Zero Zone, Inc., long-time Engauge client and one of the leading commercial refrigeration companies in the United States, faced several critical labor challenges in 2021. Namely, how to attract new Associates and retain critical internal talent in a scorching hot job market, how to compete for talent when their facility was located 30 minutes outside Milwaukee, and how to keep up with labor needs and address inflationary wages while maintaining their overall financial goals.
Engauge and its parent company, 6th Avenue Group, were able to help Zero Zone traverse these challenges and build a labor and compensation strategy that effectively attracted and retained talent, reinforced their positive company culture, and fit within their bottom-line objectives.
Workforce Strength and Compensation Analysis
Working directly with 6th Avenue Group, Engauge’s parent company who provides workforce consulting on strategic and operational challenges faced by today’s manufacturers, Zero Zone embarked on an analysis of their workforce and compensation structures and processes. This assessment culminated in a transformation of their pay structure and compensation approach for shop floor labor.
In reviewing their existing employee compensation, Zero Zone quickly zeroed in (pun intended!) on the fact that the main driver of increased compensation was time on the job. This resulted in a few critical challenges.
First of all, it locked up a significant portion of compensation within a small group of highly tenured employees, despite the fact a skills assessment confirmed these employees were not consistently delivering the highest value to the organization. It also left little budget to attract and retain younger talent necessary to support the organization into the future as baby boomers begin to retire.
Secondly, it created a vicious cycle in which one of the only ways an employee could get a raise (outside of simply being there for an extended period of time) was to threaten to quit. When this happened, Zero Zone would either have to let productive and trained talent walk out the door or agree to the compensation increase. And when other employees saw coworkers getting raises after giving their 2 weeks’ notice, it reinforced that this was an effective method until before long, every other day employees were giving notice demanding raises.
Breaking the cycle
In its new approach to compensation, Zero Zone shifted from “pay for tenure” to “pay for contribution.” They did this by building a transparent compensation system that rewarded employees based on skills rather than time on the job. They also created a roadmap that allowed employees to see and understand the skills necessary to achieve different pay levels. This was a critical retention tool as it empowered employees, putting them in the driver’s seat to control their compensation and to work meaningfully toward their professional goals.
This approach also helped Zero Zone make pay adjustments that fit within their overall budget as it tied compensation directly to value delivered to the organization and reduced the link between tenure and compensation, which had inflated labor costs without adding to overall organizational capabilities.
Zero Zone has always been known for its family-oriented culture, strong employee benefits, and promoting from within. With their new compensation approach, their pay structure reinforces all of these intangible benefits to create a highly attractive employer that can compete successfully in today’s job market without over-inflating overall labor costs.