July 15, 2024 Made to Stay: How Production Careers Can Entice Gen Z

Volume 27 | Issue 2

Manufacturers may need to rethink their value proposition and working environments to attract and retain Gen Z on the line.

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The US manufacturing sector is having a hard time filling vacancies—and keeping people in jobs. Gen Z workers could help fill this gap, but manufacturers will need to adjust old ways of doing things to attract and retain a generation for whom security, respect, and making a difference matter more than compensation alone.

The need to attract more Gen Z workers into manufacturing comes against a backdrop of a persistently tight labor market. Since June 2021, the manufacturing sector has experienced a 42 percent gap between the number of job openings and hires. And more than a third of US manufacturing employees across all ages are planning to leave their job in the next three to six months.

Technology and the unfolding Fourth Industrial Revolution (4IR) could alleviate some of this labor pain, but in the immediate term, organizations are capturing less than a third of the expected value from digital transformations. Solutions will need to come from the labor market itself.

To be in the running for highly sought-after workers, manufacturing may need to rebrand itself to draw in—and keep—more young talent. McKinsey’s Talent Trends research has found that about three in five Gen Z workers in manufacturing are disengaged, and this level of disengagement could be costing US manufacturers an estimated $20 billion to $40 billion per year.

Understanding Gen Z and what makes them tick

So, what can be done? First, manufacturers need to understand how Gen Z differs from other generations in terms of why they take a job, stay in it, or leave.

The good news is that, in most respects, Gen Z’s preferences align with their older colleagues. McKinsey’s research has found three important differences, however: money matters less for Gen Z than for other generations; security and respect are important; and more than other workers, Gen Z employees want to feel they are making a difference.

The less good news is that Gen Z workers have ample opportunity to find a job that meets these needs. Since 1970, the annual US unemployment rate has averaged below 4 percent for only four years (2018, 2019, 2022, and 2023)— with all of them occurring after 2015, when the oldest Gen Z members turned 18.

With arguably more choices available to them as they enter the workforce, Gen Z workers are taking jobs less for compensation and more because of factors including their relationships with coworkers (43 percent), the chance to do meaningful work (41 percent), and workplace flexibility (38 percent), a recent McKinsey survey has found.

Forward-thinking manufacturers are already changing how they think about and value their frontline workers in a post COVID-world. And this greater sense of appreciation could be key for this generation.

Rethinking manufacturing work environments

Despite this change in perception, McKinsey research confirms that not nearly enough Gen Z workers are entering the field to fill factory vacancies. Since 2019, 20 million Gen Zers have reached adulthood, yet Gen Z’s share of the manufacturing workforce has declined from 8 percent to 7 percent.

And, once in a job, our research has also found that Gen Z engagement levels tend to be low, and they’re more likely to quit than older workers. A focus on flexibility, connectivity, and meaning could make a difference.

Flexibility. Factory environments tend to have rigid shift patterns and long working hours that do not meet this generation’s desire for flexibility. One US food manufacturer has attracted more applications by radically rethinking its 12-hour shifts, for example. Surveyed workers at the factory listed “schedule” as the number two reason they’d quit, and after several months of unfilled vacancies for line operators the com pany introduced new ways of working: switching packaging roles from full-time to part-time; letting workers opt in to shifts based on their availability; and allowing them to cross-train for different roles. The change in approach led to a flurry of new applications.

Connectivity. Merging digital and analog skills to create a hybrid work environment could be another way to drive engagement. Gen Z is a digital-first generation that has grown up with technology. Manufacturers could take advantage of these workers’ natural tendency to lean on technology, but will need to make adjustments for this, too. On the one hand, Gen Z may be more comfortable turning to technology to solve problems quickly, feeling at ease with generative AI co-pilot-style tools, for example. On the other, they may be less comfortable turning to older co-workers to learn the job. To keep young workers engaged, manufacturers may need to combine digital and analog skills to create a hybrid work environment that helps Gen Z get the most from technology as well as their relationships with more experienced coworkers.

Meaning. To convince Gen Z that it’s better to stay and develop their career, manufacturers may also need to create new career pathways and opportunities for growth and development. This includes providing meaningful work that aligns with Gen Z’s values and interests. Some of this may, again, involve harnessing technol ogy or giving line operators more opportunities for problem solving. One consumer goods manufacturer, for example, has created a new role that bridges the gap between operating and maintenance workforces. A skills-based training program pairs operators with maintenance technicians and has introduced new incentives for operators linked to their development of new skills and improved performance on the line.

Getting strategic about talent

McKinsey analyses on the value of talent estimate that each frontline employee departure could cost about $52,000 annually in recruiting, training, and onboarding productivity losses, above and beyond their salary.

Given what’s at stake, leaders need to get serious about changing the operating model to prioritize talent and workforce development. Manufacturers could consider a number of talent-boosting tactics:

Establish a talent transformation office to centrally identify, track, and improve all the initiatives that impact workers and their engagement.

Invest in workers through onboarding, upskilling, retention initiatives—and track and measure these investments over time.

Create a talent win room to understand the value proposition for different generations, and adjust accordingly based on surveys, exit interviews, and what supervisors are hearing from teams.

Prioritize supervisory capability building to ensure that supervisors are coaching appropriately and spending time on what matters most.

Rethink talent planning to define the skills you’ll need in one year and five years from now, considering how you will secure talent in a tight labor market and leverage technology in the factory of the future.

Recent labor market challenges aside, manufacturing has always struggled to brand itself as a sought-after career opportunity. But technology is changing the face of manufacturing and a new generation of workers have a chance to come in and feel they are making a difference.

To attract Gen Z, leaders can create an environment that supports a highly engaged, highly retained, and highly productive workforce. Knowing what makes these workers tick is a great place to start.

About the Authors:

Tyler Freeman is a consultant based in McKinsey’s Atlanta office and a leader within McKinsey’s Frontline Workforce of the Future service line.

Marino Mugayar-Baldocchi is a research science expert based in New York, who leads McKinsey’s global research on employee experience and organizational labor productivity, focused on the frontline.

Fernando Perez is a senior partner based in Miami driving end-to-end transformations for manufacturing and service companies. He leads McKinsey’s Frontline Workforce of the Future service line globally.

Julian Salguero is a partner based in Miami and co-leader of McKinsey’s Frontline Workforce of the Future service line. He advises organizations on operations strategy, supply chain management, digital and lean manufacturing, and change management.

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