Make or Buy: Addressing the Digital Manufacturing Labor Shortage
Part I considered ways that companies could to increase the labor supply. Part II focuses here on what companies can do to compete for talent in the labor market.
There is no magic bullet for a hot job market such as HPC. Companies need to think holistically about what can make their company an attractive employer, and they need to pull every lever they can.
For example, improving recruiting is not enough. If the company is successful at recruiting candidates but cannot keep them, the talent shortage will remain. Employers need to think about recruiting, bringing new employees on board, supervising and training employees once they are employed, career opportunities, compensation, and benefits.
Make or Buy
There are two basic recruiting strategies: "make" or "buy." The "make" strategy hires employees with ability and potential, but the need to develop some skills on the job. Few college graduates have the full engineering, IT, mathematics, and manufacturing skill sets needed to be an independent HPC professional. If companies are able to train and develop new employees effectively, this can be cost-effective because new technical employees have lower wages than those with significant experience. Companies with a "make" strategy may wish to recruit some employees in from non-traditional sources, — such as math and IT departments — rather than engineering schools.
However, companies that lack training and development capabilities must use a "buy" strategy — hiring professionals that other companies have trained.
This can be expensive, not only because the wages of experienced hires are greater than those for new graduates, but also because experienced employees often will not change employers unless offered a premium over the wages of their current position. On the other hand, experienced hires may be productive from the time that they are hired; they have much less to learn on the job. Smaller employers often pursue a "buy" strategy because they lack internal training and development capabilities.
Once an HPC employee is recruited, how does the company keep him or her? Research on employee turnover demonstrates that new hires are at the greatest risk of turnover. New employees quickly make decisions about whether they are a good fit for the organization. Intentionally or not, the organization sends important messages about the role and status of the new employee from the first days on the job. If HPC is new in the firm, the new employees may have many questions about how they will fit in, especially if they have different skill sets, backgrounds, and compensation than others with whom they work. This suggests that the organization will need to articulate how HPC fits in the future of the company and what responsibilities the employee will have in building HPC capability.
Smaller companies can capitalize on their more intimate size to provide executive attention to the new employee. The Vice President of Engineering and the CEO, for example, may help paint a picture of the company’s HPC future for the new employee and the employee’s role in creating that future, and may invite direct executive contact if necessary to address obstacles to HPC. Most employees would find such discussions flattering and energizing.
Once on the job, supervision, mentoring, and teamwork become critical factors in employee retention. Especially if HPC is new to the firm, the supervisor must have the confidence and people skills to support a new employee who may have a very different set of technical skills than the supervisor or fellow employees. Engineering executives may need to help the engineering team understand the organization’s vision for HPC and address any anxiety about what HPC will mean for their own futures. The supervisor may need to work with the team to ensure that the group welcomes the new employee and sees him or her as an asset, not a threat. Supervisors and executives need to be able to answer such questions as whether all employees in the group eventually will need to acquire HPC skills, how they will obtain those skills if so, and how the new employee will fit the group.
The new employee is likely to have concerns about training and development as well as long-term career horizons. In a rapidly evolving area such as HPC, it is important to remain current in the field. It may be helpful to outline how the employee will be expected to remain current, including attendance at conferences, maintaining contacts with experts outside the company, and developing a network of peers in other firms who can help answer questions. Such practices may be uncommon elsewhere in the technical ranks, so clear expectations and boundaries are important.
Finally, compensation and benefits may be helpful in both attracting and retaining new employees. In recruiting employees, it can be important to develop one-time rewards that do not distort the existing pay and benefits systems. A common compensation offering is a sign-on bonus of one to six months of pay, paid in part at hiring and in part at the end of the first and possibly the second year of employment. The employee must stay with the organization to receive the full bonus.
Similarly, the organization can offer tuition reimbursement in lieu of a signing bonus — possibly with claw-back provisions if the employee does not remain with the organization. Tuition reimbursement can be extremely attractive to new graduates in the current environment. The company may need to think about whether the HPC employee should be paid differently than other engineers because of the unusual skill set. One option is to pay a "hot skills" premium — an annual bonus that retains the employee, but will disappear when labor supply catches up with demand. This preserves the overall equity of the engineering salary system but increases retention. The IT field has made heavy use of hot skills bonuses in the past decade; these have come and gone as the labor market has changed.
Finally, tuition reimbursement for HPC education may provide attractive development opportunities for all technical employees.
Clearly, companies have many ways to attract and retain HPC talent. Executives, technical leaders, and human resource leaders need to work together to develop a cost-effective attraction and retention strategy that fits the needs of their firm.