Skills shortages remain the elephant in the room

The major differentiator between great companies and the also-rans is the quality of their people. The best seek to attract and develop employees who are loyal, committed, fully engaged in their work and competent to do it. The first three of these attributes are to do with attitude, but the fourth – competence – requires management intervention in the form of training. Perhaps that's why skills – or, more accurately, a lack of them – preoccupy many of the manufacturing managers polled in Works Management's latest People & Productivity Survey. A staggering four fifths (82%) of respondents report a skills shortage in this year's survey, up from an already worryingly high 75% last year. With the situation getting worse for 46% of companies (marginally up on the 43% reported last year), the sector faces a skills crisis that threatens to wipe it out. This was brought sharply into focus by a recent industry report warning of the urgent need for almost a million workers by 2020 to replace those retiring or leaving the industry. Yet, the manufacturing sector has so far conspicuously failed to rise to the skills challenge. There is a clear danger that, despite the introduction of government-backed skills funds, the rebirth of apprenticeships and the airing of primetime TV shows that highlight manufacturing (witness The New Troubleshooter, Made in Britain and Mary's Bottom Line), skills shortages will worsen as more of the golden generation hang up their PPE and slide gently into retirement. Although the will is there in Whitehall to improve the skills situation, it is for individual companies within the sector to forge a positive way ahead. And there are encouraging signs that this is at least starting to happen, with the sector attracting apprentices, shopfloor employees, engineers and managerial job applicants that show impressive levels of enthusiasm and commitment, according to our survey. Nonetheless, manufacturers still struggle to fill many of their vacancies, with most skills shortages (61%) suffered in experienced engineering roles, closely followed by skilled shopfloor positions (57%). Multi-skilled maintenance engineers come next (40%) with middle and senior managers in fourth position (26%) and leadership-responsible positions in fifth (24%). Skills problems causing downtime There is a worrying spike in sites saying skills problems are causing downtime (up nearly 20% from 44% in 2013 to 61% this year). With higher productivity a priority if the UK economy is to enjoy sustained growth, manufacturing can ill afford unnecessary machine stoppages caused by poorly trained maintenance staff. Frustration is evident in many of the comments that accompany this finding (see the box on page 25). Expensive CNC machines standing idle waiting for a programmer, lines running slower because of a paucity of skilled operators, the inability of maintenance staff to fault find, poor problem-solving skills and a lack of maintenance leading to excessive machine downtime – the list of problems that eat into profits is seemingly endless. One respondent reports that skill shortages have resulted in an overtime requirement of eight hours on a standard 38-hour week – a horrifyingly expensive additional labour cost. Another bemoans a shortage of CNC setters resulting in back orders rocketing from £36,000 to £280,000. A third says: "During periods of sickness/holiday it is difficult... Despite lots of time spent cross-training, it seems some people lack the basic desire to do anything different." A lack of management skills The good news, however, is that many managers are clearly aware that something needs to be done in this area, acknowledging a lack of management skills as their overriding priority. This is evidenced by the fact that two fifths (41%) believe recruitment difficulties are a critical management concern and almost half (49%) acknowledge talent development as very important. The desire to do things differently can, of course, be stimulated by engaging with your employees and, encouragingly, the vast majority of respondents to our survey (99%) are familiar with the concept (even if 13% admit they did not understand it in enough detail). Engagement is defined as having a heightened emotional connection to the business that influences employees to exert a greater discretionary effort to their work in pursuit of the business's goals. US business woman Mary Kay Ash, founder of a multi-billion dollar cosmetics company, emphasised its importance when she said: "Everyone has an invisible sign hanging from their neck saying, 'make me feel important.' Never forget this message when working with people." It was heartening to discover that almost half of those we surveyed (47%) believe that engagement has improved since last year. This is less impressive, however, in light of the fact that fewer than half (46%) formally measure engagement through an employee survey. If 54% of sites aren't measuring, then any assessment of engagement will be as accurate as reading the leaves in the factory teapot. Perhaps it highlights a general lack of know-how about how to translate engagement from the purely theoretical into a legitimate performance metric? Of those that do measure engagement, an overwhelming 87% of managers try to use the feedback to adapt their business procedures/management styles to improve engagement levels. This, of course, begs a glaringly obvious question: what is the other 13% doing with the results they gather? Nothing, it would appear. Support for disengaged employees, when it is present, comes in a variety of forms including setting personal goals, listening and involving them in improvement activities, team building and away days, creating opportunities for recognition and personal development and, of course, remuneration. However, 5% do little to support those who are disengaged, believing that they are born that way and so, presumably, beyond redemption. They choose to concentrate their management firepower on the people who are engaged. One comment sums this up: "Don't concentrate too much on the disengaged; focus on those who want to move in the same direction." An apparent keenness to dismiss the disengaged – usually figuratively rather than literally – is perhaps, surprising given that the vast majority of respondents to our survey (82%) see a direct link between improving employee engagement and business performance. Gone are the days of dismissing soft skills as airy-fairy management. Enlightened managers clearly recognise that soft skills equal hard profit. Engagement must be actively encouraged Of course, engagement doesn't take place in a vacuum; it must be actively encouraged and that means effective management. However, almost a third of those surveyed – 29% – offer no formal training to first time managers. Rather, they are expected to learn on the job. It's hardly surprising that people who've developed as technical specialists have very little grounding in motivational/ performance management techniques. Incidentally, one particular comment – "We have no first time managers" – came as something of a surprise, suggesting that this company has an anti-promotion policy that stamps firmly on any chance of progressing up the career ladder from the shopfloor. From where does it source its new managers? Surely, they can't all be appointed externally? Thankfully, many managers recognise that we are complicit in creating disengaged people, with an overwhelming number of respondents selecting management deficiencies as the key driver of disengagement. Historic distrust of management A lack of management skill is identified as the number one factor (18%), but an historic distrust of management and workforce job fears also feature in top three, pointing to a clear lack of honesty in the relationship between many managers and their subordinates. More encouragingly, 43% do offer a formal accredited training course that lasts two days or more. Skills are intrinsically connected to how engaged employees are because people will only be motivated to learn if they feel a strong association with the business. However, the soft skills associated with encouraging employee engagement are, it seems, in short supply. Engineers, managers, shopfloor and apprentice candidates all score weakest in interpersonal skills and self-confidence. Potential managers scored lowest on motivational/people management prowess. Some of our respondents acknowledge this with remarks like: "management don't have skill to see the problems", and "senior management are doing day-to-day tasks so they are not thinking about developing the business". It's clearly time for managers to take a more progressive approach to skills development and employee engagement. Enlightened manufacturers employ people who are not only committed to their jobs, but are also fully engaged in their work because they are highly motivated and, crucially, have been provided with the skills they need for peak performance. Methodology 102 senior managers and decision-makers from a range of manufacturing sites responded to WM's People & Productivity survey. The sample included representatives from sectors such as plastics & rubber, general mechanical engineering, electrical engineering, pharmaceuticals, aerospace and automotive. Respondents came from companies large and small, from those employing over 500 to those with fewer than 50 people. Key findings in numbers • 82% are suffering from skills shortages • 25% have endured frequent downtime and lower profitability because of skills shortages • 62% see maintaining morale as a critical management concern A barometer of manufacturing manager morale • There has been a healthy increase in managerial moral (34%) – many people are clearly doing what they love • Most respondents say their line manger offers clear objectives (35%) and recognises achievement (36%) so expectations are understood and acknowledged, bolstering morale • Around a third of respondents have experienced stress as a result of workplace conflict, but most appear confident that the support is there to resolve the issue • "Not enough resource, not enough time" is a common lament among manufacturing managers. Indeed, these two factors are way out in front as top sources of stress. Could this be a consequence of poor soft skills and an inability to manage others' expectations without making the situation confrontational? • A third of managers already in place (34%) have suffered stress or anxiety in the workplace because of a conflict with somebody they were managing. Typical approaches to dealing with workplace conflict vary with, at one extreme, 6% grinning and bearing it and, at the other, having confidence that the senior team will help iron out any issues • Conflict is not tolerated and the perpetrators are often managed out in 16% of workplaces, 17% speak to the human resources department and 13% speak to a senior colleague in the hope that he or she will deal with the problem • A quarter of managers are looking to leave their job in the next year, most (46%) because they judge it is time for a change. Just over a third (35%) are looking for a pay rise or promotion, 15% are retiring, another 15% don't like their boss, and 4% are moving on because of redundancy or relocation. Reassuringly, none plan to leave as a result of stress • However, most managers are happy with their life/work balance, with three quarters content enough not to be seeking another job