High-tech talent remains a scarce commodity. Despite recent high-tech upheavals, applicants with in-demand skills have become more selective when it comes to choosing and prioritizing potential employers. Based on findings from McKinsey survey data (see sidebar “About the research”), with 80 percent of CEOs ranking new-business building as a top five priority,1 demand for tech talent is expected to grow from 9.2 million jobs in the United States in 2022 to 9.4 million in 2023,2 and the tech workforce will grow twice as fast as the overall US workforce in the next ten years.3
The mobility sector is no different, as discussed in the companion article, “The new automotive mandate: Moving from building products to building businesses.” Approximately 70 percent of automotive leaders are focused on building new businesses, yet there are critical talent capability gaps that require new skill sets (for example, software engineering and product management). To attract and keep the best candidates, mobility incumbents launching or scaling new businesses should take action to position themselves to attract potential high-tech recruits across the four dimensions that comprise an effective employee value proposition (EVP): great job, great people, great rewards, great company.
Mobility remains a talent ‘seller’s market’
Demand for talent in the technology industry has been exceptionally competitive. In 2022, the US tech sector added nearly 260,000 jobs, according to CompTIA, the most in a single year since 2000. And this demand for tech talent has been sustained into 2023. As a result, the sector’s unemployment rate rose from 1.5 percent in January to 2.3 percent at the end of April, still well below the national rate of 3.6 percent.
Nonetheless, these skills remain in high demand, and tech talent is still largely a “seller’s market.” What has changed is that tech workers are reevaluating their relationships with their companies. While 80 percent of laid-off tech talent found new jobs within two to four months, layoffs are new to the younger generation of talent, causing them to rethink their indispensability within their “dream” companies.
Attracting tech talent with new, innovative businesses
Incumbent automotive and mobility players building innovative new businesses can attract and retain high-tech talent in what could be a once-in-a-generation realignment. As noted in “The new automotive mandate,” incumbents have specific strengths, such as existing customer bases, established brands, and physical product experience, that allow them to attract talent that is eager to build new businesses.
To understand the connection between building new businesses and attracting and retaining new tech talent, it makes sense to examine an incumbent’s EVP. The EVP outlines the expectations and commitments of the employee–employer relationship; it can help to attract talent, align proper incentives, boost employee productivity, and drive long-term commitment.
The tenets of a strong employee–employer relationship focus on the job, the rewards (including financial and nonfinancial), the people, and the company itself (table).
The tenets of a strong employee–employer relationship focus on the job, the rewards (including financial and nonfinancial), the people, and the company itself.
There are four dimensions of an effective employee value proposition
|Great job: What do I get to do? What skills will I develop?||
|Great people: Who do I get to work with?||
|Great company: Why am I proud to work here?||
|Great rewards: How will I be rewarded?||
Progress on one factor can have ripple effects across the entire EVP. For instance, improvements in career development, mentoring, community, or reputation will not simply produce isolated benefits to those specific sections of the EVP because of the overlaps among many of the areas (exhibit). Better career development can include better mentoring, which creates a better community, resulting in an overall better-perceived reputation.
How mobility incumbents can close the talent gap
The four tenets noted above represent the best ways incumbent automotive and mobility players can attract and retain skilled high-tech talent. We will examine each in greater detail.
To attract and keep the best tech talent, jobs need clear career development paths and interesting work content to show recruits they won’t end up on a tech-focused dead-end path, but instead will have a straight shot at achieving meaningful career goals. Jobs should offer sufficient freedom and autonomy, supported by appropriate coaching, feedback, and mentorship.
Career development. Career development is the single-most-cited factor considered among people evaluating their jobs (43 percent of respondents). Career development includes several related areas, such as developing skills, advancing within the organization, learning new skill sets, and moving horizontally within the organization. As mentioned in the article “Cracking the code on digital talent,” career development is the most important reason cited by individuals who decide to stay in their current job, as well as the most important reason cited by individuals who take the leap and transition to a new job—both in terms of describing their past position (citing a lack of opportunities) and their new position (attracted by new development opportunities).4
It is also the second-highest spur for respondents who plan to leave their jobs but have not yet done so (the highest is compensation).
Most traditional career progress models trend toward management roles. This limits career growth opportunities for top talent who are uninterested in management roles but instead seek other ways to grow within their expertise domain. New business launches should offer openings to rotate people horizontally and find topics that match their interests. Additionally, career development models should provide technical knowledge growth paths as an alternative to management positions, such as expert paths.
Coaching, feedback, and mentorship. Among people who ranked overall career development as an important factor, nine in ten who chose a new company did so because it placed a strong emphasis on developing skills, knowledge, and abilities. Furthermore, 80 to 90 percent saw opportunities to learn from top talent in the field.
Skill development communities within a company are additional ways for technology and start-up engineers to develop their technical skills over time (for instance, guilds and communities of practice).
New businesses can focus on coaching, feedback, and mentorship by incorporating elements such as feedback loops, mobile learning, nudges, personalization, and microlearning. These are new tools that automotive and mobility incumbents are typically either not leveraging or have only nascent experiments under way but that represent an opportunity for new businesses to lead the charge in the transition to build a stronger feedback and skill-building culture.
Freedom and autonomy. The third-largest factor in job evaluation is workplace flexibility (34 percent), which encompasses control over the how, where, and when employees do their work (see sidebar “Presenting the right job: A case study”). Agile approaches constitute the “how” of making work more attractive to high-tech talent. Incumbents can increase their agile ways of working by considering a restructuring of the hierarchy into a network of empowered teams and introducing centers of competence that build individual and company expertise. The “when” and “where” are more straightforward to imagine, involving flextime, work-at-home, or “work on the fly” scenarios, although these can be potentially challenging to execute.
Rewards can come in many forms, including compensation and noncompensation benefits such as better control over where and when a person works, flexible schedules, and paid time off (PTO).
Compensation. Total compensation is the second-most-cited factor considered by individuals evaluating their job (38.5 percent of respondents). It is the most common reason technology-focused hires plan to leave a job (37 percent) and the second-most-common reason for taking a new job (45 percent). Incumbents should be prepared to pay a higher total compensation package for tech talent compared with traditional employees. Additionally, 72 percent of respondents who cited total compensation as a reason for leaving said their total compensation does not adequately reflect their qualifications and effort.
Given these findings, when incumbents hire for tech roles, they should consider offering a mix of cash and, where a new independent venture is being launched, equity that aligns incentives to new venture performance.
Furthermore, incumbents can offer candidates more flexible compensation packages compared with start-ups, including virtual stock options for innovative minds and larger fixed-salary components for those seeking greater stability, instead of the volatility commonly experienced in tech and start-up environments.
Noncompensation benefits. Incumbents with new business launches can also offer noncompensation benefits to increase their talent attraction and retention power. Benefits could include increased work perks such as parental leave, enhanced medical coverage, fertility treatments, investment assistance, volunteer days, and unlimited PTO (see sidebar “Offering the right rewards: A case study”). Alternative offerings can also include on-site provisions such as free food, laundry, or fitness facilities that reduce daily personal-life stress, even a four-day workweek. One four-day workweek trial study in the United Kingdom5 recently announced that more than 90 percent of the companies in the trial indicated a preference to continue with the four-day workweek, and other companies have revealed they are considering it as well.
Meritocracy. Research reveals that 40 percent of technology hires who took a new job said one reason for doing so was the opportunity to advance in the new organization. For incumbent automotive players, this makes it vitally important to ensure new business launches are meritocracies. OEMs can establish their new businesses as meritocracies by hiring talented managers who are knowledgeable about the new business’s product lines, by sourcing the best talent available through a mix of internal and external hiring rather than just the former, and by having objective and transparent review processes. This should be true across several tech-related domains (for example, data science, cloud architecture, connected-technology platforms, and customer experience design).
On the other hand, new business launches must be wary of tenure-based promotions and those based on subjective scoring. Evidence of nonmeritocratic career progression can discourage top talent, thus reducing attraction and retention.
Senior leaders and direct managers who have a demonstrated track record of people leadership and maintaining work–life balance in the larger tech community can be catalysts for any effort to attract and retain top tech talent.
Senior leaders. Survey respondents indicate that having caring and inspiring leaders is a top ten factor in evaluating their job (24 percent of all respondents) and an important factor for taking on a new job. Tech and start-up talent seeks companies with senior leaders who have vision, patience, tenacity, authenticity, and self-awareness. In a new business launch, vision means more than simply caring about end goals; it means having a holistic target from engineering to business outcomes that shows consideration for all members and teams. Senior leaders should focus on outlining and communicating a strong vision and execution plan while expressing their unwavering support for the new launch. This can be achieved through company-wide town halls that are informative, provide recognition, and allow for questions and transparent communication. In a similar vein, company-wide “ask me anything” sessions with senior leaders can provide clarity on the corporate mission and drive enthusiasm for new business ventures.
Direct managers. Managers with leadership skills and the right capabilities are needed to drive new business launches that successfully attract and retain tech and start-up talent. Key capabilities include a solid grounding in customer experience, a strong market orientation, leading-edge business acumen, and both technical and leadership skills. Enabling direct managers who are middle managers to perform their people management duties is essential to their satisfaction and the growth of their teams. Surveyed middle managers6 indicated that they spend half of their working time on nonmanagerial duties, such as administrative tasks and work that they are individually responsible for, while only 28 percent of their time is spent engaging in talent and people management work.
Placing increased value on talent and people management activities will incentivize managers to spend more working time engaged in these activities, which, in turn, can provide the mentorship and career development sought out by tech talent.
Community. Reliable and supportive people at work is another top ten factor in job evaluation. Additionally, it is a top five reason why people choose to stay in their current job, with 40 percent of respondents mentioning it. New business launches can build and cultivate communities to mirror those in tech firms and start-ups, which are highly effective at growing and retaining talent (see sidebar “Having the right people: A case study”). Connectivity opportunities, such as one-on-one coffee chats with senior leaders, can contribute to enhancing community bonds while providing important connections for career growth. Incumbents can consider structures such as guilds, which can positively impact career development while also forging a sense of belonging by grouping together people with similar interests and skill sets.
An incumbent automotive player’s brand, reputation, and impact on society can all play pivotal roles in attracting and convincing high-tech workers to make a long-term home with the company.
Industry reputation. Industry incumbents have an advantage over new entrants in this regard because they often enjoy a rich history of success, which can create a sense of loyalty that is not as easy to build from scratch at a start-up. Additionally, an incumbent’s often lengthy history leads to greater trust in the company, which solidifies its stability, attracting employees who want the fast-paced and innovative growth environment of tech while avoiding the volatility associated with start-ups. Incumbents can leverage their rich history to tell a compelling story, not only to their customers but also to their employees as they look toward the future (see sidebar “Being the right company: A case study”).
Lifestyle. Sustainable work performance is a top five factor in job evaluation (28 percent) and the fifth most important factor for new job seekers (34 percent). The nature of tech and start-ups can sometimes blur the lines between work and life, but incumbents can offer a haven from potential burnout by promoting a workplace lifestyle that emphasizes work is not life and vice versa. After COVID-19, employee health and well-being became center stage for most job evaluators. The sixth-most-important factor cited is “support for employee health and well-being.” It is the second-highest reason why people have left their jobs. Auto companies can demonstrate a culture of caring rather than a culture driven by “growth at the expense of employees.”
Culture and values. Top talent are seeking meaningful work with companies that are making a sustained impact and that demonstrate corporate values aligned with their personal values and aspirations. For job seekers looking for meaningful work in sustainability, automotive incumbents may not be the first companies they seek out. Incumbents should transparently promote the progress they have achieved through innovation across a number of meaningful areas such as sustainable products, materials, manufacturing, and emissions reduction.
Examination of the full EVP can be complemented by the review of external sources of feedback to truly understand the needs of high-tech talent in the market. Incumbents can understand the biggest pain points of tech-focused employees and prospects by collating engagement survey feedback, findings from exit interviews, feedback from prospects who did not accept offers, as well as reviews on third-party websites such as Glassdoor and Teamblind.
Incumbent automotive and mobility players launching new businesses have a unique, once-in-a-generation opportunity to attract high-tech talent by capitalizing on a fast hiring process as well as the fidelity and rigor of their existing hiring standards. With the combination of a start-up’s freedom and autonomy and an incumbent’s stability, deep pockets, and reputation, these companies can offer high-tech talent a complete package that other start-ups and incumbents without such enterprises can’t match. Well positioned to grow in the current climate (and, therefore, to attract talent), they can emphasize different elements of the EVP to deliver a rich and fulfilling experience to best influence this talent for the new businesses they are building.