The cement and wider manufacturing industry is locked in a fierce battle for talent. By 2030 there is expected to be a global deficit of more than 7.9 million workers in the sector, with a resulting revenue loss of as much as US$600bn.
In the US and European manufacturing sectors, a lot of this shortage can be attributed to ageing populations. With millions of people reaching retirement age every year, businesses must work harder than ever to fill the void created behind them.
The global cement industry is about to embark on an industry-defining period in which a generational handover will take place, from retirement age (and often post-retirement age) senior leaders to the next generation. However, there is a major challenge that is facing the cement industry in particular. Whereas many rival sectors are spoiled for choice when selecting candidates for senior level succession pipelines, the cement industry is struggling to find resource for even their most attractive senior assignments. A major change to talent strategy is needed: Those who embrace change and adapt are likely to succeed, while those who do not, may soon end up being forgotten.
The Void – How did we get here?
The void, or the lack of mid-to-senior level talent across the building materials industry is a challenge being faced by most manufacturers in most geographies. The void is a culmination of a multitude of factors. However, the most prominent are: a historical lack of leadership development, the 2008 financial crisis and a significant reduction in the mobility of talent.
Lack of development: The first of these is the historically unsophisticated management trainee or graduate programmes that were in place 20 or more years ago. Very much a symptom of the times, many of these programmes lacked clear long-term goals or truly objective assessment and failed to give many of their alumni the breadth of experience now deemed necessary in key leadership roles.
The crash: The cyclical nature of construction was taken to its extreme in the 2008 financial crash. This placed significant pressure on businesses right across the construction supply-chain, including high-profile property fund closures and several construction firm collapses. The repercussions, through legacy contracts are still being felt today. Throughout this period, a substantial amount of talent left the industry to join industries with greater consistency and highly-rewarding careers. This issue was exaggerated as organisations rationalised and ultimately selected experienced leadership over leadership for the future.
The ‘ex-pat’ factor and globalisation: The role and use of expatriate leaders has changed substantially. Historically, multinationals would use expat assignments in emerging markets as a way of initiating early stage talent into the world of business leadership. Young, ambitious leaders hungry for adventure would be sent to smaller operations in remote locations such as Africa, Central or South East Asia to ‘cut their teeth’ on their first leadership assignment in ‘less visible’ markets, with the view to eventually coming back to larger roles in Europe or North America.
However, cheaper air fares have meant that many of these exotic locations can now be visited on a much more affordable basis than in the past. This has at least partly replaced relocating with work as a way to see the world. In addition, with many families now accommodating two ‘bread-winners,’ as opposed to just one, mobility is significantly more limited. As a result, fewer ‘leadership initiation’ opportunities exist for promising talent.
What can business do?
Faced with these challenges, what can the cement and wider building materials industry do to secure strong leadership talent for the future of the sector?
Internal development: The first and most sustainable step business can take in tackling the void is to invest in learning and development initiatives that cover the full spectrum of the leadership career ladder. A core focus should be on creating robust and effective mid-career talent development programmes. These must go beyond preparing employees for just their next role and instead clearly define a syllabus of knowledge, experience and behaviours that they need to gather in order to succeed and advance in the organisation.
Alongside this, business must work on developing a variety of new leadership initiation opportunities in markets and locations that are attractive to people in modern business. There is little point defining what business experiences an individual must accumulate to reach their ambition if those opportunities are not available. One example could be the use of Deputy Country or Business Leadership positions for those that are likely to succeed quickly. This can have a number of positive benefits, including the strengthening of leadership boards in particularly challenged locations, greater ‘bench-strength’ freedom for CEOs to focus their efforts on more strategic work and also motivating CEOs to continue to develop for their next progression move.
Looking outside: The internal processes for development must be balanced with external hiring for excellent and diverse talent. By diverse, I mean looking beyond the building materials sector to recruit individuals with differing experiences and transferable skillsets. Alongside filling the void, hiring from a broader spectrum of industries helps to tackle a number of other issues that have permeated the sector. These include a lack of diversity, slow uptake in the use of technology and a lack of customer awareness.
By distilling down what makes someone successful in a particular position beyond how many years they have done a similar or slightly smaller role for a competitor, you are able to build a job profile that transcends industrial boundaries. This can then be used to select candidates from industries renowned for their expertise in particular areas; supply chain professionals from the fast-moving consumer goods sector, manufacturing experts from automotive and aerospace, health and safety leadership from oil and gas or technology and e-commerce experts from consumer products.
This mixture of leadership talent will then begin to build momentum internally, as those who have been appointed into their roles due to their diverse career histories and experience will begin to look for the same characteristics in their successors.
Reward good behaviour, not just results: The last step business can take to fill the void is by redefining what success looks like in an early career. Rebalancing appraisal criteria away from ‘outcome’ and towards ‘input’ will give leaders far more effective tools when promoting candidates and create a far healthier appetite internally for difficult assignments in challenging markets.
If an employee knows that their performance in a particular role will be judged purely on output (volume, revenue, EBITDA) then a business can expect to find it challenging to fill roles in declining or adverse markets. However, if an employee knows that instead they will be judged on a mixture of their inputs (creativity, entrepreneurial spirit, commercial acumen etc) and outputs, then business will find it much easier to attract great talent into tough markets, with these market conditions then positively shaping leadership ability for the future. This will, of course, also improve the performance of the company in that market.
Do something... now!
The easiest step for many businesses is to break the inertia of inaction. The longer they wait to fill the void, the longer senior leaders need to stay in post, perpetuating the appearance of a lack of opportunity and therefore creating an even greater void.
James Pope, one of the co-founders of Beaumont Bailey, is an executive head-hunter specialised in placing board level, senior functional, country and cluster leadership across the building materials industries, with a particular focus on cement.