Making Great Companies Where People Want to Work

"Workers are unhappy and I can't seem to solve the issue."

The kind of high-tech factory with gleaming white floors where American workers can be proud to work

Does this seem familiar? The owner of a machine shop in Turkey posted exactly this problem on Reddit. It's a common issue. In a recent survey, a majority of small business owners reported that labor issues are the top challenge facing their business right now. It seems that businesses all around the world have record numbers of open positions, but are having trouble filling those jobs with sufficient talent.

There are many reasons for the labor shortage: inflation, lack of interest in the trades, and the lingering effects of the COVID 19 pandemic, where economic stimulus payments and suspension of educational programs delayed entry of young people into the workforce, but one reason that remains top of mind for many workers is more mundane: bad bosses.

One report published in Harvard Business Review suggests that one of the most impactful things a business can do to retain employees is to train good managers. The report from Zenger Folkman demonstrated in a study of 2,800 managers and more than 13,000 employees that the least effective managers have three to four times as many people who fall in the “quiet quitting” category compared to the most effective leaders. This makes sense if you consider that employees, by taking a job, are generally signaling that they find the pay adequate, at least to begin with. Job satisfaction over the long term is therefore a function of what the job experience is like, and this is determined primarily by experience with managers who have the most influence over an employee's development and opportunity for advancement.

So how to be a good manager? Reddit once again provides some good clues. In a fascinating discussion of different workplace cultures, machinists discuss company-provided steak and beer lunches as an example of simple opportunities for camaraderie as one factor that can make a good workplace a great one.

It's important to note that these functions are the "cherry on top" of a set of common policies that contribute to employee satisfaction. Among the basics:

• Competitive pay

• Good benefits packages (especially important for employees with families)

• Clear communication of expectations, with training for new tasks

• Ideas about improvements are welcomed by management

• Employees are properly resourced to do their jobs

• Consistent working hours supported by good job planning, i.e. minimal crunch periods or stalls

• Predictable vacation and sick-time packages

• Opportunity for advancement and education

If all of these are met, occasional paid lunch breaks with good food are seen as gestures of appreciation from management to staff. It's the acknowledgement and respect that these little events communicate that inspire the workplace satisfaction and long-term loyalty to keep employees happy. In the words of one commenter on the thread:

"[I] [w]ork at a similar place with good pay. It's nice. It makes me want to go the extra mile and out[put] in the extra time. Not leaving unless they drag me out or I get a 30 percent pay bump elsewhere."

In addition to this, a truly outstanding workplace will have expressions of the following intangibles as well:

• Shared sense of mission that what you're doing is important. It should be the job of managers to constantly explain how an employee's work fits into the bigger picture, and the importance of that work in driving the whole company forward.

• A sense of pride in the work, expressed through neatness of workspaces, wearing good-quality workplace gear that contributes to a sense of professionalism, and in honoring the process that makes a high-quality finished product

• Care for fellow employees and a culture that emphasizes sharing of knowledge and helping each other

• A reputation for the company that employees can be proud of. When they tell friends and family where they work, the reaction should be "that's a great company." This is supported by marketing but is mostly a function of reputation in the industry.

• A shared sense of ownership supported by a year-end bonus plan for every employee. This doesn't have to be large, but it should adjust based on the company's performance. Nothing makes for a sense of "we're all in this together" than shared participation in the company's upside, especially for roles, like in the trades, that don't typically offer it.

Business owners, particularly in the trades, should strive to create companies that are distinguished by excellent management. You can't always control the number of qualified job-seekers in your region, but you can always control the quality of your management. In an environment where it is a challenge to hire good employees, it makes sense to invest additional resources on retaining the best ones. This will not only result in happier, more productive employees but also establish a foundation for accumulating the compounding intangible knowledge which is so vital for achieving a competitive edge in a complex industry.