Digital Lakes, a new nonprofit whose mission is to attract, develop, and retain diverse high-tech talent while elevating the digital growth of the entire region, facilitated a conversation among partners KPMG and MICHauto at the Detroit Athletic Club on Thursday, Sept. 29.
Employers Must Rethink Their Hiring Processes to Attract and Retain Top Talent
Emma Andersen, director of Deal Advisory and People Strategy at KPMG, opened the conversation by saying that the labor market is “an incredibly inefficient economic market” and doesn’t meet the needs of candidates or hiring organizations. Factors that contribute to this include:
- Lack of units of measure
- Lack of visibility
- Lack of pricing transparency
- Lack of skill definition
- Lack of available talent
Companies exacerbate this problem with their own hiring procedures such as overvaluing referrals, hiring candidates that aren’t actively seeking jobs, using inaccurate job descriptions, considering too many candidates, poorly structured interviews, and prolonging the interview process. Another common practice that works against employers is discarding candidates that aren’t the best fit for the job they applied for instead of evaluating if they could be a better fit elsewhere in the company. Overvaluing a candidate’s potential to be a good fit for the culture can also shift focus away from whether they have the right skillset for the position.
When beginning the hiring process, employers tend to post the position externally before looking internally for talent that may already exist within. This approach is expensive, ineffective, and doesn’t ultimately lead to increased retention. Citing a study from the ADP Research Institute, Andersen said, “the cost of acquiring a new hire is about 50% of that individual’s salary. With U.S. companies paying $15 billion annually for hiring support, the estimated cost of continuous voluntary turnover in the U.S. is $630 million per year.”
Cities in Michigan that are experiencing the most growth are Traverse City, Grand Rapids, Saginaw, Ann Arbor, and Battle Creek. However, with more growth comes more demand and competition among employers for talent. Based on data tracked from 2018-2022, an average of only two out of five positions are being filled, showing that the demand is not being satisfied.
To address this problem, Michigan will need to take a multipronged approach which includes investing in communities, reskilling the existing workforce, and hiring for skills over degrees. Employers will also need to consider what talent is seeking from them, like pay transparency, formal and informal professional development, and meaningful work.
Andersen concluded by saying, “you can’t make a tech hub overnight. It’s going to take a lot of partnership between organizations.”
Building the Foundation for Michigan’s Tech Future
Glenn Stevens Jr., executive director of MICHauto and vice president of Automotive and Mobility Initiatives at the Detroit Regional chamber, highlighted that not only is Michigan’s job market growing, but these new jobs require a higher proficiency in technological skills than others. With tech hubs popping up in Tennessee, Ohio, and Ontario supported by government and industry investment, it’s critical for Michigan to take steps to ensure that it is positioned as desirable place to live, work, and play.
The sustainability and digitalization of the vehicle and the ecosystem around it are creating new opportunities in Michigan’s automotive and mobility industry and driving growth. Stevens said, “one of the things we all know is we make things here,” including at GM’s Orion assembly plant, which will soon be the third primarily electric assembly plant in the state. With nine more plants yet to be converted, the transition to EV is far from over, but the industry’s supply chain, talent, and technology have already been impacted.
“One of the things I always heard in this industry growing up in Michigan and going through it, is we need to diversify away from automotive. I would argue that the best platform for diversification is our automotive industry,” said Stevens. “When you look at all of things happening in Factory 4.0 and the connected vehicle, artificial intelligence, and machine learning, why not expand those into other industries in Michigan? Now tech becomes industry agnostic.” To be successful moving forward, we must bolster the manufacturing footprint that already exists and build the digital tech and knowledge-based economy.
Stevens noted that while prominent, Silicon Valley is not the only blueprint for developing a tech hub. Michigan’s neighbors in Ontario have already evolved their approach to talent attraction by branding and positioning their tech hub as “The Corridor.” Ohio has also launched a successful initiative called OhioX with a mission to build the state as a tech hub. “Our competition is right next door,” he warned.
“When you look at why a company grows, it’s about consistency in workforce, high-tech talent, skilled trades, and digital proficiency in all jobs,” said Stevens. He also cautioned that as companies grow, they shouldn’t limit their perception of the talent pool. “It’s not just about youth. We must look at this holistically. It’s about new Americans, retraining and reskilling, and people coming back into society from incarceration. There should be opportunity for everyone,” he said.
Ultimately, ensuring that Michigan is a place that people want to live, work, and play is the base for all of this. “If you don’t have that, the rest does not matter,” Stevens said.
Talent Isn’t a Pipeline, It’s a Supply Chain
Robert McMahan, president of Kettering University, said the bottom line is that we treat everything in business as a supply chain problem except the most critical element, which is talent. “That’s what makes their organization go and it’s the only thing they treat as a hunting and gathering problem.”
He noted that these companies look to universities to deliver students with the right skills, universities look to high schools, and high schools look all the way back to middle schools. Because STEM and technical disciplines are “implicitly linear in their nature,” the chain of custody for the development of talent starts very early. The key inflection point for the talent supply chain is in the 5th and 6th grades, where students make key life decisions not by pursuing something but by withdrawing from subjects they deem uninteresting or too difficult. “We have to engage that supply chain in its formative stages as meaningfully and as seriously as we engage it in its latter stages,” McMahan proposed.
McMahan shared that the founders of Kettering University “understood that to build the industry, they would have to take the tens of thousands of untrained people flooding into Flint and they would have to train them in a way that was practical, applied, and integrated with the businesses they were building. There is a difference between learning and mastering, and that is practice.” If businesses want talent that fits their specifics needs, they will need to not only work collaboratively with education partners, but also shift their efforts to much earlier than they have done previously.