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Industry Updates

Racing for Manufacturing Talent

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The automotive manufacturing industry is facing increasing labor challenges from record-low unemployment, competition over skilled technical talent and demographic shifts. A 2018 study by the Manufacturing Institute found that over the next decade, 2.4 million of the 4.6 million manufacturing job openings will go unfilled.

While factory workers’ qualifications used to focus on manual dexterity and showing up to work on time, today’s smart factory requires a skillset in technology and the ability to adapt to rapid changes. Technology is also transforming traditional HR functions, such as hiring, training and benefits administration. Companies need to strategically redefine how they approach recruitment, training, retention and compensation models. Leveraging automation and artificial intelligence (AI) may be the pivotal point enabling HR to focus on the human side of the talent pipeline, rather than daily data record keeping.

A 2019 survey at Baker Tilly asked 400 professionals to identify the top business challenges facing their clients, and 56 percent mentioned “talent” in their responses, more than double any other challenge mentioned. The “talent” problem manifests itself in many different ways:

  • acquisition, development, retention and succession;
  • acute labor shortages in specific industries, such as construction, manufacturing and local government;
  • generational differences among employees; and
  • use of automation and robotics to improve talent management and drive efficiencies.

The talent problem is affecting nearly all industries. However, according to the National Association of Manufacturers Outlook survey for the second quarter of 2019, 69 percent of manufacturers say the inability to attract and retain a quality workforce is their biggest concern. To thrive in the industry of tomorrow, strategic human capital alignment is required today.

Candidate-Centric Recruiting

Historically, manufacturing organizations have taken a job-centric approach to hiring: When a position is open, candidates apply and the one who best fits the role gets the job offer. In fact, 77 percent of respondents to a Baker Tilly poll reported their organizations take a job-centric approach for their hiring pipeline. This antiquated approach is not nearly as sophisticated or functional as a candidate-centric approach. A candidate-centric journey creates the opportunity to increase the quality of the pool of candidates.

Here’s why: Quality candidates who know their value will quickly move on from a clunky recruiting and interview experience to prospective employers that provide an engaging, consumer-based experience, leaving only lower-quality candidates to slog through the inferior experience. Developing this candidate-centric journey takes a different mindset in organizing how candidate profiles are stored and the talent needs of the organization. Modern levels of automation that incorporate artificial intelligence (AI) — specifically machine learning and chatbot technologies — are the driving forces behind candidate-centric recruiting. Candidates receive personalized updates, become engaged in an organization’s community, receive guidance and get answers to questions in real-time. HR departments can use automation to find and screen candidates, schedule interviews and do background checks and reduce manual data entry.

The Keys to Retention

To attract and retain employees, organizations must consider what’s important beyond a salary and health benefits. Things that keep millennials motivated are not necessarily the same as what keeps older workers motivated. Younger employees are more open to change jobs every two to three years. The current employment marketplace shows that larger employers attract job applicants more than middle-market employers do, and a younger generation of workers are looking for more engaging things to work on. Larger organizations also generally have more opportunities for employees looking for new challenges.

The attitude of millennials toward job tenure and new opportunities affects all generations in the workplace. Older generations are exposed to different opportunities and work-life integration because of the influence of millennials. One problem for employers is replacing short-tenured employees. It can be expensive. According to the Society for Human Resources Management (SHRM), on average it costs an organization six to nine months of an employee’s salary to replace them. This means that for an employee making $60,000 per year, the replacement cost equals $30,000 to $45,000 in recruiting and training costs.

A checklist for retaining employees:

  • Know what employees in your industry and/or market want for a fulfilling career; it’s not just money.
  • Examine what types of alternative benefits can be added to appeal to existing or new employees.
  • Understand that if employees can’t move around within an organization, they will look to move around in a different organization.
  • Change the mindset from “investing” in new hires to “developing” new hires.
  • Include Emotional Intelligence (EQ) training as part of employee development.

The skillset of empowered employees is what runs organizations on a day-to-day basis. As industries, technology and consumer preferences evolve, how companies conduct business will change, and the roles and skills required of employees must change too. Reskilling employees requires understanding how a new process will work, and identifying who in the organization is best to perform it. Organizations need employees with a mix of business, science, interpersonal and technical skills at every level.

Automotive manufacturing organizations should look at the talent challenge as an opportunity to reposition the organization, enhance technological capabilities and provide more meaningful engagement with employees. To thrive in the mobility and transportation industry of tomorrow, strategic human capital alignment is required today.

Erich Bergen, manufacturing advisory services director, and Edward Mulford, enterprise solutions consultant, are both with Baker Tilly.

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