The Changing of the Guard

23 May 2008

Susan Mucha

Change in senior management is both inevitable and important, argues Susan Mucha. But it needs to be handled properly.

No, this isn’t a commentary on the fact that women now occasionally guard Buckingham Palace. Although it is interesting that a country with a Queen who has also had a female Prime Minister has waited until this century to add female guards. The changing of the guard that this article refers to is the demographic shifts now happening in the electronics industry. There is a brain drain both in EMS and OEM companies and as experienced personnel leave, their replacements often have steep learning curves.

There are many reasons for this trend in the US. First, companies are downsizing their staffs and expecting those who are left to work more hours. Secondly, in many cases there is a preference for also downsizing salary as new people are hired. This encourages those with less experience to apply and frustrates those who are either perceived as overqualified or expected to make up for the inexperienced new hire’s lack of expertise. Third, industry consolidation has demoralized many employees. Some of the most experienced reach a point where they no longer want to be bought and sold and leave the industry entirely. Finally, baby boomers are nearing retirement age and are less likely to tolerate the first three issues if they’ve built a nest egg.

In another little twist, industries with win-lose supply base strategies such as appliance and automotive are sending their failed executives into other still profitable industries preaching their mantra of irrational levels of mandated cost reduction.

Worse, today’s younger generations (I turn 50 next month and, yes, I’m guilty of becoming a judgmental old fossil) aren’t prepared to work 60-80 hour weeks the way my generation did for the joy of being part of an exciting industry. They want family time, activities outside of work and hobbies that don’t involve soldering pc boards in the garage. They aren’t staying up at night reading about best practices or the latest technical trends.

What does this mean to those with experience who are still left? The implications are different for both OEM and EMS teams.

On the OEM side, it potentially means that sourcing mistakes of the past will resurface. Experienced outsourcing decision teams recognize that unit price is only a portion of the total cost. Product demand variance, volumes, quality requirements, maturity of product all play a factor in determining what region or supplier offers the best total cost. Less experienced outsourcing teams usually learn that with some costly mistakes. From an OEM management perspective there is value in ensuring that sourcing strategy institutional knowledge is passed between old and new employees.

From the EMS perspective, changes in OEM decision teams are also significant. It cannot be assumed that newer team members understand the difference between unit price and total cost. Presentations need to underscore this difference by illustrating points of value associated with an EMS provider’s business model. Marketing and sales communication needs to educate in a concise and interesting way. There also needs to be some contingency planning for addressing the information needs of a team with highly varied understanding of the outsourcing effort.

Similarly, program teams at EMS companies may not reflect the experience levels once found in the industry. From an EMS perspective, it is important to ensure that processes for design support activities, new product transition, variable demand projects and end-of-life support are well understood by new team members. From an OEM perspective, it becomes important to look for evidence of both internal EMS processes and training programs that support the introduction and fast assimilation of new team members.

There isn’t much that can be done when irrational cost reduction focus enters the mix, except to let that business go to a competitor. That actually can turn a win-lose situation into a positive, as the competitor loses money , may perform poorly and generally gets the blame when quality issues driven by unachievable cost goals become highly noticeable.

While I’ve tried to approach this with a little humor (or as my UK editor reminds me humour), it actually is a serious challenge. Outsourcing can offer benefits or result in costly mistakes. It is a complex situation with a fair amount of institutional knowledge that leaves when those with experience walk out the door. The brain drain is inevitable, as will be changes in working styles driven by generational differences. But, there doesn’t need to be a loss of competency, corporate values or teamwork as personnel move on.

From an internal systems perspective, it is important to identify positions where experience is critical and document the institutional knowledge that is seldom written down. It is also important to recognize that newer employees, particularly those moving in from other industries, may need to be trained in skills that their predecessors had mastered prior to being hired. Training programs should be reviewed for relevance to today’s workforce and the changing nature of the position being filled. Creating an intranet which allows new employees to easily access information related to their job duties can be very helpful. Within project teams, measureable goals, areas of responsibilities and deadlines should be clearly communicated. If generational stress develops, teambuilding sessions should be held. Understanding why someone takes a different approach often diffuses stressful situations.

From a marketing and project team interface perspective, it is also important to ensure that the information needs of a customer team with varying experience are addressed. Critical processes should be well documented, and division of responsibilities and liabilities should be clearly understood by the OEM team. Reports should be relevant to team needs and easy for novice team members to understand.

Properly managed, the changing of the guard is actually a good thing. The team that is coming on board grew up with computers and integrates these devices into their working patterns in ways older generations have not. Potentially they have the creativity and brainpower to make quantum leaps in productivity because prioritizing family time often translates to an employee focused on working smarter. The bottom line is that change can be good if the new guard is focusing on improving robust systems vs. simply trying to figure out how things get done. If you are experienced, create a legacy by helping in that knowledge transfer.

Susan Mucha is president of Powell-Mucha Consulting, Inc., a consulting firm focused on training, strategic planning and marketing positioning. Her new book, “Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services,” is available through Pennwell Books, other online retailers, IPC and the SMTA.


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