21 April 2023
The changes underway are primarily induced by technological innovations. Novel combinations of artificial intelligence and related autonomous technologies, the Internet of Things (IoT)/Internet of Robotic Things (IoRT) and edge computing are dramatically transforming automotive manufacturing as well as the capabilities of the vehicles they sell. Other factors come into play, too: consumer expectations, energy considerations, regulatory changes, supply chain bottlenecks, new work models and a change in the employer/employee relationship.
As a result, automotive manufacturers and their suppliers are rethinking how they:
“Snatch up” and compete for talent
From other industries (such as high tech) to bring in and retain new skill sets in environments not historically designed for these talent types. Engagement and retention strategies are essential as automotive companies are just one group among many that are targeting this type of talent.
Develop and engage existing talent
Within the organization to support more innovative work models. Upskilling talent is necessary because there isn’t enough talent if acquiring talent is the only strategy. Creating career paths that enable employees to develop and grow critical skill sets (and higher levels of proficiency within them) becomes crucial.
Manage supply chain disruption and deliver value
From procurement (such as preventive risk management for suppliers and vertical supply chain control strategies) to manufacturing (such as identifying and onboarding the right skills to manage uncertainty in the supply chain).
Address new regulations and compliance norms
(Such as Emission Euro 7 and China 7) as well as environmental, social, governance and sustainability (ESGS) drivers that require adapting the technological manufacturing backbone and related knowledge capital to permeate throughout the organization to scale innovation with agility to change.
Design new operating models, culture and talent practices
To attract and nurture talent with scarce skills and provide an environment where they can thrive, innovate, design and deliver today and in the future.
Seismic workforce shifts create new in-demand skills
Historically focused on attracting and retaining traditional automotive talent, automotive HR leaders must shift their gears significantly. Fewer than one in two automotive HR leaders (49%) understand the workforce skills they have today, and even fewer (43%) have business plans with enough detail to identify future skill needs.
So, what types of skills do automotive manufacturers need?
Core technical and engineering skills
These skills are needed to innovate, design and deliver new technologies, including:
- Automotive technology: Autonomous vehicles (AV), electric vehicles (EV)
- Programming: Machine learning, AI, C++, Matlab, Java, Python and others
- Advanced electronics: Electrical/robotics engineering, car connectivity, human-machine interface (HMI), and infotainment related to communication interfaces and protocols
- Secure carware: High-end mechanical design requires cybersecurity best practices to spoof-proof vehicles and safeguard owner’s information, requiring skills related to vulnerability scanning and assessment
|Top in-demand skills in the automotive industry?|
|Top emergin skill in the last 12 month:||Top five skills within engineering and sciences:||Top skills driving pay:|
Engineering design process
Go(the programming language)
|Problem-solving and data analysis|
Transformative leadership skillsThese skills will be pivotal in creating an environment that breeds innovation and attracts technical, engineering and other scarce talent. Transformative leadership skills include creativity, strategy-setting, adaptability, talent development, influence, motivation, empathy, team-building, risk management, simplification, communication and charisma. Support functions, including HR and IT, must also evolve to support the shifts their companies will undergo and provide business partnership throughout the transformation.
|Pivotal questions for automotive leaders|
|How will we redesign work to enable talent to flow to it while allowing for work’s perpetual reinvention?|
|How will we re-envision talent experiences to meet all talent where they are and on their terms?|
In reality, most traditional automotive businesses aren’t equipped to upskill and reskill their existing workforce, nor are they prepared to successfully attract talent from other industries with very different cultures and ways of working. Sourcing these scarce leadership and technical skills will require resourcefulness and knowledge of what skills can be developed versus bought. Only two in five automotive HR leaders (41%) in our 2023 Global Talent Trends study were confident they could make this distinction. A robust skills taxonomy linked to an internal company job architecture is the foundation for understanding an organization’s skills in internal talent pools. Understanding where skills gaps exist will allow companies to acquire talent thoughtfully and effectively from this baseline.
Adjacent industries with these skill sets include high-tech robotics, manufacturing, and research and development functions. High-end or highly qualified profiles with selected skills (such as cybersecurity) can be traced within professional services/consultancy firms and IT-related industries.
Based on the above list of skills that automotive manufacturers need, jobs that house these skills are:
Satellite systems engineering
Computer vision R&D
Natural language processing R&D
Software development engineering
Integrated solutions (hardware and software) engineering
|Fewer than two in five automotive HR leaders have effective upskilling/reskilling programs to prepare talent to move into new areas.|
These in-demand skills are scarce, and over time, automotive companies may want to propagate them through upskilling, reskilling and fostering partnerships with educational organizations (such as universities and community colleges) to accelerate skill development and open access to more talent. This requires a thorough understanding of the existing workforce’s capabilities, knowledge of what this type of talent wants, and the ability to respond accordingly. For instance, more than six out of 10 technology employees will only join or stay with a company if they can work remotely or in a hybrid workplace model. Moreover, one in three employees would forego a pay raise for a fully flexible or compressed work schedule and additional well-being benefits for themselves or their families.
In the meantime, options are to explore new operating models to fast-track skill development and culture change.
New operating models
|Outsourcing||Limited up-front investment in technology and infrastructure||Skills and ways of working don’t become part of the fabric.|
|Partnership/joint venture||Shared investment and collaboration||The “devil is in the details” of partnership models. Risks can include non-exclusivity, power imbalance, etc.|
|Incubation hub/internal “company within a company”||New and existing models are separate but porous, creating a path toward greater integration in the future||This can create feelings of inequity and perceived value differences between the two companies. There is a risk of attrition on the traditional automotive side before the company is ready.|
|Flow/flex model (i.e., some sort of “all of the above” option)||Reduces dependence on a single approach as it allows organizations to test multiple approaches before (or without) committing to a single one||Not a drawback per se — but there needs to be a governing strategy that drives choices versus putting a few eggs randomly in each basket.|
|“Acquihire”||Lift and shift talent with mid-term impact||Competition with other potential acquisition-minded firms (potentially outside of the automotive sector) and challenges with cultural integration can arise.|
Critical transformation plans for 2023
- Focusing on company culture
- Increasing ability to adapt
- Enabling a skills-based organization
- Upholding diversity, equity and inclusion
- Enabling new ways of working
Transforming for the future of work
Strategic workforce planningto determine the talent required to effectively support new business challenges, balancing skills required while optimizing headcount and anticipated future need for skills
A talent strategyto design an approach that develops, rewards and engages this specific talent effectively
A skills-based framework and innovative career pathsthat enable employees to navigate their careers and development and allow organizations to know and maximize particular skill sets in their business
A culturethat creates a leadership environment and working norms and behaviors conducive to nurturing talent and driving creativity and innovation
A structurethat flattens the organization and makes it less hierarchical while enabling the efficient flow of ideas and talent from the edge to the core
Work modelsthat factor in different ways of working — everything from workplace strategy to location strategy
Kicking into high speed
To get started, automotive leaders need to consider the right strategy and partnership model for their organization. We can help you think through the people implications for the models you are considering. Once you have selected a business model, we can partner with you to design the people strategy, operating model, organizational structure, culture and talent programs you need to make the new model successful. We also can help you evaluate, redesign and reroute work so your organization is functioning efficiently and effectively and your people can maximize their contributions.
You don’t have to go it alone. Planning for a markedly different future requires an “all hands on deck” approach from automotive companies. Mercer offers a multi-disciplinary, “all hands on deck” partnership that helps organizations address the workforce, talent and organizational challenges and opportunities that lie ahead.
|Client success story|
|A renowned Italian manufacturer of luxury sports cars and SUVs had achieved new performance levels with double-digit growth and a rapidly expanding workforce. While its future performance targets were even more ambitious, the industry’s structural transformations posed additional challenges to cost competitiveness and the capability to reshape the workforce’s competencies. The client wanted to review its approach to workforce planning to ensure it met performance targets by rightsizing the company and its talent competencies.|
Mercer and Oliver Wyman teamed up to focus on both quantitative and qualitative sizing, with the specific key objectives to:
|Overall, the client gained awareness of the comprehensive skills needs of its future workforce, with details on the skills emerging in the market and absent currently throughout the organization. This allowed for designing a supply model to connect the skills needed with the rightsizing while considering market constraints (e.g., skills availability). Finally, the design of a practical recruiting plan and the prioritization of profiles developed a plan on a five-year scale to acquire and develop skills to respond to crucial business challenges.|