Bill Kerr: Is manufacturing due for a renaissance in the U.S.? There are signs: the domestic production push in recent years, reshoring in response to supply-chain bottlenecks, a ramp up in electric vehicle production. Whether this translates in sustained job growth, the demand for workers is increasing. Technological advances and an aging workforce put the premium on recruiting, training, and retaining workers. And in a tight labor market, the competition for talent often involves projecting corporate values that resonate with stakeholders. These include environmental and social commitments.

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. I’m joined today by Summer Smith, Rolls-Royce’s Global Head of HR for Defense and HR lead for North America. We’ll talk about the U.K.-based aerospace and defense company’s talent strategy, how it’s cultivating a new generation of employees, and how the role of HR has changed in recent years. We’ll also talk about Rolls-Royce’s environmental and social goals. Welcome to the podcast, Summer.

Summer Smith: Thank you for having me.

Kerr: Summer, you’ve been with Rolls-Royce for quite some time, I believe starting as an intern. So maybe tell us a little bit about the career journey to this point.

Smith: I did start as an intern, and then progressed on through the leadership development program. Rolls-Royce was great, because as you say, our main headquarters is in London, so I’ve been able to spend five years in total in England, working and living, which has been great for breadth and understanding different values, different organizations—because a lot of us are in global roles, but I actually got to live there and learn a lot more working with employees there. And I’ve progressed through various different stretch assignments. I’ve had great sponsors and mentors in my career and been able to progress more in the business partner/people partner realm, to now be where I’m leading HR for our defense sector, which is a great opportunity I’m enjoying.

Kerr: So it’s a global company, and a name that many of us know. Maybe you can give us a little bit of the talent strategy of Rolls-Royce, if you can kind of sum it up for us. How are you trying to access people and also then keep them in the company?

Smith: That’s evolving as we’re speaking, because previously, it was very much about we have a lot of long-tenured individuals, which we do want to retain, and that’s how we grow that skills and capability. But we’ve been fortunate enough, coming out of the pandemic, we have part of our civil business is growing again. Our defense business has been growing all along, and we want to make sure the new skill sets that are coming in are supporting our future skills strategy for where we want to be in 15, 20, 30 years. So we’re trying to manage that balance of individuals that have been with us for a long while, as long as how we then incorporate new talent and skills at all levels of the organization. We are currently doing a lot of work on “purpose”—how we can provide purpose to employees and the value of their role, and [how] what they’re achieving at the company can provide that purpose in their lives, make them want to get up every day—as well as employee experience. That has become a heightened focus for a lot of HR leaders as we’ve gone through the last couple of years. And then the very important part about the skills development, and how we make sure, as we evolve our business, we have the right skills in place across all levels to make sure that we can deliver what we need in the future—which the talent market is very challenging at the moment, so there’s a bit of self-help we’ve got to do in there, as well as some of the older, more mature ways of just recruiting people that already have the skills.

Kerr: Rolls-Royce was founded a little more than 100 years ago, so the culture will have had to change and update itself and be reflective of the times across that 100-plus-year period. Do you think now is at an accelerated pace compared to, say, the second half of the 20th century? Is there something special about this particular moment for the need to reach out to talent in different ways?

Smith: Absolutely, and the last few years have been a major disruptor for us. So our civil aerospace was heavily impacted by people just not flying. Unfortunately, that group did reduce in size and had to change their strategy throughout. But thankfully, we’re on the upturn coming out of that. And so coming out of the last couple of years and using this disruptor, there are parts of our culture we never want to lose. We are a relationship-oriented company. We are an innovation company. We have some of the smartest people in the world working for our company. That part of that culture and that commitment to excellence—that will hopefully stay for many years to come. But we are trying to use the disruption to make sure that we can leverage some positive things in the culture, like be more humanistic. We’ve had a much bigger focus on wellbeing, on individual relationships with employees and managers. You’re in the people’s homes more. We didn’t do a lot of that before. We all came into the office. We weren’t so flexible, where now we are embracing a lot more flexibility and what is the trend at the moment—about we’re all human beings, and we’re all trying to balance a lot. So getting that balance and that perspective has become much more important in our culture, and I hope we can hold onto, because of the last two years.

Kerr: That’s great. Maybe you could tell us a little bit more about the mental wellness part of Rolls-Royce’s efforts and some of the policies that you’ve been experimenting with or adopting permanently to help in that very important topic.

Smith: Part of it is actually just talking about it. You look at some of the studies, and you get well over half of employees that’ll say they’ve never heard their boss or senior leader ever reference mental wellness, ever having stress, ever having a challenge. So the base principle, Bill, was talk about it. Myself and many other leaders regularly say, “It’s okay to not be okay,” which wasn’t a normal part of our leadership previously. But making it okay to talk about it, and then it was developing the resources. And we’re very fortunate. We have a very mature occupational health group, and we actually have a leader focused fully on mental health, and she brought in different tools and resources that allowed leaders to be able to have those conversations and then direct them in the right way. We have recently brought in a new partner for an employee assistance program, which is who you call when you do have challenges—in essence, allowing people to have the conversation. And we’ve even brought in tools that allow teams to do some quantitative assessments on where they are on different mental health factors, and where you’re at in your finances, and how much stress is your family bringing, how much stress is your job bringing, and those conversations. I’m very glad they are a part of our conversation, our culture now.

Kerr: Being a very global company, headquartered in London and then also having extensive operations in the U.S. and Asia and elsewhere, tell us a little bit about how Covid-19 impacted Rolls-Royce. And then also on maybe dimensions like the mental wellness, are these policies and approaches being applied everywhere equally? Or is there a lot of for local areas and local markets trying to adapt specific ways?

Smith: I think a combination. I think there were some global principles—that we had a team in London that was very good about laying out—that this is how we’re going to treat our employees when certain markets were impacted—like I talked about, in civil aerospace. But also I always use the quote, “We’re all in the same storm, but we’re in different boats,” and we use that principle around how we treated it with different countries. There were often times where the U.S., we had a different approach to mental wellness. They have a bit more of a maturity and a bit more—longer—tenure in talking about that in the U.K. than we have in the U.S. It allowed us to steal some of the things that they were doing with a bit more comfort because of the necessity to do it. We did tailor it to here to make sure we still respect some of the confidential elements we have due to healthcare here. We had some of the same privacy elements happening in Germany. And in Asia, we had to take a very different stance, because the lockdowns were much more strict there. Where in the U.S., we often had people coming in a bit more freely to work in some areas, you didn’t even have the option in Asia, in some parts of England, during some of the lockdowns to do that. We did tailor it. We had global principles and a framework, but we did heavily tailor it to region, based upon what the restrictions happened to be at that time.

Kerr: One of the other changes coming out of Covid is many people are rethinking office space, trying to resize, perhaps, the offices to the way the workplace is changing. How is Rolls-Royce approaching those questions?

Smith: Absolutely. We did some surveys, focus groups, et cetera, as we were working through this. Yes, we had many more people working from home and doing hybrid working than I think we would’ve been able to get to if we didn’t have this major disruptor. I do see that as a positive, because it’s what the talent market wants, both our current employees and employees we’re recruiting. So that then made us question, obviously, our footprint. Now, we were somewhat fortunate in that our lease in our main facility in the U.S. was coming up after lockdowns rather than right before lockdowns. I do put some of that to luck. But I am proud of our leadership team that took that opportunity to say, “Let’s just not re-lease the same space. Let’s look at what do employees actually want to come to the office for.” Previously, we would’ve spent, and we did, quite a bit of effort and time on how you design the canteen or sorry, the cafeteria. That’s where people came together. It was a big social place. We had ice cream machines, a ping pong table, lots of chairs. You walk there through lunch and everybody was there. That’s not the case anymore because of the phasing of people coming into the office. We actually reoriented our offices, which were primarily: you came in, you worked at your desk, and you maybe went to some meetings. We’ve completely redone that. We’ve gone from two towers to only one tower of seven floors. Two of the floors are the previous way of working: you come in, you get a desk, and you sit at the desk. The other five floors are completely collaboration-based. They range from rooms of two people, rooms of 40 if you’ve got a team that needs to work together. The technology has been improved so that you can have people in a meeting that are in the room and people still sitting at home, and there’s not this completely different experience. We were fortunate at where our lease fell, but I was very happy we took that opportunity to listen to employees, realized that most of them, the reason they were wanting to come in the office was because of the collaboration, not necessarily to just go sit at a desk by themselves. And we redesigned the whole office. We are looking at other sites to do the same thing, but we’re hopeful that this trial will prove successful to still allow the same level of innovation and the same level of productivity by our teams.

Kerr: Rolls-Royce has traditionally had a very engineering focus in its operations and its culture and so forth. Whether it’s the policies around mental wellness or what we should do with the fourth floor, it seems like there’s a lot of testing things out, experimenting. Has that been an easy mental shift for the company to do?

Smith: Not the company nor I, because as you can imagine, in getting people to fly in the air and getting our Air Force and military to be able to perform, you’re pretty detailed in what you do in checks and balances and making sure it all works. Most companies, we all experience, you try and go and benchmark how everybody was responding to the last few years. You couldn’t because we were all making decisions in the moment. We were all making drastic changes, so we used our network to see what was happening, but we still went back to that: What does the employee actually want? The employees’ expectations are evolving as we’re going as well. It has been a bit of a challenge that we couldn’t do a benchmark and say, “These five companies did it, and it has worked, and this is the return on investment.” We couldn’t necessarily do all that, but I was happy that our leadership team realized that we couldn’t let the disruption go to waste. And let’s try some things, let’s listen to our employees. We’re in a pilot phase, as with a lot of other companies, where if you ask me in 10 years, Bill, I could say, it’s fantastic, or it was really stupid. I’m not sure yet.

Kerr: Well, we will all be watching many experiments that are happening at institutions all around the world and see a bit of what proves successful or not. In addition to an engineering culture, when we were discussing this podcast, humility came up a lot in our conversations. I’d love for you to maybe dwell upon that word and what it means for you as an HR leader and also for the organization during this very chaotic time.

Smith: You had to have a level of humility over the last couple of years, and even with what’s starting to evolve now. You look at some of what’s happening in the economy hasn’t happened since 1970s. A lot of the leaders that we have now weren’t working then—and specifically, were not leading major global companies at the time. It has been a humbling experience to not be able to do the standard benchmark, understand what’s the best way to do that, use data, and you are confident this is all going to work. And it is taking what a lot of companies already do: It’s the fail fast, fail forward, but it’s doing it on larger scales on pretty big strategic items that you need to trust your values. You need to make sure you understand the different perspectives and the different implications of what you’re about to try, but then you’ve got to have the humility to try it and be able to admit when something’s not working or you’ve got it wrong. I think, even though I have referenced the 10-year timeframe, we’re going to find out some things in six months and have to make adjustments, we’re going to find out some things in a year and have to make adjustments. I do think we have all learned that you have to have a level of humility and a level of vulnerability with your employees as well so that they can tell you when something’s not working and then you make adjustments. The agility as well required—as a leader at the moment—I think has increased greatly because we’re dealing with so much ambiguity and not having tried-and-tested methods of approaching the challenges in front of us.

Kerr: Thinking about the HR side of the work—and I know for you that talent is at the center of everything that Rolls-Royce is doing—I’d like to pick up on a few of the themes that were described earlier and just focus the light a little bit more on some specific topics that talent is facing right now. One is—whether you call it the “Great Resignation” or whether you just say that you can’t find workers anywhere—a lot of companies right now are dealing with labor shortages. Has that had a particular manifestation for your organization? Has it led you to work more with contractors or gig workers or open up new talent sources? What’s been your experience for the labor crunch?

Smith: Recruitment is a big focus for us at the moment. But it is actually making us, to your point, look at different ways to be able to get talent in to do what we need to do. So I was just actually reviewing last week, we are significantly increasing our early-career recruitment. We get great diversity in our early career. We have pretty good reputations on the campuses that we work with. And we have great leadership development programs that, like the one I came off of. But we’ve now had to take a different approach to potentially redesign work in some roles to be able to use that avenue more, because that talent is coming in. And we also have the reality of, we need to be developing talent in some of these technical areas to be able to take on roles faster and be able to contribute more. So we are looking a lot more at early career than necessarily contractors. We are bringing in contractors where available. And I would say what we’re seeing the shift there, Bill, is previously you would’ve had a lot of companies looking at contractors or short-term workers, depending on your region, as they only worked up to a certain level of capability or certain level of professionalism or management. We’re seeing very senior people choose to be contractors and technical experts choose to be contractors as a life choice. It was always expected, if you looked at any of the market trends that some consulting firm would lay out, that you’d have people going to that eventually. I do believe it’s probably happening a little bit faster. So we are going back to that agility phase, we are trying to not take the approach to talent acquisition the same way we did five years ago, because the talent market has changed, and we have to be agile with that.

Kerr: In the news recently, you had one program in particular that we were looking at. I think it’s in Derby in the United Kingdom. You’ve opened up a nuclear engineering apprenticeship program. Tell us a little bit its goals, its size. What are you trying to accomplish with that new offering?

Smith: Absolutely. This is an example of exactly what I just talked about. We have for many years provided a nuclear submarine capability to the Navy in the U.K. We’re very proud of that business. You can imagine finding talent and skill sets to perform that work can be quite challenging. And across the U.K., there is an increased focus on nuclear capability, not in the people sense, but in the product sense. And we, A) need to respond to the potential for our business to grow, but B) need to respond to that tightening market. When we looked at what we may need to have in terms of talent over the next 10 years, we didn’t think there’d actually be enough people that would naturally come into the market to be able to fulfill what we needed. So we did make a commitment. Over the next 10 years, we would be bringing in 200 people a year into this apprentice academy. It’s great because it provides a level of education for very, very early-career talent. But at the same time, people will finish the academy—we hope to retain a lot of them—but it does serve the purpose of actually putting more of that skill set into that talent market, which is also already very tight. So we have a long history in Rolls-Royce, but particularly in the U.K., about apprentice development and the significance of that to be able to support our future talent needs. And I’m really excited, as our company focuses on nuclear as a key capability going forward, we’re also making a very strong commitment to build that capability in the U.K. there.

Kerr: In this setting, and then also more broadly beyond nuclear engineering, how do these efforts to get earlier in the career, to have your own training programs, impact your thoughts of credentials and typical ways we would’ve measured skills on resumes?

Smith: It’s evolving, I’ll say. Like I mentioned, our apprentice academies have been going on for a while. And just even locally, down in Aiken, South Carolina, we have an agreement with some of the high schools there that we actually take high schoolers and have them come in. And by the time they finish high school, and by the time they finish our program, they can be certified to work on any shop floor at a pretty high technical capability across any company. And we don’t tie them in that they have to work at Rolls-Royce. But we do focus on that certification. So it is an important part for us, that all of the programs are designed to get individuals, high schoolers, all the way through college, at a certification level that would allow them to work anywhere and work at the same level as if you were hiring somebody five years into the industry—obviously not with the same experience, but that certification remains just as important.

Kerr: One of the aspects of Rolls-Royce, you invest a lot in R&D, research and development. I think it’s on the order of, like, $1.5 billion per year. How does that shape some of your staffing goals, your collaborations with other universities, institutions, and similar?

Smith: Very much so. It is an exciting part of the business that allows us to track talent in a lot of ways. We do have, equally as exciting, many of our legacy programs that have been running for a long time. And if you look at the mission of what they do—particularly take our defense sector and the power to protect—it’s a really strong mission. And we just won recently, actually, the re-engining of the B-52 bomber. Those types of things we hope will go to that purpose-driven strategy element that I talked about before and bring people in. On the research and development side, we are very realistic that we are transitioning into our journey to net zero, being able to allow our customers to be able to have products that support net zero operations, and be able to start to develop talent now and early that understands those products and understands the whole system. So the investment in research and development is very important, but getting talent working on that as it’s being developed so that when it does come into production and we can develop true operations for our customers, the talent that did conceptualize it in development is there. In addition, as I mentioned with the early career, we have university collaborations, university technology centers. An example is one we have with Purdue in Indiana. And it is a great avenue to be able to work with our local community, be able to work with students—we get some great products that come from there—and be able to advance development. So there is a fair amount of development and money and research that goes into that as well, and it connects to that whole talent agenda, which we’re very proud to go and recruit at those universities where we have those technology centers.

Kerr: Tell us a bit more the net zero carbon emissions was—your goal, I believe, is by 2030 to achieve that. And I’d love for that and other efforts you’ve been doing in environmental sustainability to describe the impact that has on different employee segments, on the younger talent, maybe on the older talent, on recruitment. How has that played out inside the organization?

Smith: It’s been something that every area of our business touches and every area of our business should be able to resonate with, because there is a growing need from our customers—and from society, in general—about making sure that the areas of technology, like flying, or like or military, they contribute quite a bit to our carbon footprint. But technology can be a key enabler of reducing that. And that is what we’re focused on now, is how we continue to evolve our products, whether it’s through alternative fuel sources or a different level of emissions and reduced emissions from some of our engines. We have a lot of capable people that have been focused on how we make sure we reduce emissions from some of the work that our customers are doing and help them on their own journeys. And I would say across generations, when we actually had a conference recently, and we asked that question around, “How does this resonate with you?” I do think it’s cross-generational. You do have your younger generations that it is embedded in them, and they’re asking the question, and it’s a key component of what they look for. But I wouldn’t discount that the older generations don’t think about that. We had one gentleman get up and talk about how articulating our journey to net zero allowed him to have a really good conversation at the dinner table with his children about what he does and how what he will do will impact their world in the future when they get in the workforce. So everybody, as with any purpose statement, is going to resonate with that differently. But I think it’s a very important step that Rolls-Royce has taken to make sure that we can contribute to our customers being able to get to a better place when it comes to net zero.

Kerr: In addition to trying to reach earlier in career stages and bring talent in, a lot of companies are also trying to look at grabbing some of the talent that maybe just recently retired, find some way to get some of those alumni back in the organization, especially with the talent crunch that’s underway. What’s been some experiences you’ve had at Rolls-Royce with working in the opposite direction?

Smith: We have the same challenge. We have a balance of, you want to respect somebody’s retirement, but you still want to get them to help advise. So actually, that nuclear academy I talked about, that’s part of what we’re looking at, because we can’t have everybody delivering that business while at the same time training up quite a lot of apprentices. So we are in discussion with some of our retirees about, maybe you don’t want to come back to work, which is fantastic, and do the same job that you did before, but wouldn’t you love to train the next generation to do what you did your whole career? And that’s quite appealing to some of the individuals we are talking about. We’re also looking at different ways to allow people to wind down their careers, because we are getting individuals that, maybe more so than in the past, they don’t want to spend the 40 hours in the office every single day as they finish their last few years of work. What other options are there, where we don’t lose all of their knowledge right away? Maybe there is a part-time option or there is more flexibility about them working from Florida versus Indiana and being agile and adjusting to that.

Kerr: That’s great. So Summer, June, which is also Pride Month, and Rolls-Royce recently earned a perfect score on the Human Rights Campaign’s 2020 Corporate Equality Index, and it was also named a “Best Place to Work” for LGBTQ+ equality. Tell us a little bit about some of the policies that led to that special honor.

Smith: Quite a bit. It’s been many years in the making I have worked with. In particular, we have an employee resource group named “Propel with Pride,” and they have partnered with us from the beginning. And I can say, in the beginning we did not have what we needed. We didn’t even know what we needed. And I do think the human rights campaign and their efforts around this program helps companies understand. So in collaborating with our employee resource groups, we looked at our medical benefits and made sure we had inclusion for same-sex partners. We looked at some of our benefits for individuals that may want to transition and transgender individuals. We looked at what we’re saying externally in terms of, we now every year, with the exception of the one year it didn’t happen in the last couple years, we march in the pride parade in Indianapolis, and in some occasions, some other cities, and we fly the pride flag out front. So there is a lot which is about making sure they know they’re supported. But as you say, there were a lot of policies, and particularly on our benefit side, that we then had to update to make sure they wouldn’t run into any hurdles any other employee had just because of their LGBTQ status.

Kerr: So as we’re getting close to the end of this podcast, what are the pieces that you have circled and say, in the next three or five years, these are going to be shaping how work is being conducted at Rolls-Royce?

Smith: The biggest thing, as I mentioned, we’re starting to look at different demographics, we’re starting to look at different ways to bring in our skills and the talent we need. I believe there will be a shift in how we look at how jobs are designed and how work gets done. We know there may be elements of AI coming in, but when you look at some of the past ways jobs are designed, it’s around a job, and you need these set of experiences, and you’re going to execute X, Y, Z and have these goals for the year. When you look at the options of gigs and more virtual working and being able to perform on more agile teams, we’ve got to be able to figure that out. And particularly in a highly regulated area, we do not want to lose our expertise or the way in which we engineer through any cultural change we do, but at the same time, we will have to rethink how we structure jobs and work to allow for more flexibility in our talent—both from what they want but also from what’s available in the market and be able to adjust that. I think we’re all in learning mode, and I’ll stay in learning mode and listen to our employees and what’s happening in the market, and hopefully keep learning from other companies as we determine what we’ve done well in and what we maybe need to reevaluate.

Kerr: Summer Smith is Rolls-Royce’s Global Head of HR for Defense, and also the HR lead for North America. Summer, thanks so much for joining us today.

Smith: No, thank you!

Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.