"Out in the West Texas town of El Paso, I fell in love with a Mexican girl..."
In the mid 2000's I acquired an El Paso, TX based trucking operation and spent much of my time early on visiting and getting to know my new customers across the border in Juarez, Mexico. Juarez is fascinating, hustling, bustling border city, full of all of the good and bad elements that come with the US-Mexico border. One evening over dinner and drinks at Maria Chuchena's with a customer(highly recommended, and don't worry about the the chalk body outlines on the sidewalk, the drug cartels only aim at rivals, are relatively good shots, and otherwise employ generally nice people). Jorge was the GM of a Maquiladora in Juarez, he was discussing hiring and retention issues in his plant with factory workers. For those unfamiliar with the term, Maquiladora is a generic reference for a manufacturing plant in Mexico, owned by a foreign(non-Mexican) corporation.
"Jorge" as we'll call him, was explaining his struggle with hiring and retaining factory workers. There are literally hundreds of large manufacturing plants in Juarez and the competition for workers has become fierce over the years. Originally chosen as a excellent location for bountiful, low cost labor, the plants were constantly battling the same issues with retention that face trucking companies today.
Jorge described his plants initial approach to the problem, which was simple, made sense and all the executives were on board with the idea. Pay them more than anyone else. A lot more. Not double, not triple, but quadruple, Yes. 4 times what the other factories were paying. This was based on formula on the cost of idle plant time and how soon they could be running at full production, etc. This will stop the turnover. This will cut our hiring costs and we can increase much needed production. Why wouldn't this solve the problem? Surely the local labor force would be knocking the door down and lined up to work at the factory. I agreed, and was impressed with this bold plan, it sounded like an excellent idea. I was on the edge of my seat as I ordered another round for us as Jorge continued his story...
So it was announced on a Friday afternoon. The word spread quickly and echoed across the rolling hills of Chihuahua and they came...And did they ever, not by the hundreds, but, by the thousands, to work at his plant. When Jorge was driving into work early on Monday morning, he saw the streets lined with people. His first thoughts were of the late, great Senor Villa and his revolution, and that the good people of Mexico had risen once again to claim their country and his plant...
Jorge's saga continues on Friday with HR Policy recommendations from Cortes and Montezuma... Subscribe by email so you don't miss and please feel free to share this post.
Good Morning and Welcome.
"Out in the West Texas town of El Paso, I fell in love with a Mexican girl..." Continued from yesterday. We have a lot to cover on this topic, so posts will continue daily throughout the week...
So the new higher pay rates were a huge a success, the next few weeks were chaotic with training, but the plant was back at full production. There was a lot of back slapping and hand shaking as the executives were very happy. This higher cost of labor was fairly easy to absorb in the cost of the product, (when a production line sits idle because of lack of labor, as we all know, it's not good for anyone) and more importantly they were able to meet customer demand.
All was well for a few months. Jorge and his European superiors were pleased with the results. Although initially not pleased with the pay raises, the cost of turnover, the training costs, the lost production time that were eliminated with the new pay program, more than made up for the additional cost. They had invested millions upon millions in this strategic facility, and having expensive manufacturing equipment and real estate sitting idle was unthinkable.
A lot of the other maquiladora's followed suit, as competitors often do, raising pay and having different levels of success, but success, nonetheless. Although not competitors in the conventional sense of the word, the mequilla's were competing for labor, which is a whole different ballgame. And a dicey ballgame at that. It does not follow conventional wisdom, it is not an issue you can throw money at, it requires a new approach.
Then - slowly but surely and almost predictably, the new employees started to leave one by one... Where and Why? I think you will be surprised.
The saga continues on Thursday with HR Policy recommendations from Cortes and Montezuma... Subscribe by email so you don't miss and please feel free to share this post.
Good Morning and Welcome.
Thought of the Day - When one of your drivers comes to you stating he is leaving for more money, you give him a raise in an effort to keep him, how long does he typically stay?
"Out in the West Texas town of El Paso..." Continued from Wednesday. We have a lot to cover on this topic...
Jorge and his European superiors are enjoying the fruits of the new employee pay increase, production is running at almost 100%, customer demand is being met. Then slowly after a few months one employee after another leaves. This was not a huge issue at first, as there is still plenty of new employees coming in the front door, as the trained employees exit out the back door.
The trend continued and within six months they were right back to where they started. 147% annual turnover,
the plant was running at 67% capacity. To add insult to injury, most of the maquiladora's in Juarez had raised pay levels, following Jorge's lead. Juarez, due to it's isolation and dependence on the mequilla's, the city tends to operate in a vacuum. So the once steady of stream of new employee applicants had slowed to a trickle. What to do, what to do?
Let's summarize, shall we? Our friend Jorge has increased factory pay levels from an average of $1.05 an hour to $3.75 per hour,
had a short lived success with retention and recruiting, and was now right back to where he started. High turnover and low production due to shortage of factory workers. Now his current roster of factory workers were all at the higher pay level. Sound frustrating and all to familiar?
Jorge's tale of struggle and redemption, along with a thorough plan for your company can be found in our new publication - Also this is posted on our new Discussion Group on LinkedIN - "90 Days to 75% Retention" Please Join us for further discussion...
Welcome to a Powerful and Productive Method for Driver Retention.
Don't accept the Status Quo and become complacent with retention. Embrace Change.
Presenting a step by step plan of attack on the core of every retention issue or potential retention issues within your organization. "90 Days to 75% Retention" effectively shows how to identify the weak areas and how to fix them in a measurable process.
There is a science and formula to successful retention. There is a solution.
Don't accept the Status Quo and become complacent with retention. Embrace Change.
Presenting a step by step plan of attack on the core of every retention issue or potential retention issues within your organization. "90 Days to 75% Retention" effectively shows how to identify the weak areas and how to fix them in a measurable process.
There is a science and formula to successful retention. There is a solution.
There is a solution...
"90 Days to 75% Retention" A Real Plan for Driver and Owner Operator Retention
"90 Days to 75% Retention" A Real Plan for Driver and Owner Operator Retention
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