US manufacturers concerned about skilled labor shortage

27 August 2018 Consulting.us

A new report finds that because of upcoming changes to the manufacturing industry – including automation and Internet of Things (IoT) – US manufacturers are worried about a shortage of digitally skilled workers, despite their increasing investments in workforce skills upgrading.

Every four years, management consultancy L.E.K. Consulting performs its Manufacturing Priorities Survey to probe US manufacturing senior managers and executives on their perspectives and near-term outlook for the sector. The 2018 edition surveyed about 200 decision-makers across industrial, automotive, consumer products, electronics, electrical equipment, aerospace and defense, and construction equipment manufacturing.

The L.E.K. survey found that manufacturers are confident about accelerated growth and investment in the US. Using a 7 point scale – with 1 representing ‘strongly disagree’ and 7 representing ‘strongly agree’ – US manufacturers had a mean response of 5.6 when asked how likely accelerated US manufacturing growth was in the next five years. The mean response was 5.2 when asked whether there would be higher investment in onshore manufacturing versus offshore, and 5.1 in response to whether the US was undergoing a manufacturing renaissance.

The confident outlook of US manufacturers was even more optimistic than the attitudes recorded in 2013, where scores to the same questions ranged from 4.5 to 4.9. L.E.K. relates that the strong outlook is being driven by a currently adequate skilled labor pool, the ability to better respond to customer needs, and optimism about increased automation.

In terms of strategic priorities, US manufacturing respondents are, unsurprisingly, most concerned with lowering manufacturing and supply chain costs (54%) and boosting sales growth (51%). Firms are also addressing transformative efforts in their strategic priorities, though, with 40% looking for greater implementation of automation and IoT in the next five years. Meanwhile, 35% are prioritizing efforts to develop and commercialize IoT-enabled products. A further 39% are looking to get ‘customer-centric’ with an increased focus on the customer throughout their product/service offering.

Increased automation bolsters investment in workforce

The L.E.K. survey also found that preparations for automation are boosting firms’ capital and organizational investments. In terms of capital investments, 54% say they are modernizing manufacturing lines for future automation, 38% are upgrading employee monitoring, 35% are investing in plant infrastructure, and 31% are improving inbound/outbound logistics. Meanwhile, in organizational investments, 49% of those surveyed said they were upgrading workforce skill sets, while 38% said they were retraining employees for different functions. Though retraining means that many current workers will stay on to work with AI-enabled robots, 22% of respondents still said that downsizing employee count was part of the preparations for future automation.

Despite investments into skills upgrading, manufacturers are still concerned about a shortage of skilled labor for future ‘digital factories.’ According to the survey, ‘lack of trained employees to utilize added automation’ was a top-three hurdle to adopting automation over the next five years. While 29% identified a potential skilled labor deficit, a further 31% said a big hurdle was that the return on investment was unattractive on incremental automation, while 34% identified a lack of capital for investment into automation.

Meanwhile, the survey found that though most firms are interested in launching IoT products, many are only in the internal planning stages. Though 48% responded that they have buy-in at the executive level, only 15% of manufacturers have reached the commercialization stage. Manufacturers in construction and electronics are furthest along in the process, while aerospace manufacturers have little to no interest in launching IOT-enabled products.

IoT faces cybersecurity, workforce shortage hurdles

L.E.K. believes that the overall delay in IoT commercialization in the sector is due to concerns over data; specifically, who owns it, how it should be collected, who would analyze it, and how it would be leveraged to provide competitive advantage.

Relatedly, concern over cybersecurity is the top hurdle to firms launching an IoT product, with 45% identifying the risk of cyberattacks and data breaches. Automotive manufacturers were the most concerned out of the various industrial segments, with 58% worrying about cybersecurity given the trend toward increased connectivity and autonomous vehicles in the sector.

Other hurdles to IoT product rollout identified by US manufacturers included a lack of technical/software capabilities (39%), lack of data collection/analysis capabilities (36%), lack of field technical support (35%), and a lack of commercial capabilities to sell digital solutions (29%). According to the report, the organizational concerns identified further point to the industry’s worry over a lack of digitally skilled labor.

Finally, most manufacturers are using a ‘follower’ strategy for IoT, according to L.E.K. "About 70% of our survey respondents said they're taking a wait-and-see or quick-follower approach to IoT, which tells us there's some apprehension toward heavy IoT investing at the moment," said Eric Navales, coauthor of the survey report and Managing Director at L.E.K Consulting.

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Korn Ferry rolls out SoFi financial wellness products to its US workers

16 April 2019 Consulting.us

Consulting firm Korn Ferry has partnered with personal finance firm SoFi to offer financial products and tools to its US workforce.

Financial stress is a heavy burden on US workers, with long-term stress often leading to mental and physical conditions. Stress reduces the ability of the immune system to fight off bacteria and viruses, while chronic stress can impair memory and increase aggression.

Financially stressed workers are also less productive, with an estimated $250 billion in US annual wage losses attributed to the effects of stress, according to a 2017 Mercer study. The average American employee spends 13 hours per month worrying about their financial security.

The central issue related to stress at work is low pay, according to surveyed employees, followed by inadequate staffing and company culture.Korn Ferry rolls out SoFi financial wellness products to its US workersFirms will sometimes implement financial wellness programs as a part of their overall benefits package, aiming to create happy and healthy workers with hopefully less outlay than massive salary increases. For firms that pay competitive wages – like most consultancies – financial tools such as investment advice and budgeting software are another feather in the cap of an impressive overall benefits package meant to attract and retain top-end talent in a shrinking market.

Likewise, human resources consultancies such as Korn Ferry have to set a good example with their own benefits and practices outside of the simple goal of effective talent management. After all, how can you expect companies to trust you as a benefits advisor if your own organization doesn’t have a first-class set-up?

To this end, Korn Ferry has further expanded its financial wellness offering for its US employees through a partnership with online personal finance company SoFi. Korn Ferry workers will now be able to access SoFi’s student loan refinancing, personal loan, home loan, and investing products, as well as financial guidance via SoFi financial advisors.

“We offer a complete package of wellbeing benefits that appeal to our colleagues’ physical, emotional, financial, and social wellbeing,” Brian Bloom, vice president of global benefits at Korn Ferry, said. “This new financial offering from SoFi is a natural addition to our Korn Ferry Cares package. We continue to look for new offerings and services to help our global Korn Ferry colleagues and their families.”

Korn Ferry’s global workforce is more than 50% millennials and Gen Z – groups that would be especially well served by SoFi’s refinancing, loan, and advisory offerings.

SoFi’s roots trace back to a loan pilot project devised by a group of Stanford business school graduates, wherein alumni would offer loans to low-risk students. Since 2011, the San Francisco-based firm has expanded to employ more than 1,000 people, and posted $547 million in revenue in 2017.

Korn Ferry and SoFi previously worked together on KF Advance, which expanded career development offerings to SoFi’s 600,000 members. The platform delivers online assessment, resume review, career coaching, and other services drawing on Korn Ferry’s extensive expertise in the area.