In recent years, there has been a significant increase in uncertainty worldwide, particularly in the Baltic region, impacting the business environment. Despite this, according to data from the Central Statistical Bureau, the number of companies in Latvia planning to increase investments in expanding production capacity and rationalization investments in 2024 has grown. On one hand, this mutual asymmetry in data is encouraging, indicating that many manufacturing companies feel comfortable even in uncertain conditions and can think long term. On the other hand, in the near future, business leaders will face the task of making strategic and significant decisions that will determine the competitiveness of many companies and their future development scenarios. To ensure that investment decisions made by manufacturing companies are commercially successful, alongside technological trends, companies should also consider workforce and leadership trends, which synergize with successful decision-making in development.
Therefore, in this article, I want to briefly summarize the main challenges in workforce development dynamics and share successful solutions and practices in workforce issues.
Controversially, the main challenge for dynamic manufacturing companies in the workforce domain is not so much related to the employees directly involved in the production cycle but rather to quality company management. Errors in the manufacturing sector can be very costly. For example, while FinTech companies can easily pivot and adapt to various markets and introduce new products, poorly balanced or surprising investment decisions in manufacturing can affect the very existence of the company. Therefore, qualitative decision-making is currently one of the most demanded competencies in executive recruitment in Latvia’s manufacturing sector. To ensure successful strategic direction, leaders or management teams need to possess analytical thinking, strategic vision, as well as adaptability and collaboration. These qualities will enable successful decision-making in each specific situation and unique company circumstances – whether to invest in equipment or wait, enter a new export market, or focus on strengthening the existing market position.
Another challenge that will require clear action from manufacturing companies in the future is attracting and retaining qualified or “key” employees. The manufacturing industry is characterized by so-called “long-term employees” who have worked for more than twenty years and fully understand specific production processes and equipment. However, these employees will soon reach or have already reached retirement age. Meanwhile, the “new generation” of employees is quite reluctant to choose work in factories, especially in regions and outside major urban areas. Moreover, from the perspective of manufacturing companies, there is a certain skepticism and caution about knowledge and skill transfer from other manufacturing sectors. For example, if a technology manufacturing company is looking for a technical manager or equipment specialist, preference will be given to candidates from a related industry rather than, for example, a talented food manufacturing specialist, and vice versa. Additionally, candidates often do not have proficiency in foreign languages at the required level to navigate various specifications.
Several manufacturing companies have addressed these situations in various ways. For example, some companies have managed to find internal resources for retraining specialists from other fields. Similarly, some companies have attracted young “millennial generation” employees from Ukraine with the necessary qualifications and skills. However, considering that not all recruited employees plan to stay in Latvia long-term and there is a shortage of qualified manufacturing workers, it is still relevant to explore new approaches to attracting technical specialists. One solution could be to evaluate remote work opportunities in manufacturing. Although, for example, compared to the finance or ICT sector, this is a huge challenge, remote work provides competitive advantages and makes it easier to attract qualified, modern employees and even attract experts from abroad. Future workforce trends also indicate that permanent employees of companies will be supplemented by individually qualified employees who will provide their services as freelancers as needed, and employee leasing will become more common. These solutions can help reduce labor costs and provide the necessary flexibility. In these matters, the support of the human resources management team will be important, taking on a more strategic role than before.
Given the above, it is logical that there is fierce competition in the labor market for “key experts” and managers of manufacturing companies. For example, companies try to retain export and manufacturing technical experts by offering career opportunities and higher salaries. Therefore, companies that can quickly adapt without losing their long-term strategic vision will win the competition for talent. To attract the best managers and employees, it is important to be aware of the company’s strengths and advantages. Evaluating candidate motivation, I have observed that, for example, from the candidate’s perspective, when choosing the next job, local companies offer greater flexibility and freedom in decision-making regarding innovation. On the other hand, foreign capital companies often offer more advanced technologies and an international environment, as well as opportunities for experience exchange. However, guidelines may come from the foreign parent company, which can be a demotivator for managers who want to realize their own ideas. Companies that clearly recognize their advantages will find it much easier to attract talents to their teams.
In conclusion, I want to emphasize that there is no one universal recipe for successfully ensuring workforce development in manufacturing companies. This will depend on the ability of company management to adapt to market conditions and make timely successful decisions. With that said, not always the seemingly most rational and carefully considered decision will turn out to be the best and most valuable for the company. In the new year, I wish successful management decisions and the development and attraction of talented team members.