How to recruit and retain workers to realize the full benefits of digital transformation

June 27, 2022
The old hiring playbook Isn’t working.

Technology is at the very root of the onshoring and re-shoring trends now driving the manufacturing renaissance in the US. Automation helps companies lower labor costs, while analytics and IoT interconnectivity continuously optimize processes to enhance productivity and efficiency.

As the all-in costs of domestic manufacturing suddenly become competitive to offshore alternatives, while mitigating acute supply chain risks in the process, the promise of Industry 4.0 is indeed motivating business leaders to bring manufacturing operations closer to home. Yet many overlook a key element: they still need to recruit and retain workers to oversee these facilities. And against the backdrop of the “great resignation,” recruiting and retaining employees with the requisite skillset is harder than most remember.

The rise of technology hasn’t helped perceptions as it relates to careers in manufacturing. Even as GDP from manufacturing has grown steadily over past decade, the number of unfilled positions in the sector reached a record 974,000 openings last year. The challenge isn’t just finding manpower, but finding highly specialized talent, particularly in fields such as semiconductors, IoT, and robotics, marked by rapidly evolving production processes. In fact, according to the Task Force on National Security and US Manufacturing Competitiveness, the “significant technical skills gap” represented the No. 1 challenge for the industry.

The same way technology is revolutionizing processes and production, business leaders need to take the same disruptive approach to human capital. Historically, many manufacturers adopted a “component parts” approach to recruiting and retention. They recruited as needed and provided only the necessary onboarding and training. The supply-and-demand realities in the labor market have made that approach obsolete.

“Human capital 2.0” among manufacturers requires a more people-centric approach to better understand the mindset of potential candidates and apply this insight to keep employees satisfied throughout their career. It’s a reminder that even amid the industry’s digital transformation, business leaders must be laser-focused on the needs of their people. The payoff is both tangible (an improved bottom line) and intangible (workplace cultures that breed loyalty).

Smart versus one-size-fits-all recruiting

The traditional recruiting playbook has become part of the problem. Manufacturers often rely on a shotgun approach, responding to labor needs with ads on job boards. Ironically, this approach to human capital is more labor-intensive than other strategies in that it may generate a lot of interest and inquiries, but attracts unqualified applicants and amplifies the potential for bad hires.

The most successful employers in manufacturing are increasingly looking to tap into very specific channels of potential workers, where there’s been a previous track record of worker success. It could be a church or a close-knit community where referral programs and word-of-mouth attracts capable workers. The benefits, beyond the network, are the closer bonds that form among co-workers. Anecdotally, business leaders will often see a support system form, in which employees form carpools to commute into work, make intergenerational referrals to bring family members into the fold, and generally become more engaged at work. These targeted approaches, as a result, generally yield better and more reliable hires.

Training is the big variable to retaining workers

An investment mentality is especially important. And employee training, in particular, is often the linchpin in improving retention. The old playbook skimps on training, yet this is the surest way to alienate new hires and leave them unprepared to succeed or even understand their purpose.

The new playbook, one that brings radical improvement in retention, emphasizes instilling confidence before placing new hires fully in the production mix. There’s no one right way to do so, but increasingly best-in-class employers are placing dedicated trainers on production lines to shadow new hires and instill a sense of competency or creating separate lines for new hires altogether until they can keep pace with regular production lines.

To reinforce purpose and provide employees with a path for growth, many manufacturers are also creating specialized training programs to identify out-performers and train these candidates in higher skill positions, like welding.

How am I doing? Invest in a communication culture

It’s often overlooked, but employees expect to find meaning at work. Effective communication, as a result, has become a vitally important retention factor. It may sound simple, but communication is the glue that helps keep good workers in place. And in the wake of the global pandemic, the shortcomings of many manufacturers in this area were exposed. 

Workers want to understand the company’s goals and whether it is meeting its objectives. They want to know how their work is tied into the bigger picture. And how they can improve their skillset, particularly in an era of rapid transformation? This level of communication takes a concerted effort to regularly engage and relate with the workforce. As companies gravitate toward more sophisticated technology that requires higher-skilled employees (and fewer of them), it becomes that much more imperative for workers—who fear they’re at risk of obsolescence—to appreciate their mission and purpose.

The only factor that will limit the impact of automation are the people who will fill key roles to guide how the technology is deployed and utilized. Ironically, this is making the people the most important catalyst fueling the sector’s Industry 4.0 emergence. Manufacturers who expect to capitalize on the renaissance will need to update their human-capital playbook to better compete for talent that will position manufacturers to fully capture the tailwinds being driven by technology.

By Shannon Gabriel, managing director of TBM Consulting’s Leadership Solutions Practice