Talent strategies and the competitiveness of the US aerospace and defence industry


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Talent strategies and the competitiveness of the US aerospace and defence industry is an Economist Intelligence Unit research report, sponsored by Oracle. The findings and views expressed in the report do not necessarily reflect the views of the sponsor. The author was Stew Magnuson.

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Talent strategies and the competitiveness of the US aerospace and defence industry

  1. 1. Talent strategies and thecompetitiveness of the USaerospace and defence industryA report from the Economist Intelligence UnitSponsored by Oracle
  2. 2. Talent strategies and the competitiveness of the US aerospace and defence industry Contents Preface 2 Executive summary 3 Introduction 4 Making the most of the available workforce 5 Attracting the newer generation to the industry 8 Strengthening the domestic talent pipeline 10 Gearing up for battle 11 Conclusion 141 © Economist Intelligence Unit Limited 2011
  3. 3. Talent strategies and the competitiveness of the US aerospace and defence industry Preface Talent strategies and the competitiveness of the US aerospace and defence industry is an Economist Intelligence Unit research report, sponsored by Oracle. The findings and views expressed in the report do not necessarily reflect the views of the sponsor. The author was Stew Magnuson. April 20112 © Economist Intelligence Unit Limited 2011
  4. 4. Talent strategies and the competitiveness of the US aerospace and defence industry Executive summary T he lack of college graduates in the United States who have studied science, technology, engineering and mathematics (so-called STEM subjects), coupled with an expected wave of retirees, has been a source of consternation in the aerospace and defence (A&D) industry for some time. And, as 2011 marks the year in which the first of the baby boomers, born in 1946, will turn 65, the pressure will only rise. The recent financial crisis, which weakened many retirement accounts, has forestalled this trend to some extent, but as the economy improves, many skilled workers will leave. In addition, regulations designed to control export of military technology prevent companies bidding for Defence Department contracts from outsourcing work to foreign firms, as well as from using non-US citizens on classified projects. Nevertheless, A&D companies interviewed for this report are acutely aware of these challenges and are taking a number of steps to deal with the issues, some of which are aimed at changing their internal culture. Our findings highlight some of the strategies being employed, from encouraging more students to consider studying STEM subjects to making the best use of potential retirees: l The economic downturn has had a slight silver lining by slowing the expected wave of baby boomer retirements. Companies are using this lull to mentor mid-level managers so they can step into leadership positions when retirements start to accelerate. l A&D firms report intense competition in recruiting college graduates who have the skills they are seeking and who can also obtain security clearances. Most use internships to sell students on the positive aspects of their companies by giving them meaningful and challenging work. l Once these restless, young workers are in the workplace, firms in the industry are making concerted efforts to keep them from departing to other companies or sectors. They achieve this through mentoring programmes and by acknowledging that the younger generations have different expectations of the workplace. l A&D companies are investing time and money into non-profit organisations that work with elementary and high school students in order to boost the number of US students choosing STEM professions, which is seen as the root of the problem. Nevertheless, enrolment numbers remain low. Companies are pushing for studies and data to assess what programmes will have the most impact. l Companies are also searching for potential employees in the ranks of retiring military personnel. If they have holes to fill when gearing up to compete for major contracts, they often use their employees’ networks, as well as online social networks, to obtain referrals.3 © Economist Intelligence Unit Limited 2011
  5. 5. Talent strategies and the competitiveness of the US aerospace and defence industry Introduction A wave of baby boomer retirements is expected in the next decade as the generation that was inspired by the space race and the cold war to enter the A&D industry will be leaving their jobs. According to the Aerospace Industries Association,1 26% of all STEM-related degree holders in the US are aged 50 or older, rising to 40% among those holding doctorates. In 2011 the first of the baby boomer generation turns 65, so retirement pressures will only rise sharply from this year. At Boeing, for example, Jim Albaugh, president and CEO of its commercial airplanes division, has noted that one-half of its engineers will be eligible for retirement in the next five years. In short, many workers are leaving, fewer are coming in, and even fewer new graduates are interested in the field. A&D companies are acutely aware of this problem and are currently implementing strategies to retain the talent they have, recruit employees into their fold and bring on the next generation of skilled workers. Fewer and fewer scientists and engineers entering the field in the 1980s and 1990s means that there is a shrinking pool of experienced personnel to take their places. Military projects sometimes involve esoteric disciplines that are not found in the commercial world, and recruiting and retaining scientists, engineers and mathematicians who can do this type of work is challenging. For a start, specialists in topics ranging from chemical warfare protection to directed energy are scarce. Finding graduates who want to do this kind of work is even harder. And finding US-born graduates who can receive security clearances is harder still. Similarly, the business and operations side needs non-engineers who understand the complex world of the US defence acquisition and contracting system if a company is to compete for lucrative contracts. The Aerospace Industries Association, for example, estimates that, of the 70,000 engineers that graduate in the US each year, only 44,000 are qualified to work in the aerospace sector. Many of those will forgo that field to work in more attractive industries such as information technology or the video game industry. Some simply will not be able to work on military contracts because of criminal records or other activities that can prevent them from obtaining a security clearance. The defence industry is also cyclical. Despite the growth in the past decade on the back of several wars, and even with muted spending expectations ahead as the country starts to rein in its budget deficits,1. Aerospace Industries industry managers interviewed for this report say the war for talent is more intense than ever. GivenAssociation, Launching this, how do US aerospace and defence companies ensure that they have the best personnel on hand?the 21st Century AmericanAerospace Workforce, And can they maintain the nation’s reputation as the world’s leading producer of cutting-edge defenceDecember 2008. technology?4 © Economist Intelligence Unit Limited 2011
  6. 6. Talent strategies and the competitiveness of the US aerospace and defence industry Making the most of the available workforce “W e were concerned about going over a cliff with baby boomer retirements,” says Erwin Bieber, vice-president and general manager of business operations at BAE Systems’ intelligence and security division. This wave has not yet materialised in the volumes once feared, probably owing to the recent crisis as 401K-retirement accounts have declined in value, prompting many to work for longer. A 2010 Workforce Study conducted by Aviation Week2 and three trade associations showed that in 2009 almost 13% of the aerospace workforce was eligible for retirement, but only 2% chose to do so. Nevertheless, aerospace and defence firms are battling to attract and retain the best personnel. “The war is intensifying,” agrees Kit McDonald, HR director for SRC, a research and development firm that provides electronics to the Defence Department and intelligence community, in reference to the fight to attract scarce talent. BAE Systems has taken this respite to ensure that knowledge is being passed down from one generation to another. Mr Bieber says that the company has instituted “very aggressive” mentoring programmes. It is identifying key areas where personnel will be needed in the next five to ten years and is tailoring programmes designed to pass down knowledge through a Capabilities Mentoring Organisation. Meanwhile, some companies are focusing on issues like succession plans to maximise the potential of talent within their four walls. Northrop Grumman, one of the top three US defence contractors, has highly structured succession plans in place. The efforts to identify future senior leaders not only reach down into the mid-level manager ranks, but sometimes into workers in their early to mid-20s, says Ed Swallow, vice-president of civil systems business development at the company’s information systems division. The Organizational Leadership Development Program at Northrop Grumman requires all division presidents, vice-presidents and directors to identify five subordinates who need further developmental activities to take on their job in the short, mid- or long term. Together, the mentor and mentee identify the professional skills they need to acquire before they can rise to higher echelons in the company. Since the programme focuses on a range of age groups, “we are creating a ladder, if you will, of people who understand what it takes to move up to the next level,” explains Mr Swallow. “So as the openings are there, we know how to go find them and pick them.” As it happens, this evolution of older workers into mentors for the younger may be a natural fit, and a crucial means of passing institutional knowledge further down the organisation. Tom Deany, vice-2. Aviation Week, 2010Workforce Study, July 20th president of human resources (HR) at Ball Aerospace, a satellite manufacturer, has found that “older2010. generations like to mentor, and younger generations like to be mentored.” Companies should take5 © Economist Intelligence Unit Limited 2011
  7. 7. Talent strategies and the competitiveness of the US aerospace and defence industry CASE STUDY: Rockwell Collins—Rethinking interactions as it is the family-oriented mid-level managers who can appreciate between generations good schools and commutes that last less than ten minutes. “Having said that, most organisations would kill to have my turnover rate,” adds Mr Kirchenbauer. On day one, the company assigns a “new hire Rockwell Collins is a major supplier of aviation electronics to defence sponsor” who is specifically tasked with showing a new employee the and civilian markets. But company executives acknowledge that its ropes. headquarters in Cedar Rapids, Iowa, is not the most glamorous or Rockwell Collins has also had positive results with specialist attractive destination for new graduates. “If you’re single and you software that is designed to match mentors and mentees. It closely say, ‘Wait a minute. I want nightlife and mountains to ski in and a resembles online dating websites. The company asks its leaders once larger city, or I want a coast to go to,’ we’re not offering a lot of that,” a year to fill out a profile with their field at work, hobbies and other admits Ron Kirchenbauer, the firm’s senior vice-president of human interests. New employees fill out a similar form. The programme’s resources (HR). algorithm calls up a list of potential mentors for the new hires. The As a response to this challenge of attracting new workers, the mentees then select which of the upper management personnel they firm’s HR department has instilled in senior leadership the need to are interested in meeting. All this happens without the mentors see the workforce not as one monolithic entity, but rather as one knowing who is looking at their profiles. comprising several generations. “We think there are huge differences Potential mentors are notified by e-mail that they have been in the way people create an affinity to an organisation or to a leader. selected. They then contact the new hire to set up a meeting. Having a And we want our leaders to understand those differences and that system that appeals to the so-called Generation Ys or millennials is an one size fits all from the generational perspective is not sufficient in important part of the programme’s success, notes Mr Kirchenbauer. today’s world to attract and retain the kind of talent that we need,” “That next generation of talent, they really like this, and they use it a says Mr Kirchenbauer. lot. It’s very much just like the online world they grew up in outside of The company is not as successful in retaining the younger workers Rockwell Collins,” he adds. advantage of these natural inclinations, he added. At best, it may even encourage some older workers to remain longer in the workforce. Rockwell Collins, a supplier of avionics to defence and commercial sectors, is another advocate of mentoring, to the extent that it has built a specific software system to support the process (see case study: Rockwell Collins—Rethinking interactions between generations). Going global? In other industries, businesses have responded to competitive pressures and any shortfalls in the domestic sector by globalising and tapping into skills wherever they may lie globally. For the defence industry, however, US International Traffic in Arms Regulations prohibit not only the export of sensitive military technology, but also the sharing of technical data and knowledge with foreign nationals. Even companies operating within the US, but which have origins overseas—such as BAE Systems (the UK) and Thales Communications (France)—have strict firewalls between them and their parent companies. Some defence companies have their feet planted in the commercial sector as well, and have more options available in terms of outsourcing work unrelated to national security. Boeing, for example, outsourced about 1,000 engineering jobs to Russia as it developed its Dreamliner passenger airliner over the past decade. But those practices end when working with the Defence Department. Rockwell Collins hires local technicians to service and install subsystems for overseas customers on commercial aircraft, but keeps all its developmental engineering in house, says Ron Kirchenbauer, the firm’s senior vice-president of HR.6 © Economist Intelligence Unit Limited 2011
  8. 8. Talent strategies and the competitiveness of the US aerospace and defence industry Sharp reductions in the number of visas for highly skilled foreign workers has exacerbated the situation. David Strong, vice-president of marketing and former chief of engineering at FLIR, an Oregon- based sensor manufacturer, laments the small numbers of H-1B visas that allow foreign nationals with specialised knowledge to work for US companies, obtain a green card and, then eventually, be put on a path to citizenship. Recruiting these experts would not be difficult, he says. FLIR has built a business model on technologies that do not rely exclusively on US military contracts. Other companies that have tighter trade control and security clearance restrictions are not so fortunate. “I can’t hire any of the H-1B visas into a defence company,” says Mr Swallow of Northrop Grumman. “I’m prohibited from doing that by law. Even if I could, I can’t get them a security clearance.” Accordingly, for those that are forced to look externally for talent, the best hope is to find a US company or subcontractor that has the kind of expertise needed to compete for a contract, and to either hire it for the work or form a strategic partnership, says Mr Bieber of BAE Systems.7 © Economist Intelligence Unit Limited 2011
  9. 9. Talent strategies and the competitiveness of the US aerospace and defence industry Attracting the newer generation to the industry O ne way to fill the ranks in the A&D industry is to target young talent fresh out of higher education institutions. With a shortage of STEM students, companies are more focused than ever on identifying appropriate skills early. Internships are a key strategy used within the sector for identifying future employees. It is a “try before you buy” situation for both parties, says Matt Riddle, vice-president and general manager of business operations in BAE’s US combat systems division. “We’re not making them transcribe and make copies,” he adds. “They are literally working with our engineers.” Ms McDonald of SRC says interns are treated the same as other team members. If a unit must travel to conduct field tests, for example, they are brought along. “Don’t treat interns like interns,” she says. SRC provides stipends of up to US$500 per month after the students return to their schools to create loyalty to the company. The students, in turn, seek out potential SRC recruits on campus. It is important for companies, especially those with a strong regional presence, to form partnerships with local universities. FLIR volunteers its executives to judge contests and teach seminars. This strengthens relationships with professors, who in turn can guide graduates towards the company, according to Mr Strong of FLIR. Rockwell Collins, the aviation electronics giant, is one of Iowa’s largest employers, and has built partnerships with the state’s universities, says Mr Kirchenbauer. It strategically directs scholarship money to potential job candidates, and works with instructors to make sure they are teaching the skills the company is seeking. The retention challenge Once employed, keeping the young talent in the fold is the next challenge. “The younger generations tend to be less tied to one company and less tolerant of rigid structure,” says Mr Deany of Ball Aerospace. “That means they are more willing to move to a new company to do the work they value.” The Aviation Week study showed voluntary attrition rates among young professionals with zero to five years of experience increasing dramatically from 16% in 2008 to 22% in 2009. BAE data showed that young employees become restless and leave at about the two-year mark. In response, BAE has created an “Assignments Panel”, a clearing-house of openings in the company, so they understand that they do not need to leave in order to find new challenges, Mr Bieber says. Other companies also invest effort into ensuring that new hires do not get restless. Northrop Grumman,8 © Economist Intelligence Unit Limited 2011
  10. 10. Talent strategies and the competitiveness of the US aerospace and defence industry CASE STUDY: SRC—From exit interviews to stay three reasons. Other questions include, “What would be the one thing interviews that would make you go home tonight and update your resume?” The resulting data are aggregated, with recommendations provided to the firm’s executive leadership. Keeping employees happy is key when seeking to retain scientists, Very few companies have done “stay interviews”, and there researchers and engineers in the aerospace and defence fields. is not a lot of data on their impact, but SRC has spent some time SRC, a research and development firm that serves the defence and benchmarking and perfecting the questions they want to ask. One intelligence communities, has had some success in the retention conclusion is that the interviews should not be done by HR, an field. It made Fortune magazine’s Top 100 Best Companies to Work employee’s immediate supervisor, or a third party from outside the For list in 2011, and its 14 regional offices are often in the Top 10 in company. The interviewer should be the next highest supervisor similar rankings in their respective states. beyond their immediate supervisor. Kit McDonald, the firm’s director of human resources (HR), Quite simply, the interviewees want to know that their chain likens the process to a marriage, where both partners have to work of command knows them and understands what they care about at keeping each other interested. “We have to make sure we’re and what they want to see improved and changed. “They want to remaining attractive to our employees because on any given day an make sure that the information gets to the right person and that employee is going to have their head turned by something else that’s it’s falling on the right ear,” says Ms McDonald. Also, they may not going on at a different organisation and that’s what we really want to feel comfortable sharing negative feedback with their immediate prevent,” she says. supervisor. To that end, the company has recently instituted “stay interviews”, These stay interviews are targeted at the top 20% of the company’s its twist on the exit interview. Exit interviews, normally conducted by employees—those who are the most vital talent with the highest HR personnel, are useful post-mortems. SRC conducts them and uses potential in the organisation, she says. “We really believe that if we that data too, but they come too late, says Ms McDonald. Instead, SRC structure our culture, our compensation and our benefits to make asks employees in annual stay interviews why they choose to remain those high-potential top performers happy, then you will make those with the organisation, asking them, for example, to name their top other 80% happy.” for example, has a highly structured rotational system where select new hires in technical or business disciplines spend their first two years on four rotations, lasting six months each. After that, they are assigned to one programme for a full year. At each assignment, they are provided with a mentor. “Then from there, they have an opportunity to figure out where in the company they want to go,” explains Mr Swallow. This is especially useful given the diverse array of job roles that the A&D sector can offer. “How many college students know the difference between programme control and supply chain? They just want a job,” he adds. There are also generational differences to consider, which can affect the approach that A&D firms take to retaining younger workers. SRC has put a lot of thought into ways of retaining the Gen-Xer and millennials, who tend to be less formal in their approach. This sometimes clashes with upper management, who in A&D companies may have been recruited from the more conservative military culture. HR personnel at SRC try to defuse such conflicts by educating senior leadership on these cultural differences. If a younger worker needs a few minutes to update their Facebook page, “let them”, is the company’s attitude, says Ms McDonald. Another tactic that the company employs is the concept of “stay” interviews, a more rigorous assessment of why people remain in the company, with a view to being more proactive in making changes to improve the working environment (see case study: SRC—From exit interviews to stay interviews).9 © Economist Intelligence Unit Limited 2011
  11. 11. Talent strategies and the competitiveness of the US aerospace and defence industry Strengthening the domestic talent pipeline T he low numbers of US students selecting STEM-related subjects or career fields has been an alarming trend for the A&D sector. To address this problem, firms in the industry have been donating both money and time for the past decade to boost interest in science and maths in schools, from as early as kindergarten and right through until the end of high school. But are these efforts working? The data suggest that they aren’t. Tapping America’s Potential (TAP), a coalition of US companies interested in promoting STEM education, set out a goal of increasing the number of bachelor degrees awarded in these fields from 223,000 per year in 2005 to 400,000 by 2015.3 Since 2005, that number has remained relatively flat and the organisation says it is not on track to meet its goal.4 Major industry trade groups, such as the Aerospace Industries Association and the National Defence Industrial Association (NDIA), have formed a coalition to tackle the problem, although it is unclear if they will fare any better than TAP. Accordingly, how and where should companies look to invest their charitable dollars? Those seeking non-profit organisations with which to partner should look for programmes that can “inform, influence and impact” students, argues Mr Swallow of Northrop Grumman. Informing them about careers is good, influencing them to take STEM courses is better, but most important will be the impact, when they enter college and actually choose to pursue a STEM degree. Companies surveyed say they tend to choose one local non-profit with which to partner in order to strengthen the pool of skilled workers in their regions. “We’re betting on this along with lots of other companies,” confirms Mr Kirchenbauer of Rockwell Collins. “We’re putting a lot of money and our leaders’ time into these courses to support kids and get them interested early on.” Rockwell Collins is trying to collect data, but so far it has only anecdotal evidence that the approximately US$1m that it donates to various STEM initiatives each year is having an impact, says Mr Kirchenbauer. Mr Swallow, who also chairs NDIA’s STEM division, says one of the coalition’s four main objectives is to push for data to measure the effectiveness of STEM programmes. Meanwhile, companies3. Tapping America’s must think locally, he says. Each region or state has different needs. Applying a national, one-size-Potential: The Education forInnovation Initiative, July fits-all programme to the whole country will not work, he adds. Utah, for example, has robust science2005. requirements in its public schools (100 hours per year after third grade), and as a result, the state exports4. Tapping America’sPotential: The Education STEM college graduates to other states. The focus in Utah is on finding hands-on internships for students.for Innovation Initiative, North Dakota, by contrast, requires only 20 hours of science per year after fifth grade, suggesting moreGaining Momentum, LosingGround, 2008. work is required in schools within that state.10 © Economist Intelligence Unit Limited 2011
  12. 12. Talent strategies and the competitiveness of the US aerospace and defence industry Gearing up for battle W inning contracts from the Defence and Homeland Security Departments and intelligence agencies is the lifeblood of A&D companies. Having the right personnel in place to win and complete such contracts successfully requires detailed planning by managers and HR departments. This may entail not only the engineers and technical experts, but also workers who understand the complex issues surrounding federal contracting. Approaches to this issue differ from company to company. Rockwell Collins, Thales Communications and BAE Systems all deal with this in varying ways. Rockwell Collins looks a year in advance at major programmes it intends to bid on and makes quarterly updates on HR needs. “That helps locate pockets of talent that we feel we can tap into quickly and then to quickly move resources from other programmes when needed or bring talent from the outside to supplement that,” explains Mr Kirchenbauer. His firm recently identified a company where 1,000 aerospace engineers were about to lose their jobs. It has been aggressively recruiting in the area in the hope of picking up potential employees. Thales Communications, which manufactures military and first responder radios, each quarter lists all its programmes on one axis, and then plots all its available engineers against it. It then takes into consideration any impending contracts that have a high probability of being won, in order to understand clearly any shortfalls. “Once we identify any gaps, we begin the recruiting process,” says Pat Flanagan, the firm’s vice-president for HR. BAE’s US affiliate, which employs some 46,200 employees, maintains a repository of skills across the company, which helps it to understand what talents are held within the company, and where. “It captures the strengths of existing employees in a searchable database that will allow managers to find talent to fit their needs,” says Mr Riddle, who deals with such challenges on the projects he oversees. His colleague, Mr Bieber, who also looks after major projects, adds that this becomes especially crucial when a potential bid becomes a confirmed contract. “Let’s say we have to quickly staff-up on a new contract win. Our database tells us what an employee’s skills and experience are, their desired developmental requirements and career aspirations, and their ability to relocate if necessary,” he says. To support this, the company tries to foster a culture of collaboration, and it is not unheard of to pull 50 to 60 personnel from one division so they can be transferred to where they are needed. It also maintains a similar system for its most senior people, to help with succession planning or the need to fill a senior-level position. “We can immediately see from this list who is ready to take the next step up on the career ladder,” says Mr Bieber.11 © Economist Intelligence Unit Limited 2011
  13. 13. Talent strategies and the competitiveness of the US aerospace and defence industry Tapping into employees—and their contacts At other companies in the industry, executives seek to tap into their employee network to deal with this talent problem. SRC, for example, aggressively recruits from other organisations and uses its reputation as one of the nation’s Top 100 places to work in the US as a selling point. When an experienced, mid-level manager is needed, it relies on social networking websites—Linkedin, Facebook and Twitter—as well as its own employees to bring in referrals. “We’re looking for folks that maybe don’t realize they need to come and work at SRC. They may think they’re happy somewhere else,” says Ms McDonald. SRC’s HR department has teams that go after talent in other companies. “Our employees are outstanding recruiters. And they know our culture and they know who they want to be working alongside them,” she adds. At FLIR, Mr Strong agrees, noting that the best way to recruit potential employees for new projects is through existing employees. But employees will not do that if they are not happy, so helping to ensure they have other resources needed to do their jobs is important. “You have to provide people with good tools to do their job,” he says. One example he gives is that of an animator on staff who needed some specialist software to do his job effectively. “It takes a little bit of creativity on my part to get everybody to understand why it’s a good idea to spend this money,” says Mr Strong. “[But] if you want to retain people in the long run, you need to go to bat for people when they need a tool.” Nevertheless, assuming employees are kept happy, the impact that their referrals can make is significant. Thales obtains about 45% of its new hires in this way and pays a bonus to the worker who brought the new hire into the company, according to Mr Flanagan. Recruiting from military retirees is also a widespread practice. This includes everyone from officers who have first-hand knowledge of military hardware to acquisition and procurement experts, intelligence analysts and four-star generals looking for upper management jobs. Competition for such people is keen, however. Retired military personnel are knowledgeable about programmes, emotionally dedicated to the defence mission, and come with security clearances in hand. BAE has employees embedded in military organisations who service the products they have sold to the branches. It uses its employees in the field to identify and recruit those about to retire, says Mr Riddle. He notes that having former military personnel on teams competing for contracts is also a huge advantage because they have actually used the equipment in the field. “They have insights that an engineer who has never been in the military may never consider,” he says. During competitive prototyping, for example, when a handful of contractors produce products that go head to head in field tests, such insider knowledge can give military contractors a competitive edge. Another networking approach taken to the challenge of sourcing appropriate skills is that of maintaining strategic relationships with other firms. Understanding their strengths can be critical when addressing human resource shortfalls, by bringing these firms on as subcontractors. At BAE, Mr Bieber says the company has a long history of working with other companies. “Sometimes we’re the prime, sometimes we’re a sub,” he says, citing the F-35 next generation fighter jet as an example. “We’re a strategic partner [on that project], and our ability to fulfil our responsibilities lies in the very talented people whose skills are evident to those they work with.”12 © Economist Intelligence Unit Limited 2011
  14. 14. Talent strategies and the competitiveness of the US aerospace and defence industry Dealing with a contract loss Meanwhile, there are winners and losers in competitive contracting. The losers may have retention problems after failing to win a bid. BAE uses its Assignments Panel as a clearing house so those who are losing teams can find opportunities elsewhere in the company. Mr Swallow says it is particularly hard when a company loses a re-compete, which is when the Pentagon opens up a previously established contract to new bidders. In these situations, the workforce is in place, and employees face the prospect of losing their jobs. Typically, Northrop Grumman holds onto 60 to 70% of the employees in these cases, with most of them absorbed into other programmes. The company has some 800-1,000 job openings per month, he notes. For those who are unable to hold on to their jobs, the good news is that other firms in the industry will be seeking their skills.13 © Economist Intelligence Unit Limited 2011
  15. 15. Talent strategies and the competitiveness of the US aerospace and defence industry Conclusion W hile the expected retirement of a significant tranche of baby boomers within the aerospace and defence industry has not yet struck in force, steady losses of these experienced senior personnel are expected over the coming years. On the intake side, the number of US graduates within the crucial fields of science, technology, engineering and mathematics remains stubbornly low. An anticipated reduction in the Defence Department budget may lessen demand for some personnel in some sectors in the coming years, but in the meantime, HR teams are working at all stages of the labour supply chain: nurturing future generations of STEM workers; aggressively seeking to recruit STEM graduates; and trying to attract and retain experienced industry professionals. Some of the pointers they should consider for each of these stages are highlighted below. To nurture the future generation of STEM workers, A&D companies should: l look to partner with non-profit organisations working with scholars of all ages, from kindergarten to high school. These non-profits should have a track record of “informing, influencing and impacting” students; l push non-profits and state and local education departments to provide data on what programmes are working best; and l think locally; companies should look to schools near their headquarters or branches and tailor their efforts based on the schools’ needs, and the particularities of that region or state. To recruit STEM students in higher education programmes, companies should: l offer internships and ensure that participants have meaningful work; don’t treat interns as interns, but rather as regular team members; l continue to assist them financially after they have left their internship with stipends or scholarships; let them be your eyes and ears on campus to help recruit others; and l volunteer to lecture or teach seminars on local campuses in order to strengthen ties with professors who can steer graduates to the company. To retain, and attract, mid-level employees, companies should: l make sure employees know there are advancement opportunities in the organisation; set up a clearing house for in-house job openings; l use employees as recruiters; pay them bonuses for bringing in experienced personnel; and l take the current respite in baby boomer retirements to mentor the next generation of leaders.14 © Economist Intelligence Unit Limited 2011
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