TOPIC #5
Workforce Development
Utilities seek to attract and retain talent in a competitive labor environment with integrated workforce planning and development.
Workforce Challenges Persist Throughout the U.S. Economy
Despite the end of pandemic restrictions, attracting and retaining talent remains a persistent challenge for many companies.
Notable workforce trends include:
- Labor force participation of prime-age workers (25 to 54 years old) is approaching highs not seen since the early 2000s.
- The participation of older workers (55 years old and above) has not recovered to pre-pandemic levels, a trend likely driven by the retirement of Boomers (born between 1946 and 1964).
- The ratio of job openings to hires—a proxy for the average time needed to fill a position—remains near historic highs despite recent declines.
To understand specific challenges facing the energy sector, ScottMadden facilitated the Center for Energy Workforce Development’s (CEWD) biennial energy workforce study, which provided insights on specific challenges facing the energy sector from data collected from 40 electric and natural gas utilities and energy companies.
Key findings from the CEWD survey, which was completed in 2023, are presented on the following pages. In addition, we outline an approach to integrated workforce planning and development.
Figure 5.1: U.S. Labor Force Participation by Age Group Seasonally Adjusted (1990-2024 YTD)
Note: Shaded areas indicate U.S. recessions.
Source: U.S. Bureau of Labor Statistics; ScottMadden analysis
Figure 5.2: Ratio of U.S. Job Openings to Hires (Nonfarm, Seasonally Adjusted) (2001-2024 YTD)
Note: Shaded areas indicate U.S. recessions.
Source: U.S. Bureau of Labor Statistics; ScottMadden analysis
KEY TAKEAWAYS
A survey conducted for the Center for Energy Workforce Development shows the energy industry workforce has stabilized, with Millennials representing the largest portion of the workforce.
Most workers have less than 10 years of service, suggesting that many aging workers have been replaced by younger workers.
Reskilling and retraining may be needed to fill the growing number of emerging technology jobs being created by the energy transition.
Both non-retirement and total attrition have significantly increased; however, it remains unclear if this is a new normal or transitory post-COVID adjustment. Retention efforts will be critical for utilities.
An integrated workforce planning and development program can provide a competitive advantage and address workforce challenges.
A survey conducted for the Center for Energy Workforce Development shows the energy industry workforce has stabilized, with Millennials representing the largest portion of the workforce.
Most workers have less than 10 years of service, suggesting that many aging workers have been replaced by younger workers.
Reskilling and retraining may be needed to fill the growing number of emerging technology jobs being created by the energy transition.
Both non-retirement and total attrition have significantly increased; however, it remains unclear if this is a new normal or transitory post-COVID adjustment. Retention efforts will be critical for utilities.
An integrated workforce planning and development program can provide a competitive advantage and address workforce challenges.
Aging Workforce Concerns Replaced by Need to Train Younger Workers
Concerns over an aging workforce have been replaced with a new challenge focused on developing a younger workforce.
When viewed by generations, Millennials (born between 1981 and 1995) now represent the largest percentage of employees in the energy industry, exceeding both Generation X (born between 1966 and 1980) and Boomers. Also notable, more than 50% of workers have fewer than 10 years of service. The data suggest that many aging workers with lengthy experience have been replaced by newer workers.
In response, the energy industry will need to redirect some of its focus from recruitment to training, mentorship, and other programs to develop its younger, less experienced workforce.
Figure 5.3: Percent of All Utility Employees by Age Group (Surveyed Utilities)
Source: Center for Energy Workforce Development
Figure 5.4: Percent of Utility Employees by Years of Service (Surveyed Utilities)
Notes: YOS means years of service. “Key Jobs” are primarily line operating positions and exclude administrative and support organization positions.
Source: Center for Energy Workforce Development
Few Emerging Technology Jobs, but Category Shows Significant Growth
While still a small portion of the overall utility workforce, emerging technology jobs approximately quadrupled between 2021 and 2023. The survey defined emerging technology jobs as data scientists, as well as solar, wind, storage, and EV engineers and technicians.
A significant number of emerging technology jobs are held by mid- to late-career individuals, suggesting these positions are being filled by both younger workers and experienced individuals moving into these roles.
Consequently, the energy transition will require careful management of workforce changes and a focus on programs to retrain and reskill displaced workers to perform new energy jobs.
Figure 5.5: Total Attrition and Hires for U.S. Utilities as a % of Total Workforce (2008 to 2022) (Surveyed Utilities)
Source: Center for Energy Workforce Development
Attrition Spikes Post-COVID, but Long-Term Trend Remains Unclear
Both non-retirement and total attrition have significantly increased in the last two years. In 2022, these metrics hit the highest level since the CEWD survey began in 2008.
It is unclear if the elevated attrition reflects a new normal post-COVID or some natural adjustment after a period of very low turnover during the height of the pandemic.
If elevated attrition persists, the energy industry will need to increase focus on retention efforts and programs to encourage workers to build long-term careers in energy. This may include placing a greater emphasis on employee health and wellness.
Companies Report Relatively High Adoption of Diversity, Equity, and Inclusion (DE&I) Practices
The survey asked participants to report on the adoption of 13 different DE&I practices. Response options ranged from “currently in place” to “no plans to implement.”
Survey results show favorable adoption of DE&I practices with 9 of 13 practices being adopted by 75% or more of the participants. Adoption was generally higher among larger companies, those with nuclear, and those with a dedicated DE&I leader.
The most adopted practice (87% of participants) was having DE&I strategies and goals within the company. The least adopted practice (27% of participants) was DE&I training for board members.
Tackling the Talent Challenge with Integrated Workforce Planning and Development
In response to recent workforce challenges, many companies have launched workforce planning and development strategies and initiatives.
However, these programs are often developed in silos, which leads to misaligned business and people strategies, a disjointed employee experience, and lackluster returns on investment.
A better approach is to implement an end-to-end workforce planning and development program. An integrated approach allows a company to establish a foundation from which multiple talent strategies can be developed, including:
- Anticipating and planning for changes in workforce sizes and skill needs
- Enhancing leadership capabilities and functional expertise
- Managing the workforce and retaining top talent
Implementing a successful integrated framework includes three steps—workforce planning, workforce assessment, and workforce development (see Figure 5.6).
Figure 5.6: Integrated Workforce Planning and Development
Source: ScottMadden
IMPLICATIONS
The energy industry faces new workforce development challenges. Concerns about an aging workforce have been replaced with a need to enhance the skills of younger workforce and develop talent in emerging technologies.
In addition, some degree of flexibility may be needed to attract and retain talent. For example:
- Recruiting talent from new sources (e.g., community partnerships, expanded geographical focus)
- Adjusting minimum requirements for certain positions (e.g., experience, education)
- Enhancing health and wellness offerings (e.g., onsite childcare, wellness funds)
Regardless of the specific approach, an integrated workforce planning and development program can provide a strong foundation that supports a robust collection of talent strategies.
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On Workforce Development
RECENT INSIGHTS
Available at scottmadden.com
ScottMadden posts energy and utility industry-relevant content and publications on a regular basis. The list below is a sample of recent insights prepared by our consultants.
