“Aging Workforce Puts Strain on Skilled Manufacturing Workers” – this was the headline of an article I came across on the WSJ Logistics Report. The article illustrates the impending crisis for the manufacturing sector in Northern New England as baby boomers retire at a rapid pace. New Hampshire in particular is struggling today to fill open jobs and the problem will only get worse because there are not enough skilled young people (or people in general) to replace them. “Nationally, a 2015 report from The Manufacturing Institute and Deloitte found that the skills gap “is real, and it is substantial,” noting that over the next decade, 3.5 million manufacturing jobs will have to be filled and that the skills gap means that 2 million of those jobs will go unfilled.” This is a real problem BUT not just for the manufacturing sector.
We have been hearing from our clients for YEARS that having the right talent is of concern. They too are looking into the future and seeing a large percentage of their people getting ready for retirement yet they have no plan to fill the skill gap and the skill gap today is not necessarily the same skills they will need for tomorrow. Knowing that the gap is imminent, changing and increasing, waiting for qualified resources to fall out of the sky is NOT a plan. So what do you do? By the way, we are not just seeing this in Souring and Supply Chain. It is an issue across a number of professional services – Accounting, Finance, IT, Engineering, etc.
You really need to start with a Strategic Workforce Plan (“SWP”). Here is a simple definition:
Strategic Workforce planning connects human capital strategy to business strategy to ensure the company has the right people, in the right place at the right time and at the right cost.
SWP starts with the business strategy – sound familiar? This will help you understand why you need more of this or less of that skill or competency. Here are some key questions to be answered:
- What are the business drivers (from the perspective of the business units you support) that must be satisfied today and in the future?
- What changes in the environment need to be considered (new technology, shifting customer demands, competitive landscape, regulatory changes, etc.)?
Now that you understand the why, the SWP helps answer the following:
- What organizational skills, competencies and capabilities are required to satisfy the business drivers?
- How many people are needed by skill set?
- Where are resources needed (numbers and skills)? Do you need less people in one business unit / geography and more in another? What do the local labor markets look like?
- When are the resources needed? How soon will you need them? Which needs require a long lead time? Which needs can you fill immediately?
- Which skills are a competitive advantage for your company? Will you build your own resources (hire / train) or rent resources from a third party or both?
- How much will it cost to acquire and retain the necessary resources?
For those of you that have already invested in a competency model for your organization, you will have a leg up because that is a key component of your SWP.
SWP is not only done at a company level – countries like Germany have been doing it for years. According to an article written in Business Insider last year, Germany has been widely criticized for the number of refugees they have allowed into their country as many European countries feel asylum-seekers will damage their economy. But “Germany is counting on the record numbers pouring across its borders to save its’ own”. Economy Minister Sigmar Gabriel told parliament, “If we manage to quickly train those that come to us and to get them into work, then we will solve one of our biggest problems for the economic future of our country: the skills shortage.” For them it is a practical solution to a huge issue.
By the way, developing an SWP is NOT an HR responsibility. It should be driven by the functional organization OR as part of a perform vs. buy strategy under Category Management. We are actually working with a client that needs an SWP for the professional services category they are working on under their Category Management process. The output of the SWF is the future demand profile they need for category management. The SWF (once constructed) in a critical tool that should be updated periodically to remain relevant. As you are stressing out about your talent needs today and in the future, get started on your SWP today.
Let us know what you think and join in the conversation . . . . . . . . . . . . .