The utility employment landscape is changing, driven by varying forces, writes Philip Gordon. It’s predicted that those utility workers born in the mid-1900s, otherwise known as the “Baby Boomer” generation, are retiring, and according to a January 2017 assessment by the US Department of Energy, 25% of US employees in electric and gas utilities will retire within the next five years.
The US Department of Labour has also estimated that as much as 50% of the current energy utility workforce will retire within the next ten years, and the average age in the industry is 50.
The problem is not just limited to the US, with more than half (52%) of the UK electricity sector’s workforce over the age of 45. Figures in the water utility industry are similar at 54%, and in UK gas utilities 49% are over that age.
But are things as they appear at face value? What other factors have contributed to a skills gap that looms large in human resource management’s minds late at night? Certainly, retirements have a role to play, but has protecting the bottom line created a high-risk present? Utilities worldwide have had to contend with a wave of disruption in recent years that has affected critical infrastructure, staff roles, automation and digitisation. Socio-economic factors have also had a role to play. The worldwide recession of 2009 saw many – regardless of industry – shelve plans for early retirement or retirement at 65, after long-term investments, retirement savings and pensions felt the pressure of a global economy in crisis.
From a utility perspective, new revenue generation opportunities have been hard to come by – in most cases requiring grid infrastructure investment to support smart metering, prosumer integration and increasingly, electric vehicle and smart city infrastructure.
When seen in the light of increasing grid defection, and the reduced cost of self-generation technologies such as commercial and residential solar and renewables, balancing the books to show the 10-15% annual revenue increases stakeholders want to see looks like a juggling act, and the problem appears even direr.
Bottom-line pressure to increase revenues year-on-year has led many utilities to look inwards to reduce operational costs dramatically, in many cases leading to staff cuts. However, in light of the predicted exodus of as much as half of the utility workforce, reducing staff doesn’t seem to make sense any longer.
Factors adding complexity to what is an already strained set of dynamics include the lack of experience of new incumbents in the industry, who need practical, hands-on ability, and increasingly, the guidance of those who have it. This makes recruiting the next generation of utility workers challenging at best.
A 2017 report by the US Department of Energy, The 2017 US Energy and Employment Report, echoed the above statements, with 63% of utilities surveyed naming insufficient qualifications, certification and education found to be lacking, and a further 47% of incumbents found to lack experience, training or technical skills.
But is this just a problem for the human resources department, or is this an opportunity for utilities to revisit their business models, and seize the advantages that technology has to offer to offset the effects of a declining workforce, both in size and skills?
Recruitment models can include strategies like long-term succession planning, forming partnerships with local educational institutions, developing in-house training and ongoing education programmes, and participating in local industry associations and organisations. Yet none of these will offset the effect of a drastically reduced workforce. One approach recommended by experts calls for companies to use innovative technology to drive forward progress:
- Leverage reduced headcounts against new, streamlined job role definitions that take new technologies such as automation and software to increase efficiency into account
- Utilise the experience and insights held by senior staff members through inhouse training, capitalising on the human knowledge base currently available
- Improve data access and communication practices to reduce the number of people, travel, and time required to complete work • Maximise the efficiency of new processes and technologies to create new “best practices” and eliminate legacy workflows
- Place emphasis on specialised skills rather than headcounts, to reduce the amount of staff required
- Excite potential incumbents by presenting them with a streamlined, modernised business model that embraces the sort of modern workplace practices like flexitime and work-from-home options that technology enables.
Vertical structures stifle growth as the future is non-linear. Utilities are becoming increasingly customer-focused, leading to an increase in customer-related processes that affect numerous departments and operational centres. Yet, like many organisations, most utilities embrace a vertical model, in which work is carried out by individual departments, each only responsible for their part of the work required. The challenge this presents is that specialised knowledge stays within that silo, or department. Yet, as customer-focused processes increase due to the rise of decentralised generation, prosumerism and customer-facing technologies, a more ‘horizontal’ approach is increasingly called for, synchronising work in the field, in-office, and on-site to ensure operational efficiency.
In the past, many technology options developed for the utility industry have worked well in solving specific, localised challenges, but this reinforces the ‘old’ workforce model – effectively relying on silos of knowledge in vertical, departmentalised structures. A declining workforce calls for new process models, considering the organisation as a single entity with multiple moving parts. More connected, agile, de-siloed processes will be essential to ensuring smooth operations with a lowered headcount.
What will the future utility look like?
As with everything, there’s no crystal ball to predict the future, but what is clear is that a declining workforce, with proper planning, isn’t an impending disaster.
The increasing role of automation, driven by AI-enabled solutions capable of predicting asset maintenance and automated customer-facing processes – matched with an increasingly disparate generation model made up of distributed, renewable energy, as well as prosumer and corporate-owned microgrids – translates into a future where human capital, though perhaps more specialised, is less important.
What must also be remembered is that the grid is becoming increasingly interconnected with technologies like IoT used in smart city infrastructure capable of managing tasks with very little or no human intervention.
What is needed are the engineers, developers and process experts to pilot utilities into this new future, girded by the knowledge of those that have passed before them, to take the best of the past into an exciting future – but this will require utilities to move quickly. Time is of the essence.