Thermoforming Report

The Value of Talent

Most manufacturing leaders would agree that people are critical to the success of any organization. Yet, while companies carefully track production metrics, equipment performance, scrap rates, and operational efficiency, the value of talent is often much harder to define – and even harder to measure.

That challenge was highlighted in a recent CEO Magazine article:

“For many leaders, the real challenge has never been believing that people matter. It has been making those investments [in people] legible in the same decision-making language used for every other material investment in the business.

When the impact of leadership development, wellbeing and culture remains invisible – or visible only through proxies like participation and sentiment – those investments are forced to compete at a disadvantage.”

“Why Measuring Talent ROI Has Been So Hard – and Why That’s Changing,” CEO Magazine, March 2026

“You get what you measure.” – Richard Hamming

“What gets measured gets managed.” – Peter Drucker

Both statements ring true in my experience.

In thermoforming and manufacturing more broadly, we tend to focus heavily on measurable operational and financial results. But over time, I’ve become increasingly convinced that talent – the people leading teams, solving problems, developing customers, and driving continuous improvement – is often the single greatest differentiator between companies that grow and companies that struggle.

That view is reinforced by ongoing discussions around leadership capability, hiring quality, and the challenge of connecting talent decisions to real business outcomes. The common thread is simple: when talent is treated as a measurable driver of performance rather than an abstract cost, better decisions tend to follow.

To understand why, it helps to first look at why measuring people and performance is so difficult in practice.

The Problem

Measuring people and performance is inherently flawed. It is rarely rooted in hard facts and numbers in the same way operational or financial metrics are. Yes, we have objectives and results that we are tasked to deliver. Our results against those metrics are relatively easy to measure.

But what other circumstances influenced that outcome? What if the market changed (anyone remember COVID)? What about factors closer to home, like poor leadership or morale issues? There are many influencing factors that need to be taken into account, which makes it difficult to isolate the true impact of people.

As noted in the CEO Magazine article, understanding the return on investment of a people program is “far more simple than most organizations expect. … as Don Rheem explains in the book Thrive by Design, levels of employee engagement are associated with meaningful differences in performance: Employees who are actively engaged are significantly more productive than those who are merely engaged. Thus, when a talent initiative measurably shifts engagement, that change can be translated, using conservative assumptions tied to compensation, into a reasonable estimate of financial impact.”

Given that this work generated an entire book, we will only scratch the surface here. However, a clear trend emerges: “the largest financial effects emerged where leadership behavior created ripple effects by shaping decisions, influencing others and affecting performance beyond the individual leader.”

In simple terms, companies need strong leaders throughout the organization who can consistently keep their teams engaged and performing.

That point is reinforced in another CEO Magazine article, “The Hidden Cost of Ignoring Leadership Capability” (March 2026), which highlights how poor leadership shows up inside organizations in very practical ways.

“When capability falls behind, the consequences show up everywhere: missed opportunities, inconsistent performance, poor execution under pressure and leaders burning energy trying to compensate for gaps they were never equipped to manage. The cost of weak leadership capability rarely shows up as a single line item. Highly paid leaders are spending time fixing issues that should never have escalated. When senior leaders earning senior pay are pulled into rework, escalation and avoidable performance problems, the cost isn’t theoretical. It’s time diverted away from growth, customers and revenue.”

“The Hidden Cost of Ignoring Leadership Capability”, CEO Magazine, March 2026

That dynamic shows up in real organizations every day.

I’m currently working with a highly respected company in the thermoforming industry. They are growing and have aggressive targets, and are adding key leaders in several parts of the organization. As anticipated growth hits, senior leaders are pulled in to navigate and manage the downstream impacts. Capital projects are underway. An acquisition is announced. Integration has become a priority.

But without the right leaders in the right places throughout the organization – from front-line supervisors up through directors – small problems become bigger problems. And as the article highlights, senior leaders are ultimately pulled away from higher-value work. As a result, this company is actively managing mid-level leadership capability and making the necessary adjustments to strengthen overall performance.

The old adage holds true: “people don’t leave roles, they leave leaders.” Gallup also finds that 42 percent of voluntary turnover is preventable, meaning leadership and management choices often determine whether people stay or go. Yikes, what a statistic!

And often, it is a known problem. But turning that insight into action is where most organizations struggle. It involves multiple functions, competing priorities, and sustained attention. Performance improvement plans are implemented and tracked, but in spite of that effort, replacement is still often the outcome.

And that challenge only becomes more complicated when hiring is added to the mix.

SHRM data indicates that a bad hire typically costs 30% to 50% of the employee’s first-year earnings, with total costs often reaching up to five times the annual salary when factoring in lost productivity, training, and recruitment expenses. Measuring the quality of a hire falls into the same challenge: how to do it effectively.

A 10-year-old SHRM article (“The Holy Grail of Recruiting: How to Measure Quality of Hire,” November 2015) attempts to answer this question, but candidly, it still reflects how difficult that problem remains today.

What This Means for Manufacturing

The challenge is not that organizations lack data, frameworks, or intent. Most already have access to more information about people than ever before. The challenge is that talent still does not sit cleanly inside the same decision-making language as other business investments.

As a result, leadership capability, engagement, hiring quality, and cultural impact often remain partially visible – inferred through outcomes rather than measured directly as inputs.

Until that changes, people will continue to be one of the most important – and least precisely understood or accurately measured – drivers of performance in manufacturing organizations.

In our upcoming May blog, we’ll look at how some organizations are beginning to address this gap in practical terms – and what changes when talent becomes more visible in day-to-day decision-making.

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