In July 2014, with the support of the Chicagoland Workforce Funder Alliance, the Illinois Manufacturing Excellence Center (IMEC) launched the Genesis initiative to improve both business success and job quality at small and medium-sized manufacturing firms in the Chicago region.
The premise of Genesis is that workforce practices are central to a firm’s operations, productivity and competitiveness. But for IMEC, the Genesis initiative represented a major departure from traditional approaches to manufacturing extension services (MEP). Typically, MEP focuses on short-term projects to promote efficiency and productivity improvement by operationalizing lean manufacturing principles—which generally seek to reduce waste and eliminate bottlenecks or unevenness in the production process.
Through Genesis, IMEC adopted a transformational approach that integrates process improvements with “people” strategies to improve workforce engagement, productivity and stability as well as “product” strategies to keep up with changing market demands.
This integrated “people-process-product” tactic was also a departure in terms of the time frame of firm engagement, with IMEC working with firms over longer periods than it had previously. This approach allowed IMEC not only to help a business solve a near-term problem but also to build and implement a long-term strategy to sustain success.
A new four-year evaluation report of the Genesis initiative, co-authored by CURS Interim Director Nichola Lowe, found that these workforce-focused extension services yielded benefits for both manufacturing workers and their employers. The report was co-authored with Ranita Jain and Maureen Conway from the Aspen Institute Economic Opportunities Program and Greg Schrock from Portland State University.
According to Lowe, professor of city and regional planning at UNC-Chapel Hill, “U.S. manufacturers are desperate for solutions to address staffing shortages and retain workforce talent. IMEC’s Genesis program shows that changes at the workplace can help more manufacturers become employers of choice and in ways that magnify business and industry success more broadly.” She also notes that “manufacturing extension is a great platform for promoting worker-supporting organizational change, with publicly-funded MEP centers located in every U.S. state serving close to 30,000 manufacturing firms each year.”
Overall, the report found that IMEC’s strategic work with the 22 Genesis companies yielded benefits for both workers and businesses.
Benefits for workers came in the form of improved job stability and security, safer operating procedures, clearer job descriptions and advancement pathways, and improved wages and benefits. Companies realized benefits in production efficiencies, cost savings from reduced injuries, improved adherence to customer quality standards, improved sales retention, and increased profitability and growth.
Genesis companies (the 22 firms that participated in the initiative) experienced notable sales growth, sales retention, cost savings and job retention in comparison with other Chicago-area small and medium-sized manufacturers that IMEC worked with during the same time period. Twelve of the 22 companies logged more than 150 project hours in Genesis. These companies, referred to as most actively participating companies, reported the largest gains.
Highlights of findings include:
- Fifty-five percent of all Genesis companies reported increases in sales, compared to 37 percent of non-Genesis companies that worked with IMEC.
- Seventy-one percent of all Genesis companies reported cost savings, compared to 47 percent of non-Genesis companies that worked with IMEC.
- For the 12 most actively participating Genesis companies, median annual cost savings was $92,500, compared with a median annual cost savings of $50,000 by IMEC’s non-Genesis companies.
- Sixty-five percent of all Genesis companies and 74 percent of the 12 most actively participating companies attributed job retention success to their work with Genesis, compared to 42 percent of non-Genesis companies served by IMEC during that same period.
Analysis of wage data for Genesis companies provided evidence that earnings, job stability and job security improved for front-line production workers as companies became more stable, secure and profitable. Highlights of findings about worker outcomes for Genesis and non-Genesis manufacturing firms include:
- Average annual earnings for workers at all Genesis companies increased by 12 percent in real, inflation-adjusted terms from 2014 to 2017.
- Genesis companies made progress closing the gap between their average wages and industry wage benchmarks, increasing from 78 percent of industry average in 2014 to 84 percent in 2017.
- Among Genesis companies’ front-line workers who earned less than $50,000 annually, average year-over-year increases in earnings nearly doubled (5.4 percent increase 2014 to 2015; 9.9 percent increase 2016 to 2017).
- Average worker turnover rates among all Genesis companies declined from 5.5 percent in 2015 to 4.3 percent in 2017. Among the most actively participating companies, turnover declined even more — from 5.8 percent in 2015 to 3.3 percent in 2017.
- Genesis companies’ turnover declined substantially relative to industry benchmarks. Between 2014 and 2017, among all Genesis companies average turnover declined from 118 percent of the industry benchmark to 93 percent. For the 12 most actively participating Genesis companies, average turnover declined from 128 percent of the industry benchmark in 2014 to 76 percent in 2017.
“We’ve long held the view that good jobs are good business, and this report shows how businesses and workers can succeed together,” said Conway, vice president for policy programs at the Aspen Institute and executive director of the Economic Opportunities Program. “When workers have opportunities to grow and be heard, businesses can be more productive, more efficient, safer and ultimately more profitable.”