Last week, the Pave team spent three days in Austin at the Leap HR: Manufacturing Total Workforce event. We met with HR, Talent Acquisition, and Learning & Development leaders from leading manufacturers, including Johnson Controls, BASF, Watts Water Technologies, Birchwood Foods, Unimacts Global, and Shawmut. These executives are shaping workforce strategies that will define the next decade of American manufacturing.
I led a session presenting findings from our research on over 525 total rewards teams, focusing on their AI strategies, areas of impact, and existing gaps. The data resonated with attendees, highlighting that the sector is advancing faster than many may realize.
These findings sparked further discussion throughout the event, and four key themes emerged during the sessions. Let’s dive into each one.
1. The Hard Part Comes After AI Adoption
Every HR leader I spoke with has identified AI use cases. However, many teams are prioritizing the simplest applications instead of those with the greatest value, which was a central concern in our discussions.
Pave’s research report, How AI is Changing Compensation, found that 83% of compensation professionals already use AI tools, mainly for content creation and employee communication. Strategic applications such as AI-powered benchmarking, job matching, or workforce planning remain uncommon. Most teams are experimenting with generic tools rather than building systematic capabilities. The gap between experimentation and strategy is where competitive advantage emerges.
One key challenge for manufacturing leaders is interoperability. An AI-enabled screening tool in Talent Acquisition is insufficient if it does not integrate with compensation systems or if the benefits team uses separate data. Several leaders described situations where recruiting, compensation, and benefits teams each used AI, but their systems did not share data or logic. As a result, processes were faster, but decisions remained fragmented.
This represents the next stage of AI maturity in total rewards. Leading organizations are deploying AI tools and prioritizing data integration across Talent Acquisition, compensation, and benefits. Cross-functional data architecture is the primary maturity gap, as shown in our analysis of over 525 total rewards teams, and it distinguishes organizations that achieve business impact from those that do not.
2. Early AI Wins Expose New Bottlenecks
Leaders described the second-order effects of early AI adoption. Successful automation often revealed new, unanticipated bottlenecks further along the process.
One of the best examples came from Noelle DuBois, Head of Manufacturing Talent Acquisition at Johnson Controls. Her team had executed an impressive automation-first TA transformation, replacing a fragmented RPO model with internally led recruiting powered by chatbot-driven applications, dynamic interview routing, and visual assessments. As a result, time-to-fill was reduced from 50-60 days to 20 days, with a goal of halving it again.
She emphasized that reducing time-to-fill shifts the bottleneck to post-offer stages. The main friction point becomes the transition from offer to acceptance and onboarding. If the offer is unclear or fails to visualize the total package, organizations risk losing candidates despite faster processes.
Because the offer letter is the first compensation conversation, Pave’s Visual Offer Letter addresses this challenge. Dynamically presenting the entire rewards package, rather than as a static figure, provides a compelling reason to join and a tangible tool for the candidate and their family to discuss the pros/cons of the new opportunity. For manufacturing companies competing for top talent, clarity at the decision point is essential.
The broader lesson is that organizations achieving real ROI from AI do not stop at initial automation successes. They assess downstream effects and address new challenges as they arise.
3. Manufacturing Talent Strategies Are Changing in Real Time
A clear takeaway from three days of discussions is that the traditional workforce playbook is no longer effective. Those most aware of its shortcomings are leading efforts to replace it.
The data support these observations. Our analysis of the new manufacturing talent playbook shows that 93% of manufacturing leaders view competitive compensation as their most effective retention strategy, yet nearly half rate their overall employee experience, including total rewards, as average or below. This gap between recognizing the importance of compensation and delivering it is a key driver of attrition.
The talent pipeline challenge is intensifying. Increased construction investment in manufacturing is creating more facilities competing for the same workers. The industry will require about 3.8 million new workers by 2033, yet for every 100 young people entering manufacturing, 102 leave.
Lexi Champion, National Director of STEP Ahead at The Manufacturing Institute, grounded the conversation with compelling data. Manufacturing is experiencing approximately 30% annual turnover, and replacing a single frontline employee costs between $10,000 and $40,000. Even with the challenges expected in 2026, such as tariffs, rising supply chain costs, and margin pressure, attracting and retaining talent remain among the top three CEO concerns, according to the National Association of Manufacturers. NAM's survey shows that compensation is the #1 reason employees stay, underscoring how critical a robust compensation strategy is to organizational priorities.
Drawing on the NAM’s work with manufacturers nationwide, Lexi highlighted emerging culture-led practices that deliver tangible results, including significant reductions in attrition and sustained improvements in safety and engagement. These outcomes are achieved by intentionally reshaping workplace culture rather than relying on isolated programs or perks. Her message was clear: manufacturers with the best retention outcomes are not just paying more. They are redesigning the work experience while ensuring compensation remains competitive.
4. HR Is Evolving into a Strategic Business Partner
The final theme, and perhaps the most significant for attendees, was the evolving role of HR professionals.
Michelle Saunders, Vice President and Global Head of Human Resources at Shawmut, gave one of the most compelling presentations on exactly this transformation. She described diagnosing the operational impact of leadership gaps—a legacy decision to cut supervisors had created uncontrolled spans of responsibility, eroding safety culture, morale, and quality standards across manufacturing lines. Her team partnered with operations and workforce planning to reintroduce critical supervisory roles, implement leadership development initiatives, and embed accountability frameworks that link structure to plant-level performance.
The result was measurable: targeted reductions in safety incidents, faster time-to-fill for frontline roles, improved retention, and higher engagement—proof that when HR is embedded in operations rather than adjacent to it, the impact shows up where it matters.
This shift from reactive service to proactive strategic partnership is a focus at Pave, especially regarding AI governance. We outlined a framework for senior HR leaders to become strategic architects of AI deployment. The key insight is that if the impact of AI is real but not visible to the C-suite, the issue is traceability and reporting. CHROs should be able to trace every AI-informed compensation decision to its data inputs, methodology, and outcomes.
The manufacturing HR leaders at the Leap HR event are actively embracing this transition. They are building data infrastructure, cross-functional relationships, and governance models to enable strategic partnerships. Their efforts show that embedding HR within operations leads to measurable improvements in production output, safety metrics, and retention, beyond engagement scores.
Where Manufacturers Go from Here
Three days in Austin confirmed that the manufacturing HR community is more advanced than often recognized. These leaders are addressing real challenges, such as 88% plant manager turnover, 56-day time-to-fill for skilled trades, and the Greenfield talent shortage, with strategies directly linked to operational outcomes.
The four themes—AI maturity gaps, second-order bottlenecks, the manufacturing talent crisis, and the redefinition of HR’s role—are interconnected. Organizations that succeed will align their AI strategy with compensation, link HR systems and automations, and connect workforce planning to business outcomes.
Charles is a member of Pave's marketing team, bringing nearly 20 years of experience in HR strategy and technology. Prior to Pave, he advised CHROs and other HR leaders at CEB (now Gartner's HR Practice), supported benefits research initiatives at Scoop Technologies, and, most recently, led SoFi's employee benefits business, SoFi at Work. A passionate advocate for talent innovation, Charles is known for championing data-driven HR solutions.
