The Engineering Workforce Problem

By Reid Paquin, Research Associate at Aberdeen Group ([email protected])

According to a Pew research study, roughly 10,000 Baby Boomers will turn 65 every day for the next 18 years. With more baby boomers retiring daily, the pipeline of viable engineers is becoming dangerously thin. The Manufacturing Institute also recently released their Skills Gap Report. The report revealed that as many as 600,000 manufacturing jobs remain unfilled in the U.S.

This is quite a remarkable fact when the country faces an unemployment rate that hovers right around 8%. In December 2012, Aberdeen conducted research into the state of the engineering and technical workforce and found out that a majority of the 562 companies polled (over 60%) feel that they are understaffed in their engineering positions. Aberdeen looked into the challenges behind hiring and retaining engineering talent, specific engineering fields are trouble areas, and uncovered what the industry leaders do to combat this problem.

Overall two pressures emerged pushing companies toward acquiring engineering talent (Figure 1). The biggest pressure is to support overall growth and having the resources available to do that (40% and 38% of all respondents respectively). Companies who expand more than their current engineering workforce can handle will most likely see their product launches delayed and their product quality potentially slip. The next pressure to emerge is the decline in available staff, from either attrition or the retirement of baby boomers.

Attrition is one pressure that can be combatted through conventional retention methods - paying employees more, ensuring employee satisfaction, providing clear career paths - but the retirement of baby boomers, who now hold senior engineering positions, will happen no matter what a company does.

Figure 1: Drivers to Acquire Engineering Talent

When looking into specific engineering roles there was a group identified by respondents with related skills came out on top (see sidebar). Engineers with skills in all the identified areas are needed to produce more complex products that incorporate embedded systems. The best talent is necessary to develop these new products and the companies that already possess this top talent try their hardest to hold onto it. Manufacturers need to either find competent engineers (from a limited pool) to fill these roles or find another way to carry out these specialized engineering tasks.

Respondents were divided into three categories based on their aggregate performance on four key metrics: the top 20% of performers (Best-in-Class), the middle 50% (Industry Average), and the bottom 30% of performers (Laggards). Table 1 displays the aggregated performance of Best-in-Class, Industry Average, and Laggard organizations.

Table 1: Top Performers Earn Best-in-Class Status

Source: Aberdeen Group, December 2012

Performance on the four metrics above is directly related to a company’s engineering quality and capacity. The Best-in-Class are by far out performing their competitors; they are almost three times better in every category over Laggards. Top manufacturers handle their own engineering shortage better than their competition, and the Best-in-Class aren’t just composed of large companies that overpay and lure away all the talent. As the sidebar shows the distribution of Best-in-Class is practically identical for company size. So what are Best-in-Class manufacturers doing to achieve these high metrics while being understaffed?

The Fight Starts from Within

There are two general strategies that emerged when these companies were asked what they do to overcome their workforce problem. The first strategy is to focus on the employees they currently have. They are also strategically investing in technology solutions to assist or supplement their engineers. The focus on current employees boils down to two aspects, keeping who you have happy and making them better at their jobs. The first helps to keep staffing levels acceptable, the second helps sustain product quality with limited resources, the Best-in-Class do a better job at both.

As Figure 2 shows, the Best-in-Class are more likely to stress employee satisfaction and make the commitment to train their engineers. But where top manufacturers differentiate themselves the most is their use of rotation programs. By providing these new hires this type of program it exposes them to different engineering functions in the company. Having a wider knowledge of all the processes involved in making a product helps to reduce errors and saves time.

Figure 2: Internal Strategies Undertaken

The Best-in-Class also lead the way when it comes to utilizing technology to handle a lack of engineers. The Best-in-Class are 72% more likely than their competitors to use a knowledge management system; this helps onboard new employees more rapidly and dampens the damage of losing knowledgeable engineers in your operations. The next area where the Best-in-Class incorporate technology is in the automation of technical work. Of course not all technical work can be automated, but the Best-in-Class are more likely to automate processes such as, calculations, design modeling, algorithms, or simulations. This lessens the workload for the engineers on staff and allows them to focus on other critical product development areas.

Automation is a growing solution that many companies are starting to adopt and it is no coincidence that the top manufacturers are leading the charge in this approach.

Companies need to take new approaches to fill their engineering needs, more than just attempting to hire replacements, there are already not enough out there and the number keeps shrinking. The research shows what the best companies do to stay competitive. Keeping their current engineers happy where they’re at, training them to be better, and exposing them to more than their direct role. As well as utilizing technology to deal with inevitable worker loss and automating as much technical labor as possible. To find out more about how the Best-in-Class are successfully winning the fight against this growing problem as well as other topics affecting manufacturers today, go to Aberdeen’s Manufacturing Homepage and stayed tuned for a more in-depth report on the subject publishing in March 2013.