Demographics Keep Business Leaders Awake
Frequently, talking with top executives, I ask what keeps them awake at night. Their answer is most often the impending loss of skills in an aging workforce. With that, our discussion turns to what they are doing about it. There are generally two levels of effort: strategic and tactical.
Annual strategic planning processes look out 5, 10 and 15 years. Typically, the work sessions include market and competitive analyses exploring what the future holds for the company. How will markets and customers change? What capabilities will new technologies bring? Given that, how will we hold market share and grow the business?
Optimally, the review extends to skill requirements. What skills will we need to meet the future challenges? What changes, if any, do we need to make to existing skills mixes? How do we acquire and retain critical skill sets?
Lay these requirements over retirement schedules and you get a full picture of your priorities. The plan to meet the priorities includes integrating mentoring and development programs with succession planning and hiring efforts. They all focus on the same priorities.
An example of this is where the electrician job classification was split into electrical and instrument crafts. This allowed adding a new set of capability parameters, reflecting changes in production control technology.
Tactical action is required where serious skill loss will occur in 5 years or less. Plant maintenance typically has the highest anxiety about skill loss. Maintenance personnel are the most senior and highest skilled in plant operations. They play a critical role in sustaining equipment reliability, production capacity, and, therefore, revenues.
A Knowledge Gap
Demographic analysis tells leadership what percentage of the workforce will be eligible for retirement, and in what time frames. But that doesn’t describe the exact impact of retirements on operations. Couple that with the duration and cost of traditional apprenticeship programs, and decision makers are left in a quandary. What crafts will we need: instrument, electrician, mechanic, or pipefitter, etc.? How many should we begin developing, and when?
The problem answering these questions is a lack of quantifiable data. The key is to identify the specific equipment affected these by retirements and the corresponding specific skills needing replacement. That is, just saying, “We need 5 more mechanics”, does not cut it. Rather, be able to say, “We need 3 people who can overhaul back pressure regulators and 2 who can troubleshoot and overhaul our Fairbanks-Morse MEP engines”. This focusses replacement efforts, rather than shot gunning for a general skill set. A matrix analysis of individuals, equipment and skills provides the necessary specificity and quantification.
This method was first used with a Fortune 500 client in the nylon textile industry. Theirs was an old plant, filled with unique equipment (i.e. effectively antiques) from the 1930’s. The company was planning an early retirement program, scheduled for launch in four months. Given the short timeframe, they asked for help.
Arriving on-site, we found the plant engineer and maintenance superintendent reviewing the maintenance roster. Eligibility for early retirement was based on points earned for age and years of service. They were assessing each eligible person on the roster. Did they think he or she would take the retirement package based on (1) the reviewer’s personal knowledge of the individual and (2) whether the reviewer expected that person would take the package.
If they thought the individual would take the package (because they’d heard them say they would), they planned to fill that open position. For those they felt would not take the package (“Bobby’s got that new house and needs the overtime”), they did not plan to fill the position.
We advised them that underestimating the number of retirees could prove disastrous. Instead they should assume (for planning purposes) that 100 percent of all those eligible would take the package. In other words, plan for the worst and hope for the best.
We began an analysis on an Excel spreadsheet. The columns across the top listed each piece of equipment (by type) serviced by maintenance. The rows down the left margin listed the names of all the craftsmen. Each cell at the intersection of column and row would identify that individual’s skill level on that piece of equipment.
Working with the line supervisors, we established a rating and definition of skill level: “0” meant the individual knew nothing about that piece of equipment but could be trained; they were rated a “1” if they could follow instructions and a task list for routine maintenance such as PM’s; “2”, he or she could perform repairs and overhauls with instructions and minimal supervision; “3” was the highest skill level, meaning they could perform all of the above and troubleshoot the equipment.
The supervisors rated each craftsman/equipment cell based on their knowledge of each individual. At the same time, we collected the hours of work on each piece of equipment from the Computerized Maintenance Management system history. This provided a data-based means to identify how many people, with what skill level, were needed for each type of equipment.
Completed, the spreadsheet provided a picture of the current skills coverage for the equipment. We assessed the impact of the retirement package by deleting 100 percent of the names (and therefore the hours) of the people eligible for the retirement package. This exposed the gaps in skills after the early retirement, assuming that all eligible craftsmen took the package.
The reaction was immediate. The superintendent, plant engineer, and supervisors could see specific equipment that would lose coverage. One in particular dropped their jaws.
Windups were critical to plant uptime. They drove the spindles that wind polymer thread onto the distaffs that go to the customers. There were several hundred running continuously. Maintaining a backlog of ready (overhauled) windups was key to meeting production requirements. If a windup failed or faltered, it could be quickly changed out and replaced from the ready backlog.
Windups were also the most complex equipment in the plant. Consisting of mechanicals, electricals and hydraulics, they required a complex skill set. Using the traditional, on the job, program, individuals needed five years to reach journeyman competency.
The skills matrix analysis showed windups would be left with no coverage. So if no one knew windups, at some point production stops. Maintaining that backlog was critical.
Digging into the current windup maintenance, we found that it was performed by the most senior craftsmen. Procedures were not up to date. It was all “tribal knowledge”, passed on in the traditional mechanics’ apprenticeship program by the journeymen mechanics. And, there was a lot of variation in methods among the journeyman. Some used their own reference charts while others had specialized tools they’d designed. Some used feeler gauges to set clearances. Others did it by eye and feel.
Over the next month, we developed a two-week windup training program that incorporated the best practices of all the experienced windup mechanics. The new standard procedure called for uniform use of reference charts, specialized tools, and feeler gauges.
The training was given to mechanics who were not eligible for the retirement package. While we performed the skills analysis, we also designed and implemented a new work management process. The new process would increase manpower utilization, increasing craft productivity and improve the organization’s ability to support the workload.
An Unexpected Outcome
The date for early retirement came. All the qualifying craftsmen did accept the company’s retirement offer. The backlog of ready windups was sustained, remaining unchanged. The skills analysis and training effort were deemed a complete success.
Then the unexpected happened. Several months later, reliability engineers noticed that windup mean time between failures (MTBF) had improved by 15 percent. Their investigation found that prior to the early retirement, windup training relied on traditional methods: partner the apprentice with an individual journeyman craftsman, driving wide variation in overhaul procedures.
The new training defined procedures that had never before been applied as a whole. The experience of all the retiring journeyman craftsmen was pooled, defining overhaul best practices. Using reference charts, feeler gauges and special tools, removed any guesswork. They were performing more complete, comprehensive overhauls than at any time in the recent past.
Successfully addressing the skills loss of an aging workforce requires two levels of effort. One must look at the long range impact of retirements and changes in workforce requirements. Integrate it with all development and hiring programs.
The other effort, tactical, has to identify specific skills rather than positions. The skills matrix identified specific effects of craft retirements based on skills by equipment. The training was focused on the most critical, short-term skills gaps and incorporated the best practices of all the retiring journeymen. This shortened the time to fill lost skills. And their equipment reliability improved significantly