Three steps to boost employee retention in the power and utilities industry

While rewards and a stronger compensation package are often the primary levers pulled to fuel a strong workforce, that may not be a viable option for utilities in the current environment. Salaries can be capped by regulators and rate case budget allotments. Traditional defined benefit pension plans, which many utilities used to offer, have become too costly to maintain and are off the table for newer employees. Utilities need to consider alternatives, such as closely examining essential areas of their talent management strategy and how talent needs to be managed across all parts of an organization. A clearly understood employee value proposition (EVP), support in building career and professional development programs, and a robust succession planning strategy can be the framework for a refresh of utilities’ efforts to fortify their respective workforces against a potentially detrimental talent loss.

Frustration in middle management builds

Employee tenure in the P&U industry has decreased by 36.8% in the last decade, according to the U.S. Bureau of Labor Statistics. The drop is particularly pronounced among millennials and Gen X. This has created a sense of urgency at utilities to develop a workforce strategy that resonates with both current and future employees and meets the needs of the wide variety of individuals frequently employed in the industry.

One newly appointed middle manager at a large Northeast electric and gas utility has been at his company for more than 15 years. He received his undergraduate degree in electrical engineering and had ambitious plans for building a career in the utilities sector when he started working as a union engineer. Time has become an issue, however. Two to three years of field experience were needed for advancement. The path to get that experience was complicated, requiring extensive networking and a track record of more than 10 years of strong achievement before he was able to obtain a field position.

Now in his late 30s with two small children, the slowness of the journey has left him wondering if he wants to keep climbing. He moved out of a union position into a management role and likes being a mid-level manager — he may elect to stay at that level at his current employer. He has many friends, however, who either had less success moving through the organization or weren’t willing to make the same time commitment and left the organization.

Here are three steps that can help P&U organizations boost employee attraction and retention:

1. Evaluate your employee value proposition

A strong employee value proposition articulates the benefits employees receive for bringing their skills and talent to an organization. It is created to help individuals see, at a high level, why they should join, grow with and stay at a given company. An effective EVP begins with a review of what’s important to both recruits and employees. In a 2023 EY survey of 51 utilities employees, data revealed that the top two reasons people joined and stayed in the industry were compensation and retirement plan benefits. Data points such as this are essential for P&U companies to consider, as they can be leveraged by organizations that want to adapt their EVP to meet changing workforce expectations.

In a case where organizations are limited in how much they can increase compensation and benefits, P&U companies should dig further into other factors that motivate the specific talent they are trying to attract — motivators may vary by generation, geography, work type and more. As an example, the 2021 EY Gen Z Segmentation Study showed one of Gen Z’s top work priorities to be wanting to make a difference in the world. Because of their role in power generation and distribution, utilities are uniquely positioned to weave their role in energy transition, the rise of renewable energy sources and efforts to combat climate change into their EVP.

Diversity, equity and inclusiveness (DEI) is another way to make closer connections with Gen Z and millennial employees. The 2022 EY US Generation Survey reveals that 76% of millennials would leave an employer if DEI initiatives were not offered, and the 2022 EY Work Reimagined Survey found that DEI is seen by employees as an area that demands greater attention and action. Further exploring this topic and how it may apply for different types of employees who work across an organization and then drawing this topic out in an EVP could help organizations positively impact perceptions about P&U companies, both for existing talent and potential new hires.

2. Focus on career growth and professional development

Utilities need to address the quality of available career growth opportunities in the industry. The aforementioned 2023 EY survey found that the most common reasons individuals leave an organization is lack of career progression opportunities. Among different demographics, millennials and Gen Z workers are particularly interested in opportunities to better themselves professionally.

Career growth opportunities not only attract potential candidates but also contribute to employee retention. A career rotation program is one option, giving personnel the ability to try different jobs in the same organization. This would not just be for entry-level talent in the corporate office but also for talent at mid- and more senior levels, as well as in the field and/or call centers. While these programs can take time and effort to get right, they can provide long-term benefits to both the employee and the organization.

It’s also a way to build a workforce that can be more resilient and evolve with the changing needs of businesses and their customers. In the 2021 EY Power and Utilities Digital Transformation and the Workforce Survey, 85% of executives surveyed acknowledged that providing their workforce with the right skills will enable their organizations to succeed in the coming years. Yet just 13% and 44% indicate that they strongly agree and somewhat agree, respectively, that they have a plan in place to provide their workforce with the skills and development opportunities they will need to evolve as professionals.

The purpose of attracting and retaining top talent is not only to support an organization’s ability to grow today but also to drive long-term success. By bringing in the right talent and supporting a culture that empowers them to grow their talents and skills, P&U organizations can do more to verify that they are tapping their wide variety of employees to find their leaders of the future and then support these individuals’ ability to gain the experiences they need to be the future managers and leaders who will guide the long-term success of the organization. They can make resilience a priority for both employees and the broader organization.

3. Identify what motivates your leaders

The final key in retaining top talent at utilities is understanding what motivates the next generation of leaders. The 2021 EY Gen Z Segmentation Study, for example, shows that Gen Z’s top workplace priorities are:

• Enjoying work
• Being the best at what they do
• Making a difference in the world

The call of a senior leadership position and even the money it may offer could end up not being sufficient to motivate top talent to stay around for this progression. Providing engaging, skill-building experiences for all employees and ultimately tapping into and understanding the motivational drivers of top talent from across the organization will be ever more essential as utilities look to build their workforce for the future. It will also create more options when matters of succession planning need to be addressed.

Given the plethora of options for employment and relative ease with which desirable employees may be able to find new jobs, utilities should examine their succession planning activities and consider activating additional and evolved strategies, potentially even at more junior levels than they do currently. Utilities can further employ tactics such as “future-back planning” to define what they want their leaders of the future to look like — skills, behaviors, knowledge — and then explore their full employee population to understand who a strong candidate for focus and development might be.