U.S. Manufacturers Are Hurting Themselves by the Way They Hire

The United States is at a dangerous juncture: Manufacturing jobs are on the rise, but the growth is still fragile. Given the hypercompetitive nature of global manufacturing, it wouldn't take much to kill this momentum and put the U.S. back to where it was a couple of years ago. That's why it's critical for American manufacturers to maximize the return on all their assets — including their workforces.

U.S. manufacturers have always been at the forefront in making efficient use of physical capital, but human capital is a different story. It's not much of an exaggeration to say that for decades, companies have thought of workers as essentially interchangeable, somewhat like machine parts — if one doesn't work out, replace it with another. Managers typically assume that a worker who meets minimum qualifications can be taught pretty much any job in a short time.

If companies continue to follow that approach, they risk becoming less competitive and putting an early end to the growth of the American manufacturing sector, which has generated more than 330,000 new production jobs over the past two years. Instead, they need to recognize that not everyone is cut out to work on today's factory floor.

Production lines don't look much the way they used to. Robots and computer-operated tools are everywhere. But that doesn't mean human workers are less valuable — quite the opposite. In this environment, profits come from the company's ability to make the best use of technology to flexibly create high-quality products with continual process improvement and few accidents. Making all that happen is ultimately the responsibility of the army of one who is monitoring the robot, recalibrating as needed, watching for signs of trouble, troubleshooting, making timely technical adjustments, and proposing new and better ways of doing things. Whether the output is cars, furniture, plumbing supplies, or optical products, manufacturers increasingly need bright, technically sophisticated, adaptable, engaged workers who are self-motivated to learn. In other words, they need a world-class workforce.

To get this workforce, companies need to be as forward-thinking about their talent sourcing, hiring, and retention as they are about the technology on their production lines. That means carefully defining what capabilities are required in each hire, creating methods for determining which candidates will function best, establishing effective performance measures, and ensuring continual improvement of talent-management processes.

Of particular importance is the hire. A high hit rate on getting the right people the first time will set U.S. companies apart in the global marketplace. To achieve that, companies should be using new hiring processes that are technology driven and more relevant than the unstructured interview and résumé review of yesterday. A number of automated pre-employment assessment methods are available that include sophisticated simulations designed to measure the most relevant skills for working on a technology-driven production line. But many companies still don't use these systems; although manufacturers have become expert at process automation, most are still novices when it comes to automating the hiring process.

I'm always amazed at how many businesspeople believe the accepted wisdom that in manufacturing, American workers are a liability — that compared with their counterparts in China or India they're expensive and unmotivated. That's simply not true. The recent economic hardships have made the U.S. workforce hungry — hungry for stable, well-paying jobs, hungry for training, and hungry to compete at a global level.

For manufacturers, the key to success is thinking of the U.S. workforce not as a liability but as a competitive asset. Companies that learn to hire and partner with an engaged, savvy workforce will ensure a viable American manufacturing sector and prepare the way for long-term growth.

This post is part of the HBR Insight Center on American Competitiveness.