training can significantly improve retention.

• Train managers on effective communication and employee recognition.
• Implement stay interviews to understand employee needs.
• Encourage open-door policies and employee feedback.

5. Invest in Career Growth and Development

A lack of career growth is one of the top reasons employees leave manufacturing jobs. Employers who invest in structured training programs are more likely to retain ambitious workers with development incentives such as:

• Offering cross-training and upskilling opportunities.
• Providing leadership training and promotional pathways.
• Creating structured apprenticeship or mentorship programs.

6. Recognize and Reward Employees

A pat on the back is more than just a nice gesture. Recognition programs—whether peer-to-peer or from management—help reinforce positive behaviors and create a culture of appreciation. Making recognition public, such as through digital dashboards or company-wide announcements, increases its impact. Companies can:

• Implement peer-to-peer recognition programs.
• Offer performance-based bonuses or gainsharing.
• Celebrate milestones and work anniversaries.

7. Use Technology to Improve Communication & Engagement

Poor communication is a major driver of disengagement. Companies should:

• Use text-based tools like Team Engine to keep employees engaged.
• Conduct regular town hall meetings.
• Ensure supervisors are approachable and engaged.

8. Continuously Monitor & Improve Retention Efforts

Retaining top talent isn't a one-and-done deal, it's an ongoing mission that requires constant effort. That's why it's important to continuously measure the success of your employee retention strategies and make adjustments as needed. As the industry and workforce evolve, so should your strategies for retaining top talent.

• Track turnover rates, employee satisfaction, exit interview data and other metrics to see how your efforts are impacting retention.
• Use employee feedback to refine policies.
• Regularly assess and adjust retention strategies.

9. Foster Strong Peer & Leadership Relationships

There's a unique bond that forms when sharing stories over a lunchbox or lending a hand on a challenging task. Encourage social events, team-building activities, and open communication to contribute to stronger peer relationships.

Studies show that employees who have strong relationships with their coworkers are more likely to stay with their employer. 91% of surveyed manufacturing employees said they have positive relationships with their peers, reinforcing the importance of camaraderie at work.

To accomplish this, pair new hires or less experienced workers with seasoned employees to facilitate the transfer of knowledge and skills. The mentees can learn the ropes faster and feel more connected to the company, while the mentors can experience a renewed sense of purpose and commitment.

However, peer relationships alone aren’t enough—employees also need strong, supportive leadership. One way to achieve this is by adopting lean management techniques, where supervisors spend time on the production floor instead of being removed in an office. This approach fosters trust, enhances communication, and ensures employees feel heard. Leadership should also prioritize transparency and accessibility. Stay interviews, town hall meetings, and open-door policies help ensure employees feel heard.

10. Involve Employees in the Company's Success

There's no better way to improve employee retention in manufacturing than to involve employees in the company's success. When they have skin in the game, they have a vested interest in the company's well-being. You can achieve this through:

• Profit-sharing plans
• Bonuses for meeting production goals
• Involving employees in decision-making processes

Manufacturers that actively engage employees in decision-making and problem-solving initiatives report higher retention and stronger job satisfaction. Self-managed teams, problem-solving committees, and town hall meetings all foster a sense of ownership and purpose.

11. Gather and Act on Employee Feedback

You can't fix a problem if you don't know it exists. Stay interviews—regular, structured check-ins with employees about their experiences—are an effective way to gather honest feedback before workers consider leaving. Pairing these conversations with real-time feedback tools, like Team Engine's text-based surveys, ensures leadership stays ahead of potential concerns.

By implementing these proven ideas for employee retention in manufacturing, you can build a strong and loyal workforce. And with the help of Team Engine, you can streamline the hiring process and make your retention efforts even more effective. Sign up for a demo to learn more!

_{Originally published November 1, 2023. Last updated February 24, 2025.}