A people-centered approach to improving job quality in Chicago

Summary

In looking toward recovering from the COVID-19 economic crisis, regional economic development leaders can help enable a more inclusive recovery by helping their small businesses: 1) adapt to the COVID-19 disruption through greater resilience and productivity, and 2) shift operating models in ways that value workers and position them for success in high-quality jobs. Considering that small businesses make up nearly half of U.S. private sector employment, their livelihood is key to both the local and national economies, but centering their workers in their recovery and resilience strategies is not conventional in economic development practices. However, talent-driven economic development proves that economies can thrive when they develop and deploy their people in ways that maximize productive potential. Because most small business leaders have not incorporated this approach into their growth strategies, industry-specific advancement interventions that upgrade the capabilities of business management to properly prioritize their workers are critical to taking on these challenges.

Within the manufacturing industry, Genesis has been an example of what this kind of intervention can look like. Genesis is an initiative started in 2014 by the Illinois Manufacturing Excellence Center (IMEC), in which IMEC works as a third-party consultant for small- and medium-sized manufacturing firms in the Chicago region to improve their business success and job quality. The Genesis mantra is “People-Process-Product”—their approach integrates “process” improvements (e.g., more efficient work flows) with “people” strategies (e.g., workforce engagement, productivity, and stability) and with “product” strategies (e.g., cost reduction, quality improvement, technology adoption). With this approach, Genesis demonstrates how workers—and workforce practices that empower them—are central to a firm’s operations, productivity, and competitiveness.

Execution

In 2010, the national Manufacturing Extension Partnership (MEP) leadership called for local affiliates to follow a Next Generation Strategy, which involved broadening services from lean manufacturing to include talent development, among other services. In 2014, IMEC—the Illinois MEP affiliate—designed the Genesis initiative as a response, with the support of the Chicagoland Workforce Funder Alliance (CWFA). Genesis was inspired by the Hitachi Foundation’s Pioneer Employer case studies, which found that employers were able to create a sustainable competitive advantages when they paired product and process improvements with complementary investments in people, either in the form of compensation, training, or employee engagement.

Before Genesis, IMEC’s business consulting services offered traditional, off-the-shelf, project-specific interventions that focused on process and product optimization. In recognizing the importance of also addressing the “people” factor in their approach, IMEC took the time to build out their own ability to help manufacturers improve their HR practices and business leadership capabilities. This required staff development changes on the part of IMEC to help them expand their services. CWFA funding allowed IMEC to experiment with new service delivery approaches and bring on new staff, including an HR generalist and regional managers who had previously held executive-level positions at manufacturing firms and had expertise in financial management, leadership development, and sales and marketing.

The HR generalist was particularly important in bringing in the idea of an employee engagement survey that used the voices of frontline workers to inform the strategic planning process. The generalist was also important in developing IMEC’s printed HR service kit to help client firms learn about their offerings. To expand IMEC’s HR capabilities, this generalist documented participating firms’ HR management practices, worked with them on improving their job descriptions, helped them to develop employee handbooks, and reviewed their policies for PTO and benefits. IMEC also hired two regional managers who tested approaches for engaging Genesis firms and identified firms that were right for Genesis. As time went on, they helped to train and mentor other regional managers to teach them the Genesis approach. IMEC eventually also hired new regional managers who replaced staff who left the organization between 2014 and 2017; these new hires purposely had broader business experience to contribute to IMEC’s expanded approach (e.g., sales and marketing, profit and loss).

Between April 2015 and April 2019, the Aspen Institute’s Workforce Strategies Initiative conducted a four-year evaluation of IMEC’s implementation of Genesis in collaboration with urban and regional planning professors Nichola Lowe at the University of North Carolina at Chapel Hill and Greg Schrock at Portland State University. While Genesis has now become IMEC’s standard operating model, the evaluation captured the early years of how Genesis was executed as its own separate initiative. The description of Genesis provided here highlights the Aspen Institute’s findings between 2015 and 2019.

In the evaluation, IMEC recruited 32 companies to be involved in Genesis, and of that group, 22 ultimately participated in strategic planning and some related implementation work. Twelve companies engaged in a sustained and intensive way throughout the course of the project. Participating companies were small, manufacturing-oriented, and located in Northeastern Illinois. From a survey of 15 of the 22 Genesis companies, their median permanent employment was 35 employees, and their median annual sales level was $4.5 million. In addition, many of the firms involved in the initiative initially lacked HR capacity. As a result, the Genesis firms tended to lack consistent workforce training programs and safety protocols.

Over a period of 24 months, IMEC was a consultant for these firms, utilizing the Genesis approach. To inform the strategic planning and customized services provided to each firm, IMEC began the process with an employee engagement survey and focus group protocol that captured the perspectives of frontline production workers on the work environment. Because every firm has different needs, the results of the survey and focus groups laid the foundation in designing IMEC’s plan for each firm by revealing the strengths and weaknesses. From there, IMEC worked with each firm to improve their people-, process-, and product-related operations respectively.

In the COVID-19 era, IMEC knows the importance of centering worker voices and is now implementing an engagement pulse survey to help firms collect qualitative and quantitative data on what employees are going through and their thoughts on returning to work. They recommend that firms survey their employees to capture employee insights to inform major leadership decisions. They learned from Genesis that engaging employees in a way that shows that their voice is valued improves productivity levels, customer service, profitability, and a safer work environment.

Cost and timeframe

Genesis initially was funded by a three-year planning grant from the Chicagoland Workforce Funder Alliance. In 2016, IMEC was awared a $4 million America’s Promise grant from the Department of Labor, in part to continue this work. In 2018, IMEC received $100,000 from the Prudential Foundation to work with five manufacturers on Chicago’s west side. Companies pay for services as they do with MEP assistance generally.

Key components and features 

Genesis focuses on improving firm operations by helping to implement solutions in three categories:

• People
  • Conducting employee engagement surveys
  • Investing in training for frontline staff
  • Investing in training for frontline supervisors
  • Developing and communicating internal career pathways
  • Reviewing compensation practices (e.g., salaries and performance bonuses) and benefits by position and tenure
  • Developing job descriptions
• Process
  • Implementing quality assurance and review procedures
  • Organizing workspace to facilitate more efficient production workflow
  • Conducting production job tracking to determine ways to lower production costs
  • Identifying bottlenecks to the production process and problem-solving to develop potential solutions
• Product:
  • Working on new product development
  • Developing marketing plans
  • Improving pricing, cost estimating, and bidding strategies
  • Working on ways to increase profitability

Successes

According to the Aspen Institute’s evaluation, both firms and workers benefited immensely. For companies, the benefits included production efficiencies, improved adherence to quality standards, improved customer retention, and increased profitability and growth. Genesis companies reported a 55% increase in sales over the course of the program, compared to 37% among IMEC clients that did not participate in Genesis. Median annual sales increased by more than $250,000 among the 12 most engaged Genesis companies. As a result, 65% of Genesis companies reported retaining jobs, versus 42% of non-Genesis IMEC clients. Significant benefits accrued to workers as well. Workers saw improved job stability and security, safer operating procedures, clearer job descriptions and advancement pathways, and, in some cases, improved wages and benefits. Annual earnings at Genesis companies increased by 12%, pushing those companies’ average wages from 78% to 84% of industry average. The share of workers making less than $30,000 fell from 34% to 26%. Turnover among the most actively involved companies fell from 5.8% to 3.3%.

One of the biggest successes of Genesis was becoming IMEC’s standard operating model. IMEC’s board of directors approved and adopted the people-process-product approach, and it is now embedded within IMEC’s strategic plan. This step represents a major departure from traditional approaches to manufacturing extension services, which typically take on short-term projects and provide guidance on efficiency and productivity improvement. By expanding the time frame of firm engagement from six months to 24 months (much longer than the typical process), IMEC could address near-term problems while also working with firms to build and implement a long-term strategy to sustain success. IMEC also added new people with new skillsets to their full-time staff to expand their service offerings so that clients could get insights on improving their HR and business leadership capabilities. Most importantly, Genesis made the engagement of frontline production workers a critical component of IMEC’s strategy to help firms achieve business success, and the result improved the quality of jobs for these workers. This is an important goal to strive for, especially during the COVID-19 moment, when manufacturing jobs pose new health and safety risks. The Genesis approach is also a strong model for helping firms see a profit increase even during a global economic crisis by centering frontline workers instead of trading them out for machines.

Considerations 

In forming the initiative, IMEC demonstrated that any MEP interested in becoming more people-centered must have leadership that is open to embracing a new way of conducting business, which required a great deal of flexibility. IMEC was willing to work closely with CWFA to develop a deep understanding of the workforce issues that affect business success in order to phase in a modified approach.

In working with clients, IMEC found that it was challenging for some Genesis companies to dedicate the time for leadership, management, and frontline workers to engage in the planning process while still keeping production moving and the business running. However, the initial level of engagement of firms indicated to IMEC whether or not they would be willing to commit to the holistic 24-month process in its entirety.

Additionally, IMEC found in their employee engagement survey, which brought the voices of frontline workers to the forefront of their strategic planning, that the job quality in several of the participating companies was dismal. It revealed that employees were discontent with wages, benefits, and working conditions, including safety conditions and the allocation of work. In many cases, these EES results were surprising to firm owners and management, but when they took action and made changes based on the results, they were able to build trust with their workers by showing them that they were listening.

During COVID-19, IMEC administered an engagement pulse survey for firms to better understand the needs of their employees as they prepare to return to work. From the survey, they found three common themes that workers wanted their management to prioritize: 1) improving communication, 2) creating and/or maintaining an atmosphere of trust, and 3) providing meaningful recognition. Similar to what happens when IMEC commences their consulting services with an employee engagement survey, these results will inform the management decisions of firms as they plan next steps.

Sources

• Opportunity Insights: Economic Tracker
• The Aspen Instituite: Genesis at Work: Evaluating the Effects of Manufacturing Extension on Business Success and Job Quality
• Chicagoland Workforce Funders Alliance: The Genesis Movement
• Federal Reserve: Monetary Policy Report: June 2020
• Brookings: Talent Driven Economic Development: A new vision and agenda for regional and state economies
• IMEC blog: Listening to your employees: Employee Engagement Survey During a Crisis
• IMEC blog: Common themes from employee engagement pulse surveys to guide leaders as employees return to work

Do you have a similar solution in your area? Is there another problem that you’re tackling in an innovative way that you’d like to share with a wider audience? Contact us at [email protected].