Defining the new talent playbook in partnership with the Global Lighthouse Network
The Global Lighthouse Network (GLN), co-founded in 2018 by the World Economic Forum and McKinsey & Company, has identified 172 leading sites (and counting) that have achieved exceptional operational impacts through digital transformation. These sites have seen such impressive outcomes as 50 percent productivity improvements, over 80 percent quality improvements, 40 percent lead time reductions, and 30 percent emissions reductions. These Lighthouses have illuminated the path to a Fourth Industrial Revolution (4IR) future, so why aren’t more companies following suit? The answer is talent.
The World Economic Forum’s Future of Jobs Report highlights that over 50 percent of leaders cite skills gaps and talent attraction as major barriers to transformation. While executives understand the need for a skilled workforce, they often struggle with implementation. The production ecosystem needs a new playbook for talent—written with sites that are performing at the highest levels. To address this, the World Economic Forum and McKinsey launched the “Frontline Talent of the Future” initiative in 2023 to identify and share successful talent innovations from top-performing sites.
Close to one year later, the Frontline Talent of the Future initiative has conducted 80+ interviews with industry leaders, completed numerous site visits across the globe, assembled a database of 61 innovative talent solutions, and built a playbook for frontline talent excellence.
In 2025, the GLN will formally incorporate talent to recognize sites achieving high productivity and stability through innovative talent solutions.
Read on to learn more about how leading organizations are rewriting their playbooks to incorporate an equal focus on talent as a core enabler of performance.
Understanding today’s talent puzzle
Despite the many advancements brought by 4IR, companies continue to face challenges in maintaining frontline talent stability and productivity. Attrition, especially among those hired in the last 90 days, remains stubbornly high, reaching three digits in many sectors. Across advanced economies, productivity growth in units per hour has slowed to an average of 1.0 percent between 2016 and 2022 compared to 2.2 percent between 1997 and 2002.
It has never been harder to attract, retain, and engage workers than it is today. These combined challenges emerge from five root causes:
- Talent shortages. The demand for frontline workers is outpacing availability. In January 2024, the US Bureau of Labor Statistics reported 622,000 unfilled manufacturing job openings nationwide, while the overall labor force participation rate fell from 67 percent in the 1990s to below 63 percent in 2023.
- Widening skills gaps. Technical skills are lagging behind the pace of investment in digital and automation. Approximately 15 percent of workers are reporting some degree of skills mismatch across manufacturing industries. This reality echoes the World Economic Forum’s Future of Jobs report, published in 2023, which predicted that 44 percent of workers’ skills would be disrupted in the following five years.
- Insufficient rewards, recognition, and incentives. McKinsey analysis found that 41 percent of workers feel their total compensation is inadequate, driving attrition and workplace switching.
- Struggling supervisors. Supervisors often lack soft skills and are spending less than one-third of their time on people.
- Evolving worker needs. Today’s frontline employees want a discernible career path, respond to inspiring leaders, value meaningful work, and seek more scheduling flexibility. However, according to McKinsey research, there is a mismatch between what employers believe employees’ top needs are and what employees say their top needs are.
Investing in talent across six capabilities
Historically, business leaders have viewed the workforce as a cost center. Recent McKinsey research has found that companies that create value focus on driving capital and labor productivity in tandem. They do this by thinking of labor not as a cost but rather as an investment, in the same way they think of capital.
The Frontline Talent initiative partnered with nine companies to develop a comprehensive assessment process to identify examples of successful frontline talent investments.
The pilot revealed that companies are investing in talent across six capabilities. When companies couple these investments with total employee compensation packages appropriate for their industry and location, they see productivity and stability improvements that greatly outpace their peers. The following are just a few examples of innovations we have seen across the six capabilities:
- Work design and safety: Reimagine frontline work to create safe and productive workspaces and processes.
- Talent planning: Understand the organization and site-level needs for frontline talent; match demand and supply through dynamic scheduling.
- Attraction and onboarding: Find and activate the next generation of frontline talent.
- Development: Build distinctive frontline capabilities for operators and supervisors.
- Talent effectiveness: Manage performance for operators and supervisors that drives the right behaviors to achieve performance aspirations.
- Culture and experience: Define and deliver a compelling employee value proposition.
Want to apply to the Global Lighthouse Network?
If you believe you have achieved world-class performance through talent transformation, we encourage your application to the Global Lighthouse Network. Applications are open from December 9, 2024, to February 2, 2025.
A longer version of this post was first published by the World Economic Forum. Read the extended version here.