Redefine workforce development to uncover digital success in manufacturing

Talent and skill shortages continue to be a growing concern for manufacturers as they mature their digital capabilities. Beyond just the large and growing shortage of workers, there’s an equally troubling deficit of the digital skills needed to power the move toward smart manufacturing and Industry 4.0.

Industry leaders recently ranked “building a stronger and more resilient workforce” among the top three investment priorities for 2024. Nearly three-quarters of manufacturers surveyed cited workforce as a key area for investment this year and one of the three leading factors that will contribute to expansion.  

The intent to invest is positive news—but directing investment for maximum impact won’t be easy. Building a resilient workforce for a digital future is new territory—and requires deliberate action on multiple dimensions in not just skills but also culture, leadership, and organizational design. 

Our take? Look through the lens of key stages in the employee lifecycle to redefine and help sharpen the focus—particularly for areas that have traditionally not been a priority for manufacturers.

Recruitment in the manufacturing industry

Manufacturers need to better understand the ideal attributes (e.g., analytical thinking, detail orientation) and skill profiles of workers in a digital and data-driven factory—and then update talent acquisition strategies accordingly. This includes designing new roles and team structures based on emerging trends and changes to the business strategy.  

An even more critical and overlooked area of focus is culture: the behaviors manufacturers expect from employees to drive differentiation and competitive advantage. Manufacturing has traditionally been highly output-focused, with less attention to workplace culture. To enable smart manufacturing, organizations must consciously align culture with strategy. West Monroe found that a strong culture that emphasizes collaboration, learning, talent retention, and managed risk-taking is key to successful transformation. Those four factors account for 80% of the difference between high-performing digital organizations that exceed revenue and profitability goals and lower-performing, less digitally agile organizations.

Culture is a significant factor in retaining workers—and is becoming increasingly important in attracting them in the first place. In the 2023 Manufacturing Institute Study, The Role of Company Culture in Workforce Attraction and Retention, nearly 87% of respondents said they communicate company culture in interviews. Many also do so during employee onboarding. But how many actually measure the impact?  

While there may be urgency to fill empty seats today or create new jobs, the evolution of digital manufacturing will increasingly depend on filling roles with the right people to drive recruiting strategy—workers who demonstrate the competencies, skills, and behaviors to become effective leaders in a digital factory. 

Many companies lack a clear understanding of what “culture” even means. We view culture as a set of aspirational behaviors that drive work in an optimal way. In a smart manufacturing environment, some ideal behaviors will be different than in the past. They will vary from organization to organization, but at a basic level they include attributes like greater collaboration and communication among teams and workers, use of data to make decisions, and a bias toward taking action to continuously improve performance.  

Adapting corporate culture for a changing strategy is complex work. We’ve identified nine critical drivers for enabling the culture to influence business outcomes. These fall into three categories: strategy, operations, and talent. All require intentional design and investment. 

Some key questions to address: 

• What skills do we need in the organization today, a year from now, and three years from now?  
• Where are the biggest gaps? How will we fill those gaps? 
• What will need to change to recruit potential leaders? 
• What behaviors do we need to recruit for to leverage culture as a competitive advantage in our employer brand/employee value proposition?
• How are we leveraging each of the nine drivers above to intentionally reinforce our culture? 

Manufacturing workforce management, development, and upskilling  

The most economical way of acquiring new skills is to develop them. Research by the World Economic Forum calculated that the cost of hiring a new employee is more than three times the cost of upskilling a current employee for the right digital skill set. 

Our Building a Digital Organization Study identified a defined learning and upskilling strategy for building necessary digital skills as one of the four most important accelerators of high performance. All highly agile, high-performing companies we studied have a learning strategy in place to drive employee development, and 80% balance developing existing employees with hiring talent to increase digital capabilities. 

That said, traditional manufacturing training programs won’t be effective for preparing talent for roles that don’t exist today—for several reasons.

A training orientation rather than a learning orientation 

Training is an “event” where an expert imparts expertise on trainees, with emphasis on memorizing the manner in which a task or activity should be completed. For trainees, the experience is predominantly passive. Responsibility rests with the trainer to shape trainee’s knowledge and behavior to drive desired outcomes. 

Learning, on the other hand, happens when subjects are actively engaged in solving problems or achieving goals. A facilitator or guide provides space and time to practice, as well as useful feedback on progress—but learners are ultimately responsible for their own growth and performance. Building digital skills requires learning.  

The most successful organizations have made this shift in mindset—driven by the business, not just the learning and development, human resources, or talent management functions. To orchestrate this shift, we have found it effective to use a “resilient learning” approach that emphasizes development of actionable knowledge, structured practice, and refinement—reinforced by continuous assessment and feedback.

Misalignment with the skills requirements of digital manufacturing 

The digital factory requires hard and soft skills that have historically not been emphasized in training. This will require significant reworking of current approaches in both scope and target audience. The good news is that smart manufacturing environments—and the data they produce—make it more possible than ever to measure training effectiveness, competency, and proficiency beyond course tests and instructor feedback surveys.

Insufficient attention to leadership development 

An organization needs strategic, people-focused leaders who can bring a team along through complex transformation. While executive leadership sets the cultural tone, front-line managers are the day-to-day face of it—they have a direct impact on buy-in and retention. Simply put, good leaders engage, develop, and retain talent. Bad leaders lose talent. In the Manufacturing Institute Culture Study, 97% of employees surveyed said they stay because of colleagues, including co-workers and their manager. 

Many manufacturers underinvest in leadership development. If it does happen, it’s often a one-and-done effort. As a result, managers struggle to lead and upskill their teams. Compounding the issue, there’s still a tendency to promote the “best operators” to supervisors based on work ethic and quality rather than leadership potential—and then fail to provide them with training and coaching they need to be effective leaders. 

Manufacturers need fresh approaches for driving the right managerial behaviors. Active coaching and mentoring should be at the top of the list, along with a combination of leadership development, performance management, and both financial and non-financial rewards that reinforce managerial capabilities such as: 

• Coaching and developing people rather than telling them what to do 
• Focusing not just on a team’s output but how that output happens 
• Being available and communicating with people on the shop floor authentically 
• Leading people in periods of uncertainty or ambiguity and/or during periods of change  
• Avoiding micromanaging while also balancing needs such as efficiency and safety 

Role expectations should be intentionally defined and clearly communicated. Leadership success profiles and role cards can help. These tools outline responsibilities, required skills and knowledge, essential behavioral competencies, and metrics/KPIs so people are clear on what is expected of them and what “good” looks like. These are also useful for supporting consistent hiring, learning/skilling, development, reward, and promotion decisions. Leadership standards or “playbooks”—similar to standard operating procedures for front-line workers—can also be useful for people moving into front-line leadership roles by providing guidance for the right ways of working.  

Another way to facilitate leadership development is to find and eliminate “roadblocks” that consume leaders’ time and limit their performance and then replace those with activity that improves effectiveness—for example, the ability to coach others. Gartner’s research has found that “employees who report to managers who coach effectively are 40% more engaged, exhibit 38% more discretionary effort, and are 20% more likely to stay at their organizations than those who report to ineffective coaches.” 

Finally, don’t underestimate the impact of organization structure on leadership and managerial effectiveness. Transformation provides an opportunity to design roles and team structures intentionally to reinforce positive cultural norms. Having a clear organization structure also determines the types of leaders required—front-line leaders, leaders of leaders, etc.—and provides visible career paths, roles that stretch people, and opportunities to learn. 

Some key questions to address: 

• What skill gaps do we currently have that can be mitigated through upskilling rather than hiring? And what emerging skills will we need more of in the future? 
• Do we have the capacity to refresh development programs regularly to keep pace with change? 
• What should we be doing to build leaders? 
• What behaviors should our leaders exhibit to effectively reinforce our culture? 
• How do we show that we value both hard and soft skills? 
• What are the profiles of successful leadership in our organization? 
• Do we effectively measure leadership behaviors—and what do we need to change? 
• Are we promoting the right people, including those with leadership potential? 
• What are our leadership skill gaps, and how will we close them through development? 

Exit management 

Talent retention is one of the four most critical accelerators of high performance identified in our study. There are many facets to retention—enough to warrant its own space. While retention is the ultimate goal, it’s also important to have robust strategies around employee departures—particularly given the looming retirement cliff, with 51% of manufacturing jobs currently held by people between the ages of 45 to 65+. Manufacturers need to ensure the institutional knowledge and experience of retiring employees stays within the company. 

Heightened focus on organization design can help pinpoint potential “points of failure” when workers retire or leave, allowing better preparation. Manufacturers should be tracking the skills they may lose through attrition or retirement and establishing succession plans—including having a “talent bench” of employees who can be developed to move up to fill key or new positions.  

Manufacturers should also have a process for capturing institutional knowledge, ideally via a knowledge management tool that houses standards and other important documentation. Knowledge transfer activities shouldn’t wait until someone is heading for the door. Look for opportunities to build it into ways of working now—for example, through mentoring and/or apprenticeship relationships.  

Not everyone will be a fit for specific roles as the organization transitions to a more digital state. To retain institutional knowledge, manufacturers will need better capabilities for determining where people fit best in a digital operation, engaging in open conversations around mobility, and facilitating transitions to new roles inside or outside the company. 

Finally, it is a good idea to make sure that exit interview processes capture adequate insight into sentiment around culture, leadership, and strategy—and share that insight with the extended leadership team. 

Some key questions to address: 

• What can we do to increase mobility within the organization to retain talent and experience? 
• How successful are we identifying our critical talent risks and fortifying our teams to be resilient? 
• How can we more effectively capture and share institutional knowledge?  Do we have enabling tools or technology to assist these efforts?  Are we undertaking these efforts in a proactive versus reactive manner? 
• Are our succession plans sufficient for evolving roles? 

Build a workforce for the future of the manufacturing industry 

Workforce evolution is complicated—and it must happen without compromising current operations.  

As with other aspects of transformation, it’s helpful to have a North Star to guide you through multiple layers and months of work. One useful first step toward setting your organization on course for the work ahead is a “vision and value” exercise. This engages leaders in productive discussion around a common definition of success and promotes understanding of their roles in driving it. 

It also helps frame the work ahead—providing direction for answering many of the questions posed above, setting objectives, establishing metrics to measure success, and communicating change effectively. That’s how organizations will navigate the barriers and accelerate progress toward a resilient, digital workforce of the future.