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Why Super Human-Capital Manufacturers Outperform Their Peers

By John Brandt and James Clevenger, Ph.D.

World-class manufacturing is impossible without word-class talent. Yet 70 percent of U.S. manufacturers aren’t anywhere near having world-class human-capital management.

That’s one of the findings of a new study DDI has just published in partnership with The MPI Group.

The study report, Superior Human-Capital Management: Establishing the Cornerstone of World-Class Operations, which we wrote with MPI Vice President George Taninecz and DDI Vice President & Executive Consultant Bill Jackson, is based on an in-depth analysis of The MPI Group’s 2011 Next Generation Manufacturing Study. This analysis identified “Super Human-Capital Management” (Super HCM) manufacturers as those with 1) skilled HR and development programs, 2) skilled and engaged workforces, and 3) a companywide human-capital strategy—the three criteria that define “world-class human-capital management.”

These Super HCM organizations reap the benefits of their human-capital management investments. They outperform their peers in key business outcomes and metrics.

Surprisingly, however, the study shows that only 30 percent of manufacturers self-rated their firms as being near or at “world-class human-capital management,” meaning that most manufacturers have a lot of work to do in order to be as competitive as Super HCM organizations.

Among the other findings in this study:

  • While just 30 percent of manufacturing companies have world-class human-capital management, 78 percent of manufacturing company executives recognize its importance.
  • Only 47 percent of manufacturing executives report that a majority of their workforces have the technical skills, problem-solving skills, and work ethic to excel in high-performance work teams.
  • Nearly half of manufacturers have not addressed any of the three criteria that define world-class human-capital management.
  • Just 12 percent of manufacturers have a company-specific human-capital management strategy with fully-functional involvement and buy-in.  At the other end of the spectrum, 15 percent of manufacturers have no strategy.

What’s more, the study found that Super HCM manufacturers are more likely to deploy human-capital management best practices. Among these are having in place “state-of-the-art” business systems to support human-capital management, and an informed and engaged C suite.

Super HCM manufacturers also are much more likely to have leadership and talent development programs covering such critical areas as customer-focused innovation, process improvement, supply-chain management, global engagement, and sustainability.

The study’s most compelling findings are those that show the link between high-performance human-capital management and high-performance organizations. In the study, two-thirds of Super HCM manufacturers describe their customers’ overall satisfaction with companywide performance as “strong loyalty to our products due to ongoing trust in our organization’s people and capabilities.” Just 48 percent of other manufacturers describe their customers in that way.

And not surprisingly, more than 90 percent of Super HCM manufacturers are profitable, while just 83 percent of other manufacturers in the study are in the black.

Indeed, Superior Human-Capital Management delivers a resounding message:  If a manufacturing organization is to be competitive, investing in its workforce is a necessity.

In addition to the complete study findings, the Superior Human-Capital Management report explains how manufacturers can make the transition to becoming a Super HCM organization.

John Brandt is CEO and founder of The MPI Group.  James Clevenger, Ph.D., is a strategic account manager for DDI.

Posted: 02 May, 2013,
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