by Stu Pearman, Scott Manning and Dan Kohut, ScottMadden Inc.
The electric utility industry expects major workforce challenges during the next decade. An imminent, significant drop in the number of older, skilled workers will be the result of increased retirements, which are expected to double between 1995 and 2025, according to -Responding to the Challenge of a Changing Workforce: Recruiting Nontraditional Demographic Groups published in the Winter 2000 issue of Public Personnel Management.
Increased retirements are beginning to cause a short supply of workers, and that shortage is expected to grow for years. Although the current economic situation might delay the retirement bubble and subsequent worker shortage, the problem still looms.
Worse, the demand for qualified professionals and employees who possess skilled trades is outpacing supply. And companies will add new environmental, renewable and nuclear technologies that will require new professional and craft skills. For the first time, four generations constitute the workforce at once, and each generation is different.
Despite these challenges, fewer than half of utilities have a plan to deal with potential workforce challenges. So what can you do? Here are seven tips to help develop, implement and sustain a strategy to overcome these challenges.
1. Understand the Problem
Currently there are four generations in the workforce, each with a different set of characteristics, needs and recruiting challenges. They are older adults, baby boomers, Gen X and Gen Y. This means that companies must develop techniques to attract, develop, assimilate and retain these workers.
The workforce is getting older as 10,000 boomers turn 55 every day. At the same time, Gen Y is entering the workplace, and the workforce in the middle, most of them between 40 and 50, is shrinking. This makes generational differences more pronounced and generational handoffs more complicated.
The expectations of generations in the workforce differ greatly. For example, baby boomers are characterized as team players who trust institutions, rely on seniority and defer gratification or sacrifice to get ahead over the long run. Gen Y is characterized as impatient, techno multitaskers. They rely on heavy networking, are entrepreneurial, distrust institutions, think nothing is permanent and expect immediate feedback and rewards. These differences require different management approaches.
The newest generation also brings important strengths to the workplace, including higher levels of education, ability to multitask, self-orientation and self-sufficiency, technological savvy, and acceptance of change. Companies can leverage these capabilities to their advantage.
2. Make It Personal
Making it personal means acknowledging these challenges and understanding the impacts of the changing workforce on your organization. For example, knowing that your power plant’s maintenance organization foresees 75 percent turnover attributable to retirements in the next five years will raise questions: How will I capture and transfer their knowledge? How will I compete against the nearby Toyota production plant for replacement mechanics? How can I make the work and workplace more attractive to the next generation of employees? Each company must perform its own assessment to understand where it will need to focus.
You can start by quantifying the problem in a workforce plan, identifying demographics and retirement age eligibility distributions by job type and plant and identifying imminent and future skill gaps. Some companies have gone further and classified positions by retirement risk and focused on succession plans for replacing key individual contributors.
The assessment should also examine external factors such as feeder-school graduation rates, the relative supply of needed professional and craft skills and other local companies that will compete for the same resources.
3. Create the Roadmap for Success
A strategic roadmap provides the structure to achieve the following goals:
- Develop a culture and work environment that will attract and retain the next generation of workers,
- Create approaches that help the new generation learn from the current generation and be successful, and
- Provide the support and culture for the new generation to grow quickly, leveraging their unique capabilities.
The roadmap should incorporate the results of the assessment, start with the end in mind and provide preliminary, high-level answers to these questions:
- Where are we headed—demographics and implications?
- Where do we need to be—business needs and workforce objectives?
- How do we enlist and engage employees, top to bottom?
- What are our success criteria?
- How do we organize and implement?
- What is our preliminary communication strategy?
Developing the strategic roadmap should involve senior leaders from the business. For example, for a power-generation organization, we recommend that you include two or three well-respected plant managers and a senior executive.
Example Employee Life Cycle Leading Practices
The strategic roadmap is not the final answer, nor does it provide the detailed workforce initiatives that will be implemented. It merely provides the boundaries that strategy team members must work within as they look to capture the opportunities afforded by the changing workforce. A good roadmap provides the right level of guidance and room for creative thinking.
4. Establish a Balanced, Structured Approach
Developing and implementing a successful workforce strategy will require a balanced, structured approach. The strategy will include initiatives, plans and accountabilities—the hard stuff. This is also about adapting the culture and behavior, however, and the magic is in embedded change management—the soft stuff. How you do it is as important as or more important than what you do. Put goals in the business plan for both.
We have found that a structured, template method with the right review cycles works best for managing the project. Equally important is modeling the new culture: providing opportunities for those closest to the work to lead.
For example, at the onset, put plant managers in charge, especially of the soft stuff. Then broaden the circle using a stepwise, systematic approach. Broadening the circle means engaging more employees from strategy development to initiative design to implementation. This helps create ownership at all levels and strengthens grassroots support. This can be in the form of assigning employees as initiative leads, creating a role as an implementation champion or soliciting feedback during focus groups.
Lavish time, care, attention and communication to make it first management owned, then employee owned (vs. human resources or management imposed). Remember, employee growth cannot occur without risks.
5. Focus on the Employee Life Cycle Model
The workforce strategy should address all areas of the employee life cycle model (see figure). Describing the future state in each area to achieve strategic roadmap goals is the first step in crystallizing the strategy. The next step is to compare current management practices with the future state in each area and identify gaps. Then specific initiatives may be established to close the gaps. The figure illustrates some of the best practices companies are incorporating in their workforce strategies.
6. Partner With the Union
Developing and implementing a workforce strategy cannot be done in a vacuum. Management must work with unions to satisfy the other’s goals while collectively addressing the changing workforce. This will require a proactive, collaborative approach. Companies are developing and implementing their workforce strategies with their unions’ active participation. Participation ranges from being a part of a focus group to being a member of an implementation team. This results in increased employee buy in and understanding among union members regarding the business’ key drivers, their impact on performance and the bottom line.
This kind of approach can be especially important to union leadership, as Gen Y exhibits low union-representation adoption rates.
7. Communicate! Communicate! Communicate!
Timely, frequent communication is critical to workforce strategy success. Communications must be designed to build buy in and strengthen grassroots, sustain the project, maintain high energy and reach multiple stakeholders with multiple channels.
Two components make a good communication plan. The first is management-led, organization-specific (high-impact) communications. The second is programmatic (reinforcement, -the pounding surf) communications. Management-led communications are embedded in team, staff or labor-management meetings. Programmatic communications are delivered through broad-based communications channels such as company or plant newsletters, the intranet, etc.
It is important to communicate material progress on initiatives, reinforce key workforce challenges, highlight employee engagement and involvement and bring attention to changes that occur as a result of the strategy.
The looming labor shortage and differing needs of the next generation of workers are challenges and opportunities. Executives at leading electric utility companies are thinking creatively about recruiting and retaining workers, planning for transitions and replacement and collecting and transferring retiring workers’ institutional knowledge to their organizations before it is lost. To be ready for this demographic shift, utilities must recognize the long-term benefits of adopting a strategic, proactive plan. This effort will require involvement and leadership at all levels of a company, from the top to the field. Otherwise, the next generation of workers won’t join, won’t engage or won’t stay.
Stu Pearman is a partner and energy practice area leader at ScottMadden Inc. E-mail him at email@example.com.
Scott Manning is a partner and heads the human resource consulting practices for ScottMadden Inc. E-mail him at sbmanning @scottmadden.com.
Dan Kohut is managing associate at ScottMadden Inc. E-mail him at firstname.lastname@example.org.