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Tagged with: Disengaged Employees, Employee Communication
The auto industry is transitioning as it embraces technology, transitions to electric vehicles, and adapts to new supply chains developed in response to geopolitical challenges and shortages of components. At the same time, labor issues permeate the automotive industry. Some of the problems are due to an extension of the uncertainties created by the pandemic, the slow transition to electric vehicles requiring new manufacturing plants, and labor unions actively leveraging these issues to gain membership. There is also a labor force shortage, changing skills requirements due to technology, and a pro-labor National Labor Relations Board using agency power to institute changes in employment laws. Attracting talent and retaining employees has become a critical need, so boosting employee engagement in the automotive industry becomes a strategy for sustainable success in an industry marked by disruption.
The auto industry is faced with much uncertainty, which is a catalyst for lowering employee engagement unless there is a high level of trust between management and employees. Your employees must believe executives, managers, and supervisors will make decisions that cause the least harm to things like job security and creates the best employee experience possible. Employers are juggling numerous challenges, not the least of which are labor unions. There will be regular news in 2023 concerning unionization because General Motors, Ford Motor, and Stellantis will negotiate new contracts with the United Auto Workers in the U.S. and Unifor in Canada. Kristin Dziczek, a policy advisor for the Fed Reserve Bank, states outright, "We have much more combative labor issues. The UAW understands this transition is coming. There's a lot of things on the (union) want list. I think we're going to have an extended (negotiation) process."
The list of things on the union list reflects the industry dynamics, like transitioning to an elective vehicle market and the threats to job protection. The many industry challenges discussed in our recent blog, Labor Relations in the Automotive Industry, coupled with labor union activity, means employers must focus on boosting employee engagement in the automotive industry. Employee retention is a top priority for thriving in an industry beset by so many challenges because low employee turnover means you retain your top talent and skilled employees. Boosting employee engagement is a process requiring an integrated approach.
In an interesting twist, you can learn much about what automotive industry employees are concerned about by reading what the labor unions expect from employers, using the information as a guide to boosting employee engagement. Some of the issues, like wage increases, depend on a company's financial position, of course. Still, you can ensure your company pays a competitive wage and provides good benefits reflecting industry standards. The two men vying for President of the United Auto Workers Union, Ray Curry, and Shawn Fain, were interviewed and mentioned the following areas.
The two union members looking for the top leadership position also make it clear that a strike is on the table.
The automotive industry is extensive and involves more than just the major manufacturing plants. There are thousands of suppliers in the supply chains, and they, too are highly vulnerable to unionization. Skilled trade workers are difficult to attract, and workers must be regularly reskilled and upskilled because of the pace of changes in technology. Per Dan Stiles, Director of Strategic Accounts at the staffing agency Aerotek, another issue is that the paths for career development are not as evident in the automotive industry compared to many other industries with professional jobs. "Have perspective when thinking about your employees," he says. "It's important for employers to put themselves in their workers' shoes and ask: "What's in it for me?"
Dan Stiles offers the same advice that our team of consultants at IRI Consultants offers to attract top talent: Build a culture of employee engagement because the sense of culture creates companywide cohesion. Developing a positive, supportive culture based on respect, inclusion, belonging, transparency, and teamwork incentivizes employees with the added benefit of attracting the desired talent.
Innovation is thought of primarily as a way to remain competitive, but it also applies to preventing union organizing or even strikes in a union company because an innovative positive culture depends on people's engagement. A positive culture improves the employee experience, which flows through to the customer experience. There is much talk about the importance of innovation to every company, and it's critical to long-term success in the automotive industry. Innovation is usually thought of as applying to new products and services. However, the automotive industry is experiencing constant disruptive changes that include new technologies and changes in the laws impacting everything from trade to emissions standards to the government's strategy to move to electric vehicles. Meeting the challenges requires a fully engaged workforce willing to contribute new ideas about operational improvements, new products and product redesigns, supply chain efficiencies, and adaptability.
In the chapter Understanding Innovation and Innovation Management, the authors write that "underlying innovation are many issues related to the management of human resources. These include hiring and training policies, job design, and creating effective organizational structures. Creating a culture of innovation in which employees are motivated to be constantly innovative is fundamental, and senior executives should take an active role in coaching innovation teams. Such interactions' motivate talent and reinforce the innovation culture.' Effective reward and recognition programmes need to be maintained."
The organizational culture is pervasive and requires leadership commitment, relationship building, transparent decision-making, firm commitments, and consistency. Developing a positive culture that promotes innovation requires thoughtful leadership actions. This applies to all automotive industry members, including manufacturers, dealerships, parts suppliers, vehicle maintenance companies, and vehicle wholesalers. The Bureau of Labor Statistics categorizes the industry into manufacturing, wholesale trade, retail trade and other services. As of December 2022, there were 4,436,900 employed in all categories.
Though we tend to think of labor unions as primarily interested in large manufacturers like GM and Ford Motor, they are just as interested in automotive retailers or dealers, parts supply companies, and so on. In fact, there is anticipation that the industry will be shaken up in various ways, and labor unions are concerned. For example, the UNI Global Union's commerce sector researched the challenges facing car dealers "due to the shifting dynamics of the automotive retail sector and the increase in manufacturers selling to directly to the public. The findings show that trade union representation and collective bargaining are more important than ever to ensure a just transition for car dealers."
The predictions included the USA having lower sales volume even into the mid-2020s post-pandemic, faster electrification of vehicles which requires fewer parts and fewer after-sales repairs and maintenance, and 40 percent of new cars being sold directly to customers by manufacturers by 2030. The result is a 3-7 percent decrease in car retailing employment and "substantial reshuffling of employment between dealers and carmakers." The head of UNI Commerce, Mathias Bolton, said, "The transformation of the automotive sector through electrification and online sales is impacting workers at every stage of the supply chain. Now it's time to gear up for car dealers and build a stronger global trade union movement that will make just transition for these workers a reality."
With an industry in a significant transition, all automotive industry sectors are subject to union organizing. Increasing employee engagement is crucial to successfully meeting the demands of the future. Interestingly, the need for employee voice is an issue even within the United Auto Workers organization. The members demanded they get to vote directly for the International Executive Board, so the UAW Constitution was changed. The changes are explained in the Solidarity Magazine (July/August/September 2022), available on the UAW website.
How do you develop a culture of employee engagement in the automotive industry? With over 4.4 million employees working in an industry that could undergo significant changes between now and 2030, the level of frustration, stress, concern, and fear is high. Though your business will undoubtedly undergo changes due to technologies, shifting consumer demands, legal issues, and the negative environment the large labor unions create in the automotive industry, the positive culture and positive employee relations enable adapting and overcoming the changes while giving employee engagement in the automotive industry a boost.
The first step is to develop leaders who understand the importance of consistently developing employee engagement. It's essential not to make any assumptions about who knows what. All your leaders should develop both strong labor relations skills and strong employee engagement skills, and that takes leadership training and development.
Some companies believe they don't need to update their employee engagement strategy. They don't invest in engagement practices because they assume their culture has no issues and employees are satisfied with the workplace, or there is nothing left for management to do to boost employee engagement. One of the best ways to discover if this is true is to ask honest questions via anonymous employee engagement surveys. Questions should ask employees about satisfaction with leadership styles, feelings of inclusion and belonging, and whether they place trust in their managers and supervisors. Conducting a series of surveys can paint an honest picture through data and people analytics.
John Cragg, Executive Vice President for the Penske Automotive Group's East Region, became aware he was delegating instead of empowering. He worked with marketing and HR teams to change the focus to employee empowerment and giving employees opportunities to contribute. The result was a significant increase in employee satisfaction and lower employee turnover.
The automotive industry faces enormous uncertainty, meaning communication is critical to boosting employee engagement. Keeping the lines of communication open delivers two significant benefits. It helps your leaders stay informed about employee needs and concerns and empowers employees.
Mary Barra, CEO of General Motors, addressed what she sees as issues in 2023 for the automaker. One is the future of union leadership, and another is the state of the U.S. economy. She does think she understands the top issues GM and the union will face, saying, "What do people want? They want job security, and they want to be recognized … and appropriately compensated." These three job factors apply across the industry.
In December 2022, GM's first Ultium battery plant in Ohio voted to join the UAW with a vote of 710 to 16. Ultium is a GM joint venture with LG Energy and is one of four US factories that GM plans on building to produce electric vehicle batteries. This demonstrates the likelihood of increased labor union pressure on new plants to unionize in the automotive industry.
The Human Resources function is unique because it's focused on the whole organization.
Innovation in the automotive industry is crucial to future success, and developing and maintaining employee engagement is essential in generating innovation. It also determines employee turnover, employee-management relationships, and preventing unionization. To boost employee engagement, though, means taking a series of meaningful steps because many things affect how people feel about their work and employer. Your organization probably already has implemented some of the suggestions, but there are always ways to increase employee engagement by taking additional steps. It demonstrates that leadership wants to develop a positive culture as the industry transitions.
The experts at IRI Consultants can assist you with identifying where your employee engagement gap exists and the best employee engagement strategy to address it. Increasing employee engagement in the automotive industry is a top priority as the sector anticipates its uncertain future.