Scientific Management Techniques

The Financial Impact of the Skills Shortage

Here’s how “Fictional Company,” based on the median respondent to a survey of U.S. manufacturers, is risking annual earnings as a result of a skills shortage.

  • 8 to 10 percent of skilled and highly skilled roles are unfilled.
  • Left unfilled, the “Fictional Company” sees negative impacts in key areas, including increased downtime, cycle time and overtime costs.
  • For the example company with 2,000 employees and $500 million in annual revenue, increased downtime would cost $360,000 and increased cycle time would result in a loss of $3.24 million — a total of $3.6 million in unrealized earnings annually results.
  • Increase in overtime costs by $1 million annually.
  • Due mostly to increased cycle time, the “Fictional Company” would have 9 percent less-effective capacity to produce product.
  • When overall equipment effectiveness reduction is added to increased overtime cost, the “Fictional Company” is putting more than 11 percent of annual earnings or $4.6 million annually at risk. That is more than $3,000 per manufacturing, non-management employee.

Closing the Skills Gap

Scientific Management Techniques (SMT) is the global leader in “Hands-On Competency Based” Industrial Skills Assessment Programs and Skill Training Programs. Global Fortune 500 Manufacturing organizations rely on SMT’s programs to drive performance and profitability by significantly increasing the skill level of their workforce. Effectively solving the acute and growing manufacturing skills shortage.

Its programs are unique, validated, proven highly effective in 46 countries and deliver a return on investment in excess of 100 percent the first month of implementation. SMT’s role in closing the skills gap is twofold: evaluation and education.

Manufacturing Skill Assessments

SMT’s Hands-On Competency-Based Assessment Machines identify and measure the skills required to operate, maintain and troubleshoot a modern manufacturing facility. Program users know the Skill Level/Skill Set and Aptitude for learning of all applicants prior to hire.

The Assessment Program dramatically lowers the Risk and Cost of hiring. With the process there is no more “leap of faith” that an individual possess the skills represented in the interview process.

In addition to identifying and measuring pre-existing skills the program is used to identify “Mechanical Aptitude” for entry level staff. SMT has decades of data confirming that individuals possessing mechanical aptitude are significantly more “trainable” than individuals without aptitude.

For the incumbent workforce, SMT’s clients use the assessment program to identify individuals for advancement and measure skill gaps.

Today, SMT offers skills-assessment programs in five different areas: mechanical, electrical, PLC, CNC and process control. Each assessment machine can be set up to test variable levels of pre-existing skills.