April 11, 2008
Skills in high technology and sophisticated disciplines hold lots of sway in the New Economy, attracting the younger set that tends to be more educated and in search of upward mobility. But are utilities able to draw the best and brightest?
The power sector is marching forward. The general consensus, however, is that it has done little to make itself appealing to recent graduates. The issue has become accentuated as the industry wrestles with how to replace its now aging workforce. Indeed, challenges abound and notably the transfer of critical knowledge.
"We need to do more mentoring," says Abigail Dowling, a recruiter for Management Recruiters of Pittsburgh. "This should have been done 10 years ago and there's lots of ground to make up. We have done a poor job of getting to young people. Everyone now wants to be the next Bill Gates. We need to get into the grade schools -- to let kids know that careers in the power industry are just as exciting."
To quantify the issue, press reports have noted that colleges and universities are now registering a 50 percent drop in the number of graduating engineers in the last 20 years. That equates to a fall of nearly 2,000 undergraduate engineering degrees in 1980 to about 500 such diplomas today. To compound the problem, The U.S. Department of Labor says that at least 30 percent of the existing workforce will be eligible for retirement in five years. By 2012, it says that the utility sector will be 10,000 jobs short.
Utilities are not standing idle. According to a study performed by Sierra Energy Group, a division of Energy Central, about 57 percent of all such companies have a strategy in place for managing the impeding shortage of qualified workers. The key to successful recruiting plans, though, is to look beyond the immediate need and to envision the utility of the future. Colorado Springs Utility, for example, says that the power engineering classes it sponsors are becoming increasingly popular. The predicament, nevertheless, requires a more progressive mindset. Utilities today have slim pickings if they need a power engineer. While some new schools are starting up, other well-established ones such as LSU are shutting down. Professors, meantime, are retiring. It's about learning to market the industry to a younger set. It's also an issue of compensation and versatility. Quite simply, engineering graduates prefer not only the prestige but also the career tracks associated with other ! enterprises.
"The problem will likely get worse before it gets better," says Steve Dowdy, senior Recruitment Consultant at Sparqpoint Solutions. "I don't believe the utility industry as a whole is doing enough to promote itself and as a result, it doesn't have the glamour that the telecom, high tech and other industries currently enjoy."
Life-long Careers
Utilities are still evolving. Many sought senior executives from other industries as part of the effort to expand their wings in the 1990s. The central task had been to move away from a regulatory approach and toward a more competitive way of thinking that tried to maximize returns. Deregulation subsequently took off in many regions, all supported at the time by a growing economy and easy access to capital.
While the industry is to be applauded for its efforts to streamline and innovate, it generally fell short of expectations. Utilities are still reeling from those times and have spent years trying to shore up their balance sheets and reduce their debts. The result has been the spin-off of various assets and the firing of workers.
Therein lay the quandary of where to invest scarce corporate resources: Shareholders are requiring corporate officers to focus on creating efficiencies and increasing productivity. Regulators, meanwhile, are concerned about reliability and upgrading vital infrastructure. Operational managers, furthermore, are determined to build a skilled workforce that can deliver an essential commodity. In all cases, it takes people to get results -- assets that will generate returns for businesses.
"Salaries in the utility industry are likely to increase substantially over the next 5 to 10 years given the low supply of talent and the increasing demand for it," says Sparqpoint's Dowdy. That will help enable the industry to compete for top-notch graduates and those who may otherwise gravitate to businesses that purportedly have more cachet, he adds.
In 2005, the American Public Power Association published Workforce Planning for Public Power Utilities. It reported, for example, that 36 percent of all senior managers and 30 percent of all general managers are expected to retire by 2010. The trend affects utilities of all colors, many of which are acting now. Some such as FirstEnergy of Cleveland have hired hundreds of new experts in everything from engineering to information systems, all to permit newer employees to learn from veteran workers.
Modern utility professionals aim to be multifaceted. After they have mastered one aspect of the business, they may want to learn another. It's about understanding how the disparate parts come together -- how the overall mission affects business and operational decisions. Paying more will help. So, too, will cross-training employees. If future college graduates are to be attracted to utilities, they must be able to envision life-long careers.
It will be a challenge to replace the current workforce, says Brad Kamph, president for Santa Ana, Calif.-based Interliance. That's because utilities are too narrowly focused and avoiding the bigger issues. Creating job satisfaction goes hand-in-hand with the need to mentor and to transfer valuable knowledge. "Companies are rarely looking at the root causes of attrition, and the business case for addressing it," adds Kamph, noting that organizations have a real opportunity to lay the groundwork for the future as they replace retiring workers.
The global economy is evolving. And so too is the utility marketplace. The overarching aim is thrive by attracting the most qualified workforce. Utilities are adapting but the pace of change has been slow.
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Ken Silverstein EnergyBiz Insider Editor-in-Chief
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