Why the EMS Industry Rated a “C” for Its HR Practices

2013-07-17 09:09:00

On May 29, 2013 Charlie Barnhart & Associates, LLC (CBA) released its first ever report focused exclusively on Human Resource (HR) practices in the electronics manufacturing services (EMS) industry.  Since its publication CBA has received numerous inquiries from EMS, and some OEMs, regarding the report and its contents.  We therefore thought it would be helpful to share the answers we are providing to the most common inquiries.

Why did you do this report?

  • We realize that doing a report that is not sector or technology based is a rarity in this industry and may be considered off-beat, but we believe it is one of, if not the most critical challenges facing the industry today.
  • Every EMS claims in some manner that they value their employees and that their people are their biggest asset, but our observations of EMS companies tends to contradict this assertion.  We therefore decided to look closely at the “human element” within the industry.
  • The days of blatant exploitation if not criminal conduct towards employees is hopefully past, but that is not to say that the industry is excelling in its HR practices.  In fact, many challenges exist, based primarily on ignorance or lack of attention.
  • We do believe that people are a company’s most important asset.  They win business, operate and maintain equipment, serve customers, and perform all the tasks necessary to run the business.  They must be effectively managed and cultivated for the benefit of the company.  This has to be a considered process.

Why did you choose the issues you did in this report?

  • The topics we discuss in the report are precisely the issues that senior management teams should be monitoring to assess how their company is performing in managing their employees.  These are standard issues in the HR industry supported by an impressive amount of research, analysis, and discussion.
  • We also designed this study not to replicate the issues covered in the IPC’s annual Wage and Salary survey.

Why is this an important issue now?

  • The trends we have been reporting on for past few years (i.e., regionalization, insourcing, increasing capacity utilization, etc.) are all coming to fruition and could put a strain on the EMS industry beyond what it is already experiencing.
  • The aging of the industry workforce combined with the low margins demanded by OEMs could make recruiting and retaining qualified workers a challenge.

Why is HR important to EMS?

  • Because ultimately people are your business.
  • If you cannot recruit, engage, and retain quality employees your business will suffer higher HR related costs.
  • In a low margin business such as EMS these higher HR costs are controllable and avoidable by effectively addressing the issues we present.

Why should senior managers at EMS companies pay attention to these issues?

  • Many EMS managers think that it’s their company’s plants, property, and equipment (PP&E) that differentiates them in the industry.   I would remind these managers that this is a service industry and your people are your most important asset.  After all, the “S” in EMS does stand for Service and to excel at that requires good people.
  • Recruiting, engaging, and retaining good employees is the ultimate key to your success.
  • Depending on company size, there are few dedicated HR professionals working in EMS companies, and the industry is rife with horror stories about some of these people.  Generally speaking, a company does not add a dedicated HR professional until the employee base reaches 100.  The HR functions in these companies are usually covered by the Chief Financial Officer (CFO) and/or line managers.  As a result HR disciplines are usually not well developed and respected within the company.   This puts the company at risk, legally, financially, and operationally.

Why did you give the industry a grade of C in your report?

  • The industry essentially gave itself this grade through the reported satisfaction levels of its employees.
  • However, our experience from both working in and with EMS companies also influenced this grade.
  • A “C” is actually a decent first grade for the industry.  It means you are not exactly failing, but you certainly have room for improvement.

Why do the results of this report matter?

  • Because they indicate areas that we judge as problematic yet fixable for EMS companies.  For example, turnover rate is an important metric that can expose underlying problems within your organization, but it appears to be one that is not being fully comprehended and utilized by the industry.
  • Effective HR practices will not just naturally occur in an organization.  This has to be a considered process if you wish to retain a competitive workforce in this highly competitive industry.

Why should an EMS company buy this report?

  • Because it presents benchmarks for comparison as well as suggestions for improvement.
  • It identifies the issues to include in a dashboard to continually monitor the effectiveness of HR within your enterprise.

If you wish to learn more about the report Assessing the Human Element in the EMS Industry, or to order a copy, please contact Eric Miscoll at eric@charliebarnhart.com.


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