Navigating the Age Wave: The Maturing Workforce in the Utility Industry
A significant trend has emerged in the utility landscape that demands attention and adaptation: the age of its workforce. The average age of employees in the industry consistently surpasses the national average. As veteran workers approach retirement, rate-regulated utilities are being prompted with both challenges and opportunities. With an infrastructure that has historically been upheld by experienced professionals with significant training and industry-knowledge, utilities should use this opportunity to consider how best to invest in human capital to navigate these uncharted waters successfully.
Analyzing the Age Statistics
According to the US Bureau of Labor Statistics, the median age of utility workers is well over the national average, and the median age of accounting and audit professionals even higher. With more than 25% of the utility workforce over age 55, and a large portion of the utility industry being eligible to retire in the next decade, it is no surprise that the BLS also forecasts that the utility industry will see a net loss of jobs between 2021 and 2031.
These losses are not only due to retirements, but also from the relationship that younger generations have with their employers. On average, workers between the ages of 25-34 remain at an organization for just 2.8 years.
This is a stark contrast to their contemporaries aged 55-65, who stay with an organization for an average of 9.9 years. This demographic shift is not isolated to the electric and gas sectors.
The EPA recently published that roughly one-third of the water sector workforce will be eligible to retire in the next 10 years.
Based on this alarming statistic, it is no surprise that the American Water Works Association’s “State of the Water Industry” survey reflects a growing concern in the industry, with “aging workforce/anticipated retirements” being voted as one of the most important issues facing the water sector, moving from #8 in 2021 to #4 in 2022.
What This Means for the Utility Industry
The imminent loss of critical skills and the knowledge-base of an aging workforce has both immediate and long-term implications for utilities. Perhaps the most obvious change is the impending skill gap that will present itself when institutional expertise leaves the workforce. With years of hands-on experience, seasoned professionals are essential to the smooth functioning of utilities. As these employees depart from the field, there is a risk of a knowledge gap that could potentially hinder the operational efficiency of utility companies.
Conversely, as the utility industry braces for the departure of senior workers, it also welcomes a new generation of talent, who will introduce novel approaches to existing processes. The influx of young professionals will not only require an additional investment in workforce training, but may also come with an expectation that the workplace be reimagined to better suit their own preferred operational methods. This may materialize in the form of technological adaptation, or new approaches to remote work or office environments.
Turning Demographic Changes into Strategic Advantages
Though there are many challenges associated with the aging workforce, forward-thinking utilities will lean into the transition by approaching the demographic shift as a catalyst for technological transformation.
By embracing modern software solutions, data analytics, and automation, utilities can streamline workflows, optimize resource allocation, and enhance overall efficiency by institutionalizing the knowledge of experienced workers as they develop sustainable best practices for the next generation. New strategic technologies will help the utility evolve business processes over time through a program of continuous process improvement. The skillsets of workers needed for the future will not merely be a replica of today’s structure but can rather be an occasion to upgrade functions to better suit the needs of the business.
Utilities should not waste this opportunity by replacing existing personnel without a succession plan that takes advantage of the change to implement potential technological advancements. By using the transition period to implement system upgrades, when experienced employees do choose to retire, it will take fewer workers with decreased training times and faster learning curves to replace many industry functions.
Tomorrow’s workforce will be comfortable with artificial intelligence, cloud computing, and software-as-a-service technologies and will have a more digitally-focused mindset. Developing a “digital organization” will excite and retain new hires by changing the perception of utilities as a safe yet boring industry for young talent. Younger employees will be accustomed to streamlined data access and communications between operating units, which reduces the number of people involved. This allows utilities to place emphasis on the availability and use of key skills rather than on total numbers of personnel.
An aging workforce is not a human resources problem, but instead is an opportunity for utilities to leverage by implementing new solutions and foster positive change for the future of their organizations. The retirement of a cohort of skilled workers may represent the most significant opportunity a utility will have in the coming years to fundamentally alter how it carries out its business and upgrades its performance.
How Lucasys Can Help
As utilities confront their own business processes and explore the next generation of software solutions, Lucasys stands as an industry leader. Whether looking for new software or trying to get the most value out of existing solutions, Lucasys can provide insights into the latest accounting and tax issues facing the utility industry. To learn more about how Lucasys can help visit https://www.lucasys.com/solutions.