Like a physician with her stethoscope at the outset of a check-up, astute shareholders and directors should use the level and trend of a utility’s market-to-book ratio (MtB) as one of the first...
21st Century Talent
Building a workforce for today’s utility landscape.
something greater than themselves, and what better option than to work in an industry that’s focused on making every other industry, and day-to-day life, work? Without power, nothing happens.
Unfortunately, these values often conflict with those of older workers who are accustomed to 9-to-5 work days and traditional hierarchical leadership structures. Many of these employees worked a lifetime to attain leadership positions, while young workers expect to climb corporate ladders much faster. Older workers tend to personally identify with their careers and value their continued involvement in their chosen industries. Utility companies must learn how to simultaneously appeal to young recruits to maintain their talent pipeline, manage the expectations of young employees, and retain their older workers to preserve and transfer valuable institutional knowledge.
One of the workforce-related metrics from PwC Saratoga’s Utilities Metrics Consortium (UMC) shows that the percentage of workers in the utilities industry eligible for retirement in the next five years is steadily increasing (see Figure 1) . Although some baby boomers have begun to retire already, many others say they plan to remain in the workforce for a while longer. In the 2010 Retirement Confidence Survey by the Employee Benefit Research Institute, nearly 69 percent of boomers (ages 45 to 54) who haven’t yet retired said they plan to retire at age 65 or older—or never retire.
As these workers approach their intended retirement, companies can work to retain their skills and knowledge by paying attention to their concerns about preserving their health and well-being, financial security, and mental engagement. Older workers need to continue to believe that their contributions to their employers are as valued as their younger peers’ contributions. If they perceive this, they’ll be more forthcoming in applying their valuable experience, and also more willing to transfer it to the next generation of employees.
While a number of large utility companies have been examining their future workforce strategies for some time, many medium and small utilities haven’t, and they are subsequently behind in assessing their pipeline for filling their most pivotal positions as their older employees approach retirement age. According to PwC’s 2009 survey of utility CEOs, 57 percent of the 42 utility CEOs surveyed stated they were “somewhat to extremely concerned” about the availability of key skills in their workforce.
In addition, utilities have a more difficult time retaining young workers than they do attracting them. Companies invest considerable time, money, and effort in recruiting young talent, but they must also ensure they retain that talent. High turnover can have multiple, far-reaching consequences in a company, including:
• Lost productivity during vacancies and on-boarding of new employees;
• Diminished productivity of the team and managers who are covering for a vacant position;
• Increased labor costs due to overtime or contractor needs;
• Hiring and on-boarding costs; and
• Loss of institutional knowledge.
HR departments should be careful to present company leadership with a business case for reducing high turnover. This case must include pinpointing turnover hot spots in the organization; quantifying the financial impact of turnover by business unit, job class, and performance