John Juliano & Michael Valocchi, IBM Business Consulting Services
This is the conclusion of a four-part series.
In the first segment of this series (Dec. EL&P), we emphasized the need to prepare for the wave of retirements that the utility industry will face by the end of this decade. Focusing on the nuclear power sector, we demonstrated in the second and third articles (Jan./Feb. & March EL&P) how some industry leaders are taking active steps to ensure a smooth transition through this period of change. In this final segment, we will demonstrate the magnitude of the problem in this sector, and review the steps that can-and, in most cases, must-be taken by utilities to ensure safe, efficient and profitable operations well into the 21st century.
The Nuclear Energy Institute (NEI) recently completed a survey of current nuclear power generation staffing levels and the projected impact of impending retirements. The survey projects that about 26,000 positions-about 46 percent of the current workforce-will need to be filled over the next five years. Less than half of those working in key technical positions today are expected to be in the same positions five years from now.
Just under half the workforce is currently age 48 or older; less than one-sixth is 32 or younger. With the expected retirement age for most utility workers being about 55, retirements are expected to account for over 60 percent of attrition within this timeframe-a nearly 150 percent increase over current levels. Even if only the most likely retirees leave the workforce, an estimated 16,000 employees will be lost to retirement alone.
Non-retirement attrition (NRA) merits attention as well, as the survey estimates that another 10,000 workers may be lost through NRA. The survey respondents estimated NRA at between 1.8 percent and 2.4 percent annually, though that is about half the level of the past few years. This emphasizes that while recruitment of new workers will be critical to ensuring future success, retention of those in the workforce that are not ready for retirement should be squarely in the focus of human resource (HR) strategists as well.
Carol Berrigan, NEI director of industry initiatives, is confident that nuclear utilities are capable of meeting the challenges these changes present. “This survey reveals a critical situation, but not a crisis,” said Berrigan in recent comments on the survey results. “Action needs to be taken by industry and its related associations, but we can successfully address the situation within the next three to five years.”
The key to the early gains that have accrued in the nuclear sector has been a strong executive focus on workforce planning. The NEI survey found that nearly two-thirds of the companies surveyed have long-term staffing plans, with nearly three-quarters of those looking three-to-six years forward or more. Nearly 80 percent of these companies update their plans annually, and 95 percent plan to the department or position level.
For many companies outside the nuclear sector, planning may have yet to begin or still be in the early stages. While the impact of retirements will be different from utility to utility-and will hit some organizations harder than others-few companies will be completely spared from having to address this issue. Outside of nuclear functions, areas like transmission line maintenance, instrumentation and control technicians, and management are projected to be hard hit, but each utility must understand its own profile to form an effective remediation plan.
IBM’s “QUICKLY!” workforce planning framework suggests specific steps to target:
“- Quantification of impacts,
“- Understanding the needs created,
“- Identification of future leaders,
“- Community outreach,
“- Knowledge retention,
“- Learning programs and
“- Youth targeting.
Quantification of the impact of retirements is the critical first step in developing such plans. Understanding the impact of retirement patterns on future hiring and knowledge retention needs requires substantial management attention and effort, but must follow. Identification of tomorrow’s leaders must be done now to assure a smooth transition to the next generation, and community involvement and outreach programs should also be designed to help utility human resources departments develop better solutions to diversifying the workforce, as this is a persistent area of difficulty. (Sixty-three percent of the NEI survey respondents identified attracting minority job candidates as a significant recruiting challenge, and 60 percent said the same of attracting women to the workforce.)
Knowledge retention programs need to be carefully constructed and executed to make sure that key institutional knowledge is not permanently lost when employees retire. Additionally, learning programs-particularly ones which partner with university and/or industry accreditation agencies-can serve as both a means of training the new generation in the workforce and a powerful recruitment and retention vehicle. Also, youth targeting has been a major focus area for the nuclear power sector over the past several years, but other disciplines-such as electrical power engineering, mechanical engineering, and chemical engineering which are crucial to the utility industry’s technical infrastructure-still lag.
This framework, or a similar structure, can build effective long-term workforce planning strategies at the company or organizational level. Addressing the issue as a key strategic one now will prevent it from becoming a critical operational one five or ten years from now.
Juliano is a consultant, and Valocchi a partner, with IBM Business Consulting Services specializing in the energy & utility industry.
Juliano can be reached at 240-401-4360. Valocchi can be contacted at 610-578-2577.