Josh Bersin research: Best practices of ‘pacesetting’ Consumer Packaged Goods companies

The Josh Bersin Company’s report on Consumer Packaged Goods lays out a new talent plan for companies looking to keep pace with market and consumer changes.

Josh Bersin research: Best practices of ‘pacesetting’ Consumer Packaged Goods companies

Over the past decade, we’ve seen stories of transformation play out across every industry, thanks to digitization, automation, and large market changes, especially due to the pandemic. Reinvention in the $650 billion Consumer Packaged Goods (CPG) space has been particularly drastic and challenging — these organizations know everything about manufacturing, supply chains, production maintenance, and retail distribution, but innovations like the Internet of Things (IoT), robotics, and process automation are significantly changing their operations.

With an increase in data and direct-to-consumer (DTC) sales, there is also a greater need to satisfy the needs of consumers, who are increasingly interested in sustainable products, transparency, digital-purchasing options, and having a personalized relationship with their product manufacturer. What used to be an industry all about manufacturing things is now transforming into a hybrid that’s a little bit of a retailer and a little bit of a service provider. 

On top of that, CPG companies have been given the difficult task of addressing the implications of the pandemic on their operations, including heavily disrupted supply chains. This large shift in the business story also greatly affects the talent story, as the organizations with the right skills to tackle these changes have a competitive advantage in the market. 

In a recent webinar, The Josh Bersin Company’s Janet Mertens, Senior Vice President of Research, and Stella Ioannidou, Research Director, shared exclusive research from Josh Bersin’s Global Workforce Intelligence Project, A Perfect Storm in Consumer Packaged Goods: The Consumer Delight Imperative. In the expansive report, they define current industry trends, key findings, and strategic talent solutions, then offer strategies to start making the changes specific to your organizational needs. They also identify what factors define top-performing CPG companies, which they call “pacesetters,” and how these companies are tackling the industry’s greatest challenges with consumer-first talent strategies.

Related content: Read our latest report, Beyond the résumé: Building a workforce with a skills-based approach.

Build competencies in consumer delight

The old way of doing business in the CPG industry was mostly linear. CPG companies made things, wholesalers distributed them, and retailers were the main channel through which the products reached consumers. CPG companies used to make, move, and sell goods with no direct link to consumers, and therefore no insights on their preferences unless retailers shared that data. 

In the new operating model, the value chain of CPGs is no longer linear — it’s circular. There is a much greater need for CPG companies to create circular responsive systems that no longer rely on retailers to hold that relationship with consumers.

There is a set of skills called consumer delight skills that are the differentiators for CPG companies successful in building these relationships. The majority of CPG companies studied in the report lack the talent required to define and design the products that will delight consumers according to their increasingly selective preferences. But pacesetter CPG companies implement systemic HR solutions that enable them to bring in and grow the talent capable of maintaining this direct relationship with their consumers while ensuring it’s a fruitful one. 

These solutions depend on a talent intelligence practice that generates the data for effective decision-making around skills — not only from within the organization, but also from the labor market at-large.

Understand how the skills you have map to the skills you need

The report examined existing skills across the CPG industry and uncovered five major pillars of business transformation for CPG organizations:

  • Are they able to sustain a digital supply chain?
  • Are they able to offer transparent and sustainable products to their consumers?
  • Can they go directly to their consumers?
  • Do they take advantage of the evolving technological landscape, including advances in IoT and robotics?
  • Do they rely on AI to predict not only which machine is going to break down, but what is the next best product for consumers?

Using the Eightfold AI data set, the report found that the majority of companies still rely on skills that are either stable or declining. As a result of the pandemic, the first thing CPG companies had to do was minimize interruptions in their digital supply chain, so many steps were made toward achieving that first pillar. 

But other areas remain largely unexplored — not due to lack of interest, but due to lack of skills and talent. The pacesetter companies that made strides in these other areas did it with systemic HR strategies that allowed them to identify the skills needed and recruit and/or reskill accordingly.

Refocus in favor of R&D

Retooling a CPG workforce doesn’t just mean changing some job descriptions. The study found that the companies gaining a competitive advantage have a very different talent footprint than companies struggling with legacy operations. 

For example, CPG startups are smaller and leaner, but what actually sets them apart is that they invest significantly more time in research and innovation to ensure that they are creating a core consumer offering that will attract customers.

Overall, the study found that CPG companies invest six times more in marketing and advertising than in R&D. This means that they focus more on how to package the product than on determining how much of that product is still relevant, or how frequently they should change their product line. On the other hand, smaller CPG startups actually dedicate three times more talent on R&D, and are more adept at swiftly disrupting traditional markets.

Related content: Read The Josh Bersin Company’s report, The seven winning strategies of pacesetter organizations on what the top 10% are doing to get — and stay — ahead.  

Reexamine your company’s purpose

The report found that CPG companies are very aware that they need to gain or grow new skills, and the majority are pursuing them through recruitment. The data showed a significant increase in both job postings and advertised wages for roles related to technology, data analytics, and marketing. 

However, the majority of active CPG job postings still revolve around keeping the old business model working. They’re looking for more people in merchandising, warehousing, food and safety, and good manufacturing practices.

Talent intelligence helps pacesetter companies dive deeply into what roles and skills are declining and will be obsolete in five or 10 years, and which skills are emerging, so that they can hire or upskill for those trends. What sets pacesetter CPG companies apart from their competition are the systemic people practices that allow them to reorient what their company actually does every day to better meet consumer needs. 

Pacesetter companies often have many more people in R&D, consumer delight, predictive analytics, and data science. They also tend to have far fewer employees in business-to-business administration roles, because a big portion of their B2B operation has shifted toward the new business value chain. They also have a people strategy that strikes a fine balance between product and culture. The majority of pacesetter CPG organizations are purpose-driven and focus heavily on employee experience.

Make transformation a cross-functional effort

The first step to building a systemic talent strategy is to put the pieces together. Ask your teams:

  • What type of data do we have? 
  • What type of data do we need? 
  • Where can we find the data?
  • Who will run the analysis?

Then build a cross-functional Center of Excellence, which brings in people from across the organization who can tie in what is being done and contribute insights, both inside and outside of HR. Bring in people from talent acquisition, learning and development, talent management, and organizational design, but also from finance, sales, and marketing who can make the necessary links to connect people, skills, and purpose. 

Finally, concretely identify the most pressing challenge you’re solving for. There are so many steps, challenges, and top-of-mind priorities that it might be tempting to boil the ocean through the initiative. But it’s important to focus on the one entry point, based on the most critical talent challenge, and then move to the next.

“Real-time data and intelligence are critical to these efforts — we live in a world of nonstop disruption and external forces that are constantly changing,” Ioannidou said. “This is not a one-and-done approach, and it’s not actually a project. It’s more of a process. It’s a new capability of the organization that you bring in for the long-term health of your CPG business.”

Watch the full webinar discussing The Josh Bersin Company’s Global Workforce Intelligence Project report, A Perfect Storm in Consumer Packaged Goods: The Consumer Delight Imperative.

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