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They Don’t Make ‘Em Like They Used To: Manufacturing Sector Failing to Produce Quality Leaders

New Research from DDI and The Conference Board reveals manufacturing in last place for leader quality.

Manufacturing companies with high leadership quality and engagement are nine times more likely to outperform their peers financially.

Pittsburgh—Analysis from the largest global leadership study paints a gloomy picture for leadership quality in the manufacturing industry. According to Development Dimensions International (DDI) and The Conference Board’s Ready-Now Leaders: Meeting Tomorrow’s Manufacturing Talent Challenges, manufacturing leaders surveyed rank themselves and their peers in last place for leader quality and readiness to take on current and future challenges. Only 37 percent of manufacturing leaders rate their organizations’ leader quality as “high,” and a mere 16 percent of organizations rate their future bench strength as “strong.” On the upside, plants that implement best-in-class talent management practices with high leadership quality and engagement are nine times more likely to outperform their peers financially.

This manufacturing report is part of DDI and The Conference Board’s Global Leadership Forecast 2014|2015, Ready-Now Leaders: Meeting Tomorrow’s Business Challenges. It identifies findings on the current state of leadership and leadership practices in manufacturing, based on survey responses from 3,143 leaders and 1,332 human resource executives in that sector.

Money Wasted

As manufacturers face a wide range of issues including skill shortages, baby boomer retirements and constantly changing technology, their people challenges become more pressing. When leaders are subpar, their ineffective leadership and skills gap cannot adequately drive business and negatively impacts production and quality within all departments.

“In order to respond to these challenges effectively, manufacturers need to optimize their talent supply chain as they would their product supply chain in regards to the quantity, quality, cost and timing of talent moving through the organization,” said Jill George, DDI Manufacturing Practice Leader. “As the manufacturing industry looks at ways to improve process efficiency, there are huge potential gains to be made in talent processes of those organizations that approach talent management with the same rigor as they do their supply chain.”

Accelerating Leadership Quality Helps Predict Financial Performance

Given the industry’s heavy investment in technology, machinery and processes, the financial returns from improving talent supply chains in manufacturing are significant and are likely to be the best remaining strategy for improving productivity, quality and competitiveness.

  • Companies with high leadership quality and engagement are 9 times more likely to financially outperform their peers.
  • Top 20 percent of best financial performing companies are 3 times more likely to have VUCA- (Volatility, Uncertainty, Complexity, Ambiguity) capable leaders than the bottom 20 percent.
  • Companies that value their leader’s interpersonal and interaction skills have 2 times better financial performance.
  • Organizations with the best financial performance are 2 times more likely to use a systematic process for hiring.

Future Talent Challenges Facing the Manufacturing Industry:

The three future talent challenges facing the industry identified in the report include: 1) A weak, reactionary talent supply chain that is lacking a long-term strategy to move the supply of talent to the speed of business; 2) Poor first- and mid- level leadership readiness regarding customer focus, collaboration, capability building and alignment across levels, functions and countries; and 3) An inability to create, drive and sustain a culture of ownership and engagement.

How can manufacturers ensure the right practices are in place to get both leadership quality and financial success on par to where they need their business to be in the next three years?

  • Audit your talent pipeline, leader readiness and address gaps before you run into major shortages.
  • Reduce talent variance. Accelerate readiness by implementing systems that combine better selection with classroom, peer and on-the-job learning.
  • Implement an integrated, solidly reinforced strategy for leader growth.
  • Measure the effectiveness of current talent programs.
  • Use analytics to learn from historical trends and impending talent needs. The right data is the key to predicting future outcomes.
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Available for Interviews:

Jill George, Ph.D., Development Dimensions International (DDI) Manufacturing Practice Leader
Scott Erker, Ph.D., Development Dimensions International (DDI) Senior Vice President

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