Putting Talent at the Centre An Evolving Imperative for Manufacturing 2025

1 Companies spend enormously on people, so it might seem counterintuitive to suggest that talent investment is lacking. To be sure, McKinsey research has found that on an annual basis, most companies – even in capital-intensive sectors – spend about three times as much on talent as they do on capital equipment.1.1 (Re)invigorating your approach to talent investmentThe key to talent strategy: viewing the frontline as an investment Frontline labour should be considered an essential investment, rather than just a cost line. Historically, business leaders have viewed the workforce as a cost centre. Recent McKinsey research analysed the top 1% of publicly traded companies in developed markets in terms of labour productivity and total return to shareholders (TRS) and found that companies that create value focus on driving capital and labour productivity in tandem. They do this by thinking of labour not as a cost but as an investment, similar to how they think about capital. The Frontline Talent of the Future Initiative has identified a common mindset that underpins all leading organizations: the belief that investing in talent allows them to shape their own destiny. These companies create their own future by building a talent strategy with a localized approach, investing to build the workforce they need. This chapter will examine that mindset shift, then explore how companies can make a localized talent investment strategy based on understanding sites’ local contexts – and provide a snapshot of the potential value gains smart talent investment can offer. 10 Putting Talent at the Centre: An Evolving Imperative for Manufacturing