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Lessons From Lost Labor Lead to Lucrative Innovations

San Diego-based Veridiam took an alarming hit three years ago when it lost 15 percent of its skilled labor workforce. The flight occurred after the metal components manufacturer acquired four businesses that tripled the firm’s size and revenues, but left employees unsettled.

“Our employees were concerned over the divestiture from a publicly traded company to a private equity group,” said Chris Frank, Veridiam’s vice president of human resources. The buyout of four San Diego-based manufacturers offered new opportunities, but also challenges in replacing the skilled workers who left. 

 Veridiam employs 500 people. It has a 170,000-square-foot plant in El Cajon with 180 workers, a new 65,000-square-foot plant with 170 employees in Oceanside and a 25,000-square-foot plant in Costa Rica with 90 laborers. The firm makes parts, including tubing for surgical robots, for various Fortune 500 clients, including General Electric Co. and Westinghouse Electric Corp.

After an unsuccessful search to find such qualified people as engineers, machinists and steel production operators to perform the technically complicated work their aerospace, health care and nuclear energy clients were demanding, Veridiam decided to implement their own training program.

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 What started as a small pilot program in one department has now evolved into companywide programs.

Training people on the job and giving them incentives for promotion has not only been good for employee morale, but was pivotal in improving Veridiam’s bottom line.

Since the company adopted its on-the-job training program in 2009, company sales have grown by 13 percent, profitability is up 60 percent, and employee turnover has dropped from 15 percent to 2 percent, Frank said.

Room for Advancement

Seventy-two employees have been promoted through the program to date. The program offers built-in career advancement opportunities, which makes people want to stay and work harder to move up the career ladder, Frank said.

More than half of Veridiam’s employees, or 61 percent, started referring others to the firm, up from 40 percent in 2009, Frank said.

 “People now look at our company and realize that the company is investing in them and that it is a good place to work,” Frank said.

The firm didn’t invest a single dollar in starting the program, but a tremendous amount of time.

The firm’s top executives, human resources and operations management, and experts in their areas, made it a priority to meet weekly, develop necessary procedures and then implement them, all of which were key to the program’s success, said Lorie Chapa, Veridiam’s training and development manager.

“The weekly meetings were important to make slow and steady progress,” Chapa said. “If you try to do this in one day, it won’t work.”

In the past, Veridiam trained new hires by connecting them with an experienced co-worker who passed on his or her knowledge.

 “This was only as effective as the employee conducting the training,” Frank said.

More Effective Methods

Human resources and operations management agreed that they needed a new approach where they would put all of their expertise together.

 Having built their own equipment, Veridiam created a step-by-step program and checklist starting with a basic overview of machine operation, safety procedures and learning by watching trainers before operating machines unsupervised, Chapa said.

New hires must pass every part on the checklist.

“The trainer doesn’t sign off until he has evidence that the employee has learned everything he needs to learn,” Frank said. There is no time limit on passing each phase. “Everybody learns at a different pace and we didn’t want to promote people too quickly,” he said.

Some people move up to the next career level in months, others take years to achieve a goal.

 For instance, a typical time frame to move from “drawn product operator” to “drawn product technician I” and “drawn product technician II” to “drawn product specialist” can take up to five years. This model has proven very effective.

“It can provide them with a fairly long career,” Frank said.

Program Catches On

After the first program was implemented in one department, employees in other departments asked when they would be able to acquire skills that would help them advance in the company.

“As more checklists were implemented and exposure to the program increased, the support for the program grew,” Frank said.

Veridiam also created a communication plan to share the importance of the project, key milestones and success stories relating to the checklists, all of which helped increase employee satisfaction.

Frank said the company isn’t hiring at this time.

After hiring a significant number of employees two years ago, Veridiam’s training program is now reaping the benefits. Its workforce has been trained to meet their clients’ needs.

“Our customers wanted to see further compliance and proof of training,” Chapa said. “When we were able to demonstrate that, our clients gave us additional work, because they have more confidence that we train employees on more difficult projects.”

Marion Webb is a freelance writer for the San Diego Business Journal.

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