BY ANDREW MAXWELL, KPMG LLP
The smart grid transition has major project management and technical hurdles, but addressing the confluence of work force issues it creates can be even more challenging. Like many organizations that grew quickly in the mid-20th century, utilities will face a critical labor shortage because of the new skills the smart grid requires and the aging of their work force. Although it might be cold comfort, KPMG's experience has shown utilities face many work force issues that are common to other industries.
The smart grid rollout is gaining steam in the U.S. According to the U.S. Energy Information Administration, in 2011, 23 percent of U.S. electricity customers had smart meters. The impacts on a utility's work force can be direct: Fewer meter readers are needed because smart meters report data back automatically. Or impacts can be clearly inferred: Deploying a smart grid will require a combination of upskilling and broadening job responsibilities for the current work force or the addition of new positions or outsourcers dedicated to managing the new infrastructure. Leaving aside union issues, upskilling requires training and might shift the underlying job requirements. Adding new positions and shifting the roles of current employees will impact utilities greatly. "KEMA's Perspectives for Job Creation" estimates there will be 275,000 direct and related smart grid jobs for initial deployments and 135,000 steady-state support, including 32,000 utility positions transitioned over to smart grid operations in the U.S. alone.
Adding a New Layer
Smart grid infrastructure means utilities must ensure the teams deployed in the field are trained and knowledgeable. A parallel is how cable TV providers added Internet and voice in the 1990s and 2000s. The "cable guy" suddenly became a network support technician. The skills required in the field shifted from just cable installation and gear replacement to that plus network troubleshooting and even helping customers with their computers. Much the same way, utilities are shifting some roles to have higher education requirements and additional training. These skill gaps occur in every area, from safety to planning to engineering. Long term, the industry recognizes the education pipeline needs to grow and diversify to provide the talent.
Aging Work Force
Between persistently high unemployment and actuaries' crying wolf over the impending labor shortage for years, it might be hard to believe baby boomers really are starting to retire. Some have had to work longer than they planned because of the recession, but the labor shortage will have significant impacts on utilities soon. For some positions, such as line installers and maintainers, growth outlook is average, according to the Bureau of Labor Statistics, at 13 percent growth from 2010 to 2020, but the average age for a lineman is 48, according to the International Brotherhood of Electrical Workers. This demographic bulge might cause 30 to 40 percent of a utility's work force to turn over in the next five years, according to data from the Tennessee Valley Authority's "A Briefing on Knowledge Retention."
Capturing the knowledge of these longtime employees and transferring it to new employees is critical-some of those soon-to-be retirees built the power plants and distribution networks. Although training and education can shorten the productivity gap in the office, field employees require significant experience before they can work safely for themselves and the public. KPMG performed research with the Economic Intelligence Unit that found 46 percent of clients in the energy and natural resources sector identified retaining crucial skills as a high human resources priority.
Being Smart about Smart Grid
To get value from a smart grid, utilities must be able to take advantage of data the grid provides. Visibility shifts from seeing macro trends such as load and large unit outages to big data micro-level detail of activity of individual components throughout the grid. Managing big data sets and gaining real-time insight requires a combination of statistics, analytics and systems theory. This skill set is one of the most in demand in many industries, such as finance. Those skills in combination with the utility experience needed to be effective are rare. In the short term, utilities will need to recruit aggressively to attract the right talent and work to integrate them into an established organization.
Work Force Analytics and Planning
Utilities know how to forecast demand and load, but they must do the same with their human capital. Most utilities have a work force demand model that maps to the current labor and technology models. Sophisticated firms run that forward to see the effects of attrition and retirement and available labor supply. Leading firms take into account future skills, such as green and smart grid technologies, both on the market now, and even leave space for future, unidentified technologies.
A large and key part of the utility work force is in the field, and increasingly work force management tools can support field employees. Ideally with a smart grid, enhanced information about customer requests or outages can be managed centrally and assigned to teams that are best trained, equipped and positioned to deliver. According to the joint KPMG Economic Intelligence Unit survey, 50 percent of firms in the energy and natural resources sector responded they were increasing Web-based and mobile human resources platforms. The key is to deliver information and services to where the employees work. New human resources information systems, such as Workday, are entirely browser-based and delivered with powerful mobile apps. Mobility is the key to efficiently turning information into action in the plant and field.
The goal of the smart grid is to improve grid efficiency and reliability. The challenge is how firms turn information and data into action. The smart grid reduces truck rolls, but the physical infrastructure always will need trained people on the ground. Some systems are automated, such as self-healing networks and automated meters, but many actions still require human intervention, whether it's changing power generation or throwing a manual switch. Ensuring that people are part of the process means integrating the systems to give the field tools to manage work flow; ensuring the right skills, tools and material resources are available; and giving teams the informational job aids to help them successfully and safely work on new types of infrastructure.
KPMG has seen firms do large-scale enterprise resource planning (ERP) implementations with the goal of integrating the process front to back on a system such as SAP. The advantage is a single information technology infrastructure with most integrations' happening within the application suite. The challenges are the increasing complexity of a single, massive system and all the dependencies that creates, from longer implementation time lines to ensuring all related technologies work with the ERP smoothly, to synchronizing scheduling of outages and upgrades. We also have seen firms integrate best-of-breed systems. It creates challenges in integration, but it also allows firms to bring up key functionality quicker and independent of large ERP time lines. Also, using the native tools of smart grid technologies as a primary interface ensures getting the best and most current functionality from vendors. The downside is employees might have to use multiple applications with different interfaces to accomplish different parts of their jobs.
Managing the Change
Whichever direction is chosen, ERP or best-of-breed, rolling out smart grid technologies to the work force will require significant training and change management. Employees need to think the smart grid will be good for them and utilities. If it is pushed out wrong, employees could see it as additional work, a burden, cost-cutting move or misguided idea pushed by management and people who "don't understand how things really work in the field." But if it is rolled out right, employees and unions can see smart grid as an opportunity to stay on the cutting edge of power technology, learn new skills and provide better service.
Smart grid is arriving as utilities are about to experience a great shortage in engineering and line employees who will be needed to roll it out and maintain it. Handling the replacement of these upcoming retirees, the upgrading of skills and bringing on new talent will be challenges. With careful work force planning, a solid pipeline of talent and skills and successful management of the change, firms can make seamless this biggest upgrade since grids were first interconnected.
Andrew Maxwell is a director in KPMG LLP's People & Change HR Transformation Center of Excellence. He has more than 18 years of experience in human resources, HRIS, outsourcing, benefits administration, due diligence, risk reduction, cost control and information technology management. He advises firms on human capital strategies, and his major focus is bringing the right skills from across KPMG to HR technology projects such as Oracle/Peoplesoft, SAP and Workday implementations. Prior to KPMG, Maxwell was the chief information officer for a major HR outsourcer and a consultant at a global HR consultancy.
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