According to a recent, global IFS study, 67% of manufacturing organisations find it difficult to fill positions with 40% citing the scarcity of skilled and qualified talent as the most common challenge.
These figures reflect the latest state of the chronic talent scarcity problem that manufacturers have been suffering for a while now which can also be seen in the Talent Scarcity Infographic. However, this time around, it comes with a different spin and set of implications and finding a solution may not seem within close reach this time.
What’s different this time? Let’s unpack what has happened recently:
The Loss of Manufacturing Jobs, followed by the Big Quit
The pandemic outbreak and interlinked supply chain disruptions severely impacted production at manufacturing plants around the world, and erased millions of jobs, not all of which were entirely recovered.
The UK manufacturing industry for instance, counted a loss of around 130,000 jobs due to the pandemic, meanwhile in the US, the industry took until July this year to recover pre-pandemic employment levels, after months of incremental gains.
And yet, despite manufacturers being on growth rebound, the quest to re-hire is easier said than done. In fact, we have seen the gap between open vacancies and willing recruits widening, propelled by the so-called Big Quit / Resignation. This trend was particularly prevalent in the US, where the Bureau of Labor Statistics reported that resignation rates for manufacturing jumped nearly 60% from pre-pandemic levels to late 2021.
While some of the reasons behind this jump were Covid related (not being able to work from home, mandatory vaccination, etc.), others revolved around wage stagnation, rising cost of living and limited opportunities for career advancement.
The accelerated labor shortage inevitably pushed up wages to a point where manufacturers now find themselves competing in a price war for talent. In some counties, including the US, the industry no longer provides the good-paying jobs it once did.
According to our study, 35% of manufacturers reported unrealistic salary expectations, making it difficult to retain let alone attract talent who are willing to leave jobs at the prospect of earner more elsewhere, even if that means switching to a different industry. But will higher salaries be the answer to retain these candidates?
A different Mindset
The Covid 19 pandemic has brought about a greater awareness of work-life balance and demands for more flexible working, and employees factor these aspects into their employment decisions, alongside salary expectations. According to our study, over 50% said they are unlikely to stay with their current employers, showing that employee loyalty is at stake, and possibly even more so than ever before.
What does all this mean?
The ongoing conundrum has sparked a candidate- driven job market, and the great attrition is likely to continue in the current macroeconomic environment. For manufacturers this means that unless they can find a sustainable way to fill a significant amount of job openings, they face declines in growth and profitability, and jeopardizing the progress of digital transformation initiatives.
To this end, manufacturers need to start shifting gear by thinking beyond salary increases to longer-term solutions, here are 4 ways to get started:
Rethink and update traditional manufacturing job descriptions for the digital era
Many manufacturing organizations are still struggling with keeping their job descriptions up to date to reflect evolving business needs. However, this is important because manufacturing is no longer the manual, labor-intense industry as we once knew it. As technology integration progresses, positions require digital skills to drive new efficiencies and generate value from the investments made.
Some of these new skills are highlighted in our Manufacturing Talent Infographic.
Going forward it is critical for manufacturers to stay on top of the continuously evolving digital skills which will be required for the roles of the future.
Offer flexibility and other nonmonetary benefits
While remote work may not be possible for many manufacturers, there are still things manufacturers can do to provide more flexibility. For example, additional paid time off may give employees the extra days they need to deal with personal issues. Using other strategies, such as shift swapping, voluntary vs. mandatory overtime, compressed schedules and part-time work options, can help not only retain current workforce but also improve hiring results.
Partner with local educational communities
This will help create brand awareness as well as broaden the knowledge about what skills are needed. Spreading brand awareness in colleges and schools can help students to acquire skills that are required by manufacturing companies, especially those with advanced science, technology, engineering, and mathematics (STEM) skills.
Equally, manufacturers can engage directly with universities to define which specific skills they require, to help shape learning curricula.
Win and retain talent with modern & flexible technology
The rising younger talent of today are digital natives, meaning that that they have grown up using modern, digital technology and expect it as part of their everyday live, including their workplace. Those manufacturers who want to attract young talent need to be mindful that outdated enterprise technology could be off-putting to younger generations, to a point where they may consider switching employers on that basis alone.
A modern cloud-enabled enterprise solution enables a flexible, geography-agnostic, and connected work environment to begin with, and if enhanced with business apps and innovative technologies such as AI and robotics, for instance, it helps reducing boring and repetitive tasks while driving higher-value responsibilities.
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