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A

Game Plan
for Retaining
for Retaining
Talent
By
James
Sowers
and
Sarah
Wooddy

46
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In the competitive
labor market, electric
utilities need to see
retention as a three-
part strategy.
PictureQuest

he most important corporate resource over the next 20 years will

T
“ be talent: Smart, sophisticated businesspeople who are tech-
nologically literate, globally astute, and operationally agile. And
even as the demand for talent goes up, the supply of it will be go-
ing down.” So warned “War for Talent,” a McKinsey & Company
report, published in 1997. It encapsulates the dilemma that faces companies
across the country today. And as more and more baby-boomers retire in the
coming years, the challenge will become even more daunting. How do you
keep your most astute and agile employees fulfilled and not looking for other
opportunities or seeking early retirement?
Even though many Americans are retiring later, most job projection esti-
mates show that the generations moving up through the workforce are not
large enough to replace the generations that precede them. The Bureau of
Labor Statistics projects a 14.8-percent increase in the number of available
jobs between 2004 and 2012. During this period, there will be around 21
million new jobs with only 17 million new entrants to the workforce. The
growing offshoring trend will help alleviate this shortage, but 1 million jobs
will still go unfilled. For this reason, a skills shortage may be more likely than
a labor shortage.
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JANUARY / FEBRUARY 20 0 6 47
The flight of key talent and low recruitment rates have
become disturbing trends across almost all industries during
the last decade, but the war for talent will become increas-
ingly intense due to the shrinking workforce talent pool.
While many signs of this phenomenon are visible in the
electric utility industry, the full brunt of the crisis is yet to
be felt. Many utilities are thriving today, but their workforce
management and retention processes are not.
A recent Conference Board survey of utilities outlined
three key challenges for the industry: recruiting young tal-
ent, creating incentives for baby-boomers to stay beyond
their retirement, and finding ways to pass critical knowledge
from one generation to the next. To boost recruitment and
retention efforts, industry leaders consider three factors as
the most critical, according to research by the Corporate
Executive Board:
■ flexibility of company programs to give employees more
decisionmaking power when it comes to changing a business
model—during a business process transformation strategy
or when reorganizing a function or department;
■ ability to provide competitive compensation packages,
both cash and noncash rewards as well as long-term equity
participation; and
■ availability of career development opportunities for em-
ployees who have critical skills or who are close to retirement
but have skills that must be passed on to the next generation.
The issues of flexibility, compensation, and development
of critical skills are to the main issues in managing the work-
force. Individuals demand greater flexibility in their career Connecting this talent across generations will allow orga-
paths, and organizations need greater flexibility from em- nizations to provide young talent with hands-on training and
ployees. People must connect across businesses, divisions, give experienced workers a way to pass on their expertise,
and regions in ways that promote high-quality decisions and thereby keeping their knowledge in the institution. Indeed,
fast execution. Succeeding in today’s workplace means that knowledge management and the development of young tal-
companies must offer more than a good paycheck. ent are impossible without creating an environment where
workers can connect and collaborate. Providing incentives
The Develop-Deploy-Connect Model as well as the means for cross-generational knowledge shar-
It comes down to the critical workforce—your “talent.” This ing may even facilitate improvement of best practices as
group is the proportionally small population of employees future generations are able to use new technologies more
who carry out the majority of strategic tasks and/or who have effectively.
skills that are vital to a company’s long-term strategy. For a Many companies place too much attention on acquiring
utility, such talent might be a group of first-line supervisors talent and spend less effort on developing it. In fact, some
with 20 or more years of experience who have the ability to industries almost expect talent to develop itself. But with the
train and mentor new recruits. high replacement cost and long lead time required to train a
For leaders who want to identify the critical talent that an new employee, that can be counterproductive. While many
organization needs to succeed, the questions are basic. companies rely on indicators like turnover rate to judge their
■ Which strategies, skills, and capabilities are crucial to the success, such data do not explain why employees leave, nor
company’s current and future success? do the data offer actionable information to help retain criti-
■ What workforce trends (e.g., supply and demand of engi- cal talent that is planning to leave.
neers) will have an impact on your ability to deliver value? If you focus on the end points of the employee lifecy-
■ Who supports your critical pools of talent within their net- cle—and not how you develop and use the employee in be-
work? Are these supporting people difficult to replace? tween—you risk losing your best talent. The dissemination of
■ Within your critical workforce segments, who possesses the best practices and retention of institutional knowledge will
greatest current and future potential? likely be unsuccessful; and expertise amassed by the baby
boomers will disappear.
James Sowers is the leader of, and Sarah Wooddy is a senior con-
sultant with Deloitte Consulting’s organizational and people perfor- It’s critical to concentrate on the things that employees
mance practice. care about most: developing their capabilities, being de-

48 ELECTRIC PERSPECTIVES
Knowledge management and the development of young talent are
improved by creating an environment where workers can collaborate.

ployed in ways that engage their heads and hearts, and


connecting to people who will help them achieve their ob-
jectives. If you focus on these three things, attraction and
retention largely take care of themselves.

Developing Employees

1
To “develop” is to provide the real-life learning that employ-
ees need to master a job. This doesn’t mean just traditional
classroom or online education—it means hands-on, chal-
lenging new experiences that stretch employees’ capabilities
and provide learning opportunities from peers, mentors,
and others.
Rather than push more information onto employees
through conventional training, it is more important that
they learn how to learn. Jim Hunter, director of the Interna-
tional Brotherhood of Electrical Workers’ utility department,
pointed out that it’s impossible to hire someone off the street
and expect him to be as experienced as a line crew member.
“From hiring to journeymen’s level, it’s a minimum of five
years,” says Hunter. “To get to lead level, it takes ten.” Plug-
ging employees (and especially new hires) into the network
of experienced talent will give them the opportunity to gain
PictureQuest

the knowledge that’s sometimes not documented in manu-


als and procedures. In the learning cycle, “who” you know is
often more important than “what” you know.
Given that utility companies depend on highly specific
FIGURE 1 knowledge and expertise, the value of a co-worker network
is extremely high. For example, one large energy company
THE DEVELOP-DEPLOY-CONNECT MODEL
saw the value of information technology (IT) in preventing
Finding assignments where people can grow and build the knowledge loss. In collaboration with human resources (HR),
relationships they need to succeed; and providing them with the IT group went through a skill-gap analysis and created a
capabilities (tools, resources, and learning) to achieve personal and leadership development program focused on new talent.
business goals. Company universities of learning and development also
offer programs specific to various employee development
needs as well as targeted professional training and an op-
DEVELOP portunity for exchanging ideas and expertise. In a nod to the
importance of hard-earned and often homegrown knowl-
edge, they often attract retired engineering faculty to develop
professional and job-specific courses to train and “re-tool”
Capabilities Networks
new recruits as needed. In 1988, there were about 400 cor-
porate universities; now there are more than 1,600. Several
RETENTION years down the road, it’s possible that corporate universities
could outnumber traditional ones, which currently total
DEPLOY around 3,700.
CONNECT One of the most famous corporate universities is GE’s Cro-
Providing employees Experiences tonville Management Development Institute. Crotonville’s
with the experiences mission is simple: Someone, somewhere, has a better idea.
that will give them the Focusing on the
GE tries to find who has it, learn it, and put it into action—
opportunity to perform networks people
quickly. Employees from all over the company and the world
at the best of their form to do their
jobs and the quality come to learn, communicate, brainstorm, and network, all
abilities and reach their in an effort to build best practices in one of the world’s larg-
full potential. of interactions with
each other. est companies. It’s a real, 52-acre campus with classrooms,
living space, dining, fitness, and recreation facilities, and

JANUARY / FEBRUARY 20 0 6 49
about 10,000 “students” a year—from new college hires to companies must continuously focus on their critical talent
GE’s chairman. Classes at Crotonville last from a day to three to ensure that their skills, interests, and capabilities evolve
weeks, and cover issues facing the company (and business in in line with strategic objectives. At times, this may mean re-
general) during seminars, lectures, and roundtables. evaluating the design of the job. It also may mean redefining
Generally, however, when it comes to training and de- the conditions of the job by offering telecommuting privi-
velopment programs that aim at documenting and closing leges and flexible schedules.
skill gaps, many companies do it in an ad hoc manner and As many utilities expand their operations across state
without a clear plan. According to a 2003 Conference Board lines, some employees will be asked to relocate. This change
survey of 150 HR managers, the respondents indicated that is not always welcome, especially by mid-career employees
the majority of top executives across industries do not have a for whom moving has never been a requirement of their job.
clear picture of future skill requirements. Of the companies, In addition, some young recruits may not like such disrup-
■ 66 percent do not have an age profile of their workforce; tions to their independence.
■ 63 percent do not have an inventory of the skills available A good balance between providing opportunities for em-
internally; and ployees to find the right fit for their skills and respecting their
■ 49 percent do not have an assessment of their company personal priorities is not always possible. But as the organi-
training and development needs. zation hones its talent deployment strategy and approach, it
becomes an easier task to provide the right job for the right
Deploying Employees employee.
Many utilities are exploring nontraditional approaches

2
Deployment matches the correct candidate to an important
job or project. Sometimes skills or positions that are critical to ensure that the companies retain and capture knowledge
today may not have existed just a few years ago—this is par- and identify and support critical talent. Knowledge transfer
ticularly true in energy companies that work in a deregulated programs not only connect young and experienced talent,
environment. If people learn the most in jobs that stretch but also offer new recruits an insight into a company’s op-
them, they perform best when they can discover and define
the role that will tap their desires and skills. Companies must provide critical employees with the tools and guidance
Even after people have assumed their responsibilities, they need to build social networks that enhance individual performance.

Corbis

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erations and help them find a place in the organization that is viewed in a positive light. Encouraging “communities of
matches their aspirations. But for knowledge to pass on ef- practice,” self-organized groups that form around a common
fectively, the new crop of recruits must be capable of absorb- mission or interest, is one such method. Writing the process
ing it and using their own talents to take it to the next level. into job descriptions and grading people on their perfor-
So, a successful workforce management program must run mance in accomplishing the task is another.
from the beginning to the end of the employment cycle. Us- A good example of this is the company that conducted a
ing testing to determine the best placement, using detailed senior design project at a leading university’s mechanical
job descriptions, and hiring for trial periods may reduce the and nuclear engineering department. A team of the com-
taking on and perhaps forced retention of under-qualified pany’s engineers worked with the students one day a week
workers or poor learners. Creation of competency models for six consecutive weeks, and each engineer worked with
and measuring a worker’s progress against them could help three to six students on a specific real-life task. Each project
identify high performers and build bench strength to replace was concluded with a summary report and a presentation by
baby-boomers in senior management positions. each team. This program helps the company identify future
recruits, improves the students’ skills, and prepares them for
Connecting Employees the challenges of their future profession. (See the sidebar,

3
To “connect” is to provide critical employees with the tools “Where Have All the Professors Gone?”)
and guidance they need to build networks that enhance
individual performance and improve the quality of their Winning the War for Talent
interactions with others. You need a methodical approach to An improvement in one area of the develop-deploy-connect
connect developing employees with workers that have the cycle often leads to an improvement in another. For exam-
knowledge and skills the developing employee needs. This ple, people develop better skills when they are deployed in
not only requires a formalized approach, but also depends stretch assignments and connected with others from whom
on the cooperation and commitment of both parties. Rather they can learn and grow. Likewise, effective deployment
than leave such connections to chance, organizations can do occurs when people have the knowledge, skills, networks,
a lot to initiate them, to maximize the quality and frequency and relationships they need to succeed. Finally, effective
of the knowledge transfer, and to ensure that the process connection happens when people are deployed in work that
engages their curiosity and satisfies
their professional aspirations. In these
Where Have All circumstances, they are more likely to
learn from and teach others.
the Professors Gone? Such workforce management con-
cepts aren’t new to HR practitioners, but
ne large “knowledge transfer” problem is the fact that a significant number of profes-

O sors in technical disciplines (such as electrical engineering) will soon retire—and many
colleges are not currently planning to replace them. So, even if the number of students
enrolled in engineering programs increases, many schools may not have the ability to educate
they haven’t always been embraced or
effectively deployed. Moreover, specific
solutions depend on each company’s
unique situation. But, by using the de-
them properly. And there is no
velop-deploy-connect model, an orga-
quick fix for this problem—a
nization can capture its institutional
declining number of engineering
knowledge and transfer it to the new
graduates for the past two decades
generation before it’s lost.
has now translated into fewer
The stakes are high in the “war for
candidates presently qualified to
talent”—those who cannot compete
replace retiring faculty.
risk losing their best people and, as
■ Since 1986, the number of en-
a result, jeopardizing earnings and
gineering bachelor’s degrees has
the ability to meet investor expecta-
declined 19 percent, according to
tions. Competitive advantage is hard
data from the Engineering Work-
to achieve by using a standardized ap-
force Commission of the American
proach, especially when it comes to
PictureQuest

Association of Engineering.
talent management and employee de-
■ By 2012 the number of electri-
velopment. By helping their employees
cal and electronics engineers will
develop their own business skills and
decline almost 11 percent according to the Bureau of Labor Statistics.
potential as well as deploying them to
■ Universities now graduate fewer than half as many people in nuclear engineering as they
assignments that stretch their abilities
did 10 years ago. The Nuclear Energy Institute reports that recent enrollment figures are more
and let them grow as leaders, employ-
encouraging: The number of students enrolled in nuclear engineering programs rose from fewer
ers will find it much easier to attract
than 500 in 1998 to 1,300 in 2003.
and engage their talent. ◆

52 ELECTRIC PERSPECTIVES

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