Talent challenges in US manufacturing amplified in global chemical industry

Shoring up your organizational governance and awareness

Posted by Duane Dickson and Marcus Johnson on October 28, 2015.

As discussed previously in HR Times, the US manufacturing industry faces significant talent challenges that threaten its future (see If you build it, will they come?, Uptick in manufacturing focuses attention on human capital, and Beating the skills shortage). The global chemical industry shares many of these same challenges, in particular: (1) impending retirement of older employees. (2) skills shortages among the generation that will replace retirees, and (3) the general unpopularity of the industry as an employer of choice. These talent challenges are amplified by intense changes in the industry itself, ranging from constrained margins and increasing cyclicality to activist investors and a dramatic decline in new product introductions. From our observations and experience with clients, many in the industry recognize that problems exist, but either aren’t acting with a sense of urgency or are paralyzed by the sheer magnitude of the challenge to take action to address it.

As we explore in our new publication The talent imperative in the global chemical industry, addressing these challenges will not be an easy task for executives. It could mean a dramatic shift in thinking, including moving away from traditional business and talent models that have been in place for decades. New business models are emerging to help reshape the industry, and each carries with it different implications for the type of organizational structure and talent needed to support it.

What we’re seeing
In some cases, we have heard executives say they would address these challenges when it became “necessary,” say in 7 to 10 years. But building the talent management capabilities required to address it is hard and takes time–it is not something that can be achieved with a quick fix. Quite simply, chemical companies should take action now.

Some that want to act are daunted by the scale and scope of the effort and are hanging back, unsure how to get started or what tangible steps they can take. Others are operating “business as usual,” even when they have the capability to act. For example, succession management programs are crucial in light of the breadth of the retirement cliff. But while many companies have good programs for their senior executives, in our point of view these programs should be expanded further down into the organization (i.e., into at least upper middle management). However, for whatever reason, understanding that succession is a problem and recognizing that current programs should be expanded has not prompted action.

One of the sticking points may be uncertainty in companies about who should be leading the charge—the business or HR? In our observation, neither has the capacity or capability to take on these challenges alone, nor should they. Collaboration is essential here.

What to do
Chemical companies should start now to proactively tackle the most pressing organizational and talent issues, rather than reacting to them later when it may be too late. Some key steps for industry leaders:

  • Building collaboration with HR: To arrive at a new state of talent management, business-side executives will need to collaborate with and receive proactive support from HR. In turn, HR leaders will have to combat widespread perceptions among executives across industries and functions that current levels of collaboration fall short (see Supply Chain talent of the future: Findings from the third annual supply chain survey 2015).
  • Identifying talent early: Waiting for future talent focused on science, technology, engineering, and math (STEM) to be in college before beginning recruiting may be too late. Programs initiated in high school to build awareness and interest in the chemical industry could be advantageous, as they have been for other industries, such as aerospace and computer science.
  • Understanding the Millennials: Working to understand the value proposition that makes other industries more attractive to Millennials could be a key differentiator. Also, reinforcing the growing importance of the industry’s commercial and marketing functions, as Millennials place a high value on those skills.
  • Thinking beyond borders in talent acquisition: Broadening recruiting efforts to engage new and experienced employees worldwide and identifying innovative solutions to attract and retain critical workforce segments could serve as a powerful model for hiring not only STEM resources but also marketing, sales, finance, legal, and other resources needed to support new business models.
  • Balancing flexibility with productivity: Finding the right solution to balance worker flexibility and productivity can contribute to attracting and retaining the top talent the chemical organization needs.

The global chemical industry is beginning a new and exciting era. The people working in it will be the catalyst to once again make the industry a leader among sectors and an attractive, exciting place to build a career—but only if executives act now to build those few but critical organizational and talent capabilities required to attract, develop, deploy, and retain the people the industry will need.

Duane Dickson is the Global Chemicals Sector Leader for the Deloitte Touche Tohmatsu Limited’s (Deloitte Global) Manufacturing Industry group. Also, he serves as the World Economic Forum Project Advisor and Deloitte Global Chemical Community Lead, Chemistry and Advanced Materials.
Marcus Johnson is a senior manager with Deloitte United States (Deloitte Consulting LLP) with a focus on helping companies realize financial and operational improvements in the areas of business strategy and supply chain management through effective human capital management.

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