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Closing the Talent Gap

Ad hoc approaches will fall short when the workforce crisis strikes.

Fortnightly Magazine - August 2008

with industry attrition statistics. This allows an organization to address areas where rates fall outside the norm.

The final element that impacts workforce gaps is the transfer of employees among functional areas or locations within an organization. Utilities can identify which functions are key importers or exporters of talent by using historic transfer data and creating tools that track the number of transfers among different functional areas for a given location.

Some utilities might find that they maintain a healthy and balanced flow of employees throughout the organization, while others may find certain areas to be chronic importers or exporters of talent.

Modeling the internal flow of employees can reveal the true organizational needs of certain business functions, as some rely largely on contributions from other areas. This represents an inherent risk, as the transfer of employees from one function to the other might not be sustainable and could lead to shortages that are unforeseeable without a robust transfer analysis. Thus, transfer dynamics have implications for workforce management initiatives, for example, indicating the need for certain rotational or training programs.

Projecting the Workforce Gap

Statistics about retirements, attrition and transfers will inform workforce gap projections. To calculate the gap, however, the projected workforce trends must be compared with a baseline, typically the target staffing level required to maintain current operations. Common ways to determine the baseline staffing level include using the number of employees budgeted to the payroll, conducting staffing studies that analyze the number and type of positions needed, or benchmarking headcount levels with comparable lean organizations. Baseline resource levels might increase or decrease in a given year, based on changes to productivity—for example due to a less experienced workforce or technological innovation.

Starting with the current headcount in the organization—again, disaggregated by functional area, location and employee type—the calculus will factor in projected retirements, attrition, and transfers based on the annualized historic rates. Assuming the historic rates hold true in the future, workforce levels can be projected for several years and compared with baseline staffing levels to determine the size of the gap in a given area and year as well as the drivers.

Other factors, depending on their relevance to the organization, may be accounted for in a workforce gap assessment. In the utilities industry, many positions require long periods of training and certification; at any given time, then, a portion of the workforce is not fully effective. To get a realistic assessment of the workforce gap, the number of ineffective employees should be excluded from the headcount for a given year. Once the training and certification period is complete, those employees are factored back into the effective workforce headcount. The resource ramp-up period for training and certification also is important when utilities consider sourcing strategies, as it informs as to when employees need to be hired.

An additional element that utilities might take into account is the effect of various growth scenarios on staffing levels. If, for example with generation, a utility plans to pursue growth initiatives in the near future, such as building additional facilities, those initiatives