In recent months, an alarming trend in manufacturing has emerged. Many organizations are struggling to attract and retain people with critical industry, technical and leadership skills needed to attain key business objectives. Addressing these skills gaps is vital to sustaining long-term competitive advantage.
An October 2011 study jointly published by the National Association of Manufacturers and Deloitte shows that the size of the skills gap in the United States has not diminished since 2005. "The Boiling Point? Skills Gap in U.S. Manufacturing "report found that companies in the United States can not fill as many as 600,000 skilled positions, even while unemployment numbers continue to be high. Furthermore, nearly 5% of current manufacturing jobs are unfilled due to a lack of qualified candidates.
As manufacturers continue to focus on implementing lean principles, they require an engaged, skilled workforce that supports their organization's ability to compete at a global level. The manufacturers that are seeing increased competitiveness and profitability under these circumstances have one thing in common: They use strategic talent-management principles to engage and retain employees.
Talent Management Defined
Talent management, or people management, refers to the overall process of developing, managing and retaining employees. It includes a wide variety of functions -- recruiting, learning and training, compensation, employee performance management and succession planning -- and is founded on the principle that employees are an organization's most valuable asset.
These programs help to ensure employees not only have the skills and competencies required to be productive, but that they are accountable, highly engaged and focused on both their individual and the manufacturer's overall performance. Fostering accountability and engagement is particularly relevant for manufacturers who are increasingly squeezed when it comes to attracting and retaining employees with critical skills.
As shown in the Skills Gap study, the most profitable manufacturers rank employing a top-notch workforce and the implementation of people management practices high on their priority list. In the current economic climate, manufacturers cannot afford to lag behind in their people management practices and then expect to recruit and retain workers with the skills needed to drive the organization's success. Adopting a proactive people management strategy - one centered on performance and employee development -- can have a direct impact in terms of improving operational efficiencies, product quality and service levels, and competitive advantage.
Creating an Effective Talent-Management Strategy
For talent management programs to have a measurable impact on the bottom line, manufacturing organizations need to ensure these programs are executed in support of key business drivers, and that employees are provided clear direction and support to excel in their jobs.
For these reasons, a best practices-based approach to talent management places employee performance at the core of all talent management functions. Performance management involves a wide a range of performance-boosting activities including: organizational and employee goal alignment, ongoing evaluation of employee productivity and performance, training and development, compensation and pay-for-performance, and more.
Web-based solutions are used by many manufacturers to automate and streamline the management and administration of these activities. These solutions centralize the collection of workforce data and provide consistency to the entire talent management process. As a result, HR and senior management can be confident they have the information they need to make effective decisions in regarding the organization's human capital. At the same, HR, managers and employees can focus on higher value activities such as employee coaching, goal setting and development.
The Benefits of an Employee Performance-Focused Approach
Based in Walnut Creek, Calif., Basic American Foods (BAF) is an innovator and leader in convenience and refrigerated foods. The organization had been relying on paper-based performance management system but the leadership team found that this antiquated approach was not helping the company achieve its business objectives.
To remain competitive, the organization put an impetus around creating a feedback-rich culture focused on employee development. In 2008, BAF rolled out a new talent management strategy and implemented a web-based system to streamline the process.
As a result, BAF has created a feedback-rich, development-focused culture. Regular performance discussion between managers and employees provide the broad, balanced perspective employees need to develop and improve. Employee engagement and satisfaction with the process has increased because employees clearly understand how their productivity contributes directly to the success of their team, business unit and the organization.
Development planning has extended to a best practices based succession plan at BAF as well. This is critical as the organization prepares to insulate itself against the widening skills gap by building bench strength internally, leveraging a succession planning program and system that is cohesively linked to its online performance management system.
By focusing on coaching and developing its employees, BAF is fostering a high-performing workforce that is skilled, engaged, accountable, and prepared to remain competitive regardless of a skills shortage.
Driving Results with Goal Management
For goal management efforts to effectively drive business results, organizational alignment is critical. Without this alignment, employees lack a clear understanding of how the work they do supports the goals of the organization, which can have an adverse impact on employee engagement and accountability.
Goal alignment helps to ensure that everyone's individual contributions move the organization forward in the right direction. It also brings accountability to the entire employee performance review process.
In operation over 64 years, Sun-Rype Products Ltd. is a juice and fruit snack company that grew out of the fresh fruit business in the lush Okanagan Valley. Today this publicly traded company generates some $150M in sales annually. When Sun-Rype revamped its talent management strategy it was able to quickly change employees' perceptions of their role in the process, and drive increased productivity.
In a matter of only a few months after automating its talent management process, Sun-Rype saw a notable improvement in corporate culture and employee engagement. Employees had greater direction, more urgency and managers became accountable. Furthermore, the organization has been able to reduce employee turnover from over 20% to less than 4%, which is a major win at a time when recruiting skilled talent is a major challenge for manufacturers.
SunRype CEO Dave McAnerney explains the impact goal management has had on the organization, "Everyone plays a role in delivering against our strategic plan and this is achieved through our rigorous approach to talent management. We are a results-oriented culture and we get that through tracking not only what gets done but how it gets done, and that's been built into our competency definitions. This results emphasis is also built into the way our managers work to help employees improve performance. We not only track individual deliverables but also ensure they're aligned to our strategic plans."
Talent management provides a powerful opportunity for manufacturers to improve productivity and drive business results by creating a highly engaged and accountable workforce, while addressing the skills gap. Best practices such as development focused performance management and organizational goal alignment are key tools help ensure manufacturers have the right employees and organizational competencies they need to stay competitive for the long term.
JP Guay is a regional manager with Halogen Software. An accredited human capital strategist, he focuses on helping HR leaders and senior management in manufacturing organizations optimize their talent management practices.