As utilities industry leaders build plans for the future, they have to consider how their human resources will position their companies for business transformation.
Utilities face a wide range of challenges in today’s marketplace, as the power industry adapts to changing demand and accommodates shifting national and local government regulations. In addition, the industry is going through a rapid transformation of its infrastructure with the introduction of new and advanced automation and security technologies while integrating renewable power sources into the grid. As industry leaders build plans for the future, they have to consider how their human resources will position their companies for business transformation.
The most significant challenge facing the industry today is an aging workforce coupled with a decline in available talent. According to the Department of Labor, as much as 50 percent of the nation’s utility workforce will retire in the next five to 10 years. Many utilities require additional support to work on new capital projects, and those projects are increasingly complex. This need is particularly acute with engineering and design, where the supply is greatly diminished. According to a 2015 survey by the U.S. Department of Energy, 72 percent of energy employers report having difficulty finding talent.
Over the last 20 years, for various reasons, many utilities have not prioritized developing or expanding their workforce. This creates significant issues in succession planning, posing a threat to the continuity in institutional knowledge that gets passed from one generation to the next when a company invests in its “bench.” Without the legacy knowledge and understanding that is built up over years of utility experience, companies may struggle to continue to innovate and solve the challenges of tomorrow.
New Utilities Workers Harder to Find
Adding to the workforce complexities, in recent years fewer graduating engineers have chosen utilities as a focus. Among those graduates, some may prefer to work in different geographical areas vs. the areas where utility companies operate, or view utilities as less technically challenging than other industries.
In addition, utilities are competing for a smaller pool of engineering grads with more attractive and perceived cutting-edge industries like IT technology – hardware and software – and companies with high-profile brands like Google and Apple.
To define the scope of the issue: Utilities need a solution for their talent needs now as well as in the future. Workforce development, knowledge transfer and retention are critical. This requires a rethink of traditional talent development and acquisition methods.
What are the Options for Finding New Employees?
Companies may try to build a pipeline by offering internships, especially for short-term, low-complexity assignments. But interns require a lot of supervision by more senior workers, which could actually result in a net reduction in productivity. This desire for workers with at least a few years of experience could be why a study conducted by Millennial Branding found that most employers hire 30 percent or fewer interns for full-time positions. Co-op placements have similar issues, as do full-time hires from new college graduates.
Although utilities may prefer to hire experienced employees that can hit the ground running, the talent shortage means that those employees are even more difficult to find and expensive to secure.
The Cost of Talent Development
The cost of a new employee – assume an annual salary of $60,000 as well as an additional 20 percent in costs of employment such as benefits, equipment, oversight etc. – begins on day one. However, the employee being trained is likely only working at 20 percent productivity, becoming fully productive in year five. Utilities could be spending upwards of seven to eight times the annual cost of employment in five years before realizing the benefits of full productivity. The full impact of the costs is compounded over the total number of hires.
The solution could be an accelerated talent apprenticeship program, similar to a medical school residency program. With its long history in talent development, EASi has developed a full roster of experts in challenging and niche areas of competency that require advanced education and highly evolved analytical skills, making them well-qualified and experienced subject matter experts. New employees work under their supervision in an immersive environment, while also attending frequent learning sessions or tutorials where the application of knowledge and experience is reinforced.
The accelerated talent apprenticeship program has three basic components. First, we source the best candidates nationwide and screen them for their interest, aptitude and potential in engineering specifically for the utilities industry. Our new engineers then work closely with expert mentors who have experience in the industry/utility (often retirees from the utilities we partner with) to undergo industry, company and engineering disciplines-specific training and applications. Second, they get hands-on experience in completing actual engineering projects, participating in site visits and interacting real-time with project engineers, managers and other functions required to complete a project. This focused development provides immersive learning, to compress five or six years of learning and development into two or three years. Lastly, we focus on developing the personal and leadership skills required to be successful and make an impact in the utilities industry of today into the future.
Using the previous example with a $60,000/year employee, using this program would equate to a nearly a 50 percent decrease in cost (over $162,000), in addition to reduced recruiting, hiring, onboarding and training costs per employee. The improved productivity and reduced costs are multiplied when you consider the number of employees needed.
As you plan for the next 5-10 years, are you looking at your human resource pipeline? Have you looked at where your next leaders come from? Do they have the skills and talents required to build your company for the future. If not, this is a good time as any to revisit your workforce development strategy. This model may be the one for you.