Manufacturing sector ‘failing to produce quality leaders’

Nick Elvin

The manufacturing sector lags behind all other industries when it comes to leadership quality, according to research from talent management consultancy DDI and The Conference Board.

The Global Leadership Forecast, which surveyed more than 2,000 organisations, found that just 37% of leaders in the manufacturing field were rated as high quality, compared to the leading sector, health care, which recorded a figure of 59%. Furthermore, the future looks even gloomier for manufacturers, with only 16% rating their future supply of leaders as high, a decrease from 18% in 2011.

Dr Jill George, DDI manufacturing practice leader, said: “Manufacturers are facing some serious people challenges as they deal with a wide range of issues, from baby-boomers retiring, to changing technology in the industry affecting the skills required. In order to respond to these challenges effectively, manufacturers need to do more to optimise their talent supply chain.”

George also suggested that organisations have to rethink their processes and take action to respond to a dramatically shifting business environment in innovative and agile ways.

“An organisation’s people are at the forefront of making such change happen and they, and in particular leaders, need to be empowered with the skills they need to deliver a shifting business strategy,” she added.

“The manufacturing industry is always looking at ways to improve process efficiency and there are huge potential gains to be made in talent processes if those organisations approach talent management with the same rigour as they do production.”

The financial returns from improving talent supply in manufacturing are considerable – DDI analysis shows that companies with high leadership quality and engagement are nine times more likely to outperform their peers financially. The companies that valued their leaders’ interpersonal and interaction skills performed twice as well as organisations that did not, and organisations with the best financial performance are twice as likely to use a systematic process for hiring.

The Conference Board’s recent CEO Challenges report found that human capital remains the top CEO challenge, ahead of customer relationships in second place, and innovation and operational excellence tied for third.

George said: “By working with the business to identify and develop the skills an organisation’s leadership currently has and the skills they are likely to need in the future, HR professionals can save their CEOs a lot of sleepless nights. Optimising the talent supply and leadership pipeline is ultimately the best strategy for improving productivity and gaining a competitive edge.”