Energy & Utility Skills brought together utility HR Directors, investment specialists and human capital experts to debate building the sectors human capital to power the utilities of the future, and directly inform the impending 2020 – 2025 Workforce Renewal & Skills Strategy for the gas, power, water and waste management sector.
Through a series of new strategic roundtables entitled ‘As I Said to the Board’, the events form a partnership with leading sector news team Utility Week and senior recruitment specialists Network HR. This event report is written by and courtesy of Network HR.
As the saying goes “you can’t manage what you can’t measure”, but in a world awash with data – big data, small data, qualitative data, quantitative data (you name it, there’s data for it) – surely Human Capital is now as measurable as any other corporate asset? A recent pilot scheme run by charity ShareAction suggests otherwise.
The Workforce Disclosure Initiative (WDI) was launched in response to institutional investors’ concerns that they struggle to access meaningful data on company workforce management, both for direct employees and supply chain workers. Marry this with a lack of meaningful (or at the very least consistent) data around social value, D&I and employee wellbeing and you start to uncover a sizeable hole in investor intel…and it’s safe to say investors do not like uncertainty. Human Capital may not be a term many like – particularly those in HR – but it’s a stark reminder that when it comes to investors every asset has a financial value, and an inability to articulate the value of your people, your training and your culture could expose you to significant future risk. So how do you place a pound sign on your people?
ShareAction gave an overview of the WDI programme success and its powerful supporters. The pilot year was backed by nearly 100 institutional investors representing over $10 trillion in assets under management. Since the pilot was completed, the initiative has secured more than 130 investors worth over £15 trillion under management. Clearly the desire for meaningful and measurable workforce data is not in question. Seventy six multinational companies were invited to participate in the pilot year of which 45% contributed, with two thirds of those responding covering at least 70 per cent of the survey topics.
Some of the key findings of the WDI pilot year were:
- Weak public reporting. Disclosing companies provided significantly more workforce data to the WDI than they routinely provide in their public reports. As an example, 30 provided data on supply chain occupational health and safety whilst only seven provide this information in their public reporting.
- Board accountability. Accountability for workforce issues generally lacked clarity. Of the 34 disclosers only four were explicit about defined KPIs to assess Board performance in managing and developing the workforce.
- The (sizeable) gap between policy and reality. Whilst most companies have policies and commitments related to workforce issues, few companies disclosed the actions taken to implement these policies and how outcomes are then monitored. Most notably whilst 32 companies had a policy on equality and diversity for direct employees only four provided information on any actions they were taking to increase diversity in the workplace.
- Supply chain transparency. There is particular room for improvement on supply chain disclosure. Only one in five could provide an estimated total figure for the number of workers in their critical supply chains, whilst many highlighted that their organisation outsourced the monitoring of supply chain workforce issues to third-party audit processes creating a lack of ownership.
- Data challenges. Whilst data is perceivably abundant, commonly reported barriers to disclosure included the limitations of internal data collection systems, the challenges of collecting data from diverse business units with decentralised operations and expansive supply chains, and the difficulties in collating different regional approaches with different metrics.
- Risks and opportunities. Interestingly, “attracting and retaining talent” was viewed as the no.1 risk to direct operations by the respondents but only the 5th biggest opportunity, whilst conversely “diversity and inclusion” was deemed the 5th biggest risk but the number one opportunity. Perhaps a reaction to the shrinking talent pools sourced via traditional routes and the need to think more holistically about the skills and competencies required in the future world of work.
So how would ten of the UK’s most experienced utility HR leaders – both regulated providers and their key suppliers – react to these thought-provoking conclusions. The conversation arrowed in on 4 major themes: Talent Attraction, Diversity & Inclusion, Social Value & Sustainability and Industry Collaboration.
Talent Attraction & Talent Pipelining
The macro challenge of recruiting STEM/STEAM candidates was placed aside and the debate focused on two main areas: the perceived attractiveness of the sector to new talent and the UK Apprenticeship Levy, in particular navigating the current rules and mechanisms associated with passing on unused Apprenticeship Levy to the supply chain partners in England and local communities. The latter revealed significant frustration in employers understanding, accessing and apportioning funds – a huge opportunity both for the sector and societally in up-skilling our current and future workforce for the 4th industrial revolution. Energy & Utility Skills were acknowledged as providing the sector with valuable tools and productive dialogue with the main authorities through its high level Apprenticeship & Technical Education Advisory group of major UK utility employers (ATEAG).
Sector attractiveness was viewed more positively, with increased awareness of regional and demographic disparities in key public service provision and an increased understanding (and passion) for environmental issues globally presenting a unique opportunity for the sector to engage and inspire future entrants. Central to this would be key influencers coming together to define a consistent social value narrative, and the sector clearly demonstrating its social conscience, both of which require some further coordination. There was a positive response to the work being convened by Energy & Utility Skills to build one sector-wide ‘Energy & Utilities Jobs’ talent attraction platform and the work to create a partnership with children from 5 years of age and upwards through the newly-launched Institutions of Primary Engineers and Secondary Engineers. The idea of building a sector presence in schools, with the associated impact on parents/influencers, was well received.
Diversity & Inclusion
Whilst the business case for a more diverse workforce and an inclusive workplace culture is unquestionable, the reality of formulating and delivering a strategy for both, centred on positive action, left some of the attendees feeling somewhat overwhelmed at times. Maintaining a consistent focus on 9 protected characteristics with the same level of emphasis, in an ever-evolving societal landscape, is in many ways akin to spinning 9 plates at once.
As a result corporate D&I approaches can often end up feeling largely reactionary to whichever invested group is either (a) most vocal at that point in time, or (b) receives the most public, press and/or legislative endorsement. There was some suggestion that inclusivity should be the primary focus – that diverse workforces are by their nature both attracted to and empowered by inclusive working environments – and that prioritising inclusivity addresses some of the core challenges associated with diversity, although this theory was far from universally endorsed.
What did become clear was that for those struggling to articulate the business case for D&I, there are tools available to help demonstrate the clear ROI on inclusion strategies, with some of those adopted by those around the table resulting in a measurable impact on Board collaboration. Energy & Utility Skills had also built and deployed a UK wide Inclusion Commitment that dozens of leading utility businesses had already signed up to and will now self-audit on. The plan is to secure 100% sign up across regulated gas, power and water. The WDI survey clearly identified Diversity & Inclusion as the no.1 opportunity for businesses seeking to engage institutional investors going forward, but the subsequent path to success is seemingly both long and varied. What’s clear is any plan requires genuine action, and many still fall into the trap of policy over pragmatism.
Social Value & Sustainability
The WDI clearly demonstrates investors’ increasing consideration of how major companies demonstrate social responsibility in their investment decisions, and the UN Sustainable Development Goals are very evident in the scheme. And therein lies the opportunity and the risk: multinationals who have taken proactive steps, with clarity of purpose and measurable targets should be encouraged to publicly declare their goals and voice their achievements. Those who fail to prioritise sustainability and social value run the very real risk of alienating not only current and future investors but also future employees.
The roundtable discussions identified the magnification of such risks in the sector, where poor environmental performance is both highly punitive and highly visible, and where basic needs provision is at the core of your service offering. The HRD’s in attendance highlighted a very powerful tool in their armoury: aligning Board compensation, benefits and rewards with environmental and sustainability performance, whilst the overall importance of leadership buy-in and a consistent tone from the top cannot be underestimated.
The roundtable discussions gathered real pace in this area, and the opportunities for collaboration appear abundant. The UK Utility sector has a strong story to tell, both for its direct and indirect workforce (notwithstanding cyclical price reviews which clearly cause labour market issues).
On the subject of the Apprenticeship Levy, the industry is well-positioned to benefit from the talent pipelining benefits and reputational gains associated with a positive approach to Apprenticeships. And there are already some fantastic case studies.
The sectors end point assessment body (the EUIAS) recently delivered it’s 1,500th graduated apprentice in an engineering discipline, at a time when many UK business sectors are still struggling to make progress. The Energy & Utility Skills ATEAG has also brought utility employers together since the introduction of the policy reforms and secured one of the highest Levy recovery rates across all business sectors. Crucially, the positive approach to managing the reforms has given the sector a key voice in influencing Apprenticeship Levy policy, and there was a genuine desire around the table to set out a sector vision with some complementary commitments so that the sector stays in the vanguard and can work with the funding bodies to make sure the rules associated with passing on unused Apprenticeship Levy meet their needs.
In the meantime, Investors in People (IIP) are working in partnership with the Department for Education (DfE) to create and develop a quality mark for apprenticeship employers, which will act as a signal of quality for employers who show excellence in recruiting, developing and supporting apprentices in the workplace. There seemed a genuine appetite from the roundtable attendees to partner with IIP on this project and to provide pilot scheme opportunities. There was also a clear appetite for better coordination around sector positioning – not least in influencing press, policy, stakeholders and investors on the unique strengths of the sector.
Lastly of course there is an opportunity for the industry to proactively commit, as one, to embrace the Workforce Disclosure Initiative. The WDI would welcome the UK utilities ‘self-referring’ themselves for involvement. There was an acknowledgement from Share Action that the data approach adopted in their pilot year was somewhat laborious in places, and they would welcome working with the Utility sector on a pilot study to tailor the approach to identify the critical data needed to achieve investor’s desired income.
Institutional investors then are clearly seeking assurances – detailed assurances – on workforce strategy. Assurances that people are valued and developed as an asset, and that multinationals are evolving their workforce strategy for the 4th industrial revolution and the future world of work. Assurance that businesses are cognisant to the opportunities presented by Diversity & Inclusion and have a convincing strategy, based on measurable and meaningful action, to realise these opportunities. With some coordination the UK utility sector could be at the forefront of institutional investment planning over the coming decade, and it would seem that HR leaders and their teams – subject to the ability to positively influence the Board – could hold the key to many of these future investor partnerships.
Energy & Utility Skills will be speaking on workforce resilience and human capital on the main at Utility Week Live on 20 March 2020, as part of the Utility Week ‘Utility of the Future’ initiative.
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