To successfully navigate the journey to Manufacturing 4.0 and ensure talent retention, leaders must shift their management mindset from command and control to cultivate and monitor by creating an environment that fosters motivation and psychological safety. By Andrew Leichter
The 21st century manufacturing work environment is very different from its predecessor. As a result of the COVID-19 pandemic, by some estimates, the manufacturing industry is expected to experience five years of innovation in the next eighteen months1. This will manifest into an accelerated drive toward automation with new innovations in artificial intelligence, cognitive computing, machine learning, and robotic process automation.
Manufacturing 4.0 will demand future manufacturing team members to have skill sets geared toward problem solving rather than task execution. It will require leaders to usher teams over continuously shifting terrain toward abstract objectives as opposed to clearly defined processes and fixed tasks. This new workforce will be a key driver in a company’s journey to Manufacturing 4.0.
Organizations need to hold on to existing talent while attracting new talent in order to stay competitive and relevant. Recent research lays out a future where talent with key manufacturing skill sets will be in short supply and the shortage will continue to expand to an estimated 2.4 million unfilled positions, which will put $2.5 trillion in manufacturing GDP at risk over the next decade2.
To prevent this, leaders need to be equipped to attract and retain highly skilled team members to meet the demands of current and future customers. Old reward and punishment models designed for the 20th century worker will need to be replaced with new models, proven by behavioral science, for the leap forward. These new models do not change the leader’s endgame, but they improve an organization’s ability to achieve it.
A leader’s job is to motivate, guide, and cultivate their teams to reach full productive potential to achieve organizational goals. In day-to-day work life, leaders are required to orchestrate tasks and job direction. Similar to how a computer operating system manages software applications, resources for workers are distributed according to a defined set of rules.
In today’s organizations, those rules are defined by a combination of organizational culture or institutional history. Leaders are responsible for removing obstacles that hinder team members’ ability to complete objectives and are judged by the effectiveness of their team based on metrics the organization uses to measure output and success. Therefore, leaders often see their ability to change and improve output as defined by a single premise: manage the team’s processes, exert maximum effort from the team, and you will get improved results.
Motivated teams that work in an environment of psychological safety will produce higher volume and better quality.
Better Outcomes with Motivation
Manufacturing organizations have known the benefits of the Kaizen3 concept of continuous improvement for decades and software engineering organizations are now becoming standardized with the Agile variant of this method. It’s natural to lean into managing processes as the primary mechanism for increasing team effectiveness. Have no doubt, continuous improvement is a critical driver to a team’s success.
There is, however, a second premise that is all too often overlooked — motivated teams that work in an environment of psychological safety will produce higher volume and better quality output4. A motivated team that executes while incorporating a continuous improvement methodology into its process will outperform its less motivated counterparts every day of the week.
It’s easy to speculate that motivation is just a component of organizational culture because most organizations spend significant energy and resources focusing on company culture. “Culture eats strategy for lunch”5 is an easy to understand sentiment, but difficult to implement in a meaningful way at the team level.
Early in leadership journeys it’s critical to understand that culture must be managed, yet it’s not always clear how that manifests at a team and individual level. Still, leaders must focus on reinforcing behaviors at an individual level. After all, it’s the aggregate of individual behaviors that make up an organization’s culture. Research suggests that leaders who build a culture that emphasizes psychological safety and facilitates motivation will create teams that achieve high output and low turnover. Such a culture will allow for the evolution of individuals who have intrinsic motivation to continuously improve while maintaining high job satisfaction.
Cultivating Motivation and Purpose
Many organizations are still built around the 20th century systems of rewards and punishments. These systems were derived for workers that execute repetitive tasks as their primary output and those that did their jobs well were financially rewarded. Conversely, if they did their jobs poorly, they were punished. However, 21st century Manufacturing 4.0 roles require new problem solving and analytical thinking skills that the old system fails to support and reward. In fact, it has the opposite effect; by degrading performance, it can ultimately break down teams and diminish results. Many organizations today are struggling to make the necessary jump to newer leadership models and continue to mix the old with the new.
Certainly, economics will play into an individual’s decision to join an organization or accept a specific role. If compensation is left so far outside of market norms, it will, of course, cause you to lose talent. Behavioral science suggests that once you are in a role that is balanced to market compensation, financial incentives will no longer produce more or better quality output6. Intrinsic motivation is the primary mechanism that will drive an individual’s effectiveness and, therefore, a team’s output. This intrinsic motivation can be activated in teams where the leader deliberately manages three elements that allow motivation to thrive7:
- The autonomy for team members to direct their own steps and see their own contributions in finished products
- The margin to learn new skills, master existing skills, and experiment to find new solutions for problems that matter
- A clear sense of purpose that attaches meaning to work beyond financial incentives
Leadership training programs and corporate strategists have long understood that establishing clear and meaningful purpose is critical for organizations to succeed. What’s less understood is the impact of deliberately managing an environment of autonomy coupled with an emphasis on skills development. This requires today’s leaders to shift their management mindset from command-and-control to cultivate and monitor. Autonomy can be broken down into two high level categories8: autonomy of tasks, pace, and order, and autonomy of schedule or when to work.
Job satisfaction, a key metric for attrition risk, can be positively influenced if these two categories are properly managed and measured. Employee satisfaction surveys should include questions to generate metrics to indicate if autonomy of task and autonomy of schedule are being satisfied. Autonomy is directly linked to levels of job satisfaction, which is linked to feelings of well-being, which is linked to productivity and retention9.
Margin to Experiment
Manufacturing 4.0 will require a new level of flexibility in reacting to the demands of customers. Companies are applying Agile software development principles to their physical operations10 to meet these new demands. Chief operating officers are beginning to see massive scale opportunities in legacy software operations led by the Robotic Process Automation (RPA) explosion11. Human operators need to evolve into automation orchestrators and acquire new problem solving and technical skills.
Unlike trends in outsourcing, RPA initiatives receive negligible internal resistance12. Rather, these initiatives tend to engage employees because they see them as an opportunity to grow new skills. These trends require margin for experimentation to quickly discover which changes work and which do not.
This does not imply that organizations should undertake a massive amount of unfettered experiments. In fact, manufacturing companies should apply their continuous improvement maturity toward a controlled experimentation approach. That means leaders must define experimentation and automation success criteria to scale a team’s ability to positively impact their productivity with these new tools and skill sets.
As with Lean Manufacturing, experimentation should be limited to small batches and short cycle times. Arming workers with these new skills and margin for experimentation, coupled with clear success criteria in small batches and cycle times, will result in positive business outcomes. The ability for an individual to experiment with new skills in the workplace will drive a self-directed initiative to improve those skills and increase employee engagement, which is also linked to well-being and talent retention.
Safety is Not Just Physical
Autonomy, skills development, and a clear purpose is what ultimately matters when it comes to cultivating motivated, productive teams with high retention. That work can easily come undone, however, if it’s paired with a culture that encourages cutthroat behaviors.
Experimentation requires the ability to take risks and autonomy can only thrive in an environment where mistakes are used for learning and not advancement of others. Motivation will starve in an environment where workers constantly worry about how every action will impact perceptions of their competence. Rather, an environment that promotes psychological safety has proven to be highly innovative, satisfying, and productive13.
Arming workers with new skills and margin for experimentation will result in positive business outcomes.
Good Talent Quits Bad Jobs
Why does talent leave in the first place? People quit managers not companies is the common belief but the reality tells a different story. Team members quit poorly designed jobs too even if they appreciate their manager14. Talent retention is as much about crafting the job around your talented team members as it is about ensuring everyone is in the right roles. Workers who are in the right roles will get enjoyment out of their jobs if they feel their unique talents are being utilized and those talents are growing. That growth requires honest feedback and, many times, hard truths.
Working in an environment that is psychologically safe doesn’t mean employees will never feel discomfort about their skills or performance. It means they trust that their team and leaders will never undercut them for unethical reasons. High performing team members want to hear hard truths regarding their potential and good managers will tell them. Good managers will provide direct and compassionate feedback and cultivate a relationship with their team where trust allows real feedback to be dissected and shared.
This relationship between managers and workers can be divided into two categories: 1) The depth at which a manager cares personally for the team member, and, 2) How directly the manager challenges workers when they do not live up to their potential15.
Kim Scott, the founder of Radical Candor LLC, says, “Honest feedback is the atomic building block of good management. There is nothing more damaging to human relationships than an imbalance of power. Candor is the honest broker of truth that neutralizes the imbalance.”
The key to retaining 21st century talent is to cultivate an environment that fosters motivation and psychological safety. Today’s top workers are looking for jobs that can be molded around their unique talents and how those talents can solve problems that matter. They will thrive with managers who care personally and will challenge them directly when they fail to live up to their own potential. Companies that deliberately create cultures of autonomy, learning, and purpose will find that they not only have engaged and satisfied employees, but they’ve created fertile soil for innovative solutions to achieve Manufacturing 4.0. M
1 Due To Covid-19, Manufacturing Will Experience Five Years Of Innovation In The Next 18 Months, Anna-Katrina Shedletsky, Forbes, 2020
2 2018 skills gap in manufacturing study, Deloitte, 2018
3 Kaizen: The key to Japan’s competitive success, Masaaki Imai, 1986
4 Re-Engineering Performance Management, BEN WIGERT, PH.D., AND JIM HARTER, PH.D., Gallup, 2017
5 Culture Eats Strategy for Lunch, Curt Coffman, Kathie Sorensen, 2013
6 The relationship between pay and job satisfaction: A meta-analysis of the literature, Timothy A. Judge a, Ronald F. Piccolo b, Nathan P. Podsakoff c, John C. Shaw d, Bruce L. Rich e, 2010
7 Drive: The Surprising Truth About What Motivates Us, Daniel H. Pink, 2011
8 Autonomy in Paid Work and Employee Subjective Well-Being, Daniel Wheatley, 2017
9 Harter, J. K., Schmidt, F. L., & Keyes, C. L. M. (2003). Well-being in the workplace and its relationship to business outcomes: A review of the Gallup studies
10 Bringing Agile Concepts into the Physical Product Development World, Vicki Holt, 2018
11 Predicts 2020: RPA Renaissance Driven by Morphing Offerings and Zeal for Operational Excellence, Gartner, 2019
12 Robotic process automation (RPA) trends and to-do list for scaling across the enterprise The 3rd Annual Global RPA Survey Report, Delloit, 2017
13 The five keys to a successful Google team, JULIA ROZOVSKY, ANALYST, GOOGLE PEOPLE OPERATIONS, 2015
14 Why People Really Quit Their Jobs, Lori Goler, Janelle Gale, Brynn Harrington and Adam Grant, Harvard Business Review, 2018
15 Radical Candor: Be a Kick-Ass Boss Without Losing Your Humanity, Kim Scott, 2017