Powering up the energy, utilities and resources workforce: Upskilling initiatives can help companies address the skills gap

Niloufar Molavi Global Leader, Oil and Gas, Partner, PwC United States 16 December, 2019

The energy, utilities and resources (EU&R) industry is facing a major skills crunch. In PwC’s 22nd Annual Global CEO Survey, 76% of EU&R company leaders expressed concern about the availability of skills, particularly digital skills. In a separate PwC study, 70% of power and utilities leaders said they were focussed on either recruiting or retaining talent for digital. As automation and other market factors threaten some legacy occupations, such as truck drivers at coal mines, those same forces are birthing new industries and jobs that were inconceivable just a few years earlier, such as AI programmers for solar farms.

Each EU&R sector is experiencing this inexorable pull. In oil and gas, forward-thinking businesses are implementing digitisation and technological integration projects to boost performance management across the upstream, downstream and integrated gas business. This trend is now pushing traditional roles towards digital specialisations and knowledge of ‘smart’ tools. Despite these digital opportunities, a recent PwC study found that 14% of surveyed millennials said they would not want to work in the oil and gas sector due to its image, making it less popular than both the defence sector and the finance sector. Power and utilities enterprises have different challenges, as they face having to become smarter and more digitally savvy in an era of accelerating energy transition and changing regulations.

Across the broader resource-extraction sector, an increasing number of occupations are likely to be affected by digital change, with analysts suggesting that driller, miner and machinery operator may soon be supplanted by intelligent machinery technician and even drone pilot as the jobs with the greatest growth prospects. In fact, according to PwC research, some 52% of energy sector customer service roles and 38% of power distributor and dispatcher roles are likely to be automated or transformed in the next 15 years. There is also a marked shortage of qualified talent for new EU&R jobs, many of which require competencies in AI, machine learning and robotics.

The upskilling imperative

To respond to these challenges, businesses and governments must bridge the gap between the capabilities of current employees and the skills that will be needed to drive future growth, and they must do this by upskilling the existing workforce. In a range of industries, managers are now focussing on upskilling as an opportunity to expand employees’ capabilities and fulfil the needs of a rapidly shifting jobs market. Upskilling is distinct from reskilling, which is typically shorter term and targeted to specific groups. Retraining efforts for displaced coal workers, for instance, have proven unsuccessful when the communities and surrounding regions where local workers are based lack suitable jobs.

Upskilling is about more than just providing access to training. It’s about identifying the knowledge, skills and experience that will be most valuable in the future for new and transformed roles, and the individuals who can excel in those roles. And it’s about developing an effective way to support and inspire people to take action today and continue to adapt in the future. This means understanding evolving skills gaps and mismatches, creating the right employee experience and buy-in to unleash energy for change, developing engaging skills-development programmes, and driving return on investment with an appropriate learning organisation and technology.

Upskilling can be a net positive if carried out in an inclusive way. Analysts and economists suggest that a wide-scale transition of workers from old to new energy sectors would be relatively straightforward, with new jobs drawing from many existing skills. Some organisations, including Iron and Earth, a nonprofit led by Canadian oil sands workers, are now upskilling electrical workers so they can work on solar projects.

Invariably, upskilling represents a significant cost, particularly when the calculations extend beyond flat training expenses. Full-time training could take several weeks, during which beneficiaries would continue to receive a salary and their previous roles would need to be covered by colleagues. But these expenses must be weighed against the alternative — severance costs, as well as the time and expense of recruitment and on-boarding of people with in-demand skills. And the payoff for upskilling can be immense. PwC’s return-on-investment analysis for existing cases shows a yield of at least US$2 in revenue or savings for each dollar invested in upskilling. And aside from cutting the massive costs that come with rehiring, upskilling brings economic benefits to people and communities, as well. It allows people to move to new jobs that are better and more future-proof, and helps preserve a nation’s taxation revenues and reduce social safety net expenses.

The upskilling trend is now gaining momentum, with most industry executives acknowledging that they are unlikely to hire their way out of the current skills shortage. In PwC’s Global CEO Survey, 45% of EU&R CEOs noted that upskilling was the preferred solution to a shortage of skilled talent. These executives put a premium on developing skills in data science and analytics within their organisations.

As local markets become less regulated, the most successful utilities are making a fundamental shift towards a more consumer-facing posture, while growing into what PwC US power and utilities leader Casey Herman and PwC US power and utilities human capital leader Karen Brennan-Holton term platform players. In this model, under which utilities evolve from providers of commodities and infrastructure into connectors and integrators at the heart of a decentralised ecosystem, fielding a digitally trained workforce that advances along with the industry becomes essential.

Build a future-proof skills strategy

Companies require a focussed approach to address their future skills needs — insufficient training targeted at the wrong people can result in a massive waste of time and resources. To that end, companies must act rapidly and refresh their upskilling strategies, and ensure their learning organisation and technology are effective. Oftentimes, companies focus on building the hard and tangible assets necessary for digital transformation, while neglecting the human factors. To ensure that all employees participate in and benefit from upskilling initiatives, inclusion should be a priority. Organisations should test and evaluate strategic alternatives and scale the best-performing programmes.

Lay the cultural foundation

Leaders must communicate to employees and stakeholders that upskilling requires a new approach to jobs, training and career paths. These leaders should think intentionally about how to shift the corporate culture to encourage and reward learning and the behaviours that enable upskilling. As they do, they should also consider tapping into the potential energy of employees who are eager to learn and succeed. In upskilling campaigns, employee-led innovation can be a powerful force. And to ensure that employees are resilient to change and able to take advantage of opportunities, companies should nurture physical vitality and mental well-being.

The building blocks of effective upskilling

Designing and executing effective upskilling initiatives is a challenge. But we have developed a strategy for doing so. It requires a business-led approach that brings together professionals from areas such as human resources, IT, finance, innovation and operations to develop a blueprint for action.

Where to start? Each year, in almost every organisation, 5%–10% of roles radically change, thus creating severe skills mismatches. Organisations need to plan for this. Simply attempting to replace workers who are poorly matched to their jobs will be difficult, time-consuming and increasingly expensive. But everyone in the workforce can benefit from increased digital knowledge and understanding.

We’ve identified five key action steps companies can take to start addressing the upskilling challenge.

Assess the current environment and identify skills gaps and mismatches

Precise planning is critical to getting any upskilling initiative off the ground. Companies need to define the future needs of their workforce and understand the impact of automation. Once they do, they must assess current workforce capabilities and compare them to needs. At the same time, companies must understand their organisational culture, which will inform their assessment of their capacity to handle and promote upskilling. By identifying skills gaps, mismatches and role adjacencies that exist, companies can validate the case for change.

Develop and implement upskilling

As they develop and roll out upskilling campaigns, companies must work deliberately to create buy-in. One way of doing so is to align rewards and incentives so that they encourage and ratify the choices and efforts of those who engage in upskilling. Companies must recognise that upskilling requires a significant commitment of time and effort, and act by creating space in employees’ schedules for learning. To ensure that this time is used well, they must design engaging learning experiences that focus on building digital understanding. As they engage high-quality training providers, companies must clearly communicate the purpose and objectives of the upskilling initiative. Throughout these efforts, organisations should stress that upskilling has the capacity to be a transformational personal journey for employees.

Evaluate return on investment

Companies shouldn’t simply assume that upskilling efforts work. They must develop comprehensive digital systems that can track the participation and progress of large numbers of workers across geographies and functions. Tracking employee engagement and performance against objectives will allow companies to measure the return on the investment they are making in learning — and the return that employees are gaining on the time and effort they invest. Success stories should be communicated internally and broadcast to the broader community in order to sustain momentum, boost excitement and bolster the project’s wider acceptance. Finally, companies should benchmark their learning and development functions so they can have confidence in their efforts.

Upskilling for the long run

In the face of a changing competitive environment, companies in EU&R sectors have elevated their sense of urgency to invest in future-proofing their strategies and business models. Looking ahead, it’s rapidly becoming an imperative for the industry to add upskilling initiatives to a portfolio of investments.

To explore PwC’s research on upskilling and learn about the different perspectives on the workforce of the future, visit: New world. New skills.

Niloufar Molavi is PwC’s global oil and gas leader, with a team of more than 6,000 professionals across the PwC network serving energy companies around the world. She is responsible for all client services — assurance, tax and advisory. With nearly 30 years of experience with PwC, Niloufar has served a wide range of energy companies both in the US and abroad, advising clients on international and US tax structuring, mergers, acquisitions and potential public offerings. Based in Houston, she is a partner with PwC US.

 

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Norbert Schwieters

Global Leader, Energy, Utilities and Resources, Partner, PwC Germany

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Global Leader, Oil and Gas, Partner, PwC United States

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