Study Says Utility Industry Faces Severe Manpower Shortage as Majority of Its Workforce Plans Retirement

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It’s more than two years since the major 2003 blackout and in the last few months there have been several power failures following hurricanes and floods. Yet before the decade is out, the nation is likely to face numerous blackouts according to a new Hay Group study unless the utility industry immediately addresses dangerously inadequate staffing levels.

It’s more than two years since the major 2003 blackout and in the last few months there have been several power failures following hurricanes and floods. Yet before the decade is out, the nation is likely to face numerous blackouts according to a new Hay Group study unless the utility industry immediately addresses dangerously inadequate staffing levels.

An Aging Concern

According to a new study by Hay Group, a global organizational and human resources consulting firm, a substantial number of mission-critical employees in the utilities industry from the executive suite down to the lineman are rapidly approaching retirement age in the next four years.

The likely retirees are in key roles including management, senior engineers, operations, nuclear operators, gas transmission specialists, and control supervisors. The Hay Group Utilities study found that on average these employees are older than their counterparts in other industries and represent approximately 50% to 60% of the industry’s knowledge assets.

According to the Hay Group study, 40 percent of senior electrical engineers and 43 percent of shift supervisors will be eligible for retirement by 2009.

The study also found that more than two-thirds of utility companies surveyed have no succession plan for supervisors and 44 percent have no plan for vice presidents.

“The electric and gas industries could easily collapse if they don’t put a plan in place for staffing, retention, recruitment, and training” said Mike Brown, Senior Consultant and Utilities Sector Leader for Hay Group. “We need to seriously question if we will be able to keep the lights on in the next ten years.”

This corporate crisis began in the tumultuous years of deregulation 15 years ago when utilities were in the business of merging and downsizing. Few utilities achieved the anticipated gains from the mergers and staffs were cut across the board.

Recently, crises such as the blackout of August 2003, power failures in the Gulf Coast, and ongoing post-9/11 security concerns underscore inherent weaknesses in the nation’s electric power system. The Hay Group study found an intense need for power engineers as well as for a broad range of other utility personnel in the coming years.

Shrinking Talent Pool

The study also found that this issue goes way beyond human resources issues of retirement, recruitment, and retention and needs a comprehensive approach that includes academia. The utility industry’s staffing problems start at the undergraduate level. Universities are now graduating an average of 10 power engineers per state per year, compared to 2000 graduates in the 1980s. In contrast, such countries as India, China, and Russia graduate a significant number of power engineers each year.

Surprisingly, salaries are more than competitive, with senior power engineers earning 30 to 40 percent more than computer science engineers. The base salary for these engineers is $100,000. Yet today’s most talented, promising students are focused and directed toward careers in aerospace, biotechnology, software development, and chemical engineering.

Diversity is also an issue. According to the National Academy of Engineers, the number of women in engineering is declining. Women account for less than 17 percent of engineering graduates compared to 20 percent a few years ago.

“Hay Group has started to work with electric and gas companies to address these critical issues,” said Brown. “These firms need a comprehensive plan to address retirement, succession planning, career development, retention, and rewards. But given the shortage of talent, they should go further to include job and organizational design, job sharing, and work systems.”

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About Hay Group

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Hay Group (http://www.haygroup.com) is a global organizational and human resources consulting firm that helps its clients -- Boards, CEOs, Executives, and HR Managers -- on virtually all aspects of their people-related business issues. Founded in 1943, Hay Group has over 2,200 employees working from 78 offices in 77 cities and 43 countries.

Our areas of expertise include:

-- Design and analysis of organizations and jobs;

-- Talent management through assessment, selection, and

development of executives, managers, and teams;

-- Compensation, benefits, and performance management;

-- Executive remuneration and corporate governance; and

-- Employee and customer attitude research.

Hay Group works with nearly three-quarters of FORTUNE’s top-50 Most Admired Companies, as well as many mid-sized and non-profit corporations, public institutions, and governments.

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For More Information

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For more information, please contact:

Jeff Meyers, 215-861-2623 or Jeff_Meyers@haygroup.com

Hay Group | The Wanamaker Building | 100 Penn Square East | Philadelphia, PA 19107 USA

This press release was distributed through eMediawire by Human Resources Marketer (HR Marketer: http://www.HRmarketer.com) on behalf of the company listed above.

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Jeffrey Meyers