A variety of forces are fundamentally transforming the power and water utility sectors. For power utilities, the heart of transformation revolves around how electricity is generated and distributed, the reliability of the energy network, and the evolution of traditional relationships among interested parties across the electrical grid. For water utilities, many are seeking to rapidly mature core operations through accelerated digital transformation initiatives designed to increase efficiency, standardize work and better conduct asset management through data-driven decision-making.

Combine this with factors such as a multigenerational, hybrid workforce, the impacts of climate change, the push for cleaner water and energy, and macroeconomic uncertainty, and it’s plain to see why the utility sector is ripe for foundational transformations.

Comprehensively addressing people, process, technology and governance in an integrated fashion will help significantly in the transformational effort. In order to thrive, given the current and future anticipated environment, the most forward-thinking utilities are:

  • Investigating and confirming their strategic vision and supporting objectives, including the projects that support successful transformation.
  • Identifying how the current operating model needs to change in light of strategic and transformational goals.
  • Defining the transformation road map and confirming how programs of work will be delivered.
  • Assessing the human capital impacts of complex transformational projects and how core work can continue amid transformation.

Indeed, one of the most critical areas of change for utilities seeking to design their future operating models relates to a comprehensive people strategy. Rather than addressing elements of human capital and talent management in isolation, utilities must address all elements of a comprehensive people strategy to achieve transformational goals. This includes a holistic approach to addressing people management, spanning talent acquisition, development, engagement and retention.

Achieving transformational objectives requires focusing on all-things human capital, including:

  • Leadership: Addressing the sectorwide need to identify and develop the leadership required to direct companies into the future through transformation initiatives, and supporting new generations of leaders with training, mentoring and coaching.
  • Competency and skill development-alignment: Redefining the future skills and competencies required to deliver new products and services, and developing the critical communication and collaboration skills necessary to work together more effectively.
  • Recruiting: Identifying the channels through which top employee candidates can be identified, considering multiple factors including capability, diversity and other attributes.
  • Retention and advancement: Retaining and promoting talent and new team members through talent management strategies such as succession planning, development opportunities and enhanced performance management.
  • Knowledge transfer: Transferring subject matter knowledge and insights from experienced employees into new processes and methods, and committing to transferring the information directly from mentors to mentees.
  • Training: Providing access to training on a wide range of topics, such as utility operations and softer but equally important subjects like self-awareness, personality and working styles, problem-solving, decision-making, and conflict management.
  • Communication and change: Embracing a constantly changing environment by optimizing various forms of communication and leaning into change management as a core organizational skill.
  • Organizational structure: Evaluating and updating legacy organizational structures to reflect current best practices by reducing employment hierarchies.

The Changing Nature of Work

Utility transformation programs are redefining legacy ways of doing business and fundamentally changing the future of work in the industry. A transformation-receptive culture that puts people first is valued as a uniting factor — a positive differentiator — and considered a tangible asset utilities must properly manage, especially in the current uncertain environment. All adjustments to a utility's people strategy must be in line with the overall goals and objectives of the company. The key to achieving transformational success is effectively addressing this human side of change.

Managing human capital in the utility industry is enhanced by thoughtful planning. Find out how business strategy and consulting can help organizations improve performance and achieve transformation objectives.

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Chuck Tooman is a senior change management lead at 1898 & Co. He has broad experience assessing, developing and implementing comprehensive transformation programs for utilities and other capital-intensive businesses around the world.