Despite all the hype over the past few years about the potential devastation caused by large-scale baby boomer retirements, recent studies say that age is responsible for only 15% of U.S. workforce attrition. According to the Department of Labor, in 2006 retirements shrunk headcount by a mere 4.4%.
But here’s another statistic that should give utility executives pause: Last year, “quits” rose to 19.4%–up one percentage point from 2005 and the highest rate in many years.
In other words, if you’re focusing on retirements, you’re ignoring nearly 80% of the employee loss problem. But you’re not alone. Surveys report that only one in eight companies has a goal of addressing nonretirement attrition.
Should organizations pay less attention to aging workforce issues and more to the causes of nonretirement departures? Not necessarily. Why? Because every industrial organization has unique characteristics and needs.
Management by fad
That uniqueness, however, can open the door to unusual, unworkable, and expensive solutions. Over the past two decades, fad after fad has infected the business world. Concepts such as large-scale downsizing, Y2K, Total Quality Management, ISO 2000, Quality Circles, and e-business have swept across the organizational landscape. Sometimes these movements brought necessary changes in some sectors. But few found broad interest and long-term use.
Remember the counterintuitive efforts of some bricks-and-mortar stalwarts to set up e-business units during the 1990s (exemplified by Time Warner letting itself be acquired by AOL), the billions spent to inoculate IT systems against an imaginary Y2K bug, and the reverence still being paid to the management techniques popular in the high-flying Enron days? In many cases, unproven management strategies and methods were implemented unnecessarily. Sometimes they only wasted time and money. In other cases, they wreaked havoc on firms that had been very successful.
For another example more familiar to power engineers, let’s briefly examine the consequences of downsizing by electric utilities. Turbine generator maintenance used to be done by large in-house crews with access to huge in-plant parts and equipment inventories. A 1,000-MW plant may have had a full-time major maintenance staff of 75 to 100, many with decades of overhaul experience under their toolbelts. Day-to-day maintenance was carried out by another team of 25 to 35 people. With such personnel resources on hand, outage planners had the luxury of long lead times and slow budgeting. Management could predict easily and plan with certainty.
Outsourcing, prompted by Wall Street’s closer attention to utilities’ quarterly results, radically altered maintenance and outage planning and execution. Those big in-house crews are now gone, replaced by just enough people to oversee the work of outsourcing contractors. Inventories have shrunk, too. As a result, utilities and plants now operate in thrall to productivity, dominated by short-term planning. Long-term projects, such as vital regional transmission upgrades, are rarely given the priority they deserve. The new corporate culture doesn’t quantify the effects of employee dissatisfaction, which may be why more experienced hands are quitting. No one likes work that isn’t fun anymore.
The bottom line is that management by fad just doesn’t work. Lean manufacturing and Six Sigma techniques may work for General Electric, but not for smaller firms with limited resources.
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