Overseer?s Undercurrent: Don?t Just Wait for Your Workforce to Hobble Out the Door

Much has been written about the aging utility infrastructure, with a recurring joke being that most of the nation?s power plants, transformers, and distribution systems are now eligible for AARP membership. A less recognized problem is that the workforce we rely upon to operate and maintain the electrical system is nearly as old. ?Over the next five to ten years, about 50 percent of our 2,000 employees will be eligible for retirement,? reported Angie Robinson, human resources manager for the Sacramento Municipal Utility District. ?We expect to be losing a significant number of employees.? Industrywide statistics are difficult to come by, but SMUD?s estimate was echoed by virtually all the utility HR managers I recently contacted about the issue. That includes those at such large and diversified energy companies as Duke, Dominion, Constellation, and Pacific Gas & Electric, as well as at smaller public power entities such as Silicon Valley Power and the Florida Municipal Power Agency. Russ Jackson, senior vice president of human resources for PG&E, said that anecdotal evidence from colleagues at other utilities all points to the same trend: the average electric and gas utility employee is now 48 to 49 years old, with the average length of service approaching two decades. What concerns those who are tracking the trend is that many utility employees are eligible for partial or fully vested pensions at age 55. ?The future is coming rapidly,? Jackson observed. Companies are beginning to assess their own vulnerability to the expected wave of retirements, and many are coming up with new approaches to make sure that valuable skills and unwritten knowledge are not lost when the current generation decides to pack it in. Here are ten things energy companies might consider doing before their workforce gets any older: 1. Survey Your Horizons. At the very least, your company needs to understand what kind of impacts, liabilities, and opportunities you are facing. A five-year assessment of likely retirements in your company is recommended. Although your corporate and capital decision horizons stretch out to the year 2020, employment projections after five years are inherently riskier because of events outside your control. 2. Know Your Needs As Close to Ground Level As Possible. It?s one thing to think you?ll need 100 line crew workers; it?s entirely preferable to know whether you?ll need 20 next year in a certain territory. PG&E has more than 1,000 job classifications, noted PG&E?s Jackson. The utility is identifying its most critical segments for deeper scrutiny as part of its overall employment trends surveys. Personal interviews with potential retirees in key positions will elicit more honest feedback if the workers have an opportunity to recommend solutions to any upcoming problems. 3. Look to Critical Skills, Not Job Titles. Your workers have expertise in a variety of aspects of your business that are not necessarily reflected in job titles or daily duties. A steam plant engineer who also understands metallurgy possesses a critical knowledge that might not be captured in a job description. Look beyond the worker?s age as well. Younger employees may have valuable insights on how newer technologies make the business more efficient. Talented individuals will progress to other jobs in the organization; ensure that their exit is a smooth transfer, not a brain drain. 4. Capture and Transfer Critical Knowledge. Before the workforce gets any older. Utilities are experimenting in many ways. Some employ systematic organizational analysis and documentation of unwritten knowledge; others bring senior workers together with younger candidates to pass along a deeper understanding of the job at hand. Working with recent retirees can be rewarding for all participants. Your company capitalizes on priceless institutional memory, and the company?s culture can be reinforced. They have a stake in making sure the industry they?ve devoted their careers to can be passed along to good hands. 5. Outline a Hiring and Replacement Plan. With everything you?ve learned from the above, put ink to paper. This is an evolving map to your future recruitment and retirement mitigation effort for a decade or more. The further out in time you plan, the more likely that you?ll be updating and modifying the scheme to match unexpected circumstances and opportunities. Public Service Electric & Gas Company of New Jersey, for instance, has created a Workforce 2020 program to create its plan for the future. 6. Find the Will to Establish a Succession Plan. The company should have in place a succession procedure and criteria list for selecting the next generation of executives and technical leaders?even down to the division or business unit level. When the board or executive committee must make a choice in unforeseen circumstances, they will need much guidance and accountability documentation. 7. Examine Pension and Health Care Plans. Of course, such plans undergo scrutiny and evolution every day to match rising costs and evolving needs. An aging workforce is a legitimate factor in reassessing benefits and options. If you can make plans more flexible, without causing older employees to sacrifice benefits, some key workers might choose to defer retirement. 8. Diversify Your Resources. Everyone is learning the lesson of global competition for talent. In the utility and energy industry, working with immigrants who possess universal technical skills can broaden the ethnic and skills diversity of the industry. But also remember that older workers contribute to diversity in the workplace. Veteran workers help those who are newer acclimate to the job and company culture. Generational rifts are possible, but they are minimized when all are working toward common goals. 9. Help Create Your Future Workforce. Training programs, apprenticeships, internships, summer jobs, campus recruitment?these are all tried-and-true skilled-resource generators. Local universities and engineering schools?even high schools?make great partners in developing and channeling the skilled workers you?ll need. 10. Hang On to Your Best Employees Longer. As people remain healthier into later ages, they might not want to retire at the earliest opportunity. Industry turmoil and stock market vagaries in recent years have deflated many workers? retirement dreams. The best, vital employees might jump at the chance to take on a new assignment, staff a new business venture, or otherwise continue contributing to the company and community. Increasingly, utilities, management consultants, and academics are beginning to address the aging workforce issue. The single best report on the topic that I?ve found is Keeping the Talent Pipeline Filled to the Energy Industry , published by the Conference Board (July 2004; No. E-0008-04-RR; www.conferenceboard.org ). Several of the approaches suggested above are also recommended in the report. Scientech LLP will host an Aging Workforce Conference on October 26-28 in Clearwater, Florida (find out more at www.secure.scientech.com/conferences/ ). Finally, I?ll have a feature article on the topic in the premiere issue of EnergyBiz magazine, published by Energy Central on November 1. To get a copy of EnergyBiz , send a request to service@energycentral.com. Tell them I sent you. ?Arthur O?Donnell is editorial director for Energy Central and writes a weekly on-line column called ?The Business Electric.? Find his most current articles, activities, and speaking appearances at www.energyoverseer.com.

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Overseer?s Undercurrent: Don?t Just Wait for Your Workforce to Hobble Out the Door

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