August 3, 2020

Digital transformation can help manufacturers bridge the gap between retiring baby boomers and next-gen talent

Adam Aguzzi, Senior Principal, Industry Advisory at Ceridian, breaks down how investing in technology can help manufacturers solve the skills gap, prepare for the Silver Tsunami, and tackle its employer branding problem.

By 2030, one in five people in the UK (21.8%) will be aged 65 or over [1]. As the “Silver Tsunami” of retiring workers 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, organisations could see their top subject matter experts and leaders walk out of 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 to give it our full attention because, with all of its challenges, the pandemic has also 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, career growth, modern technology, and challenging problems they can directly impact. But UK manufacturers have struggled with misconceptions about the industry, including being largely male-dominated, low-paid, dirty, and monotonous [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 organisation and back up our employer 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 filling the gap left by baby boomers is Generation Z – those born between 1995 and 2015. Gen Zers have  grown up with digital technology at their fingertips, making them ideal candidates for the tech-driven environment of Industry 4.0.

One factor that could help manufacturers recruit Gen Z is their rising disinterest in the traditional path of higher education. Research by KPMG in the UK on Gen Z suggests that they are “early starters” when compared with millennials, opting to go straight into the workplace and gain their independence rather than saddling themselves with a mountain of student debt before even beginning work [3]. Gen Z’s disillusionment toward traditional education makes sense when you consider that the value of outstanding student loans in the UK had reached £121 billion by the end of March 2019 and is forecasted to be around £450 billion by the middle of this century [4].

Manufacturing has a golden opportunity to position itself as an ideal alternative to the traditional path of getting a degree, saddling yourself with student debt, and climbing the corporate ladder. Instead, manufacturing can offer young people technical apprenticeships and a path to a well-paid and exciting career. More than three-quarters of UK manufacturing firms currently offer apprenticeships for digital roles and nearly 70% have outlined plans to spend their training budget on technical engineering programmes [5].

While programs that help manufacturers recruit Gen Z workers are important, the trickier part is retaining them. Doing so means unraveling what this generation values and expects from work. Gen Zers seek stability in a career, having already been subject to a volatile world – global recessions, pandemics, terrorism, etc. Employers need to offer them career growth and continual learning and development. That being said, because Gen Z has grown up in the digital era, companies also need to ground their experience in technology.

Manufacturers should look to create an environment where Gen Z talent can consume everything from training, to mentoring, to scheduling on their phones and customise their experience to their own specific situation. Some great examples of technology tools 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 personalise 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. 59% of Gen Zers aspire to home ownership in the UK despite only 12% being optimistic about the political and economic situation at home improving in the next 12 months [7]. Add this to the burden of student debt, rising house prices, etc, and there is much to be concerned about. The inevitable stress that can result from this kind of financial pressure may very well lead to higher rates of anxiety, depression, and suicide within this generation. Financial wellness should not be overlooked in wellness offerings. Technology tools 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 now make up a third of the UK population8.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 [9].  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. Assuming this is the case, great talent is simply yours to lose.

 

 

Similar to Gen Z, millennials are deeply embedded in a digital, tech-consumerised 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 personalisation and a seamless user experience, for millennials who are trying to make their marks 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 democratised 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 KPMG, Meeting the Millennials, coined the phrase “the job-hopping generation”, referring to their need to explore all their options regularly as they crave knowledge10.  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: Digitising 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 of the door with baby boomers. When it comes to optimising 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, organisations 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 organisation 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 organisation 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 organisation. 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.

What’s next?

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 organisation with an investment in the right technologies to support an agile, engaged, and forward-thinking workforce.

Sources

[1] Later Life in the United Kingdom 2019, Age UK, May 2019

[2] Annual Manufacturing Report 2020 The Search for Stability, PwC, 2020

[3] Meet the Millennials, KPMG 2017

[4] Student Loan Statistics, House of Commons Library, Dec 2019

[5] Majority of UK manufacturers now offer apprenticeships for digital roles, The Manufacturer, 4 Feb 2020

[6] What a manufacturing apprenticeship is really like, The Manufacturer, 5 Feb 2020

[7] UK Millennials and Generation Z feel unsettled about the future, Deloitte (press release), May 2019

[8] Millennial Growth Spending Power Index 2019, Experian, 2019

[9] 2020 Deloitte Global Millennial Survey Report, Deloitte Insights, 2020

[10] Meet the Millennials, KPMG, 2017

Adam Aguzzi

Adam Aguzzi is Senior Principal, Industry Advisory at Ceridian. Adam helps leaders transform their operations and strategies to make better decisions that drive business value. He has spent the last 15 years directing programs in manufacturing, aviation, maintenance, and mining. He holds a CPA and an MBA from the University of Toronto.

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