Where Manufacturing Matters

Managing Unpredictable Costs in an Unpredictable Market

Posted by Rick Dawson on Apr 15, 2016 2:24:03 PM

Last week, business owners and HR professionals heard Kim Harris and Nick Stepanovich of ADP speak about being prepared to deal with unpredictable costs associated with running a manufacturing company.  While any business has expected costs, one of the most seldom thought about—and where a lot of the unpredictability comes in—is your human capital.  So, what are some of the unpredictable costs?  Turnover, Benefits Programs, Compensation, Employee Absence, Compliance, Technology, Risk/Safety, Retirement Savings and Millennials are all things today’s manufacturer faces on a daily basis—and these costs can quickly eat up your P&L.  Kim and Nick shared some interesting facts with the group as well:

  • 70% of companies expect to increase their budget for employee benefits
  • By 2020…50% of all employees in the US will be Millennials
  • A bad hire costs a company 5 TIMES their salary

Turnover, benefits, compensation, culture and engagement play a huge role in revenue, the cost of goods, operating expense and non-operating expense.  Decreased sales and decreased customer satisfaction directly affect revenue.  Increased error rate, increased shrinkage and decreased productivity due to an unhappy, untrained or disengaged workforce directly affect the cost of goods.  Unpredictable costs will lead to increased administrative work which affects operating expense while fines, lawsuits and employee-related claims all affect your company’s non-operating expense.

It is clear that a human capital strategy is critical to business success today.  Understanding that there are significant changes in how today’s business looks (or should look) and companies who refuse to change are the ones who will be left in the dust. While there are sociopolitical/socioeconomic forces out there beyond our control, making necessary changes in your infrastructure needed to respond through technology is important. Since we already know millennials will take up 50% of the workforce, businesses have to understand their values, how they work and what their expectations are in order to keep up in the business of today.


Building out your strategic HR roadmap, evaluating your administrative tasks and thinking through how you can mitigate uncontrollable costs and shift liability are calls to action all businesses should take in order to keep up.  Using tools such as technology to automate processes and to give you data analytics are important.  Having insight to know what legislative changes mean to your business, being able to capture and interpret your data and having the ability to understand your data can guide your business decisions.  ADP suggests having strong strategies in place for talent, benefits and 401K to help mitigate these costs and to keep today’s manufacturers ahead of the competition.

Topics: Seminar Series, ADP, Human Resources, 10,000 Small Businesses, Human Capital

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