Competition for top talent in cutting edge industries highlights need for revamped hiring practices

In a field once dominated by government agencies and incumbent organizations, the aerospace and defense (A&D) industry has experienced a rapid landscape change over the past decade as private companies and high-profile organizations launch commercial space programs and advance novel exploration and communications projects. These private companies present new competition to the traditional A&D industry. Increasingly, top talent in the United States has turned away from agencies like NASA and the Department of Defense and opted for what they perceive as more innovative and rewarding work at private companies, according to a new report from McKinsey. The report intends to help the traditional A&D industry attract and retain the premier talent that is often lost to private companies.

Seizing the moment: Talent challenges and opportunities in aerospace and defense highlights the prevailing trends and headwinds in the A&D industry affecting talent retention and recruiting, such as an increased demand for technical solutions including cybersecurity, automation, and artificial intelligence; increased demand for top talent; misplaced perceptions about the nature of the work; and shifting career goals among younger engineers.

The report shows how top advanced electronics and technology companies recruit from the same talent pool as the traditional A&D industry. Offering new ways to work remotely, the potential to work on innovative big idea projects, and competitive pay, these private companies have begun to outcompete the A&D industry for top talent. In fact, some of the top tech companies in Silicon Valley have implemented permanent work-from-home arrangements designed to appeal to new workers. However, McKinsey did find that all seven defense companies interviewed were in the process of implementing new ways for employees to work and six out of the seven stated they were creating new digital communication channels.

There are also misplaced perceptions about the traditional A&D industry that make it difficult to recruit and retain top talent. According to McKinsey, there is an external perception that companies in the industry are overly bureaucratic and perhaps unintentionally stifle innovation. These perceptions about the industry along with the increased competition from private companies have contributed to a growing talent gap in the traditional A&D industry.

To bridge this gap, McKinsey provides three recommendations. First, they urge traditional A&D companies to tell the story of the industry when recruiting new talent. This sort of employee value proposition situates the employee as part of a long and robust industry legacy that was built on decades of world-changing innovative work and can help the industry to change perceptions about its bureaucracy.

Second, McKinsey urges the industry to reinvigorate the talent pipeline through reskilling and strategic partnerships with universities and industry groups. These pipelines will give prospective employees a broader understanding of the field and can give them a detailed career advancement plan. For example, AeroSpace Ventures out of the University of Colorado-Boulder serves as the university’s collaboration point between industry and government through sponsored research, education, and workforce development.

Last, traditional A&D companies must make diversity, equity, and inclusion (DE&I) initiatives an imperative. McKinsey documents the impact of diversity and shows the top-quartile organizations with ethnically diverse executive teams are 33 percent more likely to outperform peers on earnings. Increasing their DE&I efforts could include convening industry-wide events for women and people of color and developing DE&I initiatives that are implemented across the industry.

The report urges A&D industry leaders to undertake sustained, coordinated outreach and rebuild their talent pipelines, noting that those that do will be able to build on their successes and ensure A&D is competitive for the best talent today and into the future.