The stiffest challenge faced by the manufacturing sector is in the area of talent. Many leaders in the sector have admitted that "what got us here (investment in capex) will not take us there". It's talent that will make all the difference. Though the realisation has dawned on a good number of leaders, the speed of change is slow, very slow. And why would the change not be slow?
For, when it's time to invest in the talent within the organisations, many leaders pay considerable attention to the wage bills, figuring out where they can keep salaries to the minimum.
Bills pertaining to building the factories and buying the machinery don't come under such an intense study. They forget that it is the employees who run these factories and machinery. N.R. Narayana Murthy of Infosys once said: “Our assets walk out of the doors every evening. We have to make sure that they come back the next morning."
One can debate -– “But the IT Services industry has more employees than we do. Mr. Murthy’s statement is true for them and not us.” Sure enough, the IT Services industry employs more than the manufacturing sector and it also contributes more to the GDP of India.
But, manufacturing is second to the service sector in employment and you still cannot take away the merit of investing in talent development.
DDI’s Global Leadership Forecast 2014-15 study suggested that organisations with better leadership quality has a strong positive impact on the financial performance of those companies. In fact, those organisations having good development initiative has 8.8 times stronger bench strength and 7.4 times better engagement with their leaders.
But what we saw in the manufacturing sector was not so encouraging. Manufacturing sector is at the bottom of the stack in terms of leader-readiness.
With only 37% effective leadership quality, the manufacturing sector is way behind some others, which include financial Services. In terms of talent, what are the challenges faced by the manufacturing sector? One, there is a large bubble of retirements looming ahead as many baby boomers are ready to hang up their boots.
Two, in the last few years, Indian manufacturing companies have faced a severe talent drain as the service sector was paying much higher compensation packages and luring the young talent to their organisations. And this has led to a lot of brain drain and a huge talent gap in the last 10 – 15 years. It is only in the recent past that we are seeing a reverse trend of talent adopting jobs in core industries as the manufacturing industry also matched the salaries of other industries.
Key question
When we are discussing talent development and retention, it's important we ask, "Where should leaders spend their time?" When this question is asked in the context of the manufacturing sector, the answers could open the door to solving the crisis of talent there.
If you put this question to leaders across an organisation, you will be amazed with the responses. Some will say, "With the customer." That's an obvious thing. Other things you may hear would include planning and organising, managing organisational politics and being on the shop floor to ensure production deliverables are met. You may even hear them say they are responding to emails.
And why not? Our organisations are designed in a way that we get too busy just managing stuff. Managing is doing administrative tasks like scheduling, making decisions and controlling processes. We found that leaders spend an exorbitant 41% of their time managing day-to-day tasks.
Our research found that organisations that value interacting as against managing outperform their competitors in the industry two times when it comes to financial performance and leadership engagement; and create 2.5 times better and stronger bench strength for their organisations. This leads to 20% of the leaders being ready for a critical position within the organisation. Now, what does interacting mean? While evaluating thousands of leaders in the manufacturing sector, DDI took into consideration, a wide range of competencies and interaction skills were among the focus areas.
Here are the interaction skills against which these leaders were assessed.
* Maintaining or enhancing self-esteem.
* Listening and responding with empathy.
* Asking for help and encouraging involvement (to build collaboration).
* Sharing thoughts, feelings and rationale (to build trust).
* Providing support without removing responsibility (to build ownership).
* Facilitating discussions
Leader performance on these interaction skills is sorely lacking, with less than one in three displaying high proficiency. Not surprisingly, senior managers perform as poorly as new frontline leaders.
How can change be effected? Leaders have to take systematic steps and the effort has to be sustained.
They have to first start planning for organisation-wide impact and sustained results. Rather than over-investing in training programmes, they have to focus on reviewing the effectiveness of these programmes by the impact they have had on the talent in the organisation.
Here is the crux of the matter. Many a time, I have heard a client say that the operational review dragged on and there was only a little time -- five minutes -- for talent review. I would ask them to change the order. First start with the talent review and then go to operational review.
Such an approach will surely make a difference.
( Amogh Deshmukh is Managing Director at DDI India )
