Ask utilities executives what keeps them awake at night and workforce issues will likely loom large.
In a recent PwC survey, 54% of all global CEOs said that skills availability is a potential threat to business growth. In power & utilities, those numbers are likely higher: four out of five chief executives in the sector are planning to do more to strengthen employee engagement, and 63% say they will invest more in creating and fostering a skilled workforce over the next three years.
So why is the ability to attract talent, rapidly move them up the productivity curve and help them manage the employee life-cycle so critical? It’s not just because labor costs — historically higher in your industry than in many others — are trending upward again. Or that older workers are now emboldened to revive their retirement plans. As the economy recovers, and footloose Millennials keep their options open, turnover rates are rising across the age spectrum.
In all industries, tensions between the motivations, habits and needs of experienced/highly tenured employees versus less experienced employees are sharply pronounced. In your industry, the mismatch between a more-conservative, rapidly aging workforce and a new generation constitutionally inclined to keep its options open is especially stark.
Compounding the problem is the fact that labor expense — partially due to the rising benefits costs of a higher-tenured workforce (especially spiking retirement benefits) — is especially pronounced in this sector.
This “talent generation gap” has profound implications for the long-term prospects of utilities. Unless they can find ways of successfully embedding the knowledge lost as experienced workers retire or leave — and persuading a newer generation that the sector offers career opportunities exciting enough to stick around for — companies will struggle with growing headwinds and competitive pressures.
Most utilities recognize the risks posted by these trends: many are already facing the implications for the integrity of their financial data, operations, internal controls and compliance, among other areas. Yet few are, as yet, well positioned to meet this growing challenge successfully.
Fundamentally, power and utilities companies should rethink their HR strategies and make sure that their HR organizations are effective strategic partners. This requires embedding a systematic approach to capturing and keeping core know-how — and finding new, more effective ways of transmitting that knowledge to a younger generation.
One obvious priority, of course, must be mitigating the loss of human capital from retirement by continuously attracting new talent, and successfully on-boarding and retaining that talent. A more strategic weapon in your arsenal should be succession and workforce planning — developing employees who are equipped with the knowledge and skills to take on their predecessors’ roles, and carry them forward in a rapidly changing landscape.
But succession planning doesn’t stop with the nomination of successors, it begins there. Your succession strategy, like your overall people strategy, must be continuously and strategically realigned with market trends, leading practices in talent development — and, most important of all, your overarching business strategy.
With over 4,ooo industry-focused professionals globally—PwC’s Power & Utilities practice is very well positioned to help you meet the challenge of a changing workforce.
Our offerings, both deep and broad, are as focused on growth strategy and building value as on mitigating areas of inefficiency and risk. From leadership development, succession planning and knowledge transfer to productivity strategies, change management, and employee engagement, we can help provide the processes and tools you need to foster a results-oriented, high-performance people culture.
Contact us to learn more about how we can help you align your people strategy with your long-term business objectives at a time of significant change.