Tag Archives: holden

A Manufacturing Risk: the Talent Gap

Twenty five years ago labor experts warned employers about an impending shortage in the skilled manufacturing workforce caused by the soon-to-be-departing baby boomers. Almost no one listened.

Those few employers who did realized preparation meant investing in training. Investment = money so many employers put it off, especially during the Great Recession of 2008 – 2010.

So here we are America … needing to fill 3.5 million manufacturing jobs in the next 10 years, according to the Deloitte publication, The Skills Gap in U.S. Manufacturing 2015 & Beyond.”

Deloitte opines that we’ll be lucky to fill 1.5 million of those openings, leaving a gap of 2 million jobs. This potential shortfall didn’t go unnoticed by Daimler Trucks North America (DTNA), a manufacturer of class 5-8 commercial vehicles, school buses, and heavy-duty to mid-range diesel engines. The company saw this bullet coming years ago.

See also: Insurance And Manufacturing: Lessons In Software, Systems, And Supply Chains  

To those in the know, the skilled workforce shortage conundrum isn’t new. As far back as 1990, the National Center on Education and the Economy identified this job shortfall in its report, “The American Workforce – America’s Choice: High Skills or Low Wages,” stating large investments in training were needed to prepare for the slow workforce growth.

If you look at the burgeoning skills gap, coupled with vanishing high school vocational programs, how, as an employer, do you recruit potential candidates?

To not address the millennials’ employer predilections is to miss an opportunity to tap into a vast resource of potential talent.

DTNA addresses the issue by reaching out to high schools throughout the U.S. via the Daimler Educational Outreach Program, which focuses on giving to qualified organizations that support public high school educational programs in STEM (science, technology, engineering and math), CTE (career technical education), and skilled trades’ career development.

Daimler also works in concert with school districts to conduct week-long technology schools in one of the manufacturing facilities, all in an effort to encourage students to consider manufacturing (either skilled or technical) as a vocation.

Like all forward-looking companies, Daimler must address the needs of the millennials who – among a number of their desires – want to make the world a better place. Jamie Gutfreund, chief strategy officer for the Intelligence Group notes that 86 million millennials will be in the workplace by 2020 — representing 40 percent of the total working population.

To not address the millennials’ employer predilections is to miss an opportunity to tap into a vast resource of potential talent. To that end, Daimler has always emphasized research in renewable resources and community involvement as well as a number of philanthropic endeavors. Not only is it the right thing to do, but it also appeals to the much-needed next generation who will fill the boots of the exiting boomers.

See also: 4 Steps to Integrate Risk Management  

Just because a company manufactures heavy-duty commercial vehicles doesn’t mean it can’t give back to the environment and the community at large. And, in the end, that will help make the world a better place.

The Cyber Threat in Manufacturing

A friend of mine asked me if the cyber-risk threat was a bit of flimflam designed to sell more insurance policies. He compared cyber-risk to the Red Scare of the 1950s, when families scrambled to build bomb shelters to protect them from a war that never came. The only ones who got rich back then were the contractors, he concluded.

I found his question incredible. But I realized that he didn’t work in the commerce stream, per se, which quelled my impulse to slap him around.

See also: 3 Things on Cyber All Firms Must Know  

I shared with him some statistics that sobered him up quickly. I explained that cyber-crime costs the global economy more than $400 billion per year, according to estimates by the Center for Strategic and International Studies. Each year, more than 3,000 companies in the U.S. have their systems compromised by criminals. IBM reports more than 91 million security events per year. Worse yet, the Global Risks 2015 report, published in January by the World Economic Forum (WEF), included this rather stark warning: “90% of companies worldwide recognize they are insufficiently prepared to protect themselves against cyber-attacks.”

Cyber protection is not just about deploying advanced cyber threat technology to manage risk; you also have to educate your employees to not fall victim to unassuming scams like “phishing,” which is stealing private information via e-mail or text messages. It remains the most popular con as far as stealing company data because it’s so painfully simple. Just pretend to be someone else and hope a few people fall for it.

While most people understand the threat to data privacy for retailers, hospitals and banks and other financial institutions, few realize that manufacturers are also vulnerable in terms of property damage and downtime. In 2014, a steel manufacturing facility in Germany lost control of its blast furnace, causing massive damage to the plant. The cause of the loss was not employee error, but rather a cyber-attack. While property damage resulting from a cyber-attack is rare, the event was a wake-up call for manufacturers worldwide.

According to The Manufacturer newsletter, “the rise of digital manufacturing means many control systems use open or standardized technologies to reduce costs and improve performance, employing direct communications between control and business systems.” This exposes vulnerabilities previously thought to affect only office computers. In essence, according to The Manufacturer, cyber attacks can now come from both inside and outside of the industrial control system network.

See also: Now Is the Time for Cyber to Take Off  

Manufacturers also need to be concerned about cyber attacks that would: a) interrupt their physical supply chain or, b) allow access to their system via the third-party vendor. Manufacturers must then take steps to mitigate those risks. When Target and Home Depot were hacked several years ago, it wasn’t a direct attack on them but an attack on one of their third-party vendors. By breaching the vendors’ weak cyber security, the criminals were able to access the larger prize.

To circle back to my friend’s weird fallout-shelter theory, it’s certainly a good idea to have a backup plan in case one is hit by a proverbial “cyber-bomb.” But rather than hunker down and wait for the attack to occur, it’s critical to educate employees, vet vendors’ cyber-security and adopt — and continuously optimize — a formal cybersecurity program.

Oklahoma

The Pretzel Logic on Oklahoma Option

As a veteran of the worker’s compensation claims trenches, I saw first-hand how the expensive nature of the system drove employers out of business. It sad to see businesses go belly-up, and it was equally sad for the workers who were suddenly unemployed.

It was definitely a case of lose-lose.

One way to combat the high costs of workers’ compensation was to opt out of the traditionally expensive system in states that allowed it. By opting out, employers were forced to be more engaged in the administration of their program and focus more on the outcome.

The result was a less expensive system, providing quality benefits to the injured workers and improving the overall outcome.

Oklahoma was one of the states that seemed to have found the right mix. So I was quite dismayed to learn of the recent decision by the Oklahoma Workers’ Compensation Commission (WCC).

The case, Vasquez v. Dillard’s Inc., involved a worker for Dillard’s who was denied benefits after a work injury that was determined to be an aggravation of a pre-existing injury.

The WCC declared the opt-out portion of the workers’ compensation system unconstitutional because they felt it created a dual system where the injured worker is treated differently.

The most intriguing facet is how the WCC abandoned its traditional administrative role for that of a judiciary in deciding what law is, and is not, constitutional.

That, I suppose, is another story.

However, the WCC completely ignored the already approved opt-out option and remanded the case back to the administrative law judge within the traditional workers’ compensation system.

Not only am I concerned about that sort of pretzel logic, but I also see it as another attack on exclusive remedy.

Right now, my company doesn’t do business in any of the opt-out states. That doesn’t mean we wouldn’t consider it if that option presented itself down the road.

But that is probably on hold as any state considering moving forward with the opt-out system has now been stopped dead in its tracks. Best to sit tight for now.

As for whether the Oklahoma ruling will change what I do with regard to workers’ compensation remains to be seen. As I’m sure many employers will do now, I’ll wait on the sidelines and see how this plays out.

This is basically what I was doing before the Oklahoma ruling … observing from afar to see if the opt-out system (if it came to my states) was not only cost-effective but also fair to the workers.

I would never consider an alternate workers’ compensation system unless I was convinced it offered our injured workers the same, or better, benefits as the traditional system. I would also need to be convinced that it produced better outcomes.

How to Think About Marijuana and Work

With a flip of the calendar, on July 1, Oregon became the fourth state in which recreational marijuana use became legal. For many Oregon employers, this status change from illegal to legal wasn’t a big deal. Medical marijuana is already legal in 24 states, including the Beaver State, and possessing less than an ounce was decriminalized in Oregon 40 years ago.

Recreational marijuana is just a new twist on an old story. All it really means is you can’t go to jail (or be fined) for smoking pot recreationally.

However, this “non-event” has made risk managers ponder the ramifications of recreational use, especially for their employees who work in the manufacturing industry. Manufacturers have strict policies to ensure a safe work environment. It goes without saying that people who are under the influence at work in a manufacturing or an industrial setting are far more likely to be injured on the job.

Being stoned at work should be treated no differently than being under the influence of alcohol or prescription medication. You certainly can’t show up drunk for work.

The employer is responsible for that employee as soon as he walks on to the job. Any drug use that affects an employee’s ability to perform the job should be a genuine concern for the employer.

The difficulty for employers is that there is no scientific method to determine a marijuana intoxication level, unlike a blood-alcohol level. Until there is definitive scientific evidence, employers are being advised to err on side of safety and forbid an employee to be under the influence of marijuana.

To do that, the employer needs a crystal-clear, zero-tolerance policy. Unless the employer has been living in a cave the past 50 years, it already has such a policy. But it should be updated to specifically address marijuana use, both on the job and recreationally, because it could affect the employee’s job performance.

It is predicted that in 2016 – the third election cycle in which marijuana legalization measures will be on ballots across the country – as many as seven more states could allow recreational use of marijuana. As each state approves the recreational use of marijuana, there looms in the background the knowledge, that under federal law, its use remains illegal.

Whether that will eventually force the feds to take a stand remains to be seen. Right now, the feds have just rolled over to let you scratch their belly.

But as each state joins the ranks of approving pot use recreationally, what was a minor irritant to the feds could grow too large for them to ignore.

The bottom line is that a stoned CPA might drop a number or two, but a stoned assembly line worker might drop a few fingers. It doesn’t matter if the cause is pot, alcohol or prescription medication. Smoke cannabis at work – or show up stoned – and you’ll be disciplined. It’s not about a worker’s rights; it’s about workplace safety.

The Aging Workforce and Succession Plans

In 1969, Neil Armstrong became the first man to set foot on the moon, marking the culmination of a $24 billion NASA space program. Ten years later, NASA sheepishly admitted they could not return to the moon even if they wanted to — they couldn’t remember how.

This is a perfect example of what is referred to as the “knowledge gap”: the loss of critical information when employees leave their place of employment. In the case of NASA, all the key people involved in the original Apollo 11 project had retired…and no one thought to jot down what they knew. To make matters worse, blueprints for Saturn V, the only rocket powerful enough to travel to the moon, were lost.

Even though this NASA fumble took place 30 years ago, the exact scenario is being played out in spades as Baby Boomers (those individuals born between 1946 and 1964) are reaching retirement age. Most employers have made no effort to capture the Boomers’ knowledge before they eventually leave. In the next 20 years, 76 million Boomers will sing the Johnny Paycheck song as they walk out the door, taking with them an entire generation’s worth of knowledge that can never be replaced. There is an inconvenient truth in the potential calamity, and most companies aren’t ready for the aftermath.

Boomers make up more than one third of the nation’s work force. They fill many of its most skilled and senior jobs. Thanks to their near-workaholic habits, they are among the most aggressive, creative and demanding workers in the market today. Economists predict their exit will cause a great, sucking hole in the workplace universe.

Companies need to bear in mind that the coming retirement years are going to be larger than at any other time in U.S. history. With 76 million Boomers leaving the workforce and only 46 million Generation Xers (those born between 1965 and 1980) available to take the newly vacant roles, there will be a deficit of 30 million workers. So while the Millennials (also known as Generation Y — those born between 1981 and 1995) number approximately 100 million, the oldest of them are still too young and inexperienced to step into leadership roles.

A study earlier this decade by the Bureau of Labor Statistics reported that more than 17% of Boomers holding executive and managerial positions are expected to leave their careers by 2010.

While some companies have begun scrambling to hire trainees, and close the potential knowledge gap created by the Boomer exodus, most companies haven’t even taken notice, according to Elizabeth Kearney, founder and president of Kearney & Associates, a nationwide alliance of experts who specialize in this trend.

In fact, according to the Institute for Corporate Productivity (i4cp), only 29% of responding organizations report that they incorporate retirement forecasts into their knowledge transfer practices. Furthermore, i4cp found that only a third add “skills gap analysis” into those forecasts; less than half say they train their managers to identify critical skills; only 23% are educated in critical skills transfer; and most companies admit they do not formally measure the effectiveness of their knowledge transfer practices.

Cornerstone OnDemand has released a whitepaper finding that most organizations, particularly larger ones, are not ready for the pending talent shortage caused by the looming retirement of Boomers. The paper, titled, “Managing Talent in the Face of Workforce Retirement,” summarizes key findings of Knowledge Infusion’s “2010 Talent Readiness Assessment,” which indicates, among other things that:

  • Organizations with more than 2,500 employees indicated that approximately one in five workers are over the age of 55;
  • More than 50% of respondents said the retiring workforce will cause a knowledge/skill gap; and yet,
  • Less than 30% of organizations that responded had a knowledge retention plan in place.

David DeLong, author of the book Lost Knowledge: Confronting the Threat of an Aging Workforce, recently pointed out that there are direct and indirect costs associated with lost knowledge.

Direct costs occur through the loss of workers with specific knowledge through retirement and attrition. When these experts are no longer around, it accentuates the indirect costs of knowledge loss: poor documentation and storage.

A holistic approach is necessary to deal with an aging workforce and knowledge retention problems, according to DeLong. The approach combines effective knowledge transfer practices, knowledge recovery initiatives, strong knowledge management technologies and finally, more effective HR processes and practices to deal with the problem on a more systemic level.

Here are three things DeLong recommends companies should be doing to deal with aging workforce problems:

  • Harvest critical information now and make it available at point-of-need. Companies should begin by identifying where they are most at risk from the loss of knowledge and experience. This involves, in part, establishing performance management and career development processes that identify employees with the most critical knowledge and expertise. For example, to sustain business after the 9/11 attacks, Delta Air Lines was forced to make workforce cuts to remain competitive. This meant that Delta had less than two months to identify which of the 11,000 laid-off employees had jobs for which no backups or replacements had been trained, and then capture that knowledge before it walked out the door. Supervisors worked with a team from Delta’s learning services unit to narrow the list down to those veterans whose departure would represent a critical job loss. Once these outstanding performers were identified, they were interviewed about their roles at the company. This way, Delta retained as much critical knowledge as possible on very short notice.
  • Use real-time collaboration tools to enable workers to interact with colleagues. As collaboration and knowledge management have grown, relevant technologies and tools have become increasingly sophisticated. Things like workspace portals are revolutionizing knowledge management and collaboration solutions by giving workers access to enterprise data and applications, productivity and virtual collaboration tools, and documented knowledge, all of it personalized.
  • Use advanced e-learning techniques. Performance simulation gives employees the opportunity to practice, in real time, the key skills and competencies they must acquire to address knowledge drain.
  • Employ better workforce planning and targeted knowledge retention initiatives to address the brain drain that now threatens entire industries.

“Companies need to proactively assess their organizations and determine a plan of action before this threat becomes a reality,” said Adam Miller, president and CEO, Cornerstone OnDemand. “Understanding the overall goals of the organization and which employees are key to achieving these goals including their role, skills and level within the company is important to implementing a retention plan.”

Not all employers are ignoring the inevitable. The i4cp study found that there are a number of up-and-coming practices in use or under consideration. “Communities of practice” are utilized by a third of all responding companies to transfer knowledge, and the use of Webcasts and services such as “Lunch and Learn” and “SharePoint” are on the rise.

Harvesting the knowledge is only part of the equation. The captured knowledge must then be reformatted into a usable database with easy access by the employer. It does no good to house the data in a three-ring binder and then place it on a dusty shelf, never to be seen again.

Northrop Grumman has been on the forefront of knowledge management for many years. In 1997, with the Cold War behind them, thousands of NG engineers, who had helped design and maintain the B-2 bomber, were asked to leave the integrated systems sector. In a short period, 12,000 workers filed out the door, leaving only 1,200 from an original staff of 13,000 employees, to help maintain the current fleet of bombers. The 12,000 took with them years of experience and in-depth knowledge about what was the most complex aircraft ever built. Without appropriate measures, this could have been a disaster of epic proportion. Instead, before the exodus, NG formed a “Knowledge Management Team” who identified the top experts and videotaped interviews with them.

To this day, the company uses a variety of tools to retain and transfer knowledge from its engineers — before they retire. The company has implemented document management systems, as well as common work spaces to record how an engineer did her job for future reference. NG also brings together mature and young engineers across the country to exchange information via e-mail or in-person about technical problems.

No company wants to be in the position in which NASA found itself — having to explain why it can’t recreate the single greatest event in modern history. If employers don’t plug the knowledge gap prior to the great Boomer exodus, it’s going to be more than just Houston that has a problem.