Most top utility managers treat their aging workforce problem (Figure 1) as either a retention or a recruitment crisis. If they focus on retention, they may respond to the demographic challenge with panic, offering unsustainable incentives in the hopes of retaining older workers. But incentive packages rarely take into account the way career paths have changed, the number of skilled retirees willing to do contract work, or the decoupling of service from location made possible by flexible grids and a global talent pool. Failing to recognize these choices, organizations run the risk of saddling their companies with a labor force incapable of adjusting to new paradigms of utility service. (See sidebar "Senate taskforce advises removing age barriers.").
1. Brain drain. A large percentage of utility workers are expected to retire in the next few years. Even more are eligible for retirement. Source: U.S. Department of Labor
Leaders focused on recruitment often try to deal with the aging workforce challenge by hiring people to replace those who have left, or by rehiring retirees (Figure 2). But this recruit-to-replace approach simply puts new bodies into the existing pipeline without considering how automation and process innovation have already changed the nature of utility work. Attempting to replace traditional talent pools—whether craft workers or tiered managers—also perpetuates inefficiencies in the industry. Unfortunately, recruit-to-replace tactics are proving useful only as a way for executives to lay low while waiting for the climate to improve.
2. Survey says. An AARP survey of 400 businesses in New York State conducted in late 2006 sheds light on the tactics companies are using to prepare for a workforce shortage caused by the wholesale retirement of baby boomers. Most survey respondents said their firms have tried at least one tactic tested in the survey—most often, improving technology. Very few are currently offering incentives to delay retirement, but many are hiring older workers. About seven in 10 are assessing their current workforce, increasing training opportunities, and hiring younger workers. Source: “Preparing for an Aging Workforce: A Focus on New York Businesses,” AARP, May 2007
But neither panic nor laying low is effective in this environment, because both responses are based on false assumptions. Panic presumes that the current workforce challenge is a singular event caused by a demographic aberration, while waiting it out presumes that the underlying cause is simply a fluctuation in the business cycle.
In fact, the talent crunch is a tectonic shift in the nature of the economy and in the architecture of how work gets done. The real problem that utilities face is a knowledge crisis—a transformation in how knowledge is valued, leveraged, and distributed in the marketplace.
This shift is fundamental and permanent. It means that organizations seeking to build forward-looking infrastructures must assess how the roles that people play in the enterprise are changing. Doing so is particularly important for utilities because the nature of the physical infrastructure that supports the industry is changing. As smart technologies facilitate the creation of highly efficient, decentralized, and flexible grids, the way that people are organized to deliver services must also be reconfigured. As the market reshapes demand, talent in the utilities sector must be aligned to reflect the operation of the post-industrial grid.
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