FRESH TAKES ON BIG IDEAS

Over the past couple of years, businesses have faced frontline talent scarcity at a level that leaders may never have seen before. What amplified the challenge was that companies’ typical solution stopped working: just offering another dollar or two per hour hasn't moved the needle.

That’s partly because employees are looking for more from their jobs. But scarcity has also become a more complex problem because it affects multiple industries at once: manufacturing, retail, warehousing, and truck driving. In manufacturing alone in the United States, the most recent data show almost 500,000 unfilled jobs—a figure that the National Association of Manufacturers projects could well rise to almost two million by 2034. Frontline workers can move between sectors more easily than ever, so any one company has more competitors for talent.
 
Plus, jobs are changing. At today’s fast-food restaurants, customers start at a kiosk or in an app, placing their orders themselves. These companies don’t need workers to take orders, but they do need them to interact with customers, make the food, and ensure quality. It’s similar in manufacturing, where the level of automation keeps rising. Instead of performing manual tasks, people spend more time solving complex problems and interacting with computers, robotics, and AI.

Frontline talent is a global issue. Although it was exacerbated in the United States by specific macroeconomic conditions, the employee skill and capability transition is pretty universal. Even in places where there are enough frontline workers, there often aren’t enough with the right capabilities to do what frontline employees need to do these days.

Talent scarcity is resetting the narrative about automation. People used to see automation almost as a four-letter word—presuming that it would take away jobs. But companies have learned that automation often takes away the tasks that employees like the least, such as heavy lifting in a factory or warehouse. For a finance person in a back office, it’s taking away the most trivial and boring aspects of the job.  

“Real transformations have happened when leaders listened to what frontline employees wanted to be automated: the parts of their jobs that they liked the least.”

When leaders think about frontline talent strategy, they need to be more transformational than in the past. They need to confront basic, hard questions, such as “How do we want to organize our business?” and “What capabilities do we need?” 

To figure out how to do this systemically, rather than executing the short-term fixes seen over the past few years, leaders can take four steps. The first is to understand that frontline talent can’t be just an HR issue. It’s about reframing frontline talent as an investment—not just a cost. Frontline talent is crucial to the next generations of productivity and operational excellence. It determines where and how companies can automate and enhance with technology and what type of capability building people need. 

The second step is to put real performance improvement at the core of the talent strategy, backed by clear operational and financial metrics. Applying the right data analytics to tracking and performance management data can reveal that more rigorous capability building and career pathways aren’t just a “nice thing to do.” They’re critical to business performance. 

The third is to focus more on middle managers. They’re the early-warning detectors who make sure that the organization has the right facts about where the problems are, so the right people can help design solutions. They also lead capability building for frontline workers. It’s the middle manager who provides the on-the-job reinforcement and coaching that are essential for people to learn new skills and try new things. 

The final point is to lean into the technology. It’s become clear that companies can’t just focus on automating the areas that senior executives prioritize to save money. We’ve observed real transformation when leaders listened to what frontline employees wanted to be automated: the parts of their jobs that they liked the least. If automation (and related technologies) can make their lives better, employees will be more engaged and an even bigger part of the solution. 

It's exciting to hear a leader commit to a special talent initiative, as it shows the right momentum and investment support. But it’s even better when talent is no longer a special initiative because being concerned with talent is just part of how the company does things. That’s the goal: for a talent focus to be embedded in how things are done.

ABOUT THIS AUTHOR

Dan Swan is a senior partner in McKinsey’s Connecticut office.