This is a focus on the energy sector - the big business / sector drivers and how they're influencing the way people work in those sectors, the opportunities opening up as the industry repositions itself in light of the climate emergency, and the impact on recruitment and retention of talent .
The transition away from fossil fuels and the need to secure independent energy supplies mean organisations are shifting their focus, collaborating with competitors and moving to protect the skills and expertise they need as they face stiff competition now hybrid working is so prevalent.
From Northern Ireland, we hear that there 's a pressing need to address the shortcomings of the education system that isn't preparing young people to fulfil the available roles and how employers have to step in to fill the gap.
AWA Host: Karen Plum
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00:00:00 Karen Plum
Hello everyone. Given the state of the climate and the war in Ukraine, there's a big focus on energy at the moment. Energy security, the transition away from fossil fuels and the development of infrastructure to support renewable energy sources. Inevitably, these seismic changes have an impact on the world of work in the sector. Let's find out how it's adapting.
00:00:26 INTRO: Welcome to the Changing the World of Work Podcast where we provide insightful, practical content to untangle and demystify workplace change. I'm Karen Plum, director at Advanced Workplace Associates, where we combine science with nearly 30 years’ experience, helping organizations change the way they work, for the better.
00:00:51 Karen Plum
In this focus on energy, let's start by looking at the big picture. I asked my colleague Pat Turnbull, a Senior AWA Associate based in Chicago, to set the scene.
00:01:03 Pat Turnbull
In 2015, the UN set up the 2030 agenda, which is 17 sustainable development goals to be achieved by 2030. And the remarkable thing is that all 193 UN member countries signed the agenda to create the future that we want in 2030 and they committed to achieving a carbon neutral footprint by that time.
So here we are, and virtually every corporation and every individual on the planet consumes energy, so how do we get there? So companies are under a lot of pressure right now, on setting themselves on a transformative path.
I was lucky enough to be a guest at a renewable and energy storage conference recently and I was just struck with how important this renewable sector is, because it is key to helping us achieve a carbon neutral footprint. It helps conserve our natural resources and it really is set to play a central role in economic recovery, as we move forward.
I was struck at this conference by the fact that renewables itself and energy in general is really a multi-faceted multi, multi, multi billion dollar sector. And it includes companies like utility companies that buy power and deliver it to the average consumer as well to corporations. It includes very large corporates like Microsoft and Google who are storing all of our data in the cloud and have huge, huge data centers that consume lots of energy. So they enter into contracts with companies who develop and produce energy to get the right mix of renewables versus traditional energy sources.
There are developers who are looking for land and developing wind and solar farms and innovative companies that are developing new forms of hydroelectricity and nuclear electricity.
Even bankers are involved in this - bankers and investors because they find ways to provide tax credits so that as companies are transitioning from old to new energy sources, there are ways to offset the investments and offset traditional energy sources. It's fascinating to look at the sector in a macro way.
00:03:43 Karen Plum
Pat told me that many companies at the conference she attended were asking the big questions associated with the many challenges of this rapidly changing landscape.
To explore how oil and gas companies are responding to the issues, I spoke to another AWA colleague, Sophia Fonseca, a Senior Associate based in Houston. I started by asking her to summarize the big drivers in the energy sector at the moment.
00:04:08 Sofia Fonseca de Nino
Sustainability has become top of mind because the companies are trying to reach net zero and you see that across the board all companies are really keen on establishing policies that help achieve that. Of course it's happening in the refineries, it's happening in the supply chain bringing the oil or the gas out of the ground and all of the companies are investing in renewables.
So you see the major oil and gas companies have rebranded themselves with the idea that now there are energy companies and they have wind farms, solar farms, and they're investing a lot of money in the energy transition, so that is a key element that is affecting our workplaces as well.
You see a lot of the companies after COVID reducing their footprint because across the board everywhere, including in the tech sector, in the health and science sectors, we see that people are using some of the virtual and remote working capabilities, which means they're coming less days into the office. So that sustainability net zero reduction mindset is now becoming a footprint reduction driver that we are seeing also on the real estate side.
Generally, if you speak to real estate agents in Houston, I mean the Gulf Coast, you see a reduction of footprint - there's a lot of subleases happening right now, and there has been at least a quarter of all the real estate in Houston that was empty, so that's a really big number.
There's large blocks of real estate that are not used. In fact here in the energy corridor there's several large buildings that are being changed into condominiums, moved to become residential, multi use buildings because they've sat empty during the pandemic, and people have consolidated buildings and they now are ready to be changed in their use.
00:06:30 Karen Plum
I was interested in you mentioned the incubator. Can you tell us a little bit about that incubator and how companies are working together, collaborating?
00:06:38 Sofia Fonseca de Nino
Yes, in Houston because we also have a big driver within the healthcare industry, we started to see incubators first related to the health and tech joint ventures and now those move to the energy sector. They've always existed because the move to automation and digitization has been here for more than a decade, and we've seen lots of things in the space of artificial intelligence, from the geo techs that are using new applications to find gas or oil, all the way through the supply chain to applications for payroll or moving transportation, logistics.
So the ventures are looking at ways to streamline the entire operation from the point where you draw it out to the point that you deliver it and those startups were happening, sometimes even within the companies. But having an incubator where money is being funded from the big oil and gas companies into that venture, the idea of innovating together.
A lot of the startups start with a topic they want to improve the logistics and transportation sector and they are doing something specific to track ships for example. Every company is trying to do that. Figuring out how to support those apps that are going to help everybody streamline how operations happen because that reduces the footprint if you've got ships that are full in there, you've got to have less that are moving across the oceans.
There's a driver to make that efficient, and all the companies are doing that, so these innovation labs have lots of beautiful events that bring all of them to panels or you know, lunches to both support them financially but also with content - bringing the problems and then the startups are finding ways to solve them and then many of those are moving into the energy companies and they are scaled larger as they find those solutions.
So it's a real amazing scene to watch Houston become a startup related to the energy and sustainability ventures. It's an exciting development and there's a lot of money being funneled into those efforts.
00:09:22 Karen Plum
And are you seeing that the companies are being less competitive, if you like? It seems quite progressive and innovative that previous competitors would now be effectively collaborating.
00:09:35 Sofia Fonseca de Nino
I think that each company has its own competitive strategy that is very unique and very closely guarded vision. But those are just typical Fortune 100, Fortune 500 companies have their own mindset about how they achieve their targets, but within the space of innovation there is a great desire to collaborate because we know that we are all trying to achieve some larger good and we also know that we are in an energy transition that is going to last quite a few years because we're not ready to scale what we have found in the renewable world yet.
It's not happening with enough profit that it is scalable. The electronic vehicles having enough stations, the batteries lasting long - everything is moving in the right direction, but the infrastructure is not there. But you can hear collaborative conversations for how to solve the problems.
Also for the desire to have Houston lead in that space because being the energy capital means that we have to be the leader in the renewable world as well, and so in that desire, groups like the Greater Houston Partnership Association, for example, is driving a lot of that collaborative effort, so you've got financial, or you've got all the universities they have angel investing sessions where you see different venture capitals presenting and investors there, they're funding the efforts.
So it's a really wonderful scene, they are now calling it the third coast 'cause we've got Palo Alto and Silicon Valley, we've got the East Coast with all the great universities - MIT, Harvard, Yale - and now they're calling the Gulf Coast the third Coast because there's so much investment happening.
00:11:46 Karen Plum
Has this really ramped up over the last couple of years or has this been building for quite some time?
00:11:53 Sofia Fonseca de Nino
It's been building for quite some time, but I think the pandemic accelerated the hybrid mode of work as all of us know, and these tech hubs position themselves to continue leading in that space and in keeping the community connected.
00:12:11 Karen Plum
And I guess the most recent climate change report and the climate change summit in Glasgow last year also put a very big spotlight on the climate emergency.
00:12:24 Sofia Fonseca de Nino
It is the case I think stakeholders are also requesting that as investors in the companies and so it's become a mandate from the bottom up. Also, employees are requesting it and so in order to attract and to retain the young bright people coming out of universities with the greatest technology and the newest ideas.
The companies have to be able to show that they are investing in sustainable, in net zero aims. They have a plan so you see it across the board that there are people goals, space goals, technology goals to help achieve health for the climate of the planet.
00:13:14 Karen Plum
Have you seen much movement in terms of recruitment? Are energy companies losing people to other energy companies, or indeed are they losing them to other industries?
00:13:27 Sofia Fonseca de Nino
During the pandemic, I think most energy companies had huge losses of employees because nobody was driving, so a lot of things were not moving and therefore there was a big hit to the bottom line and it then moved companies to transform internally. So we have seen every major oil and gas company go through a process of transformation and that means that there's been a movement of people from energy companies to other industries.
And also hires from other industries into the energy companies to move that transformation into a more tech minded mindset. Of course you need the core parts of the business to be intact because you still need to drive. What I've seen is a lot of outsource.
Many departments, and I think that's a general idea that some of the departments that are not core become outsourced. So in some of these incubator panel sessions you hear that it is happening across the board. And there are waves. There were many, many layoffs during the pandemic, and then you've seen new hires.
You drive, you see tons in the energy corridor. The last few weeks we've seen license plates in cars from all over the United States, so that's always an indicator - OK, we're driving again, and people are moving into Houston!
00:15:10 Karen Plum
Right! I was just wondering, is the energy sector still an attractive sector for people to move into?
00:15:17 Sofia Fonseca de Nino
I have many friends living in Houston that have been in the oil and gas industry for generations, and so there is a joy about that field because it has made Texas what it is and there's the joy now as some of my friends’ children become petroleum engineers.
There is a sense of pride because it is such a part of the ethos of their community. But now the mindset shifts to say, now we've got to do this better than any other generation has done it.
We see what's happened in Europe, when we have been challenged with Russian oil not moving into Germany, for example, that it has affected the quality of life. Because we are a fossil fuel driven world. So the young people that I see - you know I teach at the University of Houston and we're right next to the engineering school - so I hear students that are part of the petroleum engineering department and I ask some of them why do you feel that this is a field still that appeals to your generation.
And they respond saying, we have a duty to do this better and better, to be more mindful, to make sure that we're drawing it out of the ground to drive our economies, which is still going to happen for the next few decades and do it better and cleaner and make sure that we're applying technology to it. So they have a sense of duty and a sense of innovation that it's really commendable.
00:16:55 Karen Plum
Pat reinforced Sofia’s experience of the collaboration between organisations.
00:17:01 Pat Turnbull
There's an exceptional alignment of values between these different companies and different parts of the distribution chain, so there's lots of sharing amongst people in the industry. And so they have challenges like, I'm losing talent to the Googles of the world, who wants to work for a utility company, it's just not as sexy as the tech sector.
So there was talk about utilities shouldn't think of themselves as an energy company, they should think of themselves as a big data company because that underpins everything that they're doing in terms of how do you measure electricity and energy and what sources, where does it come from - so highly underpinned in big data and data analytics.
And also the sector is ripe for mergers and acquisitions because of rising costs and market volatility, they're all looking at ways to come together and create a stronger infrastructure for delivering back to basically the world population.
So they're looking for innovation. They're looking for skills. A new skill set. They're focusing on changing needs and all of that impacts the way that they look at culture, the way they look at people.
Each person is a little engine as it was described to me, and managers are really struggling with managing a remote distributed workforce. And how do they unlock the potential of each of those little engines in there organisation? So I think the key in this sector, from what I saw, was how do we create the culture and the opportunity to attract and keep the talent that we're going to need for the future of work?
00:18:44 Karen Plum
For a perspective from an energy company, I talked to Gordon Parkes, Executive Director People and Culture at Northern Ireland Electricity Networks. I asked him for his perspective about the big drivers in the sector.
00:18:58 Gordon Parkes
Well, for my business NIE Networks, we're an electricity network business and our role is to facilitate the transition from fossil fuels to renewable energy and government have set targets specifically for net zero by 2050, and these targets were set prior to the current crisis in Ukraine, which is now we believe accelerating this transition where it's very important to have our own independent supply of energy and electricity that's generated here in this part of the world.
When you take a look at Northern Ireland where we're based alone, 2 billion is currently spent on fossil fuels, and that is 2 billion it could be spent in the local economy here, which will generate jobs, generate skills, and ultimately generate more reliable and cheaper electricity for all.
So it makes sense not only from a sustainability point of view from being good for the planet, but also it makes good economic sense in the long term to invest. But that investment needs skills. And this sector has been on a downward trajectory since many of the organizations over many, many years have been reducing costs - quite rightly to ensure the customer in relation to their bills don't see an increase in their costs.
The network businesses, in our case, we're roughly about 20% of the customer’s bill. We used to be about 25%. So through 40% efficiencies over many, many years, we have now become a very efficient business. And we've got very good at that. So our two primary drivers have been keeping everyone safe, our employees and our customers and also costs.
But the drivers now have to be innovation, sustainability and growth and those are very different drivers and they require different skill sets. And this is at a time when the labor market has, for the last 25 years, not being as tough. Right now, it's a candidate led market. 50% of employers according to latest CIPD research, it's 48 gone up to 50% of employers cannot fill current vacancies and at least 50% of those companies are going to have vacancies go unfilled the next 12 months.
So, massive challenge in terms of growth and innovation at the same time as the skills and the labor market has never been in such a difficult place.
00:21:14 Karen Plum
What sorts of skills are you particularly short of?
00:21:19 Gordon Parkes
Now, it is across the board. Up until 2-3 years ago it was primarily IT skills and electrical engineering skills and what we've done very successfully is introduced a number of partnerships with local universities and local college, and we provide scholarships for young people where we select them at school level and then we sponsor them through their degree or their NHC in engineering.
And that has worked very well in both the engineering side and the IT side, where there are particular shortages. Grow your own, basically. By growing your own you get a higher level of loyalty and commitment. But now what we're seeing is that functions where we could attract very strongly skilled people from externally, such as HR, procurement and marketing, comms, all those sorts of roles, it's just taken us nine months to fill a comms role.
We haven't successfully filled an HR role - we've had to re-spec the role and basically not look for the level of expertise we originally had, basically make it more of a training role to fill those sorts of roles. So it's across the board - administration roles as well.
Now we're seeing that at the same time as we also see when we go out looking for people, people with the wrong skills. So there are skills mismatches in society that we've been collaboratively working with locally here to try and resolve.
They happen at 2 levels. There's the skills mismatches of the individuals who get left behind by an education system that's primarily academically focused and those that are practically and vocationally based end up not getting qualified to a level, what we call a Level 2, which means they're not even qualified at a high enough level to apply for an apprenticeship.
So again, we need to do more for that group, and certainly in Northern Ireland here that's between 30% and 40% of the labor population, so there's a huge emphasis needed to bring those people in and make them capable of being employed by providing outreach programs in what we call entry level programs to ensure that where the school education system has failed and that employers step in and then provide entry level programs so that they can attend apprenticeships.
Back in the area where there's an issue is, too many young people not getting the right career advice and studying the wrong qualifications and coming out with qualifications in particular sectors where there's no need.
So the skills mismatches that exist are two levels. Highly qualified people with degrees, but they're the wrong degrees. I'm not mentioning a particular degree, but maybe there are lots of good arts degrees, but there's a number of them will not get you employment. And more science related degrees are needed and we know that there needs to be more of an emphasis on STEM (Science, Technology, Engineering, and Mathematics). So you get at the two levels - at the higher level the wrong degrees and then at the lower level, people who are very practically oriented and not gifted academically, being left behind
And employers can do a lot to provide programs between schools, colleges and the employment group. That all needs to happen in collaboration with each other as employers. No one employer can do that on their own.
00:24:09 Karen Plum
Given that we're normally expecting to see organisations in competition with each other, how does it work in practice?
00:24:16 Gordon Parkes
Now you’ve hit the nail on the head there Karen! I mean, if we don't do this and we just decide we're going to be selfish about it, and we will train our own, what happens is we spend 70,000 training an apprentice -that's what a craft apprenticeship in our sector costs - if we do not train also for our contractors, our contractors will simply pinch the people that we train because they will offer a different set of terms and conditions that maybe don't have the training overheads that we have so they can offer better terms and conditions.
So we're doing all the investment in the training and we become a training Center for our contractors. So isn't it much better that we say to our contractors - we're also going to provide training facilities - you can use our facilities, you can use our trainers. And we get the local government support to do that, so collaboration with the contractors is one.
We also know that the sector’s going through huge automation – technology’s, driving automation and a lot of manufacturers are manufacturing brand new systems to go into our network where it means, for example, if there's a fault in a rural area, you no longer need to send a team out. That can be done remotely through an automated process.
The manufacturers of that equipment also need the skills that we have and again working in collaboration with our manufacturers to create training programs where we all feed from the same training pool and we're not robbing each other of key resource. We’re all actually using the programs that we have where, for example, we can take our engineering graduates from our premises and place them in the manufacturing company.
They become aware of the equipment and then when they go onto out network, the collaboration means that we've got fully skilled people that can work across both the manufacturer and also the supplier. So collaboration with contractors, collaboration with manufacturers and then the third area of collaboration is energy and utility.
Skills are merging. If you think of, for example, oil heating, it's going to be replaced in the future by heat pumps. Heat pumps merge the technologies between water and plumbing and electricity and so therefore a water employee, a gas employee an electricity employee, the skills there will merge in terms of apprenticeships.
So we're developing and we've been working with the local government here to develop an entry level, joint utilities program which allows young people to train across the sectors in multi skills so that they can be trained in electricity, gas, could be trained in the water system as well and then they can eventually specialize, but they've got the skills to be able to introduce heat pumps and install heat pumps into the future.
00:26:38 Karen Plum
So how are things looking in terms of retaining your key talent?
00:26:44 Gordon Parkes
It's well known that hybrid working has become exceptionally popular and is in high demand now from employees primarily accelerated by COVID. It was happening prior to COVID, but we've seen a huge acceleration. As a result of that, we've certainly had to up our game because in this little part of the world with the water between us and the mainland we were very good at retaining our employees and also regional wages exist.
And we all know that London pay more than the rest of the UK. But there's an even bigger regional wage difference between Northern Ireland and the rest of the UK, and the difference primarily between prior to COVID between London and Northern Ireland, is about 12% in terms of wages.
What we're seeing now is as a result of hybrid working and desktop engineers and design engineers and highly skilled IT staff, they're getting offers from companies based in central London saying - you continue to live in Northern Ireland, continue to work in Northern Ireland, we'll see you maybe a couple of days a month at the most. You can do your work here, and they're offering wages we’d find it very difficult to compete with.
So COVID has meant that regional wages just no longer exist. We have to now improve our wage structures and not only wage structures, but the entire employment practice, including - we've not just looked purely at hybrid working, we've looked at our whole flexible working, part time working. Everything’s been in the mix and it's been an integrated collective approach based on the needs of our employees that we've really accelerated significantly in the last two years because the retention piece is becoming hugely important for us.
We're still in a good space, we're retaining 94% of employees, but it was 97% prior to COVID and prior to hybrid working, so we're seeing good people getting headhunted and that's becoming more regular. The benefit is twofold. For the individual, we're having to look now beyond the terms and conditions and into the development process for individuals, providing greater skill sets, having people with day jobs, but also with portfolio roles.
In our organization, for example, people love a good storm because it's the best team building event we can get. And suddenly your HR person becomes a call handler in the storm and people love that dynamic - gives them insights into other roles and lets them see what it's like in a crisis.
So therefore we're actually playing to the advantage of the fact that we have these difficulties at times in the year when weather is very unkind to us and we use it to help develop our skill sets in our workforce. That in turn means that we don't have to outsource those skills, we've got them internally so, but rather than go in in the middle of a storm to try and find an extra 50 call handlers, we've already got them inside, but they tend to be our HR staff or finance staff, and people who are primarily support staff suddenly becoming frontline staff.
00:29:28 Karen Plum
Yeah, so everybody pulls together. Do you think that's going to result in people perhaps staying in the organization longer?
00:29:35 Gordon Parkes
I think if we get it right, yes. The key is to recognize now that we like majority of employers have five different generations in the workforce all at once. And it's about maximizing that, but using for example, the generation that have 30/40 years’ experience mentor the younger generation and vice versa. We've got a 2050 group that we've set up, which is the younger team that are saying OK, what is life going to be like in 2050? And they're educating the generation that have been with us for 30 and 40 years on what the future is going to look like.
So using all the different groups in different ways to create interest, to create an energy within the organization. and using the intergenerational piece to an advantage rather than a disadvantage. And we found that we have had to look at our terms and conditions and say there are certain aspects that apply to the longer serving people that younger people aren't interested in.
Their big thing for example, is younger people aren't interested in employment for life anymore. It's employability and skills and so therefore our career within NIE has to say, yep, we're going to give you that employability, but we're going to move you into different roles, we're going to move you around. So rather than going to some other employer to get the new experience, have it with us and get it from us.
00:30:47 Karen Plum
I'd like to thank Pat, Sofia and Gordon for coming onto the podcast and sharing these great insights into the challenges and innovations in the energy sector.
I'm going to wrap up this episode with a final word from Pat, which I think neatly sums up the landscape in terms of the energy world of work. And don't forget, AWA are working with companies worldwide to address the issues she highlights. If you'd like to talk to us, there are details in our show notes.
00:31:17 Pat Turnbull
People that work in this sector are just like other people. They've had a taste of working from home and not traveling as much to do client development and so even though the knee jerk reaction is - everybody come back to the office - not everyone is happy about it, and it's part of this struggle.
So I think that they are looking for that balance, how do we implement emerging workplace models like hybrid to attract and retain the talent, create higher workplace satisfaction, support health and wellbeing of their employees and still get the job done. So I think hybrid in this sector is absolutely part of the equation that is evolving.
00:32:03 CLOSE: Thank you for listening to this episode of the Changing the World of Work podcast. Please follow or like the show so you don't miss any of our content. You can find more information on this episode in our show notes, including a link to the AWA website, if you'd like to know more about us. Hope to see you next time. Goodbye.