aviation week workforce study...

Aviation Week Workforce Study 2012

Carole Rickard Hedden

August 13, 2012

In association with

Aerospace Industries Association

American Institute of Aeronautics and Astronautics

National Defense Industries Association

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www.aviationweek.com

AVIATION WEEK WORKFORCE STUDY 2012

Carole Rickard HeddenAugust 13, [email protected]

2012 Aviation Week Workforce Study Advisory Board

Marion Blakey, CEO, AIA

Wes Bush, CEO, Northrop Grumman

Klaus Dannenberg, AIAA

Paul Graziani, CEO, Analytical Graph-ics Inc.

Greg Hamilton, President, Aviation Week

John Langford, CEO, Aurora Flight Sciences

Bradley J. Morton, President, Eaton Aerospace

Frank Pace, President, General Atom-ics Aeronautical Systems

Rick Stephens, SVP Human Resourc-es and Administration, The Boeing Co.

Ed Swallow, Chair, STEM Workforce Div., NDIA

Anthony L. Velocci Jr., Editor-in-Chief, Aviation Week

2012 Young Professionals/ University Student Study Advisory Board

Ondrea Adger, Software Configuration Manager, ATK

Gina Burns, Chair 2012 YP/University Advisory Board, Lockheed Martin Corp.

Robert Canfield, Interim Head Aero-space & Ocean Engineering, Virginia Tech

Annie Caraccio, Chemical Engineer, NASA

Angie Clover, Process Excellence, Rolls-Royce N.A.

Tim Denning, Sr. Dir/Business Dev Operations, L-3 Communications

Anthony Eddy, Satellite Communica-tion Systems Lead, Lockheed Martin Corp.

Janna Feeley, Technical Staff Algorithm Support, NASA

Philip Harris, International Operations Liaison, NASA

Ed Hoffman, Director APPEL, NASA

Kristin Freeman, Systems Engineer, Design Visualization, The Boeing Co.

Leah Jamieson, Dean College of Engineering, Purdue University

Debra Larson, Dean College of Engineering, California Polytechnic University

Ryan Rudy, Team Lead Flight Test, Boeing Commercial Aircraft

Patrick Shannon, Systems Engineer, Orbital Sciences

Elida C. Smith, Principal Systems Engineer and Project Team Manager, The MITRE Corp.

David Wormley, Dean College of Engineering, Penn State

Vigor Yang, Dept Head Aerospace Engineering, Georgia Institute of Technology

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EXECUTIVE SUMMARY

While Charles Dickens hardly had the aerospace and defense industry in mind in writing his best/worst comparisons, the record demand facing the commer-cial side of the industry and the draw-down of the defense and space sides defi-nitely fits the situation.

The commercial sector faces record de-mand, with full knowledge that this cy-cle too will end and with all-new com-petitors in the marketplace. Hiring is under way, on a cautious but clear growth basis. At the same time, better than half the industry’s employees are poised to re-ceive layoff notification this fall linked to the threat of sequestration by the U.S. Congress.

Under sequestration, the Defense Dept.’s budget will automatically be cut in Janu-ary 2013 if legislators are unable to reach a budget agreement. The across-the-board cuts imposed would fall across all pro-grams rather than through strategic selec-tion of programs to be eliminated. Given

the choice of selecting versus vowing to “protect jobs in my district”, legislators have hit a stalemate.

The second part of this mix – the lay-off notices – results from U.S. labor law, which requires that employers provide advance notice (normally 90 days but varied by state) to employees concerning major layoffs. Without direction as to which programs are to be cut, and thus exactly who will be affected by the lay-offs, corporations have no choice but to notify everyone who might be affected.

With this as the backdrop, industry lead-ers were asked to forecast their workforce needs and strategies through the annual Aviation Week Workforce Study.

The net result, as indicated by this study, is that industry employment will dip be-low 600,000 by year-end, while at the same time companies plan to hire 28,000 people to replace retiring employees and add new skills and capabilities.

Overview

The 2012 Workforce Study represents better than 80% of the industry employment, up from 72% a year ago. Response for the Young Professionals Study was similarly strong (33%) as was the response to the third annual University Engineering Student Survey (18%). A fourth component of this study is a longitudinal survey among young professionals who participated in the study in prior years.

While the study is focused on U.S. based companies, this year’s evaluation included questions con-cerning international plans and a breakout of hiring by geographic region around the globe. A fun-damental shift has occurred in that U.S.-based companies are no longer chasing the lowest manu-facturing cost and are instead developing substantial operations globally to provide better access to growing customer interests. Among those who have established greenfield operations in the United States are AAR Corp., Boeing, Embraer, GE Aviation, Rolls-Royce and Spirit AeroSystems.

Early hiring forecasts for the year reflect a highly automated and advanced manufacturing ca-pability in these green field sites. While factories of the past employed thousands, the manufac-turing plant of today is designed to flex from commercial to defense customers and with a more highly trained employee base formed into high performance teams.

The initial forecast is for hiring of 28,000 employees by the industry in 2012 to replace 56,000 employees who will exit through retirements and voluntary attrition. The net impact would place the industry’s headcount just under 600,000 for the first time since 2003. These numbers do not reflect the impact of a possible sequestration, and most employers indicate that even with layoffs dictated by the budget they will hire to assure a sound future.

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This leads to the second key finding: there is a dramatic difference between big and smaller companies in this economy and in terms of what they can and should do to safeguard future business opportunities. The larger firms appear able and prepared to take a strategic approach as cuts arerequired. Rather than merely slashing headcount, many plan to continue recruit-ing on college campuses; of the 28,000 jobs to be filled, 14% will come from the university campuses.

Other key findings this year: •Leaders are defining ways to target base pay and other compensation for critical skills, to

better compete with other industry sectors.

•Concern is mounting as Research and Development employees retire, while new govern-ment-contracted efforts are limited.

•Respondents report that a highly skilled workforce and business process innovation are the two most important factors to their success and growth opportunities in the near term. Advisory board members clarified that shifting work to a different level of the supply chain does not equate to business process innovation.

•Growth and success are hampered most by shortages of skilled scientists, design engineers and program management leaders.

•Reports of a lack of skilled manufacturing workforce are mixed and indicate regional edu-cation and workforce development issues or problems within specific industry segments not viewed as having as much opportunity as others.

•Despite reports that companies have increased hours of new-employee training to support work readiness, training and development hours held at an average of 21 hours per em-ployee per year, or less than one week.

•While young professionals (those under age 35) rate their employers and their industry high, more than 45% plan to leave their current organizations within the next five years.

•More than 40% of the industry’s young professionals are paying off student loans. Of these, 53% say their loans affect their career planning decisions, and 28% owe more than $40,000. Universities indicate there is not a positive correlation between grade point av-erage and whether a graduate has loans – students with every level of GPA are using loans to offset expenses.

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EXECUTIVE RECOMMENDATIONS

•Given the current environment and the forecasted demand for future innovation and ca-pability, it is critical that action be taken now to assure the workforce talent of the future. ¤ Develop a “brand” campaign for the industry to address current and future employees. ¤ Campaign must articulate a vision for aerospace and defense future across all sectors: commercial, space, defense, security, energy, cyber.

¤ Campaign must use the delivery channels used by employees and students of today. ¤ Engaging today’s young professionals in this development is a must.

•The industry’s role as a manufacturing leader requires clear identification of skills required and effective, collaborative communication to policy makers, educators and other impor-tant constituencies.

•University/new grad hiring must continue if A&D is to capitalize upon opportunities. ¤ Alignment between A&D and the universities needs to be improved (where graduates are being hired versus where the largest enrollments exist for specified skills).

•A study of this magnitude requires processes to assure maximum return. ¤ Develop a process guide to assist in driving out wasted effort/expense. ¤ Develop a process guide for use of the data within responding organizations.

•As part of this study’s review of technological challenge data for 2013, develop a sound benchmarking of what indicates innovative health at the organization and industry level.

•There is significant discussion about this down cycle and the possible scenarios with regard to reduced headcount for the industry as a whole; organizations that make a priority of identifying and measuring strategic action versus fast and furious cutting will be the orga-nizations that preserve key talent and skills needed for today and for the future.

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STUDY BACKGROUND

The Aviation Week Workforce Study was launched in 1997 to share information about com-pensation and job/career opportunities across the industry. Over the past 16 years the study has grown to include a demographic reflection of the workforce, comparisons with other industry sectors, and identification of key issues and trends that impact the overall health of the indus-try. In addition, the study includes components designed to provide data on how best to attract, retain and develop the workforce into the future.

The partnership that supports the study was formed in response to shared goals among the partners. These include:

•Establish a single, credible source of information;

•Reduce redundancy of effort;

•Identify core issues/trends; and

•Identify opportunities for collaborative solutions.

The Workforce Study and its varied components reflect the A&D industry employment situ-ation in the United States. On a global basis, the rules and regulations governing areas as diverse as retirement and education make direct comparisons between countries impossible.

However, for the first time this year study respondents were asked to identify hiring plans beyond the bounds of the United States and by sector – civil, defense, space. These changes were made to increase the fidelity of the data, as well as to reflect the changing geography for many A&D companies. No longer are organizations seeking mere low-cost production; rather, significant investment and effort is being made to support emerging economies and industry capability beyond the traditional core of the United States and western Europe.

Over the years, the U.S. Workforce Study has grown in breadth and depth as a result of the partnership between Aviation Week, AIA, AIAA and NDIA. The study currently consists of five key elements. These include the corporate data survey.. The instrument is designed to ad-dress the demographics of the current workforce, projections on hiring, compensation and data relative to the factors employees say matter most when making career decisions – technological challenge, learning/development, and valuing the individual. Responses are tabulated by size of company, providing a higher degree of accuracy for comparative or benchmarking purposes.

The second dimension of this year’s study was to validate the factors used in the study through a survey of aerospace and defense industry employees through an online survey at Aviation-Week.com. Completed in September 2011, the study established the basis for several changes made this year. These changes include an examination of hiring data by geographic region and inclusion of questions regarding impact of skill shortages and issues on the future of the indus-try. Note also that the survey instrument for this segment mirrors questions frequently used by organizations to gauge the level of employee engagement – how able an employee is able to contribute to the goals of the organization.

The third element of the study is a Young Professionals (YP) Survey. This study involved 14 companies in 2012, each providing a 10% random sample of the professional workforce ages 35 and under. The questions were developed by an advisory board comprised of industry and government leaders, along with a cadre of young professionals.

The YP Survey was launched in 2010 with the intent of soliciting volunteers to participate in a longitudinal survey. The longer-term effort would be to follow the young professionals so as to identify trends and issues affecting this cohort. AIA and NASA partner with Aviation Week on this part of the study.

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The final element of the study is the University Student survey. This element grew out of the industry efforts to support education in science, technology, engineering and math (STEM) studies and the need to increase the number of STEM-literate individuals and potential em-ployees. At the request of the universities, questions were added this year to determine value of education provided, value of internships and co-operative education experiences, and percep-tion of value of additional degrees to career advancement.

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METHODOLOGY

The Aviation Week Workforce Study relies on five different survey instruments. The instru-ments are developed with input from the advisory boards and with guidance from the AIA Workforce Steering Committee and Compensation Steering Group. Also participating in this year’s survey instrument development were NASA and the Defense Dept., as well as the Na-tional Academies.

The definitions of key terms (retirement, job levels and categories) were developed by Human Resources professionals through the AIA Compensation Committee and Workforce Steering Committee.

Aviation Week developed the index by which Technological Challenge, Valuing/Respecting the Individual, and Learning/Professional Development are defined.

The Corporate Study is submitted to industry CEOs and their designees for completion. The data are submitted to a third-party firm, Development II, to be aggregated and tabulated by size of organization.

The base workforce population used for calculations in this survey is 624,000 as reported by AIA for year-end 2011.

Organizations were grouped to assure a valid representation of employment:

•0-499;

•500-999 (insufficient responses resulted in no reporting for this size tabulation);

•1,000-9,999;

•10,000-49,999;

•50,000-99,999;

•100,000+.

The reader/user survey was conducted by Aviation Week. A random sample of global AW users/readers was notified by email that the survey was open and had four weeks for comple-tion. In addition, readers/users were invited through Aviation Week & Space Technology and AviationWeek.com to take part in the electronic survey. The data was used to develop the 2012 survey instruments and refine the index used to identify employers for the “Where A&D Professionals Want to Work” feature.

The young professionals survey was designed by an advisory board of industry and government leaders along with a cadre of young professionals. This is the only element of the study that en-gages government agencies (NASA). The effort is sponsored by NASA and AIA. A 10% ran-dom sample of professional job category employees, ages 35and younger, is used for the study. The random sample individuals are alerted to the survey via email and log in to a separate web site to complete the survey. Respondents are asked to volunteer to participate in a longitudinal survey, which is conducted via web link.

The student survey is conducted among universities identified as being the schools of prefer-ence for A&D hiring, as defined by the employers. The universities identify a 10% random sample of students in the College of Engineering, who are alerted to the study by the Dean of the College of Engineering via email. A web link is provided for completion of the study.

The Aviation Week Workforce Study Project Leader was certified by the Dept. of Human Services to conduct human/non-invasive research. Internal Institutional Review Boards at the universities approved reviewed/approved the Student Survey.

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All data are aggregated and reported by Development II to Aviation Week.

Development IIThe 2012 Aviation Week Workforce Survey was aggregated and formulated by Development II, the same company that assisted Aviation Week in moving the informal job openings/com-pensation survey into a more statistically relevant and thorough effort.

Development II, inc. is a business consulting and market research firm that specializes in prob-lem solving, using customer satisfaction measurement as a primary tool for analysis. Located in Woodbury, Connecticut, Development II was founded in 1989 by Robert L. Brass and Steven W. Lewis. They focus on providing the most effective and results-oriented services for their clients. They have recognized the pitfalls of many widely used market research techniques, and have responded with client-specific programs that uncover information, which may otherwise be unable to obtain through traditional research methods.

Their customized programs deliver accuracy upon which strategic plans may be confidently directed. Their experience conducting Executive Interviews includes a methodology to extract and prioritize customers’ problems. When solutions are directed toward solving customer prob-lems, successful new products and service improvements occur.

Development II focuses upon helping their clients fully realize the impact that each part of their business relationship has on their customers’ satisfaction, purchasing behavior, reten-tion, and long-term business partnerships. They have worked with clients around the world in dozens of countries, languages, and cultures to improve clients’ products, marketing programs, sales activities, and strategic business processes.

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Organizations Participating in Corporate Study

AGIATKAcutec Precision Machin-ing

AerojetAerospace Corp.Alenia Aermacchi NAAurora Flight SciencesBAE SystemsBall Aerospace & Technologies Corp.

Bell HelicopterThe Boeing Co.

Curtiss-Wright ControlsEaton AerospaceGE AviationGeneral Atomics Aeronau-tical Systems

Hamilton SundstrandHarris Corp. HITCOL-3 CommunicationsLMI AerospaceLockheed Martin Corp.Loral Space Systems LORD Corp.

MITRENorthrop GrummanOrbital Sciences Corp.Parker Aerospace GroupPratt & Whitney RTI International MetalsRaytheon Co.Rockwell CollinsRolls-Royce N.A.SAICTherm Inc.United Launch Alliance

Organizations Participating in Young Professionals’ Study

AGIAerojetThe Aerospace Corp.The Boeing Co.L-3 Communications

Lockheed Martin Corp.MITRENASANorthrop GrummanOrbital Sciences

RTI InternationalRaytheon Co.Rockwell CollinsRolls-Royce N.A.

Universities Participating in Student Study

Cal-Poly/San Luis ObispoGeorgia Institute of TechnologyPennsylvania State UniversityPurdue UniversityVA Tech

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THE CORPORATE WORKFORCE STUDY

The Corporate Workforce Study represents approximately 80% of the U.S. workforce based on employment base of 624,000. The data covers technology, learning/development, compensa-tion/benefits, hiring, and demographics.

The 2012 study was conducted March through May 2012, based on data from calendar year 2011. The findings reflect the environment in which industry leaders are working to keep highly talented individuals as budgets contract. More importantly, they are working to assure that, as the economy rebounds, talented individuals choose to remain with A&D versus leav-ing for perceived greener pastures in other industries.

The findings of this study indicate how disparate the companies and even business units within companies have become. The notion of security and defense has evolved, with opportunities to provide cyber services — offensive and defensive — for industry sectors as well as national security; alternative energy sources not just for aircraft but for a range of applications; biotech-nical solutions to address the needs of soldiers in the field as well as for the wounded.

While the defense and space sectors, heavily reliant on government spending, braced for dra-matic cuts, the commercial air transport sector was accelerating with new operations opening in Virginia, the Carolinas, Florida, Alabama and Mississippi. According to information from Aviation Week’s Advanced Manufacturing research, low-cost is no longer the principle driv-ing manufacturing decisions. Due to dramatic cuts in energy cost in the United States, com-bined with increased productivity and automation, domestic manufacturing has emerged as a competitive advantage in some situations, particularly when the manufacturing facility can flex to accommodate a variety of production markets.

The key finding in this year’s study is that for the first time since 2003 A&D employment is expected to drop below 600,000 by year-end 2012. Voluntary attrition and retirements com-bined created a decline in employment of 56,000 while the yet-to-be-determined Defense Dept. programmatic cuts will add to this number. Regardless, company leaders have strategies in place to hire up to 28,000 people in 2012, driven by business requirements and to shore up core capa-bilities required for the future. Note that the hiring number includes 14% dedicated to new graduates.

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Skilled Production

Production Professionals

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Scientists/Design Engineers

Management/Administration

BD/Marketing/Sales

Organizational Strategy

For the first time the Aviation Week Workforce Study asked about challenges specific to meet-ing current and future requirements.

When asked about ability to respond to a dynamic business environment, respondents cited a highly skilled workforce as the most important factor. At a distant second was innovation in processes and technologies, followed by mergers and acquisitions.

From national headlines, it could be assumed that the most dire shortage for highly skilled people exists within manufacturing. However, the study respondents indicated that the most significant shortages exist in the research and development/ product development category, followed by manufacturing. A&D may be leading the way in American manufacturing during this economic time, but the ability to create new products remains the core strategy.

Q. Where have shortages had the most negative impact on your ability to expand or meet requirements?

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This does not negate the fact that the retirement rate within the manufacturing community is nearly two times that of other job disciplines and that the ability to hire may relate to regional economic development efforts to improve preparation of manufacturing talent.

Finally, the study asked which shortages have had the most negative impact on the organiza-tion’s ability to expand or deliver to requirements. Again, the respondents pointed to a short-age of specific skills within science and design engineering, followed by program management leadership.

Note also that business development followed closely behind skilled production talent in terms of need. Again, BD is a category where experience counts and where retirements are pending.

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CORPORATE STUDY: AGE, RETIREMENTS AND ATTRITION

The average age of A&D workers in the U.S stood steady at 45 for 2011. Anecdotally, com-panies posed a question to Aviation Week this year: in which age grouping should employees over age 70 be included? The query was not an oddity; rather there is an increasing presence of workers between 70 and 80 choosing to remain on the payroll. As adjustments are made to deal with the demand for commercial aircraft, the emergence of the commercial space sector, and a rebalance of required skills as part of the Defense Dept. drawdown, the reality of age dif-ferences does matter.

For the first time, the study also asked questions pertaining to employment outside the United States. The average age of the international workforce, employed by the U.S. employers, was 42. This reflects the work laws of many countries, which impose retirement.

While retirement may be delayed, the exodus of talent will occur and demands knowledge capture and maximizing the expertise of the individuals. It also creates a dilemma in terms of managing the relationship and shifting structures to allow younger employees to continue to advance in their careers. The Young Professionals Study, as well as our reader/user study, indi-cate that promotion is recognition of progress; as an industry A&D has not come up with an alternative means of recognition.

Despite the forecast of fewer jobs, organizations continue to monitor the distribution of age across total employment, assuring that young, new employees are attracted to their organiza-tions.

Employment between ages 22 and 25 years was 4.19% in 2011, or just about even with the 3.9% of 2010. The total percentage of employees 35 years and younger was 23.5%, up slightly from 22% a year ago.

Moving the numbers on age is much easier for small organizations where a single hire can change the dynamics. Still, it is worthwhile to note that the percentage of young employees in the smaller companies is higher. Note however, that the largest companies are managing the upper age groupings; the percentages of workers over age 60 is near equal across all organiza-tion sizes.

Age Distribution by Organization Size0-499 1,000-9,999 10,000-49,999 50,000-99,999 1000,000+

22-25 7.1 3.7 3.7 3.2 3.8

26-30 11.7 8.7 9.6 8.6 8.5

31-35 10.7 9.7 10.5 9.4 8.6

36-40 12.7 9.8 9.9 8.9 7.8

41-45 9.1 11.6 10.9 9.8 9.6

46-50 13.9 16.5 14.4 15.8 17.2

51-55 16.1 17 15.5 20 20

56-60 10.4 12.3 11.6 14 14

61-64 5.7 7 6.2 7.5 6.9

65-70 2 2.7 1.9 2.4 2

The study also looked at average ages within specific job disciplines. The average age of the engineering workforce was 44.6 years across the industry. The average age for software develop-ers was 43.6 years, while the average age for R&D employees was 47.8 years. The job categories with the highest average age were Program Management and Business Development, at 48.

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Retirement Forecast & Security Concern

A decade ago, the slow pace of granting security clearances was impeding industry perfor-mance. In 2012, industry leaders indicated a need to know the impact retirement will have on the cadre of “cleared” employees. This is of particular relevance given the pending cuts from the Defense Dept. and the unintended consequences of reductions. In the first chart, note the percentages for Secret Clearance and Above Secret Clearance. Actual retirements were low in these categories, just as in the job functions. Longer term, the industry will have a higher need for employees who not only have the skills and degrees, but who also meet the standards to gain a clearance.

Retirement levels for 2011 remained low and of no surprise due to continued economic uncer-tainty. The highest rates of actual retirement were in the hourly production and R&D job func-tions. Eligibility, however, was double digit in most categories with the exception of software.

RETIREMENT 2010 Eligible 2011 Eligible 2012 Eligible 2013 Eligible 2014 Eligible 2015 Eligible

Engineers Eligible 11.6 1.23 12.4 13.8 15.65 17.84

Software 8.1 .65 9 10.02 12.31 14.42

R&D Eligible 15.55 2.48 17.02 18.1 20.4 22.6

Program Mgt 13.27 1.78 14.44 15.9 19.2 21.73

Sustainment/MRO 15.19 3.87 15.6 22.9 20 23.1

Business Development 15.08 1.97 16.5 18.6 20.3 23.6

Hourly Manufacturing 16.76 4.01 18.1 18.95 21.5 24.3

Secret Clearance 10.44 .23 14.05 13.66 15.86 18.2

Above Secret Clearance 8.05 .12 11.55 11.75 13.71 15.8

RETIREMENT Overall Under 499 1,000-9,999 10,000-49,999

50,000-99,999

100,000+

% Eligible Retire 2011 12.69 4 12.7 16.2 14 25.65

% Actual Retire 2011 2.16 .7 2.3 3.6 1.8 1.8

% Eligible Retire 2012 13.18 2.9 12 19.3 16.23 29.7

% Eligible Retire 2013 14.36 3.4 13.7 17.9 19.13 33.9

% Eligible Retire 2014 16.43 3.7 15.7 20.5 22.25 38.5

% Eligible Retire 2015 18.54 3.7 17.9 23.1 25.47 43

% Eligible Retire 2016 20.86 4.5 20.3 25.8 28.37 47.7

Hourly manufacturing employees were twice as likely to take retirement as other employees, and the rate of eligibility is highest in hourly manufacturing.

The data outlined through 2016 indicates that the larger the company, the higher the risk profile on retirements. Actual retirements in 2011 were highest in companies with between 10,000 and 49,999 employees.

This year’s study also queried as to retirement benefits. Defined contribution plans now domi-nate with close to 76% of companies currently offering only this option to new hires, as op-posed to the pension plans of the past. Just under one quarter of companies still offer pensions, normally tied to a negotiated labor agreement. This shift continues to work its way through the age groupings: better than 55% of employees over age 55 still qualify for a pension. This will be a relevant data point for the future, particularly as headcount comes down and the need for expertise remains.

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Voluntary Attrition

The A&D industry has long been committed to assuring employees are challenged, engaged and rewarded in their work – the recipe considered full proof for performance. The metric most frequently associated with this is voluntary attrition – the rate at which employees choose to leave an employer. Voluntary attrition does not include retirements.

Given the cost of replacement of an employee, at better than $180,000 for hiring and ramp up, a high voluntary attrition rate equates to financial impact. Leaders indicate that some degree of voluntary attrition is healthy; without it an organization may sit back or even eliminate programs that keep the best employees. The debate continues as to what the right level is.

Overall A&D’s voluntary attrition rate for 2011 was 7.7%, compared to 9.5% a year ago. Indus-try leaders also have monitored the rate of voluntary attrition among young professionals for the past four years. In 2012, the rate for young professionals with 0-5 years of service was 12% vs. 16.4% a year ago. Clearly the global economic situation has played into these numbers. Im-portant to factor in is that YP survey respondents indicated that 9% plan to leave their current employer in the next year and that 45% anticipate leaving their current employer within the next five years. This is a data point to track in the near term as just three years ago the vol-untary attrition rate among young professionals exceeded 20%, far beyond an acceptable rate.

Voluntary Attrition Rates 0-5 yrs svc

Industry Wide

Under 499 1,000-9,999 10,000-49,999

50,000-99,999

100,000+

Overall 11.9 8.5 16.2 9.3 6.5 6.6

Engineering 8.28 4.7 10.7 7.3 4.5 6

Software Dev 6.45 3.8 5.3 8.8 6.4 8.3

R&D 6.3 .2 7.4 8.8 6.1 3.6

Enterprise IT 8.5 .1 10.2 8.5 8.3 8.7

Prog Mgt 8.5 2.17 13.5 5.3 5 8.4

Fin/Analysis 9.2 2.8 12.1 8.2 6.6 7.3

Business Devt 9.32 .8 12.9 7.6 6.9 7.1

Supply Chain 9.16 2.2 13.7 6.7 6 5.7

Sustainment 9.57 0 17.7 3.4 9 4

Mftg Exempt 10.42 5.7 16.3 6.8 4.2 3.4

Prod Hrly 11.05 10.1 16.8 6 6.4 4.1

Attrition remains highest among hourly manufacturing employees and lowest among supply chain professionals. One category to continue watching is business development, where the voluntary attrition rate was 6% in 2011. A year ago it was 8.5%. The risk on this job function is significant given the average age and eligibility for retirement, coupled with voluntary at-trition.

Program management, another professional category that has been closely monitored over the last decade, had voluntary attrition of 3.8% across the entire industry, compared to 7.4% a year ago. The one category where there was no change in the voluntary attrition rate was software development at a steady 5.8% for 2010 and 2011.

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CORPORATE STUDY: HIRING

The job situation across the aerospace and defense industry is volatile and will remain so throughout the coming year. A given is that the headcount for the industry will dip below 600,000 employees for the first time since 2003.

With a retirement rate of 2.8% and a voluntary attrition rate of 7.7%, the industry will lose approximately 56,000 employees (on a base of 624,000). Organizations plan to hire 28,000, or half the loss. This would put year-end headcount at 596,000, without sequestration impact.

For the purposes of this study, employers were asked to provide a forecast on hiring necessary to meet current contractual obligations, the skills required, and an assessment of where these jobs would be located geographically. The study also assessed the sectors in which the jobs would be offered – civil, defense/security or space.

2012 2013 2014 2015

US Intl US Intl US Intl US Intl

Civil 4,508 270 4,086 317 3,605 338 3,410 396

Defense/Sec 23,080 1,267 21,999 1,215 23,257 1,584 16,660 833

Space 1,006 0 270 1 131 0 149 1

28,594 1,537 26,355 1,533 26,993 1,922 20,219 1,230

10% with clearance 11.3% with clearance

12% with clearance 20% with clearance

For 2012, the forecast is for 28,594 jobs, down from 31,800 projected hiring a year ago. As the chart above indicates, 10% of the hiring in 2012 will require qualification for Secret or Above Secret Clearance. Note that the same companies will hire an additional 1,537 people outside the U.S. Through 2015, the numbers continue to decline. If retirements and voluntary attri-tion were to hold steady through these out-years, the industry population would fall to 569,000 by year-end 2013 and set the pace for dropping below 500,000 within five years.

Over the last four years, the study has looked at hiring upon completion of baccalaureate, master’s and doctoral degrees. This is particularly relevant as the respondents indicate concern about the loss of scientific and technological expertise. Despite this concern, less than 1% of the hiring forecast for on-campus in 2012 is at the PhD level, compared to 3.5% a year ago. This does not reflect PhD hiring from sources other than the university campuses, and thus does not provide an accurate picture of all scientist hiring. It does, however, bring yet another cautionary point of conflict between what respondents say they need to grow and assure a fu-ture stability with what actually is planned.

Regardless of the decline in overall headcount, company leaders indicate they will continue to hire and that 14% of their new hires in 2012 will come from the college campuses. Achieving these two things will require careful implementation, and more and more often organizations are discussing organizational effectiveness and high performance teams as the key means to achieving business objectives. Selection and retention of specific talents and leadership capa-bilities will become more important. In a discussion among senior leaders in early June, the situation was depicted succinctly: “A” Players Require “A” Leaders.

This situation is more complex as companies are seeing an increasing number of applications from individuals who do not hold the minimum qualifications for a position, but who may have mastered the art of keyword selection. As one company human resources leader said, the issue is not the number of applicants; rather it is a matter of sifting through the quantity of applications to identify those who actually qualify. With heavy reliance upon on-line applica-tion systems, this situation continues to build and is becoming a focal point in a term more frequently see in HR titles – talent acquisition strategy. This may also indicate why an increas-

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ing number of organizations are reducing the number of universities for recruitment to assure efficiency versus quantity.

Study respondents identified as most-difficult-to-fill positions in systems engineering, aero-space engineering, program management, mechanical engineering and software development/programming. These are not, however, the areas where the highest quantity of hiring is under way.

Because the balance between draw down and hiring is a challenge, the study carved up the hiring in a variety of ways to provide a view as to where hiring would occur – by company size, by job discipline and by geographic region.

The first chart provides a four-year view of hiring within each sector – civil, defense/security and space – and by size of organization.

*Organizations with fewer than 500 employees did not break out hiring by sector.

The study also looked at hiring in key job disciplines for a two-year span.

2012 Plan 2013 Two-year total

Engineering 4,338 3,744 8,082

Software Development 2,338 734 3,070

R&D 206 162 368

Enterprise IT 986 981 1,967

Program Management 624 572 1,196

Supply Chain 1,802 1,825 3,627

Sustain/MRO 2,254 2,552 4,806

Finance/Fin Analysis 833 789 1,622

Business Development 586 348 934

Production (Exempt) 1,847 1,468 3,315

Production History 2,397 1,917 4,314

0-499 1,000-9,999 10,000-49,999 50,000-99,999 100,000+

Civil Def/Sec Space Civil Def/Sec Space Civil Def/Sec Space Civil Def/Sec Space Civil Def/Sec Space

2012 101 186 1,735 993 1,083 677 0 0 10,590 0 3,455 11,485 10

2013 77 47 658 254 1,149 144 0 0 10,983 0 3,186 10,870 11

2014 92 24 246 113 1,457 142 0 0 12,017 0 2,441 11,680 10

2015 99 24 306 143 1,543 1,263 0 0 13,302 0 2,213 2,555 0

Sector Totals 369 281 2,945 1,503 3,776 2,226 0 0 46,892 0 11,295 35,590 31

-Yr Size Totals 369 4,729 6,002 46,892 47,916

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Finally, the study examined the hiring by region and whether the positions were in operations/manufacturing or non-operations job categories.

Region Non Operations Operations

Northeast 20 15

Atlantic Coastal 12 3

Southeast 10 12

Midwest 10 5

Southwest 8 12

California 18 5

Northwest 12 1

Euro West 5 5

Euro East 5 0

Pac Rim 5 4

Middle East 1 0

Hiring New Grads

Just as companies have rationalized the list of suppliers to a more manageable number, they have applied quality metrics to identify the institutions from which they will hire new gradu-ates. The single most important factor in this evaluation is the success of graduates already em-ployed by the business. In fact, as companies embarked on integrated knowledge management processes, the coordinators of these efforts found that one of the most natural and prevalent methods by which employees align themselves is their alma mater.

In response to our advisory boards, this year’s study examined the listing of universities along three distinct paths. The first is qualitative by the organizations hiring – what institutions do they rank purely as their go-to choice when hiring college graduates. The second pathway is by the numbers: from which institutions were the most graduates hired? Finally, Aviation Week asked young professionals what the perceived association was between the universities they attended as an influencing factor in their career advancement.

Corporate Preference By Number Hired YP Perceived Value to Career

1. Cal Poly 1. Iowa State 1. Georgia Institute of Technology

2. Purdue University 2. University of Washington 2. (tie) Purdue University, VA Tech, Rose-Hulman

3. ( tie) University of Maryland and Rochester Institute of Technology

3. Purdue University 3. Cal Poly

4. Georgia Institute of Technology 4. (tie) University of Iowa and Embry-Riddle Aeronautical University

4. Penn State

5. VA Tech 5. Georgia Institute of Technology 5. (tie) Brigham Young University, Embry-Riddle Aeronautical University

* ID – Insufficient data

The lack of alignment between numbers hired and go-to preference is among the points high-lighted by the Workforce Study Advisory Boards, particularly as referenced previously in terms of reducing the number of universities where recruitment occurs for an organization. Later in this report, there is additional alignment data specific to what young professionals believe best prepared them for their work and the courses and experiences needed for the future.

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A Look at Our Forecasting

Among the questions asked by the advisory board was the accuracy of forecasting over the past three years in terms of U.S. hiring requirements. The study does not track actual hiring by job function for the previous year. The study does track planned hiring going forward and the job functions that are critical to performance but difficult to fill.

In terms of job functions difficult to fill, the list changes in order but not in content; since 2008 the list has included aerospace engineering, software engineering, mechanical engineering and systems engineering. Note that in 2011 and 2012 the data was requested for all engineering versus being broken down into specific engineering categories. In 2013, the study will return to a request for specific engineering categories as this information is useful to universities, men-tors, associations, and current/future employees.

2009 2010 2011 2012

All Engineering 3,621 4,338

Aerospace Eng 953 1,078

Mechanical Eng 1,451 1,011

Software/ Programming

2,746 1,755 579 2,336

Systems Eng 3,530 3,591

A&D headcount, according to the original forecasts, would have dipped to 618,000 in 2010 and to below 600,000 by year-end 2011. This was not the case, boosted in part by growth on the commercial side of the industry and continued hiring in defense that kept pace with rev-enue growth of about 5.5%.

Voluntary Attrition Retirement Actual Projected Hiring Y/E Headcount

2009 9.7 5.7 28,579 644,000

2010 6.7 2 31,000 623,700

2011 9.5 1.2 31,000 624,000

2012 7.7 2.8 28,594 *596,000

*Estimate

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CORPORATE STUDY: COMPENSATION

Competition for critical talent is keen, particularly as reliance on technical and scientific com-petence has extended to everything from consumer products to the games children play. The result is that high-demand skills are driving compensation upward. During the 2011 Aviation Week Executive Summit, examples were shared indicating that a “fresh out” petroleum engi-neer can earn $120,000 per year the first year, plus a sign on bonus that may reach $35,000. Software engineering in non-A&D fields presents similar challenges, particularly in reference to top-tier companies. Generally these top companies offer $110,000 per year plus a sign on bonus.

The question of fair versus equal gains relevance, as organizations must identify targeted com-pensation and benefits strategies to attract and retain the talent needed to achieve business strategy. As one leader indicated, the organization that views people as interchangeable parts does so at its peril.

Compensation data was gathered for the industry overall, dividing job functions across six lev-els of responsibility. Within each level, pay was calculated as an average for the level, as well as the average for the bottom quartile and the top quartile. The study then compared Aviation Week data to data released in Spring 2012 by the Georgetown Center on Education and the Workforce, the U.S. Bureau of Labor Statistics and with the Engineering Workforce Commis-sion. The tabulated data is available to companies participating in this study.

Note that, in general, the Georgetown data skews a bit higher than does the BLS data. Also the data indicates that a chemical engineer working in the chemical industry will make more than s/he will in A&D.

Compensation Comparisons – Table 1

Source: Aviation Week, the Georgetown Center on Education and the Workforce, and the Bureau of Labor StatisticsData based on Level 1/0-5 year experience, top quartile averages

Aviation Week Study Georgetown Center on Education & Workforce

Bureau of Labor Statistics

Petroleum Engineer NA $120,000 $108,000

Software $71,787 $98,000 $96,620

Aerospace engineering $71,859 $87,000 $67,173

Chemical Engineering $61,509 $86,000 $71,173

Electrical Engineering $70,757 $85,000 $87,770

Mechanical Engineering $70,518 $80,000 $77,020

The Engineering Workforce Commission conducted its annual Engineering Salaries study ear-lier this year, receiving responses from some of the same companies participating in Aviation Week’s study and many from other industries. The number of engineers represented by the EWC data is 39,907. All salaries in the next three charts are stated as the average of the upper quartile for the levels.

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Engineering Salaries/Average for All Engineering in All Industries

Year: 2011Source: Engineering Workforce Commission

By Region 0-5 Yrs Experience 15 Yrs Experience

New England $73,106 $106,418

Mid-Atlantic $68,318 $99,696

East North Central $78,634 $112,246

West North Central $68,282 $99,126

South Atlantic $67,251 $105,056

East South Central $59,550 $90,105

West South Central $74,510 $108,553

Mountain $67,652 $106,552

Pacific $70,762 $104,658

Southern CA $76,621 $105,968

Engineering Salaries by Sector

Year: 2011Source: Engineering Workforce Commission

0-5 Yrs Experience 15 Yrs Experience

All Manufacturing $81,863 $113,652

Primary Metal Manufacturing ID** 110,257

Fabricated Metal ID 88,534

Machinery Manufacturing ID 94,804

Transportation 83,680 116,570

Motor Vehicle 84,351 116,852

Non-Manufacturing 66,975 97,869

Professional Services 66,713 103,364

R&D Engineering 72,543 103,705

Mining 70,981 101,268

Utilities 67,269 87,307

*Note that Year 1 salaries for Transportation and Motor Vehicle actually outpaced the average for 0-5 years; the entry salary for both sectors was $87,036. **ID=insufficient data

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CORPORATE STUDY: EMPLOYEE ENGAGEMENT

Organizational development experts view employee engagement as the critical mass of data points that pinpoint how committed and able an employee is to contribute to an organization’s success. This is not employee satisfaction; rather, it is a reflection of how and where an indi-vidual believes he can be valued and contribute.

In 2005 Aviation Week asked A&D employees to share what drives their engagement, and to indicate what really is most important to them. Three critical factors, with associated questions, were identified: Technological Challenge, Valuing/Respecting the Individual, and Learning/Professional Development.

In addition to identifying what keeps them on the job, Aviation Week users/readers were asked to share what drives them away. This information is used to identify the companies who do best in meeting the needs of employees in the most critical areas, and allows companies to monitor and shift focus where needed to differentiate themselves.

A random list of Aviation Week users/readers was notified by email of the online survey, con-ducted Aug. 22-Sept. 22, 2011. The respondents were predominately from the Untied States, 75%, but 11% were from western and eastern Europe.

Timing of the survey was important, particularly given the late September pronouncements about escalating health care costs – 74% of respondents say health care is the top priority among the benefits offered by their companies, followed closely by holidays and time off (72%) and retirement plans/401 (k)s at 68.7%. A&D companies, on average, pay 80% of the cost for health care plans – slightly more than American companies in general.

Respondents to the survey say the current economic situation has most affected their job secu-rity and promotion expectations, at 43% each. For young professionals under age 35, the econ-omy has most affected their expectations with regard to promotion and decisions on whether to pursue new work options.

Sixty-seven percent of respondents indicate they find their work challenging. Respondents overall indicated they believe today’s A&D leaders are committed to continued investment in innovation at just over 50%; this figure droops to 39% for young professionals. All respon-dents, regardless of age, are concerned about the level of investment in R&D, with close to 64% wavering as to their agreement that the level is high enough.

Of most concern is whether the A&D industry will be able to keep the talented people re-cruited, trained, and retained over the past five years. Data from this study indicated better than 60% of the respondents expect to stay in the industry for the next five years, with 44.8% saying they plan to stay with their current employer for the next five years. Those tea leaves hold a lot of information – 40% of the respondents say they are leaving the industry and over 50% say they believe they will be with a new company or agency by 2016.

Aviation Week applied these responses to the 2012 Workforce Study instruments and found that employees continue to believe that valuing the individual, technological challenge, and career development/advancement are the most important factors when considering their em-ployment options. Benefits and compensation are a major issue, however, as are job stability and location. The continued troubles of the U.S. housing market make relocation difficult and at times impossible. Similarly, accepting positions abroad carries economic baggage.

In the factor Valuing/Respecting the Individual, the study found a significant change that is at-tributed directly to generational perceptions. In completing the Young Professionals Survey, an increasing percentage of individuals self-identified as being of two or more races. In addition, an emerging demographic chose not to identify gender. In the initial analysis, leaders indicate

24




that this is consistent with what they are learning – that race, gender, and sexuality are less of an issue for younger workers than is respect for the individual.

Beyond attracting the best and brightest, these factors correlate to the rate of employment engagement and thus the success of an organization. Organizations with levels of engagement exceeding 65% outperform other organizations by better than 20% (McKinsey & Co.). In addition, Aviation Week’s Program Excellence initiative has indicated that employee engage-ment factors directly link to program performance at the same or higher levels than do techni-cal or financial acumen.

Aviation Week identifies best-in-class companies in the core areas of Technological Chal-lenge, Valuing/Respecting the Individual, and Learning/Professional Development. An index has been developed for each of the core areas. The outcomes of best-in-class will be included in the Aviation Week & Space Technology coverage.

Technological Challenge

The index for Technological Challenge includes senior leadership possessing degrees in engi-neering, science and math, revenues allocated for organic R&D, revenues generated by new products; investment in tools and technology to produce development, voluntary attrition with the technical ranks, percent of the total workforce that is technical, and the rate of pro-motion among technical employees.

Investment in organic R&D, expressed as an average per company percent of revenues, was 5.5%. In 2011 the percentage was 6.4%. We also examined this by size of organization. Ob-viously, 3.5% of revenues for the larger companies is a larger dollar amount than a higher percentage for smaller organizations. However, it is important to note that the averages have systematically declined and that non-contractual R&D will be a primary source of innovation going forward. New development in engines/ propulsion/fuels, as well as in materials, robotics, data analysis, cyber systems (offensive and defensive), and the sustainment of complex systems will be the growth engines during the coming five years.

2011 Average % Revenue per Company Spent on Organic R&D

Source: Aviation Week Workforce StudyOverall 0-499 1,000-9,999 10,000-49,999 50,000-99,999 100,000+

Ave % Revenue

spent on or-ganic R&D

5.5% 5.82% 5.62% 7.68% 2.18% 3.5%

Respondents to the study indicate that, on average, 14% of revenues were generated by tech-nologies or products developed within the past five years. This is known as the new product vitality index (Harvard Business Review). The NPVI’s “fit” with A&D is incomplete due to the long-lead times for development, but it is an important factor for consideration. Lead-ers contributing to development of this study and attendees at Aviation Week’s Innovation Roundtable indicate that this is a better reflection of an organization’s innovation capability than is the number of patents awarded.

Promotions remain a seminal reflection of accomplishment for the technical community. For 2012, 8.4% of engineers received a promotion, 7.2% software developers, and 5.8% of R&D personnel received promotions.

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Top Areas for Promotion – 2012

Source: Aviation Week Workforce StudyJob Category Percentage

Supply Chain 10.6

Finance/financial analysis 9.27

Manufacturing Exempt 8.9

Engineering and Program Mgt 8.4

As in the past, the study also assessed the investment made in tools to support innovation and technology. This is becoming increasingly important as the devices used by employees to manage their homes are now as elegant and advanced or more so than what is being used to support them at work. On average, 1% of revenues was spent on upgrading tools, equipment, and laboratories. As an industry, this equates to approximately $1.6 billion on 2011 revenues of $162 billion (AIA Aerospace Industry Sales data).

Valuing/Respecting the Individual

Valuing/Respecting the Individual is assessed through an index that includes diversity of the population, voluntary attrition rates, years of service, average pay increase, average invested in learning, compliance with national labor laws and average number of hours for skill/professional development. Nationwide, the base pay increase for all industries in 2011 was 2.4%, according to Challenger Gray Christmas. InformationWeek’s April information technology salary survey found that IT salaries are fairly stagnant at $90,000 for staffers and $116,000 for managers. The base pay increase ran at 1.8%. For the A&D industry the average pay increase was 2.7%.

Average Pay Increase - 2011Nationwide Pay Increase (Challenger

Gray Christmas)Information Week April Salary

SurveyAviation Week 2012 Workforce Study

2.4% 1.8% 2.7%

The average years of service for industry employees was 11, stretching to a high of 25 years for one employer. Attrition, as noted before, is voluntary and excludes retirements. This is the rate at which employees choose to leave their employer. The average attrition rate for the industry in 2011 was 7.7%. However, the best-in-class companies had voluntary attrition half that pace.

Among the most notable and enduring concerns with regard to valuing the individual is the representation of non-white males and females in the workplace. As in the past, the presence of women in the workplace remains below the overall female employment figures at 23.6%. Last year we remarked on the elevation of women to key leadership positions. However, there is caution as the percentage of women seeking engineering degrees continues to hover at 14%.

Key benchmark factors for the industry in terms of valuing the individual include:

Source: Aviation Week Workforce StudyFactor Industry Average Best in

Class

% Workforce Women 23.6% 33.4%

Under-represented Minorities 23.6 67

Average Pay Increase 2.73 4.8%

Voluntary Attrition 7.7 Less than 1%

Average % Invested in Learning 1.84 5.4%

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Learning/Professional Development

Learning/Professional Development index incorporate average number of hours in learning, investment in learning, presence of career plans, tuition reimbursement offerings, and promo-tion rates.

The average investment in learning increased slightly from 1.6% of revenues a year ago to 1.8% in 2012. The number of hours employees spend in training each year did not on aver-age increase, remaining at slightly over 21 hours. Benchmark companies, however, recorded a much higher average with four companies exceeding 40 hours per year per employee. in discus-sions about these data, there were comments concerning the start-up training required to bring new employees to a work-ready level and that this training had increased. In future studies we will more closely examine the distinction between work readiness training and ongoing train-ing and development hours.

The final result, of course, of effective training and development in the eyes of an employee is assignment to a more advanced project or position. On average, 8.8% of the A&D employ-ment received a promotion in the past year, up from 7.75% a year ago.

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YOUNG PROFESSIONALS AND UNIVERSITY STUDENTS

Three years ago Aviation Week, NASA and AIA joined together to add the Young Profession-als and University Student Survey to this report. The objec-tive was to identify key trends for the current calendar year, but also to begin following a group of young professionals over time. The study would examine how their perspectives may change over the span of their careers and, importantly, whether the attrition rate among young professionals was the result of flight from the industry or churn within.

The Young Professionals Study was administered to a 10% random sample of employees under the age of 40 at 14 A&D organizations. The University Student Survey was conducted with a 10% random sample of students at Cal-Poly, Georgia Tech, Penn State, Purdue, and VA Tech. The study was conducted by email. The response rate for the YP study was 33% based on a sample of 6,257 individuals. The student survey had an 18% response rate.

On average, the YPs have been with their organizations for 5.5 years and 47% of the respon-dents were under the age of 30. The demographics changed slightly this year: 29.7% of respon-dents were female versus 33% a year ago. According to the universities, the female enrollment in engineering programs is 14%, a factor that has not changed in the past decade despite increased recruitment activity.

How YP Are You?

Gender data differs for the YPs from the overall A&D population, and it differs between those who are under age 30 and those who are over. Thirty-six percent of the 30 and under respon-dents were female versus 30% of those over age 30. The older the YP, the more likely s/he is to leave the organization (9% of those over age 30 plan to stay another 5-10 years; 19% of those under age 30 believe they will be with the same organization 5-10 years from now). That said, 63% of those over the age of 30 believe they will retire from the aerospace and defense indus-try; 43% of those under age 30 plan to stay through to retirement.

Similarly, 26% of those over age 30 are looking for a new position outside their organization; the number drops to 19% for those under age 30.

Impact of Student Loans

The YP Advisory Board, comprised of young professionals and university deans/department chairs, requested additional information from the respondents this year specific to student loans. The belief by the YP advisors was that student loans are playing a significant role in the career decisions being made. Forty percent of this year’s respondents owe on student loans, and of that number, 53% say the loans are a factor in their career planning. Of those who owe for student loans, better than 28.5% owe more than $40,000.

One common belief is that the higher the GPA, the less is the reliance upon student loans. In fact, members of the advisory board pointed out that the reputation of the industry for hiring for high GPAs made this a factor worthy of further evaluation. Of the five institutions par-ticipating in this study, all five report that students at all GPA levels are equally likely to use student loans to pay for some portion of their education.

The study looked at the data on student loans by age grouping – over age 30 and under age 30. For those under age 30, 45% owe on student loans with 8.5% owing more than $80,000. For YPs over age 30, 34% continue to pay on student loans with 10% of these owing more than $80,000.

Year 3: Flight from industry = 17% of those who changed jobs

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The second “look” at this data was to evaluate the amount of the loan, the age of the young professional and the number of individuals represented – the “heat” per se. We offer two different images of this data, both of which tell the story more accurately than disparate data points do.

The vast majority of YP respondents owe less than $10,000 on loans. Note, however, that for YPs between the ages of 22 and 25, the loan amount trends toward $40,000 to $80,000, payable on a 20-year basis with interest rates scaling between the lower Dept. of Education interest rate of around 3% to higher commercial education loan rates that can go above 8%. In the most recent Congressional cycle, regulation passed holding the interest rate but erasing some of the protections afforded to young professionals, including the six-month delays or holds on repay-ment while unemployed after graduation.

350-400

300-350

250-300

200-250

150-200

100-150

50-100

0-50

Not repaying $0-$10K $10-$20K $20-$40K $40-$80K $80-$100K $100K+

Over 35

31-35 years

26-30 years

22-25 years

Prefer not to answer

0

20

40

60

80

100$100K+

$80K-$100K

$40K-$80K

$20K-$40K

$10K-$20K

$0-$10K

Not Repaying

Prefer Not to Answer22-25 years26-30 Years31-35 YearsOver 35

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Young Professional Attrition

Respondents – 37% of them – say they are looking for new opportunities within their organiza-tion; another 23% are looking outside of their organizations for a new job. However, the lon-gitudinal study provided another layer of information. Forty-five percent of these respondents plan to leave their current employer within the next five years.

Principally they are looking among other defense com-panies, in civil aviation or in software. Unlike some anecdotal reports, financial firms rated fifth in the em-ployment categories perceived to offer opportunity and gaming was in a distant 13th position.

Examining the data by over/under 30 tabulation, gov-ernment agencies are viewed with greater opportunity than by the YPs as a whole, more so with those over age 30. Those under age 30 ranked unmanned systems as number 2 on the hit list and consulting as number five.

Leaving an employer is seen by YPs as leaving more than leaving a company – it is leaving a team, and personal relationships do matter to this cohort, according to our study. This is in stark contrast to the cliché images of young people communicating with one another by text, across the room. Both the YP and Student Surveys indicate that on important matters, which include career decisions, personal relationships are critical. Parallel to this finding is that the top sources of frustration leading to a YP leaving a job are internal politics, and unmotivated/ uncooperative/incompetent colleagues.

What Matters Most

As with the general A&D population, YPs value technological challenge, professional devel-opment/education, and respect for the individual.

Young Professionals indicate that the top-ranked positives about their current positions are the variety of tasks in what they do, the flexibility afforded, and the technological challenge. The most important factor: my work makes good use of my skills, followed by my work is challeng-ing. This did not vary between those over age 30 or under age 30.

In terms of professional development, YPs said the most important thing is the opportunity for career advancement, followed by a distant second: I am fairly considered for promotions and assignments. Having access to a career plan, training/education, recognition and mentor rela-tionships followed in this ranking. By age the only difference was that those over age 30 valued access to my immediate supervisor over mentor relationships. The study did not distinguish whether a mentor was internal or external to the organization, or both.

Young Professionals were also asked to indicate what best prepared them for careers in A&D. After on-the-job experience (in industry or the military), in rank order, the responses were:1. Computer sciences2. Intern/Co-Op experience3. Courses in my major4. Hands-on courses5. Team experiences (of any kind)6. Design projects7. Project management experiences8. Technology, flight sciences, human communication, structures (tied).

Where I’m Looking …

1. National Defense

2. Civil Aviation

3. Software

4. Unmanned Systems

5. Space

6. Financial Firms

7. Consulting

8. Intelligence

9. Telecommunications

10. Consumer tech devices

11. Smart materials

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The university deans specifically wanted to examine this preparation question. Forty-three percent of the YP respondents believed their choice of university positively affected being hired for the current position, while 64% of respondents believe their alma mater will affect their promotion opportunity. The intern/co-op questions also delved into the value placed on these experiences.

Understanding what YPs think they need to further their careers is key to professional develop-ment strategy and planning. However, it is critical to note that the vast majority of YPs said nothing, no answer or don’t know (combined 40%). This is problematic given the focus on mentoring and career planning for YPs. The query then is whether the uncertainty reflects the uncertainty surrounding the industry or if the YP respondents are unsure what direction to take to assure job stability and opportunity in the future.

To further their careers going forward, the respondents ranked their development needs: 1. Management/leadership2. Advanced degree3. Computer/software4. Time on the job5. Project management training/experience6. Opportunity to lead7. Business strategy/planning8. MBA/Mentor

In terms of pursuit of advanced degrees, it is important to note that tuition reimbursement is a key factor in how employees of every age view their employers. In 2011, 5.8% of the A&D population received tuition reimbursement of some kind, and it’s clear that the YP cohort has every intention of using that benefit.

When asked what title or position they seek, the respondents replied, in rank order:1. Software engineers2. Business Development/planning3. Engineer (no specific)4. Systems Engineer5. Structural Engineer6. Manufacturing Engineer7. Supply chain8. Accounting/financial analysis9. Logistics10. Electrical Engineers and Technology Staff

Respect for the individual, the third factor most considered in terms of engaging employees to maximize performance, found some division by age. Both YP categories listed work/life balance as the number one way an organization demonstrates respect for the individual.

Respondents were asked to rank the degree of importance to you with the following statements:

Under Age 30 Over Age 30

My organization supports work/life balance. My organization supports work/life balance.

My organization recognizes performance in a meaningful way. I contribute to my company/agency success.

I contribute to my company/agency success. I have flexibility with regard to work arrangements.

I have flexibility with regard to work arrangements. I work in an environment that respects individuals/diversity.

I work in an environment that respects individuals/diversity. My organization recognizes performance in a meaningful way.

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Students Say …

The University Student Survey showed increased interest in aerospace and defense – 71.8% in 2012, compared to 62% a year ago. The list of participating colleges varied, however, between the two years. MIT and University of Michigan represent much larger populations seeking academic credentials and engineering pursuits outside of A&D. It was impossible to eliminate the MIT and University of Michigan data for a better comparison as students did not identify the school they attended as part of the survey, and gmail, me.com and other servers are used increasingly to respond to the surveys.

The study first looked at who the respondents are: 20.8% are female, and 69% are Caucasian. The gender is relevant as A&D is staying apace of the university demographics, pointing to a need for more down-stream (pre-high school) engagement with women. Another point of dis-cussion among advisory board members is to determine what prevents young women talented in science and math from seeking an engineering degree – the nature of the work, the lack of role models, or other? As one advisor indicated last year, it may reflect the need to focus on STEAM rather than STEM – the preservation or addition of the arts to the curriculum.

As with the YPs, engineering students – 46% of them – are using student loans to defray the cost of their education. Better than 38% said the availability of jobs was an important factor in choosing their major.

While YPs list internships/co-ops as an important preparation for their careers, just 14% of students are engaged in co-op experiences and another 37% in internships. This means that just less than 50% of engineering students are graduating with no engineering-related on the job experience. Those who are engaged in internships/co-ops found them of high value – 50% of interns indicated very useful, while fully 76.8% of co-op students indicated this highest level of value. Input from the academic deans serving on the study’s advisory board queried as to whether this is one of the critical partnerships between industry and higher education that needs to be expanded and more fully optimized.

Engineering students say a personal interest in aircraft, space, and/or defense is the number one reason for their interest in A&D. This is followed closely by the desire to work on high-profile projects. Those who are uninter-ested in pursuing an A&D career indicate it is because they simply do not have interest in A&D.

This year’s results do differ from a year ago when the most sought-after careers were in Basic Research and Academia. Education, which fell to the 11th position this year, was number 4 a year ago.

As with the YP Study, 45.8% of the University study re-spondents have student loans and 37.5% say the ability to repay the loan was important to them when selecting the degree they would pursue.

The worry of future employment and the nation’s com-mitment to innovation and space clearly affected this year’s write-in comments. In the open comments seg-ment of this study, one respondent articulated a com-mon view: the most attractive offer extended was from the Defense Dept. It paid for school, a research center internship, and service to the department for a defined period to repay the expense. Other respondents pointed to similar offers early in their education cycle, including ROTC.

What is the most

desirable career for

you upon graduation?

1. Aerospace

2. Defense/national

security

3. Mechanical

Engineering

4. Aeronautical

Engineering

5. Basic Research

6. Automotive

7. Consulting

8. Academia

9. Biotechnology

10. Electronics

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The vast majority of students indicate they believe personal relationships and interaction are the best guides to future employment, followed by professional associations. Despite the dra-matic growth of online social media, ranging from LinkedIn to Facebook, this is not where the majority of students are seeking input or contacts concerning their careers. This data point links directly to the desire by companies to foster better, higher quality relationships at fewer universities.

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