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The Talent Bubble

As Baby Boomers near retirement age, utilities face the challenge of preparing the next generation of leaders.
Fortnightly Magazine - February 2004

age statistics among industries can be difficult, but the average employee at the public power utilities participating in the APPA study was 44 years old, compared with the average American worker's 37 years of age. This implies the talent bubble will begin deflating sooner for utilities than for many other companies, and it will hit the industry harder.

The most painful effects for utilities likely will involve the loss of critical knowledge (see Figure 2, p. 53). "It is certainly a concern to us because there is a lot of talent that you can't easily replace," says Arlene M. Abbott, organization development and employee relations manager for Public Utility District No. 1 of Washington's Chelan County. "We are a very progressive public utility, with a lot of innovative projects and developments. We wouldn't be [as innovative] five years from now without the critical intelligence that we have in our organization."

Such issues are already affecting some companies in the wake of mergers and acquisitions. "Companies have consolidated and are losing critical knowledge," says Matthew Sadinsky, co-founder of utility training firm SOS International in Charlotte, N.C. "Many times key knowledge assets go out the window," he says, when companies merge and then integrate their organizations and processes.

Staff reductions, too, have given many companies a taste of what it means to lose knowledge assets-even though most companies try to minimize these losses by cutting the least-critical positions. "Getting rid of staff is easy, but sometimes you cut muscle instead of fat," says Griffin of the Midwest ISO. "That is coming home to roost."

Indeed, the industry's tight payroll might lead to greater difficulties as the talent bubble deflates. "A lot of utilities have been in cost-containment mode, and we haven't grown our workforces," Haake says. "If anything, we've shrunk our workforce." As a result, many utilities have done little to cultivate and recruit new talent.

That is likely to change, however, as the impending talent shortages become impossible to ignore. "Now we can see the age demographic taking hold," Haake says, "and at the same time we are realizing that we need to replenish our talent, and bring in newer processes, technologies and knowledge that maybe we've missed because we haven't been recruiting."

Stemming the Tide

Preventing the most serious effects of the brain drain requires utilities to examine the age characteristics of their personnel and to implement appropriate plans for filling the gaps that will appear as retirements accelerate. Such steps might include the following (adapted from the APPA study):

  1. Track pertinent workforce statistics, including average age, age distribution, and years of service;
  2. Make retirement projections and identify talent shortfalls;
  3. Plan the utility's future workforce, considering the utility's changing organizational, market and technical needs;
  4. Educate personnel, directors, regulators and political leaders about the issue;
  5. Capture undocumented knowledge and facilitate its transfer from older employees to their successors;
  6. Recruit, develop, and retain younger workers;
  7. Consider rehiring selected retirees;
  8. Slow the departure of older workers due to retirement; and
  9. Create and maintain a supportive workplace culture that promotes mutual respect among workers of all