With subsectors as diversified as aerospace and defense, chemicals manufacturing and construction materials, the industrial segment of the economy doesn’t look and behave as a single sector. It is, however, in a state of transition across the board and industrial companies are making deals left and right to prepare for the future. Whether buying, selling or sharing another business entity, these transactions can promise accelerated growth, preservation of the core business or access to new markets. Regardless of which strategy these businesses are pursuing, they will need to rethink their approach to talent acquisition and workforce management. They cannot rely on the mindsets of leaders and skill sets of employees that drove the growth of yesteryear. As oil prices drop to their lowest levels since the Great Recession and the majority of commodities feel the effects of slowing growth in China and subdued demand in the rest of the world, businesses tied to resources are finding themselves dealing with the realities of sustained low prices. Leaders are cutting capital expenditures, deferring capital projects, and seeking to reduce cost through streamlined operations, divesting from non-core businesses and reduced headcounts. In “right-sizing” their businesses, commodities companies are pursuing consolidation through cost and the leadership talent that has developed through a sustained period of growth may not have the skills, experiences or competencies that are required in the current business cycle. Commodities firms, if they are to succeed in today’s market, need a highly productive workforce that can do more with less, for less. These businesses are also realizing that new skills are required for success as their business operations evolve. There’s an increased demand for tech savvy talent to drive innovations that will improve operating performance and leaders skilled in the realignment of assets. On the other side of the equation, with deal value nearly doubling from $87 billion in 2014 to $172.7 billion in 2015, mergers and acquisitions are increasingly characterising the global logistics and transportation industry. The beneficiaries of low fuel costs and a better economy that’s driving consumer demand – ensuring more goods are moving around the country – many companies within the industry have become attractive acquisition targets. The value of consolidation in such fragmented sectors is apparent and private equity firms are increasingly getting in on the action. A study from the Harvard Business Review, leveraging data from Korn Ferry assessments, found mergers with acquiring leaders possessing certain skills were more financially successful than mergers led by managers without those skills. As players within transportation and logistics pursue a strategy of consolidation through investment, the necessity of leaders with the ability to motivate others, influence others, build relationships, develop others, act with integrity, show adaptability, and focus on customer needs is paramount. One could make the case that social skills are important for today’s logistics and transportation leaders than ever before. Eighty-one percent of manufacturing CEOs believe technological advances will be the greatest driver of business transformation over the next five years, according to a PwC study on talent management in manufacturing. Consider the impact 3D printing, the Internet of Things, cloud computing, and automation are having on every aspect of a manufacturing business, from product development through warehousing and supply chains to consumer feedback. Advanced technologies are creating efficiencies that reduce the number of individual contributors needed to bring a product to market. To leverage these technologies, companies need to be seriously investing in digitisation and the acquisition of talent with technology skills. Manufacturing businesses are looking to hire, among other roles, software engineers, system analysts and programmers. They are finding talent competitors now lay outside the industry, often in technology, and figuring out how to lure top talent away from tech is proving a challenge all to its own. As manufacturing companies pursue a strategy of consolidation through innovation, they are recognising the importance of brand strategy and the merits of a strong employer value proposition. In one way or another, industrial companies are pursuing business transactions, be they mergers, acquisitions or divestitures, to stay competitive given current economic conditions. Leaner, more streamlined, organisations are not necessarily a bad thing as many companies are focusing on what they do best and figuring out how to do it better. They’ll just need to rely on a new kind of leadership and workforce to be successful. Outsource is partnering with Futurestep to produce a pair of editor's breakfast roundtables on talent acquisition and management, taking place in London on June 9th and July 7th 2016. For information on how to attend, please contact Ellyn Peratikou at email@example.com or on +44 (0)7581 375557.
An industry in transition: why industrial companies need new talent for future success