The ultimate shift swap: Digital transformation can help manufacturers pass the torch between generations

By 2030, all baby boomers in the US will be age 65 or older [1]. As the “Silver Tsunami” washes over the manufacturing industry, the question for manufacturing leaders is whether or not we’re prepared to fill the gap left behind. When workers retire en masse, it’s not just about getting new bodies for empty roles. Without the right transition plan in place, organizations could see their top subject matter experts and leaders walk out the door with a wealth of institutional knowledge. When lessons learned aren’t captured and translated to the next generation, there’s an efficiency cost to be paid. And when effective leaders move on without someone equally great to fill the void, productivity and engagement suffer.

The potential negative impact of mass retirement is compounded by a widening skills gap driven by rapid technological advancement in the sector – referred to as Industry 4.0. The pace of change is only accelerating, and the COVID-19 pandemic has added an additional layer of uncertainty for manufacturers. Closing the skills gap, preparing for the Silver Tsunami, and keeping up with change all start with investing in our people. And now is the perfect time because, despite all of its challenges, the pandemic has created opportunities to build a more agile, engaged, and future-ready workforce.

Beyond branding

There’s nothing like a crisis to make people rethink their choices and core values. Many people will likely place a higher importance on job and financial stability now, even in the younger generations. The manufacturing sector is perfectly suited to appeal to younger workers, as it can offer a combination of high salaries, job security and growth, modern technology, and challenging problems they can directly impact. But manufacturing has struggled with a branding problem among young people due to misconceptions about the industry, largely passed down from their parents [2].

Manufacturers need to get in on the ground floor with new grads, making an effort to be where they are and do a better job of employer branding. That being said, it’s not only about selling a vision of a modern workplace. We also need to look inside the organization and back up branding efforts by creating a workplace that can not only attract younger workers, but keep them. Technology will play a key role in building a modern employee experience, and it should be considered a critical piece of manufacturers’ digital transformation plans.

Three challenges and solutions

Challenge #1: Unraveling Gen Z

A great place to start when it comes to replacing baby boomers is Gen Z, because they’re already somewhat primed to hear a positive message about working in the sector. According to the 2019 L2L Manufacturing Index, one-third of Gen Z-ers have had manufacturing suggested to them as a career option, compared to only 18% of millennials [3]. And they are 12% less likely to view the industry as being in decline than the general population.

Another factor that could help manufacturers recruit Gen Z is their rising disinterest in the traditional path of higher education. According to Forbes, 17% of current college students were considering not returning to school in the fall (reported in June 2020) [4]. While this can be attributed in part to the general uncertainty around education stemming from the pandemic, Gen Z’s disillusionment toward traditional education runs deeper than the COVID-19 crisis. There is currently $1.6 trillion in student loan debt in the US, and more than 40% of new and recent grads are underemployed in their first job, a disadvantage that often haunts them throughout their careers [5].

Manufacturing has the opportunity to position itself as the ideal alternative to the traditional path of getting a degree, saddling yourself with student debt, and struggling up the corporate ladder. Illustrating the point, NAM recently featured a story about a high school student who wanted to become a librarian, but realizing her expected salary wouldn’t match her debt levels she instead took part in a cooperative learning program founded by Toyota and run by The Manufacturing Institute [6]. The Federation for Advanced Manufacturing Education (FAME) program left the student with a two-year Associate’s Degree, a career path, and onsite experience – without the debt.

While programs like this one are a great way to attract Gen Z talent, the trickier part is retaining them. Doing so means unraveling what this generation values and expects from work. A recent EY study described Gen Z as “Different from millennials. Different from each other. Different from your preconceived notions. They’re a generation of contradictions.” [7]. If the hallmark of this generation is difference, then the strategy to engage them at work has to involve a high degree of personalization. And for the generation that grew up digital, technology should be front and center.

Manufacturers should look to create an environment where Gen Z talent can consume everything from training, to mentoring, to scheduling on their phones and customize their experience to their own specific situation. Some great examples of technology that would appeal to Gen Z workers are self-serve tools (i.e. shift swapping or requesting time off through a smartphone app) and learning platforms that personalize and embed learning into their work. Companies should also consider an automated and digital way to run pulse surveys to keep on top of the various drivers of engagement or disengagement among diverse Gen Z employees. This will have the added benefit of helping to engage the entire multi-generational workforce.

Wellness is another area of importance for manufacturers to consider when designing the right employee experience for Gen Z. When it comes to this generation’s top concerns, the EY study found that Gen Z respondents were worried about not having enough money (67%), getting a good/better job (64%), and paying for college or university (59%). And they are stressed as a result, leading to higher rates of anxiety, depression, and suicide within this generation [8]. Financial wellness should not be overlooked in wellness offerings since that’s the source of much of Gen Z-ers’ stress. Technology such as on-demand pay, which gives employees the flexibility to access their earned wages between pay periods, and tools that help employees determine the best benefits package for their situation, are just two examples. Learning platforms can also be used to educate employees on how to manage stress and improve their physical and mental health. 

Challenge #2: Building millennial leaders

Millennials make up more than one-third of the US labour force [9] and are currently aged between 24 and 39 years old. For the past decade, talk of millennials has been prolific and often grounded in negative stereotypes – from their love of avocado toast to their job hopping. Now it’s time for that conversation to mature, as the millennial generation ages into a different life phase, and increasingly into leadership roles. As baby boomers move toward retirement, understanding how to attract, develop, and retain effective millennial leaders to replace them will be critical.

While it’s too early to tell with certainty, it stands to reason that the economic crisis resulting from the COVID-19 pandemic will likely impact how people of all ages view their life choices, as well as their core values. This is yet another reason why companies should forget what they think they know about millennials, rather than building engagement strategies on top of outdated stereotypes. Take the job hopping, for example. According to Deloitte’s 2020 Global Millennial Survey, less than one-third of respondents anticipate changing jobs in the next two years, a drop from 49% the year prior [10].  A combination of their age and the uncertainty caused by the pandemic may be pushing millennials to crave stability, making job and financial security more of a priority [11]. Assuming this is the case, great talent is simply yours to lose.

Similar to Gen Z, millennials are deeply embedded in a digital, tech-consumerized culture, and they expect to have the same experience at work. However, as they age, what this looks like may evolve. While for Gen Z employees it might be about personalization and a seamless UX, for millennials trying to make their mark in leadership roles it may be more about how technology can make them successful. A great example would be access to the right data to make good business decisions and manage their teams better. Millennial leaders will be focused on results over effort, and data plays a key role in that. They’re also the generation that democratized information, and that likes to have a voice – and they know the Gen Z talent they’re managing is the same. Tech tools like employee pulse surveys and flight risk analyses are just two of the tools that will help millennials grow into the leaders they strive to be.

One pre-pandemic fact about millennials that is likely to stand the test of time, however, is their desire for growth – both in skills and in their careers. A study by Boston College Center for Work & Family found that the top career goal for millennials is to take on increasingly more challenging tasks [12]. This restlessness can serve companies well if properly channeled through well-designed learning and development strategies. In a world where menial, repetitive work is being automated by technology, millennials’ focus on building skills and chasing meaningful work may actually benefit manufacturers by creating a more agile workforce – a value that millennial leaders will pass down to their reports.

Challenge #3: Digitizing knowledge

One of the biggest challenges facing manufacturers with the impending Silver Tsunami is the loss of institutional knowledge stemming from years of experience on the job that will go out the door with baby boomers. When it comes to optimizing workforce efficiency, having the benefit of history is significant. Take for example planning a new project – imagine the wasted time and cost of exploring unsuitable opportunities or repeating past mistakes when someone could have simply told you what worked and didn’t work last time.

To guard against this loss of institutional knowledge, organizations should work to build a culture of continuous learning, and leverage technology to capture knowledge digitally. Much of the knowledge transfer activity that happens within an organization is done informally. It can happen through mentoring, through on-the-job experiential learning, or through employee collaboration channels. The right technology can provide an online tool to facilitate social learning between peers (i.e. employee sharing forums) and also capture tribal knowledge so that the entire organization can access it.

Planning ahead can also help to store knowledge from subject matter experts in the form of training modules, videos, and courses – before they retire or leave the organization. A robust learning platform will help to make that content accessible for employees who are planned successors of departing staff, as well as to new hires. Capturing knowledge through technology also helps to ensure business continuity in times of crisis, such as with the current pandemic. It means if an employee needs to step into a new role quickly, they can access the information they need to get up to speed right away.

Final thoughts

Manufacturers have a real opportunity right now to correct the branding problem they’ve faced in the past and position themselves as the ideal career path for both millennial and Gen Z workers, while also capturing and retaining the expertise and knowledge of departing baby boomers. To make it successful, though, it can’t just be a branding or recruitment exercise. It has to start inside the organization with an investment in the right technologies to support an agile, engaged, and forward-thinking workforce.