Results of a new study released on October 5, People & Profitability – A Time For Change, commissioned jointly by Deloitte, The Manufacturing Institute and Oracle, indicate an ongoing need for manufacturers to embrace new and progressive talent strategies in order to maintain profitability and stay competitive in the future. The report serves as a supplement to the 2005 Skills Gap Report issued jointly by Deloitte, the National Association of Manufacturers (NAM) and The Manufacturing Institute.
The study, conducted in May 2009, analyzes the future importance and current performance of people management practices relative to a manufacturer’s business success. It also reveals the challenges manufacturers are facing with talent shortages and offers strategies to address them.
The study shows that surveyed manufacturers, especially the most profitable, rank employing a top-notch workforce high on their priority list. Many companies assigned a higher importance to implementing people management practices compared to increasing customer service orientation.
However, the study also found that many companies still rely on traditional approaches and old tactics when managing and developing their employees, and it furthered revealed that progressive tactics have failed to gain traction.
“In the face of a global recession and intense international competition, American manufacturers must differentiate themselves through innovation and a highly skilled workforce,” said Emily DeRocco, president of The Manufacturing Institute. “Companies need to invest more in employee training and make workforce skills a top strategic priority. Our education system must also do a better job aligning education and training to the needs of employers and job-seekers. To support this effort, The Manufacturing Institute recently launched the NAM-endorsed Manufacturing Skills Certification System to provide a solution to our nation’s talent development needs and help manufacturers compete successfully in the global marketplace.”
“Fundamental change has never been more necessary in the way companies attract, retain and develop their employees,” said Richard Kleinert, principal, Deloitte Consulting LLP. “The challenges that lie ahead have the potential to cripple manufacturing as we know it if we don’t face these issues head on and take proactive steps to prepare and engage workers for the future.”
Even during the current economic downturn, nearly one-third of companies report a moderate to serious shortage of skilled workers, and most foresee increased shortages ahead. This may seem counter-intuitive, but it suggests that many companies that have experienced layoffs may be simultaneously recruiting for specific types of employees, with specific skills and capabilities, in specific locations.
The study suggests that people management practices may be championed by human resource executives, but that they must also be embraced by all levels of leadership and line management.
“It is important to align people management processes and strategies with the overall goals and strategies of the company,” said John Barcus, vice president, Oracle Industries Business Unit for Manufacturing. “When executives place emphasis on talent management and retention by moving focus from the HR organization to the lines of business you see a greater ability to align individual effort with business objectives leading to improvements in employee contribution, satisfaction, and retention.”
Regional talent shortage disparities also emerged from the findings. In the Midwest, 26 percent of manufacturers surveyed reported moderate to serious talent shortages. However, in the Southwest, 50 percent of companies reported such shortages.
Companies surveyed indicated that progressive management tactics seemed to have gained little traction in recent years. The largest gaps between future importance of people management practices and current performance were found in the following categories:
· Talent acquisition
· Talent development
· Performance expectations
· Technology deployment
Despite dramatic changes in the economy since the release of the 2005 Skills Gap Report—A Survey of the American Manufacturing Workforce, according to the survey participants, the top three overall drivers of future business success over the next two to three years remain the same:
1. New production innovation: 65 percent in 2009 vs. 49 percent in 2005
2. High-skilled, flexible workforce: 50 percent in 2009 vs. 75 percent in 2005
3. Low-cost producer status: 43 percent in 2009 vs. 45 percent in 2005
Recommendations in the 2009 People & Profitability – A Time For Change report urge:
· Collaborative people management practices that involve all levels of leadership and management
· Development and implementation of measures and analytics by which to measure the value of talent instead of simply the cost
· Deployment of technologies to support the attraction, development and productivity of employees
· Adoption of people management practices designed to attract, retain, motivate and develop critical skills
About the study
People & Profitability – A Time for Change, A 2009 People Management Practices Survey of the Manufacturing Industry was commissioned by Deloitte, The Manufacturing Institute and Oracle, and surveyed manufacturing organizations in May 2009. For more information and to download the survey findings, go to: http://www.deloitte.com/us/peoplemanagementpractices.
As used in this document, “Deloitte” means Deloitte Consulting LLP and Deloitte Services LP, separate subsidiaries of Deloitte LLP. See www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
About The Manufacturing Institute
The Manufacturing Institute is a non-partisan 501(c) (3) affiliate of the National Association of Manufacturers focused on delivering leading-edge information and services to the nation’s manufacturers through its Center for the American Workforce and its National Center for Manufacturing Research. Visit www.nam.org/institute.