Uptick in Manufacturing Focuses Attention on Human Capital

The traditional manufacturing view of HR as a tactical, back-office cost center is changing. Talent is being looked at much more strategically — and rightly so. About 70 percent of U.S. Industrial Product companies and over 60% of U.S. Process companies face labor shortages (see more in Boiling Point? The Skills Gap in U.S. Manufacturing). Companies realize that growth depends on having people who can lead the charge, as well as people who have the right skills and motivation to follow that lead. This realization is leading to transformational HR changes aimed at attracting, developing, and retaining talent.

For many manufacturers, that transformation is at a foundational level. It includes fundamentals like building the HR infrastructure and systems to understand what skill sets their people have today and what they will need tomorrow, where those people are located, how they’re deployed, how they’re compensated, and how they’re performing. Many are pursuing cloud-based solutions to lower up-front investment costs and speed deployment of new systems.

Along with transforming infrastructure and systems, our clients are also addressing some of the most important talent trends outlined in our new report, Human Capital Trends in Manufacturing: Challenges and Opportunities. For example:

• Innovating the talent brand is a trend aimed at positioning the company as a desirable place to work in order to attract scarce, high-demand talent, such as STEM (science, technology, engineering, and math) professionals. To this point, one of our clients, an automotive supplier, is redefining itself, moving away from its traditional hardware/metal-based parts and assemblies model to one that is much more information- and software-driven. This has ramifications for the kinds of people the company needs to attract and hire — many of whom would also be attracted to jobs in software or high tech — and how it positions itself as a company and an employer. As a result, refining its talent brand has become a critical component of its business strategy.
• Debunking the superman myth refers to having a cadre of leaders — rather than one “ideal” leadership type — who bring a range of specialties and skill sets to excel in different situations. This trend is evident in a top global diversified manufacturer we’re working with, which has realized that the leaders it needs to meet its longer-term objectives are not the people it has now or has traditionally been hiring. So from a talent perspective, the company has started looking very closely at the capabilities needed for its leaders of the future and is revising many of its internal processes and programs to be able to grow those leaders.
• Thinking like an economist is a trend toward considering talent from a more analytical point of view, asking “How do we allocate this scarce resource to ensure we have the workforce needed for current and future needs?” We see this played out in a number of ways for our clients. For example, those looking to expand into Asian growth markets are finding they have very different talent challenges there compared to their U.S. business. They are asking questions such as “How do we recruit people in China? How do we retain people? What types of reward and incentive systems do people in other cultures value?” They are finding they have to adapt their talent strategies very specifically to local markets and cultures and consider a range of economic and socioeconomic data about those regions in crafting those strategies.

These are just a few examples of the kinds of fundamental rethinking about human capital we’re seeing throughout manufacturing. We hope you’ll spend a few minutes with the new report and explore how recent human capital trends might help your organization overcome workforce challenges, build the talent to take advantage of the uptick, and grow your business.