How can industrial contingent worker programs attract new workers — and keep the ones they have — in an increasingly tight market that is seeing wages skyrocket?

A panel discussion titled “War for Light Industrial Talent: Attracting and Retaining this Critical Workforce,” held last week at SIA’s 2022 CWS Summit North America in Dallas, shed some light on ways to adapt.

“From layoffs to onsite Covid testing to remote work to talent shortages, the industrial sector has had a rough time of it recently,” said Subadhra Sriram, SIA’s editor and publisher, media products, who led the panel. “As a result, the way enterprises have been looking at talent has changed.”

The US industrial staffing market reached $36.5 billion in 2021, and SIA forecasts further growth in 2022 and 2023. In addition, SIA’s research also found that industrial staffing bill rates increased 16.1% from 2020 to 2021 with pay rates increasing as well but at a lower rate of 13.8%. As a result, the sector saw improved profit margins.

This is the result of an unprecedented demand for industrial workers, both perm and contingent. A few of the factors fueling demand include:

  • The pandemic prompted many workers to accelerate their retirement plans.
  • New, emerging players in the space are increasing the competition for talent — and they are coming in with very deep pockets.
  • A decades-long push of college over careers in the trades and industrial work is slowing the flow of new workers to the sector.
  • Companies that experienced supply chain issues as a result of the pandemic are reshoring their manufacturing back to the states, increasing competition for talent.

Organizations must be proactive and innovative to be an employer of choice for this talent and compete with other deep-pocketed employers, according to panelists Michael Nora, global category procurement manager at Caterpillar, and Lisa Zak, director, indirect supply management, at Medtronic Inc.

Culture. “Your differentiator really needs to be driven around a culture, because you can chase price as much as you can, but Caterpillar doesn’t have the same wallet size as an Amazon or a Tesla or a Rivian,” Nora said. “What we have, though, is a longstanding culture and a brand — especially in the United States — where we can utilize that to much fanfare.”

The biggest change he has seen recently is a focus on driving a culture around safety and cleanliness, while also differentiating Caterpillar with a “humanity aspect” where workers feel they are part of a team and churn has been reduced.

Changing temp paradigm. The workforce is evolving and changing; hence, organizations should examine how they respond. For example, consider removing or reducing drug tests, background tests and training requirements.

“When you think about the workforce in general, and when you think about the demographics of this workforce, we have to remove some of those barriers,” said Medtronic’s Zak.

While some checks are necessary at Medtronic due to the specialized products it produces, one thing it looked at is removing the high school diploma requirement for contingent workers in general assembly roles. In lieu of that, the company now allows its vendor on premises and partners that provide those types of workers to replace the diploma requirement with a pre-screening test that ensures the candidate has basic English and math skills.

“We have a lot of international talent coming in, and the process for validating that diploma could take us six weeks, two months — the talent is long gone by then,” Zak said.

Medtronic is also evaluating its drug-testing policies for contingent workers after hearing from suppliers that many candidates don’t even bother to apply when they find out there is a screening. In addition, the organization experienced no incidents or problems during the 18 months that testing was suspended during the Covid pandemic.

The company’s two-year tenure policy is another area of concern. Zak noted that contingent workers are choosing to remain in temporary roles because they want the control and flexibility, not because they are hoping for a pathway to a full-time role.

“We have to think about that,” she said. “Our workforce’s mindset is shifting, and we are going to see more and more people wanting to work these roles [as contingents].”

Pay rates. “Ultimately, what our workforce wants right now is pay. We are in a hugely competitive market, and I could talk about Medtronic’s culture and saving lives all day, but that doesn’t pay the rent,” Zak said. “Money talks.”

Because Medtronic’s contingents are paid the same amount as its FTEs in the same roles, bolstering pay rates takes an “act of God.”

“It’s too slow,” she said. “We can’t respond to the market on both the FTE and contingent side.” Hence, she developed a “Bingo card” of incentive bonuses tied to production that encourage both contingents and FTEs to increase output. These also include referral, retention and signing bonuses.

“It’s a short-term plan to try to get the workforce in,” she explained. “If I can’t adjust the pay across the board, I’ve got to get creative with those bonuses to compete.”

Candidate experience. Word of mouth is exceptionally important to draw talent in the door.

“They all talk to each other,” Nora said. “It is remarkable. They sit at the same pubs. They share the same dinners. They are all friends. They are very tight-knit groups of people.”

Therefore, if you can attract one worker and provide a positive experience, they will share that experience and bring more applicants to your organization.

Upskilling. Providing a clear and defined pathway to a permanent role and/or career advancement is still paramount to many contingents, and upskilling plays an increasingly important role to filling key positions amid a limited pool of talent.

For example, a a worker who first joins Caterpillar as a floor sweeper can upskill to a forklift driver role in six to 12 months. Logistics and building positions are also options for future jobs.

“That opportunity means a lot to them, and that helps with retention,” Nora said.

However, Zak noted the decision should be up to the individual; not all of them are seeking that career pathway.

“We have to ask the workforce what they actually want and how they want to work,” she said. “We have to go back to them and not just assume what they want to do.”

Maximize your supplier relationships. Leveraging your suppliers is paramount to keeping a pipeline of solid contingent talent and working together to attract talent via job fairs, advertising and co-campaigns is vital. It is important to approach the relationship with your suppliers with mutual respect and understanding, as light industrial is a difficult workforce to attract and retain.

“We are tied at the hip,” Zak said. “We have to be if we are going to do this.”

Going Forward

Removing barriers and creative thinking will be necessary to keep pace with worker demand and organizations’ production goals. Costs will remain a concern and could become untenable. Promoting industrial as a strong career choice will also be important to drive younger generations to the sector.

As more people embrace temporary work and contingents become a larger percentage of the workforce, organizations must consider what they are doing to accommodate that shift and recognize their role as a joint employer.