Manufacturers brace for a 20% premium as early retirements, reshoring and changing economic and social factors change the equation.
We’ve all heard the expression “War for Talent,” and if you are in manufacturing, you’ve been living this war intensely in recent years – particularly at the hourly level or in front-line supervision. Quite simply, resources are limited, and competition abounds.
Nowhere is this competition for talent greater than at the plant management level, where the shortage of skilled and experienced plant managers and assistant plant managers is acute.
This shortage is driven by a wave of early retirements, expanded investment in U.S. production by foreign companies, and the “reshoring” of production back into the U.S. from China and Mexico. In many instances, to manage selling, general and administrative expenses (SG&A), companies eliminated the assistant plant manager role – a vital succession-planning position.
All of these factors have driven up salaries and compensation packages that companies must offer qualified job candidates to fill openings. Companies filling plant manager and assistant plant managers positions at mid-sized manufacturing plants should now expect to pay as much as a 20% premium over what outgoing managers were making. Anything less invites a fast counteroffer by incumbent employers.
The “industrial production managers” occupational category, designated by the Bureau of Labor Statistics, includes positions ranging from operations manager and production supervisors at the lower/entry-level end of the spectrum to plant manager at the top end. The number of industrial production managers is projected to grow by 2% from 2022 to 2032, about as fast as the average for all occupations, according to BLS data.
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While this amount of job growth sounds modest, it is occurring against the backdrop of an increasing competition at this level, as well as social and economic factors that have led to an increased reluctance of candidates to relocate for new opportunities.
Those factors include rising housing costs, as well as an increase in candidates who are reluctant to move from larger, more affluent markets to smaller, more rural markets for a higher-level position; want to stay close to aging parents’ or are concerned a move would disrupt their spouse’s career. The BLS projects that there will be more than 15,000 job openings for industrial production managers each year over the next 10 years.
Employers should be adapting to the market by being flexible, responsive and adaptable to candidate circumstances by doing the following:
Define industry and production experience as broadly as possible to attract the largest number of candidates. These are smart candidates who can quickly learn and adapt to specific production processes and tangential industries. This may be the difference between a local candidate vs. a relocating candidate.
Be prepared to act fast. Candidates who have decided to explore other opportunities – will have other opportunities. If you can’t move quickly, other employers will. You may not have the luxury of choosing from more than two or three candidates (two or three if you are lucky). Keep the process moving.
Do a deep dive quickly into the barriers to attracting a candidate. What will get a candidate to a “Yes”? This may include total compensation, including any unvested long-term equity; earned bonus to date, which will have to be covered by a sign-on bonus; family barriers to relocation and timing; and costs of potential relocation (real estate & legal fees, moving expenses, temporary housing and mortgage costs).
Be prepared to adapt your relocation policies to cover the cost of interest-rate increases. Chances are good candidates may be leaving a mortgage with a 3% interest rate for a mortgage with a 7% or greater interest rate. Without help during a transition period, this will be a major hurdle.
Offer networking assistance to the trailing spouse who may be forced to exit a role. Bring the spouse into the decision process early.
Be prepared to offer a sign-on bonus, or guarantee a portion of the candidate’s current performance year bonus, depending on where in the FY cycle they sit. Bonuses, in large part, are paying at or close to target.
Align management with all of these suggestions before starting a search.
A 20% bump in total compensation sounds like a lot – and it is – but any offer that is under 15% more than what a candidate is making now is likely to be matched by the current employer. You must make it hard for the current employer to counteroffer.
Our advice for all manufacturers is to put robust training and succession plans in place now so that your company is better positioned to promote from within when plant managers retire.
It costs companies far less money and takes far less time to develop talent from within and promote existing managers than to recruit replacements.
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ARTICLE BY: Industryweek | Brad Holden, Alex Richardson | Published: 08/06/2024
