A Lesson in Workforce Planning from BMW

I recently caught a rerun of BMW: A Driving Obsession, a one-hour CNBC special about the German car giant hosted by Squawk Box anchor Carl Quintanilla.  In the program, Quintanilla takes viewers beyond the mysterious gates of BMW’s factory and dives in to its notable 1998 acquisition of the Rolls-Royce brand.

Okay.  Truthfully, I woke up on Saturday morning and my husband was watching it.  I reluctantly agreed to follow along.  But then I became fascinated with the Rolls-Royce story.

First, a quick history lesson.   BMW really wanted to own Rolls-Royce and its brands.  After a 10-month bidding war and a $66 million investment, the 90-year-old automobile maker acquired the Rolls-Royce name, logo and trademark hood ornament… and nothing else.  No factory.  No car to build.  And no workforce.  (Competitor Volkswagen got the rest of the company for more than $700M, while BMW agreed to wait until 2003 to begin developing its own line of cars using the Rolls-Royce name.)  At this point, Rolls-Royce was essentially a start-up with a great brand and BMW was starting from scratch.  With no factory and no workforce, the nearly century old company needed a plan.  It needed to think like a startup.

The company knew they had more than five years until they could begin producing their own line of cars using the Rolls-Royce name.  They took the time to research their customer and understand why someone purchases a Rolls-Royce.  Beyond simply acquiring a status symbol of wealth, customers purchased the car to own one of the finest units of hand crafted luxury – a true rarity in today’s world.  Fortunately, BMW was paying attention.  They realized that in order to build an even better car, this would need to be their focus.

BMW got to work.   It built a factory just 60 miles outside of London in a town called Goodwood.  It hired craftsmen from the local yachting industry.  Today, the Rolls-Royce factory has more than 800 employees who build each car by hand.  Not a robot in sight here.   Wait, what?  Yachtsmen who build cars?  Yes.  BMW had developed a beautiful workforce planning strategy and one that has helped the organization to profit.  So what can other organizations learn from BMW?

Lesson 1:  Don’t focus on recruiting from your competitors

BMW didn’t recruit from Volkswagen, Audi, or Mercedes-Benz.  They hired yachtsmen to work in their factories.  Why?  Because BMW wanted the Rolls-Royce to be a custom-made, hand-crafted luxury automobile devoid of having any relationship with robotics or automated manufacturing.  A hand-crafted Rolls-Royce can take 9 months to build and is generally customized with intricate and elaborate designs.  How long does it take to build a hand-crafted super yacht?  Twenty months.  BMW understood that in order to develop a product that would meet these standards; they would need to recruit and hire talent that had the skills and experience that are truly relevant to do the job.

Recruiting from “like” industries or companies can often prove to be a better focus for your talent acquisition strategy, especially for an organization at the startup or expansion stage.  Companies often get too focused on “poaching” talent directly out of their competition.  There are several problems with this strategy.  The talent pool is probably too small and will dry up.  The culture across organizations, even in the same industry, can vary drastically.  You may find you have an employee that often says “but we did it this way.”

And finally, if you want to stand out against your competition, don’t you want to hire people who will have creative ways to differentiate you in your market place?  Sure, someone from the other guys will bring competitive intelligence with them, but what about the new ideas?

Lesson 2:  Build your HQ in a talent-targeted location

Why do new advertising agencies crop up all over NYC?  Why is Silicon Valley home to some of the world’s greatest startups?  Your company should be built in a location that naturally attracts the talent you want and has a great pool of qualified candidates.  BMW established that it wanted to hire skilled yachtsmen — which is exactly why they built the Rolls-Royce factory and HQ in a town called Goodwood, naturally.

Goodwood is located in South East England, just an hour away from the coast.  Conveniently, the town has long been associated with motorsports and craftsmanship.   Yet even more relevant is the plant’s proximity to the English yachting industry.  Goodwood is just an hour outside of two major ports, including Southampton and Portsmouth, home to the Super Yacht Academy.  BMW had strategically placed its new factory in a location that could easily attract and retain the best talent in its target industry.

BMW is undoubtedly one of the best brand managers in the automobile industry.  Yet it recognized that in order to build a better Rolls-Royce, it couldn’t just rely on the brand alone.  In the last 10 years, the company has achieved an annual 10% increase in service revenues.  Last year, the company sold more than 2,700 cars across 50 countries, nearly tripling its sales since 2007.

Organizations, from startup to a Fortune 100, can learn a few things from BMW’s workforce planning strategy.  After all, it’s the talent upon which you build your company, not the brand name, which will truly make you successful.