By Kevin McCarty, Co-founder and Executive Vice President, West Monroe Partners
The aging workforce in the energy utility industry has been well documented, and the fear of losing skilled labor is serious and real. According to the United States Department of Labor, the energy utility industry averages the second-highest average employee age among 54 industries studied. Nearly one-fifth (19.2 percent) of industry workers are within five to seven years of retirement. Perhaps the most alarming statistic involves age distribution, as illustrated in the chart. The average age of an energy utility employee is steadily rising; since 1995, the number of industry workers aged 55 and older has increased by 225 percent.
An initial concern is loss of physical headcount. Average age, average tenure and age distribution statistics indicate that energy utilities are either not actively recruiting or retaining young talent successfully. Certainly, public perceptions of an “antiquated” industry do not aid these efforts.
But once an individual walks through the door, he or she stays. In 2006, the energy utility industry boasted a median tenure of 10.4 years—the highest average by more than three years among industries analyzed by the U.S. Department of Labor, Bureau of Labor and Statistics.
On the flip side, longer tenure signifies a higher capacity for that individual to possess industry-specific skill sets and critical intellectual capital. It is the loss of this technical know-how and critical knowledge that dominates the minds of executives—more so than the dwindling of sheer manpower numbers.
Forward-thinking energy utilities have the opportunity to plan initiatives now to address this impending problem in the future, while separating themselves from tactical competitors. Through strategic re-branding efforts and technological investment, energy utilities can obtain, mentor and train young, technically savvy talent.
Hiring young talent offers the most potential for addressing this issue. But, there is a major barrier: young workers today have little desire to work for energy utilities.
Young workers view the industry as old, antiquated and hierarchical. They seek vibrant cultures, challenging opportunities with tremendous upward mobility potential, diverse environments and cutting-edge ideas and technology usage. The industry must address this image problem by looking in the mirror and changing virtually everything that does not appeal to Millennials. Or, at least, it must change Millennials’ perception of the industry.
The banking industry offers an appropriate role model for this effort. In an industry once known for stodgy, pale-colored interiors and as a career destination for “lifers” who never expected to change jobs and assumed to climb the corporate ladder, pioneering banks took some key steps. They made things fun and lively, promoting diversity, collaboration and career development.
Energy utilities will also need to address Millennials’ dedication to preserving the environment. Companies must promote their investments in technologies that safeguard the environment, not to mention their efforts to generate more and more energy through renewable sources.
Bridging the Gap
Once young talent has been recruited, it must be retained and a massive transfer of technical- and industry-specific knowledge must occur before boomers retire. Ideologies, preferences, motivations and general attitudes differ greatly between Millennials and baby boomers. Closing this divide is critical to successfully transitioning key information.
Management must nurture a close-knit interaction between the two groups and career-hungry Millennials will need to pick the brains of baby boomers. Without a doubt, facilitating a dynamic, new culture will require a serious change management effort.
Millennials are eager to absorb industry knowledge. With a newly created comfort level between the two groups as well as some coaching, they can effectively drill in to the business processes and key “secrets” of the boomers’ daily operations, thus capturing industry knowledge before the mass retirement movement.
Once Millennials and boomers have bridged the gap, the company can extract core and previously undocumented business processes from workers’ minds and then analyze and streamline them to reduce costs and create efficiencies. Tools such as enterprise content management applications can help to preserve intellectual capital, socialize process changes, and bring other advantages to the table. New technologies also back up companies’ commitments to safeguard the environment:
All signs point to a mass retirement movement within the energy utilities industry, but top-tier organizations have an excellent opportunity to minimize the exodus of industry-specific talent and critical knowledge. Those that maintain a strategic vision to integrate intelligent solutions into their core operational procedures, prepare their people to succeed in a new environment, and maximize technology to support the enterprise will be in the best position to face the looming obstacle.
Author: Kevin McCarty has more than 15 years of global business and technology consulting experience across multiple industries. His firm, West Monroe Partners, helps organizations address cultural changes and prepare workforces to achieve business objectives.