Talent Management in Manufacturing: Importance, Trends, Best Practices

Talent management in manufacturing is the process of hiring, retaining, developing, and optimizing productivity of people in manufacturing companies. This article explains the components and importance of talent management in manufacturing, and the top trends for HR in manufacturing.  

Despite relatively high rates of unemployment in several nations, manufacturing companies have difficulty with hiring and filling open positions. The struggle for talent is intensifying, and manufacturing jobs aren’t necessarily perceived as the most attractive ones in the market. For youngsters, the manufacturing industry has little allure. Even if the manufacturing business keeps expanding and is actually a lucrative source of employment, it doesn’t attract the people it needs to sustain growth. HR leaders are cognizant of this issue, and they acknowledge the significance of talent management in manufacturing to be critical for the continued development of their organization.  

Without robust talent management in manufacturing, it is hard to identify the right individuals for the available roles, plan career development opportunities for them, and plan for the future. 

What is Talent Management in the Manufacturing Industry? 

Talent management is the approach taken and techniques used to determine how manufacturing companies attract and nurture a employees who are productive and is committed to work with the organization over the long term. Implemented correctly, talent management in manufacturing improves overall company performance and ensures continued competitiveness. 

Talent management in manufacturing may also facilitate digital transformation, which is a current manufacturing imperative. If current trends continue, 43% of manufacturing CEOs believe their business will not be commercially viable 10 years from now. A robust talent management system helps prepare the workforce for the future, and guarantees that workers are able to adap to new technologies, processes, and business models. 

Talent management in manufacturing starts with CEOs, regional heads, and other executives who establish a framework for employee recruitment, growth, and continuous development. Human resources (HR) teams then take charge of the talent management processes, managing hiring practices, supervising the training of new recruits, continuous performance evaluations, etc. 

HR leaders in manufacturing companies work closely with middle management like team leaders, factory floor managers, shift supervisors, etc., to ensure these processes are executed smoothly and using the right tools. 

Learn More: 16 HR Trends in the Manufacturing Industry in 2023  

6 Key Aspects of Talent Management in the Manufacturing Industry 

Talent management as a process varies from industry to industry. The priorities differ based on the kind of workforce and the requirements of the industry.  

For companies in the manufacturing industry, talent management revolves around:  

1. Total Rewards

One of the key goals of talent management in manufacturing is to achieve the business's strategic objectives through driving up employee productivity. This is done primarily through incentives like recognizing workers, acknowledging their contributions, and honoring their value to the organization. This includes compensation, managing hourly worker pay, overtime, temporary worker payroll, etc. and handling benefits and perks, etc.  

2. Career Pathing and Professional Development

This pertains to the training and development of employees in anticipation for better, higher-paying positions. Career development is typically a big challenge for talent management in manufacturing, since the sector employs a large number of individuals without college education or conventional schooling. However, as the manufacturing sector evolves, it is important to cultivate future leaders by offering them career-advancing professional development opportunities and also provide alternative pathways for those unwilling/unable to take on physically demanding roles. 

3. Employee Engagement and Employee Experience

With the emergence of Industry 4.0, it is important for companies to ensure that the employees they hire are in for the long haul. Unlike earlier when the employer-employee relationship was purely transactional, companies in the manufacturing sector are working towards nurturing a deeper relationship with their employees. Strategic employee engagement through surveys and feedback collection is now a major, important part of talent management in manufacturing. 

4.Strategic Employee Planning 

Strategic planning involves planning resource allocation so there’s the best use of resources and the highest possible levels of productivity. The process helps with identifying key roles within the company and identifying individuals capable of achieving the objective. This part of talent management involves using people analytics and predictive tools to plan the most optimal org chart, shift distribution, team composition, etc. 

5. Succession Planning

A succession plan ensures that the company will continue to function efficiently even if unforeseen vacancies occur. This is a top priority for talent management in manufacturing, since the industry has average to high attrition rates, with new, high-skilled roles emerging every day due to technological progress. 

6. Talent Acquisition and Retention

Recruiting new talent and retaining existing talent are both important. Understanding when to employ from within, and when to recruit externally, is essential to talent management. Working on retaining workers is also an equally important part of this process. 

Learn More: Highlights from Darwinbox’s HR ChangeMakers Club Session: Digital Foundation for A Future-Ready Workforce  

Why Is Talent Management Important for Manufacturing Companies? 

Talent management in manufacturing is a necessity for the industry globally; 60% of manufacturing company executives surveyed by PwC ranked the development of a competent workforce as their top priority. 

In addition, Deloitte research indicated that up to 2.4 million positions may remain vacant until 2028 due to a tightening labor market and a lack of skills required in the manufacturing sector. Even though the long-term effects of COVID-19 are still being determined, the pandemic created an unprecedented disturbance in manufacturing and deeply aggravated labor challenges. 

Therefore, the management of human potential in manufacturing companies is now acknowledged as an integral element of their administration. It is essential due to its capacity to: 

• Minimize the gap between both the organization's required skills and workers' interest in gaining them 
• Continually improve talent quality to increase productivity and efficiency

• Develop a culture of attaining organizational objectives via outstanding performance 
• Enhance organizational culture and conditions of employment 
• Offer greater satisfaction with work to employees 
• Reduce employee churn and enhance retention of core personnel 

Key Trends in Talent Management for Manufacturing 

The talent management function of HR in the manufacturing sector is shaped by several ongoing trends. This includes: 

1. The adoption of new manufacturing technologies, which calls for greater skill development

In all aspects of manufacturing, technological advancements are propelling innovation. It enables businesses to establish highly efficient supply chains, customize products, and save R&D expenses and accelerate time to market.  

Manufacturing companies must recruit individuals with STEM (science, technology, engineering, and mathematics) abilities in order to support new technologies and innovation. In addition, companies must take steps to train existing employees in the skills required for the world of smart manufacturing.  

2. Changes in workforce demographics

Several established economies, such as the United States and Japan, are struggling with aging populations and the retirement of baby boomers, creating a substantial void in the workforce. Manufacturing companies will need to find a systematic way to guarantee a seamless hand over charge and institutional knowledge from one generation to the next. 

A rapid increase in urbanization in relatively underdeveloped nations is often accompanied with a rise in poverty or high dropout rates, culminating in a talent shortage. As a consequence, employers find it difficult to recruit and keep staff, frequently losing them to rivals who offer even modest salary rises or marginally better working conditions. 

3. Gaps between formal education and the skills required in manufacturing

While fundamental abilities may be acquired in the classroom, they can only be refined via real-world experience as well as on-the-job training. Graduates won’t necessarily have the skills they require to take up an open position and hit the ground running.  

However, the gap between what is required at the workplace and what students are trained in shouldn’t be so wide that training the new hires takes months. When recruiting, businesses must consider the candidate’s competencies, the ability to acquire knowledge and adapt to rapidly changing situations. This aspect is gaining importance for professionals involved in talent management in manufacturing, particularly in developing economies where formal education is often general and theoritical, and isn’t always aligned to business needs. 

4. Millennials and Gen Z entering the manufacturing workforce

As older employees retire from the workforce and younger people enter the manufacturing sector, companies will have to adapt to requirements of a younger workforce. For instance, millennials and those belonging to the GenZ are eager to travel and stay mobile, and want rapid professional growth. They are more inclined to pursue their own path, and they're more entrepreneurial than previous generations. Employers, in order to retain talented employees and improve employee engagement levels, need to supply them with the tools and technologies they need, the kind of workplace and work culture they expect, and career opportunities they seek. 

Learn More: 18 Tips to Retain Talent in the Manufacturing Industry  

7 Talent Management Best Practices to Remember 

To win the talent war in the manufacturing sector and succeed in Industry 4.0, the HR and organizational leaders must follow best practices that have proven to be successful in the past: 

1. Invest in nurturing talent

To develop and nurture talent, manufacturing companies need precise specifications, an in-depth knowledge of the skills their employees and prospects have to offer, and concrete ways to enhance workers' skill sets. In the past, these were handled by supervisors and human resource professionals, and were based on conversations and observations with employees. Nowadays, people analytics and other technologies may complement and inform the judgments of leaders. 

These techniques can uncover trends that aid recruiters in locating potential applicants and nurturing them into loyal, highly engaged employees. They may also assist leadership and employees in envisioning and pursuing rewarding career options within the organization. So, it is important for manufacturing companies to invest in tools and technology that assists HR leaders in identifying, upskilling, and nurturing talent and also enabling them to work on employee engagement.  

2. Get creative with recruitment

To gain a competitive advantage over other businesses, manufacturers should begin recruiting aggressively, and look for new avenues to identify potential candidates. Early engagement with students may aid in establishing your company as an attractive place to work. It is also important to educate employees about the growth opportunities in a manufacturing company and that it can be a lucrative profession. 

For example, manufacturing companies could invite college students to work part-time, allowing them to gain experience without incurring college debt. In addition, some businesses collaborate with universities to discover talented overseas students and help them in meeting residency as well as citizenship criteria. 

3. Plan for development opportunities and career pathways

To action this talent management best practice, manufacturing companies can take advantage of their existing scale and geographical reach. Establishing a workforce capable of and willing to work anywhere involves more than international career routes for a few high-potential workers. 

Offshore experience must be integral to professional pathways and pursued at an earlier stage in professional life cycles. While this investment in early-stage workers may seem contradictory, it pays off by aiding in the development of a variety of skills and promoting employee loyalty among those who acknowledge the value of the investment in them. 

5. Integrate and standardize HR processes across the company

In the past, manufacturing companies' HR processes and systems have been fragmented and frequently localized, making it hard to categorize and use data to improve employee engagement, increase productivity, hire the right kind of talent, etc. Manufacturing companies in the era of Industry 4.0 would benefit if they harmonize their HR processes and standardize operational processes. For instance, companies today have operations in several parts of the world, and having a standard, uniform process across the world for all operations will ensure smooth functioning. Companies could also establish processes for identifying early-stage potential for global expansion, and guaranteeing a talent mix across geographies. 

6. Offer training and upskilling opportunities

Training, which includes formal lectures, informal mentorship, on-the-job experiences, rotational growth, special assignments, and overseas project experiences, is a crucial component of talent management in the manufacturing industry. It may also assist firms in developing global competencies without necessitating relocation or exorbitant expatriate packages. 

In the manufacturing industry, where students aren't readily equipped to join manufacturing operations and come with theoritical knowledge, practical training is of importance. Manufacturing companies must proactively create training and upskilling opportunities for employees so they are incentivized to work in the organization and grow in their careers.  

7. Focus on and invest in employee experience

Employee experience as a concept has gained prominence over the last couple of years, with employees across industries and at all levels seeking better experiences at the workplace, rather than merely having transactional relationships between the employee and the employer. This talent management in manufacturing best practice can help manufacturers increase employee loyalty and improved productivity. In addition to compensation and benefits, a value offer comprises the organization's practices, philosophies, conventions, and informal networks. Several of these aspects of a manufacturing company differ based on the local culture, so, manufacturers should adapt their employee value offerings to the conventions and norms of the markets in which they operate. 

For example, the employee value proposition must take into consideration specific social factors, such as offering escorted transportation for female workers in India or extra days off in the US, where paid vacations are not legally mandated. 

Learn More: Refine Your Recruitment Process to Attract the Best Talent 

The Need for Talent Management Systems in the Manufacturing Sector 

Talent management tools that help organizations implement the goals, processes, and best practices, and manage the entire talent management process for a company. Next-gen SaaS-based talent management software can store, gather, and analyze data pertaining to future and current employees and ensures that the process is efficiently planned and executed.  

Modern talent management software can assist HR professionals in the manufacturing sector in the following ways: 

• Predict future resource requirements to avoid any skill gaps in manufacturing 
• Create detailed talent profiles for current and prospective employees 
• Easily identify and evaluate applicants from massive talent pools, such as university recruiting 
• Observe and predict employee and shift/team productivity 

• Enable succession planning, by evaluating an employee's potential, risks, loss impact, and performance 
• Provide employees with exceptional employee experiences 
• Proactively offer workers learning suggestions based on their objectives and goals 

Cloud-based talent management software is particularly relevant for talent management in the manufacturing sector, since it can operate at scale, across multiple sites, and from any device.  

Learn More: The Role of HR in the Manufacturing Sector: Issues and Solutions  

Conclusion 

Talent management in manufacturing will be a top priority for the industry in the upcoming years. Several trends and challenges have made this function critical to the administration of manufacturing operations. There are several opportunities to be gained – via next-gen talent management systems that address key manufacturing issues through AI, automation, and data analytics. By following the right best practices and choosing a robust software platform, HR teams can improve talent management in the manufacturing sector. To learn about a modern, unified talent management platform built for manufacturing companies, schedule a demo with Darwinbox today!