Online retailer Amazon make a rather significant announcement this week, one related to changing workforce skills. In this commentary, Supply Chain Matters reflects on the potential implications of the Amazon announcement, and what it may imply to multi-industry supply chain management teams.
Within our Ferrari Consulting and Research Group’s 2019 Predictions for Industry and Global Supply Chains, (Available in our Research Center for complimentary download) we included a belief that needs for supply chain management talent recruitment, development and retention will reach alarming stages, possibly impacting ongoing business support or other initiatives. We made that prediction after multi years of speaking with specialized recruiters along with a sampling of hiring companies and supply chain executives.
As we pass the mid-point of 2019, all indications point to the reality of our prediction.
This week, Amazon indicated that it plans to spend $700 million over a six-year period, to retrain a third of its U.S. workforce on new job skills. In reporting the announcement, The Wall Street Journal indicated that effort represented one of the largest corporate retraining initiatives on record, equating to $7000 per worker and upwards of $1200 per year through 2025. The training will reportedly be voluntary and will not oblige participants to remain at Amazon. The program will be an expansion of the existing Amazon Career Choice program that compensates employees for certificate programs in high demand fields, such of which may not be related to Amazon at all such as nursing, teaching or aircraft maintenance. With this announcement, there are plans to open upwards of 15 new career-choice classrooms by the end of 2020.
Jeff Wilke, head of worldwide consumer business indicated to the WSJ that like many enterprises, the online retailer has struggled to find both existing technically skilled employees, and further realizes that a growing number of future jobs will be different and include more technical based skill sets. For our readers, that should serve as an acknowledgement of the current multi-industry challenge.
Multi-Industry Supply Chain Organizational Implications
It is no secret that Amazon’s labor management practices have been in the limelight for quite some time. Even as the online provider’s Prime Day shopping event kicks-off in a few days, existing employees at certain fulfillment centers are once again threatening work stoppages due to grievances.
However, from our lens, an announcement of this magnitude, should not be argued in the category of public relations or altruistic. Nor does it solely imply a roadmap to job reductions. This is a meaningful statement of the current realities in talent recruitment and retention.
As we have noted in prior blogs related the ongoing talent crisis, today’s workforce tensions center on pressures of older, more tenured employees’ realization that job skill requirements are changing , perhaps beyond current technical abilities, and their individual fears of that trend. Employers who practice workforce reduction as a pretext to later hire more technically skilled employees play roulette with employee loyalty and longer-term retention. New, younger workers enter the workforce more attuned to STEM and technical skills, but lack the functional domain, business and industry experience of older employees. Within that equation are joint needs to mentoring and re-skilling. The termed “gig” economy attempts to contract for such in-demand skills avoiding the burden of larger-scale permanent payroll and benefits.
What is occurring is a reality check that in the new digital economy there remains a need for a workforce that can continually adapt to new skills, processes and job roles. That requires companies to “invest” in employees with skill potential in both functional, personal and team-based relationship areas. That especially includes multi-industry and multi-geographic supply chain management teams.
A further reality is that few companies have the deep pockets to be able to invest upwards of $116 million over the next six to train employees in new skills and job needs.
For growing, midsized business, the challenge of talent acquisition and retention comes with a high dependence on academic institutions, industry, local, state and federal training programs to assist in continual workforce re-skilling and training. The reality for smaller businesses are talent needs where employees must be able to contribute in multiple functional and business process roles, and where skills trump traditional job titles.
Colleges and universities must be prepared to continue to support needs for ever changing workforce needs that require continual education and development that are not tethered to formal degree programs.
The single most important takeaway is that once again, there is a growing reality that talent is not another expense line in the P&L, but rather an important business asset that needs continual investment and renewal.
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