Germany has a long history of manufacturing and a reputation for quality products. However, a perfect storm of demographic factors and wholesale changes to workplace culture, particularly since the Covid-19 pandemic, has led to a talent shortage in the industrial sector.
The German Chamber of Commerce and Industry’s early summer 2023 economic survey found that 53% of the 22,000 companies surveyed reported a shortage of skilled employees. Within manufacturing, the good news is that 19% of companies plan to increase hiring and 64% plan to remain constant when it comes to recruitment, but employers will need to be strategic and proactive to solve the talent crisis in the long term.
Heike Lipinski – global client director, AMS
Sebastian Borchers – head of talent management and organisational development Germany, Continental
Janina Riahi – head of sourcing and recruiting, Thyssenkrupp Materials Services
Dr Helen Schropp – senior vice-president top talent management and strategic workforce planning, Schaeffler Group
Emilio Zambade – head of procurement digitalisation, GEA Group
What has caused the talent crisis?
Sebastian Borchers, head of talent management and organisational development Germany, continental, says the shortage of skilled talent was “very well predicted”.
He says that the Covid-19 pandemic revealed hidden issues, such as demographic changes with an ageing population, as well as changing the way people want to work, with more demand for flexible, hybrid and part-time working arrangements. This, combined with technological changes – in his case, in the automotive sector – has created “a perfect storm in some regions, but it’s not surprising that we have ended up with a shortage of people.”
Dr Helen Schropp, senior vice-president top talent management and strategic workforce planning, Schaeffler Group, agrees with Borchers: “We saw this, we knew that not enough new, good workers would come through to replace the retiring workforce, but what we saw with Covid is that the dynamics changed – it’s a daily competition for talent.”
Borchers adds that while immigration programmes are important, heavy reliance on other EU countries, especially Eastern European neighbours, as well as non-EU states, means those countries are experiencing the same shortages, creating a knock-on effect.
“Attracting the right people has become much harder than it was a few years ago,” says Janina Riahi, head of sourcing and recruiting, thyssenkrupp Materials Services. “You have so many recruiting platforms, such as social, but you need to use the right one, especially for blue-collar manufacturing workers. We’re making sense of all these options to attract the right people in the right places – it’s a huge challenge but it is necessary and pays off.”
Heike Lipinski, global client director at AMS, the global recruitment process outsourcing provider and talent experts, reiterates the pace of change as a major factor in the labour shortage, along with the need for companies to modernise hiring practices. In particular, she cites the employer-driven box-ticking obsession with finding the ‘perfect fit’, in which hiring managers want every new employee to fit all the criteria for qualifications and experience.
Instead, she urges hiring managers to “change their mindset for the future, not just for what is needed now”. Organisations should specifically look at competency- or skill-based hiring so that new employees have training and development opportunities for long-term retention, as well as meeting immediate staffing needs.
“The time of plug-and-play talent is over,” stresses Schropp. “You won’t find the 100% fit in the market, so you need to favour strategic planning.”
What are the top strategies for attracting talent?
Dr Helen Schropp, senior vice-president top talent management and strategic workforce planning, Schaeffler Group, says: “One common denominator is to individualise your offerings, to put the individual at the centre.”
Janina Riahi, head of sourcing and recruiting, thyssenkrupp Materials Services, stresses the importance of good communication, ensuring everyone understands how companies plan to evolve and, importantly, to “walk the talk” and “be authentic as a company”.
Emilio Zambade, head of procurement digitalisation, GEA Group, says that engineering needs to be promoted as being essential to long-term economic development, which “forces industrial societies to have more and clever engineering solutions for the future”.
Zambade’s comments reflect those of Sebastian Borchers, head of talent management and organisational development Germany, continental, who says that it is crucial to focus on developing competencies by “speeding up and starting early”. This is especially critical, thinks Borchers, because of the pace of technological change: “With the pace of change, you need the skills to keep up – companies need to support and drive that process.”
Heike Lipinski, global client director, AMS, says that businesses need to adopt multiple strategies to attract talent, but it can be overwhelming when expectations are high. It is important to take the first step of a long journey, she says, with the support of the entire organisation: “You need to start somewhere. If you think it’s too much, then you won’t even start to tackle the challenge – everyone needs to pick it up.”
Proactive, long-term solutions
The panellists agreed that short-term solutions to the labour shortage, such as quickly hiring from other countries, will not solve the problem in the long term. Instead, it’s about taking a strategic approach to attract young people to manufacturing and engineering, offer them meaningful career paths and retain talent.
“There’s no real short-term solution,” says Schropp. “If you want the right competencies, you need to invest in those capacities. It’s not enough to offer flexible working hours or an attractive workspace, you do need to pull all the strings and focus on individual needs,” she adds.
“Lead by example – make sure the leadership team understands what’s important for the company,” says Riahi. “When it comes to diversity and inclusion, the leaders need to show that it can work.”
“So far, we have been very lucky with our culture – it takes investment in signage, interpreters, language classes or whatever is needed so everyone can communicate,” she says.
Lipinski and Schropp advocate strategic workforce planning with clear execution plans that involve entire companies, rather than siloing responsibilities.
“It’s not just about capacities. It’s about defining the skills for each job profile, defining your measures,” says Lipinski. “Make the most of the analytics and data you have to get a clear picture. We can’t forecast exactly what will happen in five years, but we can have a clear plan, and you can amend and react to the plan.”
Schropp says workforce planning must be part of overall corporate strategy: “We have a yearly dialogue for the whole executive – what resources do we need in the future? Our programmes regarding people and culture have moved to the corporate road map, and CEOs and financial officers understand this now.”
In the post-pandemic labour market, the panellists made it clear that the companies which ensure employer branding matches reality, leverage technology for strategic long-term workforce planning, and embrace diversity, inclusion and flexible working conditions will emerge stronger from the labour crisis.
If your company is facing these challenges – and you want to find out how AMS can help – please reach out at weareams.com/contact-us/