CHROs in paper and packaging share talent-related challenges and how to win

Now more than ever, chief human resources officers (CHROs) are earning their seats in the executive suite through comprehensive strategies to gain a competitive advantage and foster high-performing teams. Across the sector, investment in all facets of talent is expected to increase as CHROs gear their organizations for continued transformation and growth in an increasingly complex, post-Covid world.

To understand current talent dynamics in the paper and packaging industries, we recently took a pulse-check of the CHRO community. During Q3 2023, we interviewed CHROs across the sector, including at publicly traded, privately held, and private equity–backed organizations. Our goal is to highlight the challenges faced and corresponding strategies and initiatives to attract and retain top talent in the sector.

A key highlight from all the CHROs to whom we reached out is that businesses are facing ongoing talent challenges on multiple fronts, from how to build and develop a strong base of frontline hourly employees in manufacturing environments to how best to recruit and retain salaried and executive staff. The pandemic accelerated the need to identify and fill talent gaps at all levels.

One people leader described the challenge: “How do we make our brand of manufacturing a destination from a career standpoint, and how do we make this industry attractive to a fast-shrinking talent pool?" 

Hurdles in attracting top talent

Paper and packaging businesses face multiple, often-related challenges in attracting top talent. We identified four primary areas that leaders in the sector are tackling head-on. 

A shrinking talent pool

First and foremost, CHROs raised the issue of attracting talent into the manufacturing sector. Fewer people are interested in manufacturing in general—especially as it relates to field operations roles and skilled trades. Among the factors driving this reality are challenging working conditions, long hours, and mounting competition for frontline talent from other industries and sectors. Covid-19 made the challenge worse, contributing to retirements and unanticipated departures as talent sought out new and different work–life balances and, in some instances, found more attractive compensation. 

The challenge has been exacerbated by an aging workforce and a lack of next-generation talent to fill critical roles, which can lead to significant gaps in knowledge and experience. For example, recent college grads who are early-career prospects in areas such as sales “want to work for more household names in consumer or technology sectors; our industry is not what they think is sexy,” suggested one CHRO. At the executive level, leaders are often lured by competing upstream and downstream sectors from paper and packaging, such as the push toward energy transition and sustainable materials, which has drawn top industrial talent. 

In short, bench strength is an acute and widening issue across paper and packaging, exacerbated by Covid-era accelerated promotions that left hard-to-fill voids in skilled trades but also salaried and executive roles.

Skepticism about culture and development

In today's talent-driven economy, candidates have choices, and many are attuned to a healthy work–life balance, "cultural fit," and opportunities for growth and development. In line with this, paper and packaging CHROs reported fielding more questions from the candidate pool about the cultural environment. Candidates have questions about developmental opportunities as well as the day-to-day culture. People at every level want to feel represented, valued, and supported and are asking questions like: “What does inclusion mean in your organization? Can I be successful there? What’s the culture and climate like?”

CHROs noted that candidates inspect hiring businesses for employee resource group funding as well as executive leadership team and board diversity, and want to know the likelihood of their finding sponsorship at the organization. Still, diversity, equity, and inclusion programs can have unintended consequences if mandated and not nurtured; some CHROs report talent flight and regrettable loss in that situation, especially in operations. Expectations and scrutiny about sustainability and innovation have also risen notably in recent years. As one chief product officer noted: “For those from the junior level to about seven or eight years of experience, sustainability is a top priority.”

Career path and timing are other hot buttons with candidates. One CHRO said, "We've been forced to rethink the days of continuous moves to unpopular geographic locations." Another noted expectation for time in the role is also under pressure, with many candidates looking to understand their long-term prospects for promotion in two- to three-year increments. Beyond seeking a more detailed understanding of career paths, candidates are increasingly inquiring about development plans and looking for evidence of existing executive moves as an indicator. Another executive commented, "The days of taking a leap of faith and trusting that the organization has your best interest in mind are behind us." Identification and selection have taken on new meaning—not just for candidates but also for companies who need to acquire and develop the talent they need.

Office time, work hours, work–life balance, and relocation

Unsurprisingly, flexibility is a common challenge, especially given the manufacturing environment's 24/7 nature. In some cases, office staff enjoy flexibility while businesses work through how to bring more of this to operations. Others are choosing to hold the line, mandating that office hours match plant hours with no exceptions or apologies. Generational differences loom large here as well, with younger employees and candidates asking, “Why do I need to be in the office?” 

While many companies do offer flexible or hybrid schedules, it may be challenging to mandate in-office work without alienating good employees. One chief people officer (CPO) said, "People are opting out and looking for remote or 9-to-5 jobs. Even plant managers want hybrid work. The average tenure is sliding down. It's a gig-based economy now." Multiple interviewees said many of their junior employees would resign if forced to be in the office full-time.

Geography plays a role in recruiting and retention as well. “We lose hourly and salaried employees to geography and relocation issues—such as the perception that some cities have too much crime or some locations are too remote,” an executive said. 

Executive mindset

Alongside these market challenges is existing leadership's reluctance to consider talent from outside the industry, which has the greatest impact on their ability to recruit P&L leaders, commercial roles, and operations executives. “People without direct industry experience just aren’t seen as credible to our more tenured leaders,” a people leader said. 

Another said, “When we think of the top 150 roles here, we have to ask whether we’ve over-indexed on industry experience rather than broader leadership capabilities.”

This general challenge complicates succession planning. As a CHRO noted: “We have a number of gaps as we’ve been growing and don't have enough leaders or ready-now leaders to step into larger roles, but leaders who are industry vets are skeptical outsiders can learn." This entrenched point of view can be a large obstacle to overcome and has been further tightening the industry's talent options. 

How to win

The leaders we talked with and our own work also suggest several practical solutions to address these challenges.

Expanding mindset and reach

Spending on recruitment, several CHROs noted, is at an all-time high, including for advertising, job fairs, and other activities. But it’s largely about recruiting smarter, not harder. For example, leaders should be open to tapping nontraditional talent pools. All the CHROs reported beefing up talent acquisition and more frequently reaching to the outside to fill roles, with an eye to skills that transfer well across domains. 

The gradual retirement of longer-tenured executives should support greater openness to outside hires and a focus on development and knowledge transfer. That will also help address the growing need for new skills, including commercial ones, as the sector evolves. “Now it’s about innovating and partnering with your customers on innovation,” a CPO said. “It’s about growing your territory and geography, not just maintaining.” 

For example, the quest to build more diverse, future-ready workforces has led to closer cooperation with external constituents like trade associations and on-demand talent solutions for project-based, professional-level needs. We are also seeing concerted efforts to work with universities and colleges located close to field operations, and the tapping of alumni networks for interim assignments. 

Some businesses are also using tactics like simplified job listings with fewer requirements, in part to attract more diverse candidates. One executive described using “micro internships” of just a few weeks to assess mutual fit. There are multiple practical initiatives to consider, but it all begins with a more open mindset and willingness to get creative. 

Positioning the sector as an employment destination

Paper and packaging businesses can also benefit from promoting their growing focus on sustainability and innovation. Companies must meet the expectations of younger employees, and the trend toward sustainable innovations that create value is often a significant calling card. 

Businesses in this domain can emphasize that those who work within them can be part of something bigger than themselves and give back to the environment. For example, packaging plays a large role in everyday consumer life, ranging from its environmental impact (packaging as a major component of the circular economy) to its impact on product promotion, consumer utility, and education. One CPO noted that their business has invested heavily in employee communications that highlight established platforms like the investment in recycling and recycled materials. 

Similarly, several CHROs discussed the importance of communicating that innovation fuels future industry growth, leveraging material science and other cutting-edge STEM disciplines. Overall, employers can point to their commitment to investing in sustainability and innovation, along with any awards and other recognition they’ve received for their impact.

Embracing DE&I as an outcome of “culture-first” philosophy 

Getting culture right, especially in areas newer to paper and packing, like DE&I, requires thoughtfulness and finesse. "We are foundational in our DE&I journey right now," a CHRO said. "We want to increase representation without being in your face or polarizing. We focus first on qualification because otherwise, it becomes toxic." 

We have observed a trend toward viewing DE&I initiatives as enablers for high-performing teams. One CPO commented, “You could make DE&I a talent management initiative, but if you haven’t gotten the climate, leadership, and culture right, then you will be chasing your tail.” In this sense, CHROs are viewing a shift in representation as the successful intersection of talent and culture.

Another CPO noted the impact of higher levels of engagement from conscious efforts to support resource groups: “Employees involved in ERGs [employee resource groups including those for underrepresented groups] score 20 percentage points higher on our engagement surveys than those who aren’t.” The findings, and others we've observed, suggest that leaders are embracing DE&I as part of an integrated culture versus a stand-alone strategic pillar, a sign of growing thoughtfulness around culture shaping. 

Examining compensation, benefits, and flexibility

As in most other industries, we are seeing more talent strategies aimed at improving compensation, benefits, and flexibility. In general, paper and packaging businesses are completing salary studies and increasing compensation to recognize, reward, and retain. 

Sometimes, this applies to relocation and housing benefits, as one CPO noted: "For managers and above who relocate, we reduce mortgage rates to 3% with a four-year program [the company pays the difference between that and a higher rate], and help with refinancing when the program ends.” Some companies have experimented with four-day, 10-hour shifts in operations. Others have offered full-time benefits to part-time workers. When it comes to executive relocation, we are seeing longer lead times associated with moving to headquarters or plant locations, but most employers are still requesting that leaders make a commitment to be among the teams they lead.

As one executive shared: “We relocated corporate HQ, and because we’re not allowing hybrid, we asked people to move. We ask associates at the plants to be there, so we can't have corporate people working from wherever." Another leader commented, "It was made clear from the start of Covid that employees were being sent home for their safety." Now that Covid is over, "we expect a return to the office as normal." In another instance, the messaging has been direct and clearcut to help determine who wants to be part of the fabric of the company culture moving forward: “The faster we stop making excuses for who we are, the faster we recognize the nature of our business and who wants to be a part of it.”

Engaging in strategic succession planning

We are seeing more strategic approaches to succession planning in order to create a larger bench in a time of greater attrition. Businesses are redefining the critical paths to assuming larger roles, and downplaying the need for continuous relocation, especially in commercial and operational roles.

Some businesses are reexamining competency requirements and delving more deeply into what constitutes readiness—so it becomes less about domain and functional expertise and more about strategic know-how and leadership skills that can be applied universally. In this way, a focus on time in the role is giving way to identifying and supporting enterprise initiatives and transformation efforts with the right mix of diverse talent.

In this context, many emphasize the importance of external benchmarking through mapping and other exercises. As one CPO said, "In some ways, we look at search as an external benchmarking exercise." Indeed, we see clients moving beyond traditional nine-box diagrams into meaningful dialogue based on harder data and alternative leadership assessment frameworks, with a focus on leadership skills, transformation experience, and readiness for internal and external candidates—again, to get beyond the traditional bias for domain expertise.

For example, one business is looking at the incumbents in their top 100–150 roles to understand the capabilities this group represents related to industry experience and core leadership qualities like enterprise thinking, resilience, and team development. They will use the assessment to identify the leadership capabilities required to compete and to inform their approach to talent segmentation and identification going forward. 

Executing on learning and development 

CHROs and their teams are also taking practical steps to promote executive learning and development, accelerating upskilling and critical experiences. In some cases, this takes the form of microlearning (e.g., online modules and academy curriculums). It can also be about equipping executive leaders with assessment tools and approaches and requiring more regular identification and articulation.

Development is increasingly happening online. “We put in place a system focused on high-potential employees to go through individual development plans, with online coaching for specific populations like sales directors,” a CPO said. 

There is also a growing emphasis on the identification of high-potential leaders and the creation of development cohorts, including through professional assessment, development plans, and coaching. “We are looking to increase spend on cohort-based development,” a people leader said. 

Another described how they are training leaders to move from “super-operators to coaches” by encouraging managers to have at least quarterly coaching sessions with their employees as part of multiple coaching-focused leadership competencies fostered by training and mentorship.

The road ahead

Leaders in paper and packaging are reshaping their approaches to talent, with CHROs and their teams leading the way. We highlight three key themes to help you navigate the road ahead. 

• Putting new and renewed rigor around succession planning: The risk of inadequate succession plans reached new highs during COVID. In addition to identifying critical gaps in bench strength, this is also about changing the industry’s historical mindset around domain expertise. Leaders are taking a multipronged approach, which includes assessing for key leadership attributes to identify high potentials, redefining new and alternative career development paths, and supporting these paths with L&D programs that leverage tech-enabled platforms and tailored development programs. 
• Extending reach and knowledge related to external talent: It is no longer business as usual in attracting new talent. Leaders are investing larger portions of their annual spend on “talent intelligence”: market-based strategies and tactics to build the knowledge and awareness to land great talent. Initiatives include bolstering internal recruiting teams focused on field operations; identifying new sources of talent by mapping external talent in relevant industry adjacencies; utilizing sustainability and innovation platforms to attract candidates; and sourcing interim and on-demand talent as needed. 
• Prioritizing culture-shaping: We are seeing thoughtful, systemic approaches to improving and modernizing this sector’s culture, along with post-COVID return-to-work policies that reflect new cultural norms and expectations. Savvy CHROs recognize the linkage between talent and culture and are taking deliberate steps to integrate DE&I initiatives into hiring, development, and mentorship programs while avoiding mandates that can have unintended consequences. To ensure employees, especially new hires, have a positive experience, businesses are fostering a high-performance workplace. While the range of responses to post-COVID work policy remains varied, leaders are making a conscious effort to align policy with the culture they support.