One of the leading challenges facing many manufacturers in the U.S. is the attraction and retention of talent. At the same time, many U.S. states (particularly in the South and Southeast) are throwing attractive incentive packages at manufacturers to lure them to move to their states. At the recently concluded 2015 National Directors Institute (NDI) conference in Chicago, the authors organized a panel that explored the interplay of talent development and site selection, including the role of the Board of Directors in both areas.
As noted by panelist Tim Hicks, principal of TCH Consulting, LLC, the strategies employed for talent development and site selection must go hand-in-hand and complement the specific mission and culture of the company. The talent development approach adopted by tech companies, for example, may be disastrous for a manufacturing company. Thus, it is crucial for the Board to identify the company’s specific needs given its current circumstances with respect to talent, and articulate and reinforce the appropriate strategy consistently.
Lessons from Michigan
Panelist Michael Finney, until recently a senior economic advisor to Michigan Governor Rick Snyder and currently the founder of Community Ventures of Michigan, noted that the Board of a manufacturing company, for which technical knowhow is paramount, must align site location decisions with the company’s talent and business strategy, including supplier and customer location. Mr. Finney noted, as an example, that in making site selection decisions companies often try to locate remotely and away from their competition, but this may not always be the correct approach from a talent development perspective. While close proximity to competitors may result in talent migration and attrition, such cost may be more than offset by an overall greater talent pool generated by a competitive manufacturing business environment, serving as a magnet for talent and other companies that further attract that talent.
It is well known that Michigan is home to the “Detroit 3” automotive OEMs. A less well-known fact is that Michigan is also home to about 75% of all transplant automotive companies’ engineering research and development operations in North America (California being a distant second at 5%). Toyota recently consolidated some of its engineering functions in Michigan to be closer to this talent pool and “the pulse” of the North American industry.
Lynchpins for Good Site Selection
The role of talent in site selection applies at all levels, as pointed out at the NDI by Meredith O’Connor of Jones Lang LaSalle. It is essential to do talent mapping across the spectrum of the company’s needs, and Talent plus Incentives plus Real Estate/Infrastructure are the three lynchpins for good site selection decision-making by the Board. Ms. O’Connor noted that the active participation of both HR and Real Estate professionals are essential to effective site selection, and that sometimes one or the other is overlooked.
Finally, Brande Stellings at Catalyst Corporate Board Services highlighted the need for the Board of Directors to develop and manage a cadre of diverse C-level and lower management team members. She noted that several companies have started mentorship programs with Board members mentoring female executives, including membership of such executives on outside boards to further develop their experiences and skill sets.
The formulation of a coherent site selection strategy that takes talent development into account is a manufacturing business imperative, as important as financial, production and safety metrics. An intelligently developed and executed strategy can help improve employee attraction and retention, and therefore overall employee corporate effectiveness. The Board of Directors can and should play an active role in the formulation and execution/monitoring of that strategy.