The US power sector is just beginning to understand the extent of the challenge it faces in replacing a retiring workforce, and to take steps to address it. But even if utilities manage to fill vacant positions, it remains to be seen how smoothly they can integrate a new generation of workers, and how long they can retain them.
The impending retirement of a large share of the existing power sector workforce not only generates job vacancies, it also raises continuity questions, such as how to transfer knowledge from seasoned professionals to new entrants, how to attract new talent to the sector, and how to hold on to a new generation of workers more likely to change jobs several times over the course of their careers than their predecessors did.
“Generally utilities have been keenly aware of this long-coming challenge. But I don’t believe that utilities really understood the extent of the impact,” Dennis Curtis, Risk Assurance Director in accounting giant PricewaterhouseCoopers’ Power and Utility practice, told Breaking Energy.
“This is becoming the new norm for the utility sector. You’re going to realize continued loss of your more senior workforce, and continue to see the turn of the newer generation, due to cultural differences between the new generation as well as their goals. The focus really is on how do you deal with the situation,” said Curtis.
“It’s going to become the new norm. How do they adapt to this change to catch up and become better prepared for it to continue?”
Filling vacant positions is one of the first orders of business, but a dearth of qualified replacements can lead to unusual and costly temporary measures. In some cases, utilities are re-hiring retired employees, many of whom receive a percentage of their former salary in retirement benefits, as contractors. “Utilities are really questioning whether they want to pay their employees twice – pay retirement benefits and hire them back as contractors to fill holes,” Curtis said. “Frankly, it’s the only solution in certain cases.”
And where new workers are found, knowledge transfer is a significant hurdle, due in part to inconsistent formal documentation of processes and responses for operations. “There’s maybe a void of information that they didn’t realize they were missing, whether it’s documented information or stored in someone’s head,” said Curtis.
“There has been, over the last few years, increasing scrutiny from a variety of regulators, both local and nationwide, whether it’s concerns around cyber security or pipelines or transmission on the electric side, and their ability to understand why certain things were done,” said Philip McLemore, PwC’s Utilities Human Capital Director. “It’s very hard to peel back the onion and understand what led to the original approach. It’s not documented.”
Under normal circumstances – when things are working relatively smoothly – a lack of formal documentation has limited impact. But “when an event occurs, the time it takes them to react to the situation is a bit delayed. Without having that full body of knowledge, they’re finding themselves hesitant to quickly react before they know they have the right solution to step forward,” Curtis said.
Some utilities have begun to address these challenges in various ways, some as simple as moving away from manual, paper-based documentation systems. Whereas in the past one person might have been the center of institutional knowledge for a specific organization, “now it’s all getting documented, and the technology will be the receptacle for information about processes, and act as a backstop if that person fails or is no longer there”, McLemore said. Automating more processes also reduces workforce requirements, which, helps to address the shortage utilities face from a labor resource perspective.
What may be harder to overcome are challenges associated with organizational and cultural shifts at all levels of the utility, which sometimes prompt resistance from long-standing employees reluctant to adjust to the “new normal”.
“There’s an incredible amount of informal veto power that is very tough in the middle management and lower level,” said McLemore. “If you’ve got someone who’s worked somewhere for 30 years, they’ve seen a number of management changes come through that may or may not have taken hold. If I’ve got 3-5 more years, can I wait this one out? You’ve got to work driving the change and adoption both from leadership alignment, top down, and also from the bottom up.”
And encountering that resistance to change may deter newer employees from remaining with an organization. “That can really frustrate new employees and drive them out of the industry quicker,” Curtis said.
The prospect of an accelerating economic recovery, while positive for electricity demand, may be another obstacle to utilities’ efforts to attract and retain workers. “As the economy gains momentum, folks who are approaching retirement have more visibility and security about the future, those keeping them on the job go away and the challenges get exacerbated,” said McLemore.
“For the younger generation, more opportunities will open for them,” said Curtis. “They might become stereotypical millenials characterized by hopping jobs every few years, which could create a perfect storm of a talent void.”