New Strategies for Building a Smarter Workforce in Aerospace & Defense

IBM Global Business Services
White Paper
Aerospace & Defense
New Strategies for Building
a Smarter Workforce
in Aerospace & Defense
Analytics, New Management Models, and Knowledge Sharing Strategies
Can Help A&D Companies Escape the Looming Generational Challenges

2 New Strategies for Building a Smarter Workforce in Aerospace & Defense
Introduction
Aerospace and Defense (A&D) companies are facing a seismic
shift in their workforces. Baby boomers, who possess critically
valuable knowledge and leadership skills, are on the verge of
a large scale, but unpredictable retirement rush. The thin ranks
of their middle-aged successors are not sufficient to replace
them, new Millennial recruits seem hesitant to join the industry,
and those who do aren’t staying long. Millennial A&D has a
serious problem: leadership will be retiring, knowledge will leave,
and there will be no one left to do the work.
It is a complex challenge without a silver bullet solution. The
remedy for the A&D staffing crisis will take an arsenal of new
strategies and tactics. It will require a new approach to under-
standing and targeting employees with personalized experiences.
This requires analytics. It will also require new management
models, a change in how work is done, a transformation in how
knowledge is acquired and shared, and likely a new and elevated
role for HR leadership to engage with the broader leadership
team. The solution is larger and more complex than HR can
muster by itself, so HR must rise to become a powerful partner
with the Lines of Business (LOBs) and advocate for changing
the organization.
The Abandonment of an Industry and an
Emerging Talent Crisis
Current generations of A&D engineers (or potential ones)
are either heading for the door, not coming in, or were never
there. High-quality engineers are seemingly abandoning the
industry, and a pan-industry talent crisis seems imminent.
The oldest in the workforce, the baby boomers, are expected
to retire en masse shortly. The specific timeframe is unknown as
jolts in the macro-economy in recent years have potential
retirees changing their minds about precisely when they feel
ready to retire. Recent studies harken the upcoming retirement
rush: “The baby-boomers, the foundation of aerospace manu-
facturing, are retiring in droves with dramatic effect. According
to a private survey conducted by Advanced Technology Services
(ATS) and ACNielsen, 41 percent of skilled tradesmen will
retire by 2017. Correspondingly, an IndustryWeek survey
commissioned by ATS found that 39 percent of aerospace
companies report that the labor shortage is having an “extreme”
effect on their ability to grow business.1
”
These engineers represent a treasure trove of experience and
skills. As they leave, their valuable knowledge leaves with them
as many are resistant to engaging with newer and younger
workers. The apprentice model of old is disconnected between
the oldest and newest workers. Knowledge capture and transfer
becomes a priority and a new approach is likely needed.

IBM Global Business Services 3
The disconnection between the older and newer generation
adds complexity to acquiring and retaining the new Millennial
recruits. Some believe that the industry’s appeal has waned in
light of newer, more fashionable engineering fields such as
software and high tech. Millennials would often rather engineer
virtual airplanes and warcraft in a video game than work on the
real thing. The industry also has a projection of being old and
slow moving, staffed by seniors and paced by the sluggishness
of government.
While acquiring Millennials is challenging, keeping them seems
to be even harder. Attrition rates are high among this segment,
with many only lasting a few years. According to a recent study:
“One-in-five A&D professionals under the age of 35 submitted
resignations in 2012, up from 12 percent the year before.2
” Many
of their reasons for dissatisfaction and quitting are legitimate:
• Many don’t see a clear path to career advancement, and the
existing leadership doesn’t provide an example they can
relate to
• Projects are often viewed as progressing too slowly
• A lack of diversity in projects, especially when assigned to them
for years on end, seems boring and disengaging
• The general work style and culture doesn’t align to how they
want to work. Processes and collaboration lack technology
that Millennials are accustomed to
• The overall management model is not conducive to employee
engagement with Millennials
Some of these objections are features of the industry and
out-dated leadership practices. Some of the trouble can also be
attributed to lack of the generation between the young and old.
In our observations, most A&D companies don’t have many
“middle level” managers in their thirties and early forties. These
employees would be key in demonstrating the steps in a career
path for Millennials. They would bridge the cultural and work
process gap between the young and old. They would enable
more direct mentoring and apprenticeships.
The middle generation would also be the natural succession
to the retiring generation. The knowledge wouldn’t be lost with
the retirees, but likely organically transferred. Unfortunately,
filling this gap might be very difficult in any short amount of
time. Poaching the middle generation from other industries
would likely be an expensive play (if even feasible) and the
internal cultural issues would have to be remedied to be sure
they were retained.

How should A&D companies rethink their
workforce strategies?
The workforce outcomes of today are very much a result of
different foundational factors a long time in the making. Solving
them won’t happen by simply installing an IT system or giving
everyone raises (even if that were economically feasible). It will
require foundational changes to management models and culture.
Many aspects will require intense participation beyond the walls
of the HR department.
While not comprehensive, we have identified some new workforce
objectives for the modern A&D company looking to improve
workforce challenges both in the short-term and the long-term:
• Create individualized employee experiences:
Accepting the fact that no one can force people to stay, the
best approach is to make the work environment enticing and
engaging in different ways for different people. HR and LOB
leadership can learn from consumer marketers. In market-
ing, customers are analyzed to discover what offers and forms
of engagement work on a one-to-one level. A&D leaders
should use similar techniques in analyzing employees and
crafting their work experiences.
• Recruit candidates more likely to succeed and stay:
Some in the industry believe that there is a “patriot gene”
among the employees, a commitment to national defense and
safety that aligns them well with the mission of the A&D
industry. Other employees have natural dispositions toward
the pace and work style of A&D engineering. This means
that retained employees can be analyzed and understood for
these characteristics and these criteria can be applied to the
recruiting process to find the right matches between candidate
and company and “predict” who will be the employee that
more likely stays for the long haul.
• Focus on retention of engineering and diverse employee
populations: HR managers can now apply predictive
retention analytics to identify behavior and candidates of
those who are likely to leave, enabling HR and LOB leader-
ship to take remedial, preventative action. Tactics could
include enhancing leadership preparedness and competence,
changing a potential retiree’s work arrangement, making a
reporting switch, initiating a development program, adjusting
compensation or benefits, or simply soliciting feedback about
their dissatisfaction.
• Better incorporate talent factors in business decisions:
Consider total HR cost and dynamics in strategic workforce
planning by using employee feedback and analysis of
workforce data. Improve talent criteria for how the business
is operated, such as choosing sites attractive to the ideal
working population.
• Attract and engage an evolving workforce:
A&D companies need to reinvigorate the existing work
process and culture to be current and competitive with
other industries vying for engineering talent. Enhance the
employee experience with social collaboration, learning tools
and mobile tools. This will help retain existing young
employees and improve the reputation of the company,
effectively its employment brand, beyond what any
recruiting ad could do.
Most of these new objectives require a fact-based, data-based,
analytics-driven approach to HR. Analytics can enable one-to-
one employee experiences at scale by identifying and predicting
human action, then provides insight that drives human capital
strategy and tactics.

New Analytics and Technology Approaches
for Human Capital Management
It will take a thoughtful, comprehensive approach to address
the A&D industry’s complex workforce challenges. This said,
there are some very provocative and potentially powerful new
technologies that can help HR leadership change the game.
We believe the most interesting include:
Smarter workforce analytics and technologies
Strategic workforce
planning analytics
Behavioral
sciences analysis
Mobility
Social learning and
collaboration tools
Predictive
retention modeling
Predictive
hiring modeling
Analytics and
Technologies

Strategic workforce planning analytics
Too often, short-term, reactive resource management planning
sacrifices vitality, productivity, and skill mix considerations,
thereby reducing the long-term performance of an A&D
engineering workforce. HR leaders and LOB leaders can now
use Strategic Workforce Planning Analytics to forecast
unpredictable Baby Boomer retirement trends, key talent gaps,
subsequent talent acquisition and retention trends, and shifts in
the workforce to develop an optimal resource plan. Strategic
workforce planning analytics enables the realignment of capacity
and skills in dynamic labor environments to meet core business
objectives and execute business strategies. Organizations can
develop an optimization model that quantifies the impact of
workforce policies after analyzing historical data from multiple
sources. The model is used to identify levers such as hiring,
separation, reskilling, retention, promotion, and others that
maximize workforce performance in the long-term on brand,
geography, and job role levels. Instead of reactively managing
resources and skills, new skilled hires are ramped up ahead of
predicted business needs so that skills are proactively aligned to
capacity and project needs. This implies the Line of Business will
need to take known risks to support the expected revenue growth.
Predictive retention modeling
Employee attrition increases recruitment and training costs
and decreases productivity while new employees ramp up.
Retention in A&D is especially important as attrition is rampant,
engineers often take a long time to develop, and security clear-
ances can be difficult and time consuming to obtain. HR
managers need a way to identify employees at-risk of leaving
in order to optimally direct resources in an effort to retain them.
Use advanced predictive models to identify employees most
at-risk of leaving as well as identify the characteristics that
put them at risk. This can be done by creating models based
on past employees who have left the company. Proactively
provide managers risk levels of their respective employees
along with employee-specific prescriptive recommendations
to decrease probability of attrition. Then, align workforce
policies to focus resources on high-value, at-risk employees.
The value of predictive retention modeling is two-fold. Real
attrition data can vastly improve forecasting for strategic
workforce planning, enabling the company to plan for and
adapt the workforce in aggregate. It also provides actionable
data to be used on a case-by-case basis.

Predictive hiring modeling
Hiring the right person is a boon to the company, and the best
contribute a multiple of value compared to middling employees.
Bad hires represent wasted recruiting and development costs,
and usually a missed opportunity to find better talent. A bad
employee who doesn’t leave can also be a drain on the company
in perpetuity, creating frustration and dissatisfaction with those
around them.
Use Predictive Hiring techniques to attract and find candidates
who would thrive in the industry. Leverage existing employee
data to identify the high performers who are most engaged in
the business. A leading practice approach would include:
• Conduct people, unit, and business linkage research to
identify key elements that differentiate unit performance.
• Identify the link between human capital metrics and business
performance, finding factors that differentiate top from
bottom performing units.
• Learn from the best employees by identifying traits,
experiences, behaviors and practices of top performers in key
job families.
• Develop and deploy assessments by increasing the hiring of
candidates who match the profile of top performers.
Behavioral sciences analysis
Creating employee engagement requires changing the way the
company operates and transforming the employee experience.
While leadership could make their best guess on what those
changes could be, a much more reliable and justified approach
is to listen to what the employees need to be successful. Smart
companies should use formal techniques and programs to
create a constant and informed feedback loop between the
employee population and the leadership team.
Behavioral sciences analysis is one technique for understanding
employee engagement and what drives it, and how to develop a
measurable alignment between an individual and organization.
It’s a formal way of measuring and predicting an individual’s or
company’s performance by understanding an individual’s
capacity, capability and cultural fit. Analysis should be performed
both in structured (analytical) and narrative (anecdotal) formats.
Textual and sentiment analysis can be performed on employee’s
comments and feedback as well as intranet postings Direct
techniques may include direct stakeholder interviews, focus
groups, and one-to-one conversations. Being creative and
proactive in creating methods of learning about what makes
employees engaged and high performing.

Social learning and collaboration tools
To help bridge the gap between generations and improve
sharing of knowledge and expertise, companies should consider
embracing new social learning and collaboration tools. Social
Learning leverages the power of the entire workforce to drive
development of new employees and virtualizes a global appren-
ticeship model. Social learning can help A&D engineers learn
specialized techniques and procedures that are often only
practiced by a handful of experts around the world.
A social learning program would help engineers locate,
connect with, and recognize contribution from others with
the needed skills and capabilities. It would reinvent learning
programs to appeal to a more social, interactive generation,
one that Millennials in particular are already immersed in
within their personal and professional lives. Social learning
programs can inspire people to engage, contribute expertise, and
learn from experts using interactive rich media in real-time. It
can facilitate social learning groups to share knowledge using
formal and user-generated content. Additionally, analytics can be
applied to identify opportunities to optimize content, improve
efficacy and increase relevance.
Mobility
Every engineer, young and old, carries a computer — the
smartphone — in their pocket. Mobile applications can empower
individuals to create their own work experiences, wherever and
whenever they are. The right app can stimulate skill acquisition
and sharpen career focus through mobile systems of engagement.
Mobility also appeals to the working and interaction style of
Millennials, allowing creativity and innovation to be captured
and communicated whenever and wherever it happens. HR
leaders should get creative on how they can blend a mobile
experience into their employees’ working environment.

Empowering the organization to optimize
the workforce
Analytics can provide a powerful new asset of facts and insights
to drive improved decision-making and action, but meaningful
change must go beyond the computer screen and into the living
workday. HR must play a lead role in solving for A&D’s human
capital challenges, but change must be embraced by other
functional groups, especially Engineering, Program Management
and “Mechanics”. In this way, HR cannot be a lone actor in
driving change. Listed below are perspectives on solving other
aspects of the human capital equation.
HR can be a steward and catalyst for change
Since many of the tactics will require other groups to
change their organizations, culture and working styles, the
HR department may find itself with a lack of power to enact
change. Because of this, HR should step up to the executive
table and be an energetic steward and catalyst for change.
HR leaders will need to make their stories compelling and
impassioned, and have answers to some really tough questions.
HR should be a willing and able partner with other leaders,
showing them the way to change in ways that are collaborative
and express a win-win for everybody involved.
Integrate HR
In many organizations, the various departments of HR (e.g.,
hiring, retention, employee development, payroll, planning) are
isolated into their own independent groups. Reorganize HR so
that groups can better work together and collaborate. Create
programs and accountabilities that foster an integrated, united
HR organization.
Formally study what creates engagement and
continually listen
Launch formal initiatives to learn what makes employees
tick and establish ongoing methods of collecting employee
feedback. For example, one major A&D company performed
a study on what leadership attributes created the highest
employee engagement levels. They found that “Trust my
supervisor to act in my best interest,” “Supervisory takes my
development seriously,” “Addresses employee performance
issues,” and “Selected based on demonstrated leadership” to be
highly correlated with engaged employees. These attributes
were then subsequently emphasized in leadership hiring,
selection and training and development programs.
Leadership must support HR to be successful
If the CEO and his or her team don’t support HR, most
initiatives will get little traction. The executives’ existing level
of support is driven by culture, history, personal views and the
value they perceive HR to bring. The onus is on the HR
leadership to cultivate support and change the relationship. It
starts with compelling, new ideas, a convincing intellectual
prowess, and is ultimately fostered through high quality, high
performing action with measurable results.
HR must have a robust infrastructure and foundation
Especially for HR analytics to work, HR must have a robust
and high performing infrastructure. If core systems are weak;
data is incomplete, lacking or inaccurate; and the processes are
inefficient, then innovative programs will likely fail. Get the
basics right first.
HR should use all of its levers of changing behavior
When it comes to motivating change in employees, the HR
practitioner may feel limited to the few traditional levers they
have in their toolbox, such as compensation and benefits.
While these have good uses, HR leadership doesn’t want or
need to simply “buy” new behavior. Plus, it’s not sound
business economically. Look for creative ways to improve
behaviors, including development programs, changing roles,
exploring alternative schedules and working arrangements,
soliciting feedback in new ways, and empowering employees
with new powers and responsibilities.

Changing the management and operating models
to suit new workers
In most cases, the underlying management and operating
models will be the largest culprit in employee retention and
engagement. The complaints listed earlier such as the tempo
of projects, how people apprentice, the channels of engagement,
the flatness or hierarchy of organization, etc., will need to be
purposefully designed and retooled. This will require the
participation of many, and may be the hardest part of solving
the challenges.
Use data to engage engineers
Don’t hoard newfound analytics power, instead, share it with
the Engineers, Program Managers and “Mechanics”. They
happen to love data and it can be a powerful tool in engaging
and persuading them to do new things.
Prepare for different tenures and career trajectories
There’s a strong chance we’ll never return to a time where
every employee starts and ends their career with one company,
or even industry. Find ways to make shorter tenures work. The
largest challenge will be in how knowledge is captured and
shared. Look to formalize and institutionalize knowledge in
ways that new people can be plugged in and productive quickly.
Reconsider the traditional career path so that seniority isn’t the
only path to leadership.
Rethink talent strategy and resource tactics
While we’ve focused on recruiting and keeping in-house
employees, also consider alternative staffing models for some
situations. This may include contingent staffing, outsourcing,
offshoring, onshore rural sourcing, and creative ways to get
retirees back in the workforce in part-time or transitional roles.
HR Analytics in Action: IBM’s Own Story
IBM was experiencing employee attrition increases, which in
turn was driving recruitment and training costs while decreasing
productivity as new employees ramped up. IBM needed a way to
identify employees at-risk of leaving in order to optimally direct
resources in an effort to retain them.
To solve this dilemma, IBM employed advanced predictive
models to identify employees most at-risk of leaving and
identified the characteristics that put them at risk. IBM created
new workforce policies to focus retention resources on high-
value at-risk employees. The solution leveraged Cognos BI and
SPSS Modeler to provide HR leaders an aggregate view of the
at risk populations the factors increasing attrition rates. HR
provided Operational managers risk levels of their respective
employees along with employee-specific prescriptive
recommendations to decrease the probability of attrition.
The results were impressive. IBM realized an estimated
USD85 million net benefit through reduced attrition in IBM’s
growth market employee population. HR calculated a 325 percent
ROI for the investment in the program.
Conclusion
The aerospace industry is changing, and that’s a good thing
if you are the one driving the change. Big data can be a game
changer as aerospace OEMs transform their traditional design-
make-sell model into one of support-learn-enrich for their clients.
Capitalizing on data can make the entire ecosystem more
intelligent; going forward it can be a powerful tool to create
advantage, differentiation and dollars to the OEM’s core business.
Early movers will be the shapers of the big data analytics-
empowered ecosystem and will get to dictate how others
participate. Like always, it’s the winners that get their first.

Authors & Contributors
Leo F. Brajkovich, Ph.D.,
Smarter Workforce Executive — NA West
IBM Software Group
leo.brajkovich@us.ibm.com
Victor J Reyes
Associate Partner — Talent & Change
IBM Global Services
victor.reyes@us.ibm.com
Michael Matthew
A&D Business Solutions Executive
IBM Global Services
mikematthew@us.ibm.com
Timothy J. Wholey
Partner, IBM Global Business Services
Aerospace & Defense Industry
North America
twholey@us.ibm.com
For more information
For more information about IBM Global Services in the
Aerospace & Defense Industry please contact your IBM Sales
Executive or visit the website:
ibm.com/industries/aerospacedefense
ibm.com/services/us/business-consulting

© Copyright IBM Corporation 2014
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1 Dave Russell, “The Perfect Storm in Aerospace Manufacturing”, Advanced
Technology Services Inc., 2013.
2 Carole Rickard Hedden, “Cutting Carefully”, Aviation Week & Space
Technology, 26 August 2013.
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New Strategies for Building a Smarter Workforce in Aerospace & Defense