Compensation in the Manufacturing Industry
In the coming years, the manufacturing industry will be put to the test as it will need to continually adapt to an ever-changing environment, while also keeping up with integrating technology into everyday operations. The shortage for skilled talent remains one of the manufacturing industry’s top challenges. Therefore, a compensation plan that provides a competitive edge is crucial to attracting the top performers necessary to the success of any manufacturing business. That’s where NFP Compensation Consulting (NFPCC) comes in. Although we’re considered strategic compensation experts across many industries, we’ve emerged as leaders in the manufacturing space. Our team of experts understands the challenges and keeps abreast of trends affecting the industry to provide strategic plans that produce results.
NFPCC is here to assist clients through the changing environment in the manufacturing industry with compensation programs that will not only align the labor force to the goals of the company, but to shareholder performance as well. While recognizing that a client’s identity is not indistinguishable to any other, and each have their own unique thumbprint on the industry, it is our goal to ensure we understand a client’s competitive profile and how we can best support the achievement of long-term value creation.
In addition to NFPCC’s work with some of the nation’s most prominent companies, our team is also experienced with small and startup companies, many of which are backed by private equity groups. Below are some of the manufacturing clients NFPCC has worked with.
Diverse Service Suite for Manufacturing Companies
- Compensation Philosophy Development
- Peer Group Development
- Executive Compensation Analysis
- Annual and Long-Term Incentive Plan Design
- Board of Director Compensation Analysis and Structure
- All Employee Compensation Analysis and Salary Grade Development
- Severance Benefit Design
- Employment Agreement Design
- Compensation Risk Assessment
- Change in Control and Employment Agreement Plans
- Merger and Acquisition HR Integration
- Investor Relations, Shareholder Engagement Strategy
- Succession Planning Design
- Retirement Compensation Design
- Compensation Discussion & Analysis Drafting and Review
Manufacturing Industry Case Study
In reaction to the COVID-19 impact on compensation programs, namely annual and long-term incentives, NFPCC worked with a public building materials company to alter the annual incentive plan. This alteration resulted in the utilization of a quarterly performance goal-setting process and payouts. The results were a more manageable bonus program that allowed for more realistic projections and will reduce the need to make major discretionary adjustments at the end of the annual period.
The Compensation Committee released a supplemental proxy detailing the revised program and received positive feedback from key investors.
Strategic Compensation in the Manufacturing Industry
Compensation structures are dramatically evolving and therefore require greater strategic thought to stay in front of the market. NFPCC stays up-to-date on the latest trends affecting the industry to keep our clients informed and strategically positioned to succeed. The manufacturing industry outlook for the next three years is highly optimistic, but have you considered what this means for compensation? Below are a few facts and figures demonstrating current trends.
- The manufacturing industry saw a wage growth of 5.3% in 2022 as part of its efforts to stay competitive in tight labor conditions.
- Attraction and retention of top-level talent is a high concern following the Great Resignation.
- Skills gap concerns due to the retirement of older workers have placed more emphasis on upskilling strategies and enhanced training programs for a stronger workforce and improved business operations.
- Following the disruption Covid 19 brought to supply chain management and logistics, more companies are moving to cloud-based ERP (enterprise resource planning) systems.