Talent strategies: Overcoming skills shortages

The looming shortage of skilled workers has been identified as one of the most pressing challenges facing manufacturers today. And though manufacturers are aware of the upcoming talent crisis and its likely impact on the industry, they have typically pursued reactive talent management initiatives.

In today’s business environment, talent management initiatives focusing exclusively on the traditional areas of recruitment and retention are proving to be increasingly ineffective. Nevertheless, most organizations devote the majority of their talent management time to recruitment – an activity with limited added value – and little time on training, coaching and developing talent.

In the near future, success will come to those who let go of outdated and ineffective recruitment and retention strategies, and understand that their primary focus must be on their existing human capital assets.

Talent management needed
Several converging trends will compel Canadian manufacturers to dramatically boost their talent management capabilities in the next 10 years.
• Global pressures. Facing competition from abroad, many North American manufacturers rely on offshore labour pools to cut costs. Since most mass production operations have already been outsourced to foreign countries, the anticipated talent shortage will likely be most heavily felt in specialized occupations, such as engineers and technicians. At the same time, companies are being forced to compete on product design, innovation, productivity, flexibility, quality and
responsiveness to customer needs. In this context, a workforce focused on innovation is of paramount importance.
• Technology advances. Manufacturing jobs are now technology-driven. All employees must have a wide range of skills to work in an increasingly complex environment. That being said, according to 2004 data from Statistics Canada and the National Bureau of Statistics of China, the number of students graduating from applied science and technology programs in Canada is half that coming out of China (in terms of percentage of total graduates). Clearly, there is an imbalance of skill levels on the horizon, and an imminent challenge awaits Canadian manufacturers, who can expect to experience major difficulties in attracting qualified personnel.
• Talent supply. Labour pools in North America will shrink rapidly as baby boomers begin to retire. For several years, the manufacturing sector has had the lowest rate of employee turnover, meaning that fairly senior employees who have amassed an impressive array of knowledge and experience have been holding the same positions for years. With many of these employees retiring at the same time, manufacturers will soon be faced with a significant lack of resources, both in terms of the number of employees and the knowledge and skills to be developed.

Addressing the challenges
Attracting and retaining potential employees in a talent shortage and high turnover context will be the most crucial challenge facing manufacturers in the near future.

Manufacturers can begin to address these challenges by considering this fundamental talent question: What are the critical workforce segments required for the business to succeed? Critical workforce segments are groups and individuals that drive a disproportionate share of the company’s business performance and generate greater-than-average value for customers and shareholders.

Manufacturers must, therefore, build strategies around three key dimensions that matter to critical workforce segments:
• Development and growth, recognizing that training is part of, but not the sole path to, achievement;
• Deployment of employees into jobs or special projects that engage them, creating roles and opportunities that tap the full potential of top performers; and
• Connection and engagement with others in the company, focusing on the networks and quality of interactions that top performers need to succeed.

By fostering programs that develop, deploy and connect employees, organizations can generate capability, commitment and alignment in key workforce segments, which in turn improve business performance.

Manufacturers will find that the shift in strategy from the traditional approach of attracting and retaining employees to the broader, more encompassing method of a develop-deploy-connect model can be enabled through integrated human resources programs that are calibrated to specific talent needs.

For example, if a company seeks certain skill sets, improved morale or greater productivity, then tailored learning, recognition and performance management programs are powerful levers.

Companies needing a wider range of technical skills can rely on workforce rotation programs, used in conjunction with organizational learning, to produce the types of skill sets that align better with business priorities.

If a company has a large group of retiring employees and, therefore, will be recruiting many skilled workers in coming years, knowledge retention processes–supported by tailored learning programs–can harvest decades of institutional knowledge in the retirement-age workforce, and can be used to accelerate the on-boarding of successors.

Companies with these types of issues can take the following steps to get started with the develop-deploy-connect model:
• Identify critical workforce segments (CWS) based on business strategy and required skills.
• Conduct workforce planning for each CWS based on flows in and out, future demand and supply.
• Evaluate and redesign your sourcing strategy considering alternate sources, immigration, your process and overall employment brand.
• Evaluate your total rewards strategy and align with CWS.
• Measure levels of employee commitment and identify drivers for each CWS.
• Refine and align performance management processes, metrics, technologies and other inter-dependencies.
• Develop a knowledge management strategy for collaboration, knowledge capture and transfer.
• Create a talent development strategy for training, career paths, mentoring and coaching.
• Create a “connect” strategy around culture, front-line supervisory skills, workforce communities and communications.
• Develop an evaluation strategy with metrics, key performance indicators and scorecards to assess effectiveness.

The pool of talent from which manufacturers currently dip is already shrinking, and far worse talent shortages are still to come. Leading manufacturers are already looking seriously at how to get in front of the resulting talent shortage that is sure to emerge. Success will come to those who let go of outdated and ineffective recruitment and retention strategies in favour of talent management models that nurture, inspire and reward employees in new ways.

Beno”t Grenier is a manufacturing national industry leader with Deloitte’s Human Capital practice in Canada. To receive a copy of Deloitte’s point of view on talent management, download the report entitled, It’s 2008: Do You Know Where Your Talent Is? Why Acquisition and Retention Strategies Don’t Work, at
www.deloitte.com/ca/talentmanagement.