From Grids to Growth Human Capital

Amidst all the technological advancements and efforts to decarbonize the power value chain, how can the industry simultaneously ensure that the industry’s Human Capital is resilient and equipped to support the transformation?

This Point of View draws on perspectives from discussions with clients globally, including Latin America, Europe, Middle East and Southeast Asia. It features an Executive Knowledge Exchange among leading companies keen to share insights on common challenges. These insights are further distilled, underscoring the urgent need to prioritize and INVEST IN HUMAN CAPITAL — ensuring that the workforce is not only skilled and equipped but also adaptive and ready to manage rapid technological and environmental changes.

Evolving Mandates and Emerging Challenges: Transforming the Future of the Power Industry

Today, the Power industry has a mandate to accelerate national electrification coverage and maintain uninterrupted power to both communities and industries. Yet, the conditions under which this mandate must be delivered have changed radically, demanding profound industry adaptation, which includes rethinking of traditional operating approaches.

Emergent new business models strain aging infrastructures, stretching them beyond their original design and geographic limits. At the same time, the rapid acceleration of renewable energy investments necessitates a strategic rebalancing of the power value chain which includes the repurposing or retirement of assets that cannot fulfill the new purpose.

The transmission and distribution grids, the backbone of the power industry, are extending even further to cover remote communities, and are increasingly embracing automation to introduce self-healing systems that can operate with minimal human intervention. All of these are clear signs that the industry is rapidly adapting by rebalancing their business portfolio with new technologies.

Different geographies are advancing their industry transformation at varying paces, shaped by local constraints and national priorities. For instance, Indonesia aims to reduce their emissions by 29 – 31 % by 2030 and achieve net zero by 2060 whilst the European Union has mandated a 55% reduction in emissions by 2030 and net zero by 2050.

The challenges to achieving these goals include:

• access to capital
• clear articulation of economic benefits of the investments
• an environment that is conducive to the deployment and delivery of capital projects
• the integration of new renewable power assets into legacy infrastructure in urgent need of modernization

Additional challenges are presented by rising political and regulatory risks that may impact the viability of those investments.

And yet a critical and often overlooked dimension of this transition is the risk to the Human Capital.

FROM LEGACY TO PORTFOLIO MANAGEMENT: ELEVATING HUMAN CAPITAL IN THE POWER TRANSITION

Power and Utility companies execute their strategies through a combination of new projects, enhancing the performance of existing assets, and repurposing or decommissioning legacy assets to meet sustainability goals.

As companies navigate the complexities of rapidly evolving portfolios, the workforce is embarking on a development journey of its own.

New capabilities are being developed and deployed into portfolio businesses. These could be deployed to deliver net new projects at varying stages of the investment cycle, or to upgrade existing operations.

Naturally, new technologies, equipment and the provision of services tend to dominate the investment agenda, but the safe and successful execution of both existing and new initiatives will depend on whether sufficient people charged with delivering them are the Right Fit for the job!

Typical questions that have resonated when framing this Problem Statement include:

• is the workforce engaged and aligned to the organization’s purpose?
• is the existing capability developed, equipped and structured for successful delivery?
• are the people recognized for their performance and rewarded for their success?

A critical success factor for any organization engaged in the Energy Transition is the development of an Operating Culture that aligns and equips the whole organization to deliver the agreed value. This means, regardless of status or level, people are safe, empowered, equipped and enabled to deliver agreed outputs and have the mandate to achieve those objectives.

Figure 1 illustrates the stages of an evolving power company’s project portfolio, and the objectives that it should aim to achieve.

Leaders and Contractors Unite to Elevate Safety and Performance Across the Value Chain

A vibrant and engaged workforce should transcend all levels of the organization and include internal and external stakeholders. Contractors and Partners play a considerable role in the Enterprise Agenda, and they must be integrated into a common culture, particularly in relation to resilience in Safety and Performance!

Cultural Transformation programs are often cited as vague and intangible, but this should not be the case. These are investments in developing the right human capabilities, aimed at achieving defined benefits for both the organization and the individuals involved. Despite differing contexts, these programs should explore how to adapt processes and controls to compliment rituals and behaviors to “switch on” output focused mindsets that will build the organization’s Human Capital.

Cultural Transformation must start with leadership. The role of senior leaders must evolve to model and uphold a culture that values safety and embodies the core values necessary required for sustainable transformation. This has been lacking in many regions due to incorrectly perceived priorities, which has since prompted leaders to recognise the importance of greater engagement and a mindset change.

Executives are urged to embrace change and strengthen the role of partners and employees in driving the Power Sector Transformation.

Technology and data have an important role to play too! If applied correctly, they will equip the workforce with the tools and intelligence needed to navigate controlled workflows more effectively and safely deliver quality output. By making risk and performance more visible, leaders at all levels will make informed, intelligent decisions quickly that will improve both the predictability of their business and improve performance levels.

Figure 2 examines how leadership can leverage data to gain a balanced view of performance, and prioritize opportunities to drive resilience and value creation within the portfolio.

DEVELOPING AND SUSTAINING HUMAN CAPITAL: SPOTLIGHT ON POWER AND GRID MANAGMENT

Developing and sustaining a capable workforce at levels required to deliver organization objectives is more complex! While companies prioritize and allocate significant resources to attract and capture new talent from a shrinking pool, they tend to overlook the training, development and retention of existing talent who are critical to delivering the portfolio’s priority activities.

Consider Grid operations in the context of the portfolio; reference figures 1 and 2. The business imperative is to maximize uptime of the asset and neutralize the potential negative impact to the community that it serves. With the grid being wide reaching, one might also consider integrated planning (supply chain and logistics) and automation to minimise the resources, specifically People, Technology and Process (PTP Intensity) being deployed to operate the assets.

In looking at these portfolio levers, we are attempting to answer the following questions:

• How can organizations do more with less?
• How can we ensure our employees safety even when we ask them to increase their productivity?
• What can we do for our employees and partners to develop the right capabilities that will help them deliver what we have asked of them?
• How can they equip our teams with the right mindsets to protect one another and deliver quality output even in the face of emergent operations risks?

Grids are innately dynamic assets, constantly stretching to meet new demands and adapting to connect to diverse new sources of power. As service infrastructure, they offer economic and environmental utility that is constantly evolving through initiatives aimed at protecting and extracting commercial and environmental value.

Figure 3 illustrates the three stages of value generation. The first stage establishes the foundation for managing risk, the second focuses on driving efficiency for enhanced performance, and ultimately, the third leads to the creation of sustainable value.

In terms of human capital, the first step must be to PROTECT the workforce working in power and grid systems. An alert, responsive and output focused MINDSET in Safe Operations provides a strong platform for developing all the right components necessary to building a high performing CULTURE in the Organization.

The second step is to TRANSFORM the competencies of the organization and its ways of working with technology, so that the organization delivers the goals it has set. For instance, within the asset portfolio of transmission and distribution grids, a BALANCED SET OF TARGET OBJECTIVES will dictate the activities prioritized by the organization.

Finally, whatever transformation has taken place within the operations, the organization must be structured and enabled in a way that keeps the organization energized and adaptable to future changes. An organization must embrace change, acknowledging that transformation programs are just a prelude to arrive at sustainable business operations.

Figure 4 illustrates how major industry themes, from legacy assets to energy transition programs, can be addressed if the right competencies, structures and behaviors are integrated into the business.

Having determined those goals, the organization must now develop the requisite capabilities to deliver them. A Business-as-Usual mindset will not deliver the expected results.

As shown in Figure 5, the core capabilities should be designed to align with the portfolio objectives. The key focus areas include:

• Portfolio Management and Capital Projects
• Operations Risk Management and Process Safety Management
• Operations Excellence through Supply Chain and Asset Management
• Sustainability

The technical nature of these capabilities will evolve alongside the assets and technologies that they are supporting.

However, structural capabilities and softer skills will be equally important particularly where the human will interact with technology and data to deliver their work. Since the whole operating environment will change, some key design principles should form part of any practical transformation.

• What is the location of the work? With the advent of drones, remote monitoring and self-healing systems, the workforce may not necessarily always need to be on site but may be operate remotely.
• Who does the work? Which tasks should be automated, which should be assigned to technology i.e. robots and which must continue to be done by the human workforce?
• Who makes the decisions? When the controls are built into the work processes, which decisions will be informed by data intelligence, and which will require human judgement?
• Which work processes may be reimagined from legacy vertical structures into end-to-end horizontal capabilities with digital cores?

Transforming Human Capital

Ultimately, organizations must adopt a strategic approach to Cultural Transformation, setting out the specific objectives they aim to achieve. They must also identify points of vulnerability in the system to ensure that the culture instilled allows the organization to flex in response to both planned and unplanned events. There are two approaches to cultural transformation, and it is up to business leaders to decide which one best suits their organization.

1) Cultural Transformation through Structural Processes and Rituals

2) Cultural Transformation by focusing on workforce engagement

The first transformation type involves introducing controls through structured processes and rituals, while the second depends more on instilling the right behaviors and mindsets within the workforce. Depending on the nature of the business and maturity of the workforce, the type of transformation activities will be designed to accordingly to minimize disruption to existing operations whilst accelerating the path to value creation.

A key aspect of any transformation is the role of leadership. The right leadership capability can act as a fulcrum for cultural change, cascading from the C-suite down through the organization levels to frontline workers. While processes, tools and rituals help drive the activity, adopting a leadership mindset promotes collaboration and ownership of outcomes that allow a system to deliver more than the sum of it’s parts. Change can be immensely disruptive and challenges parts of the organization to different degrees in different ways. An effective way of supporting the organization is to cultivate knowledge champions or ambassadors of change who have the aptitude and capability to drive the transformation.

The Way Forward

This executive brief on the Human Capital brings together the concerns shared by Power and Utility executives worldwide, from Latin America, Europe, the Middle East and Asia Pacific — regarding the impact of workforce issues that are compromised by capacity, capability and credibility.

As the industry continues to advance through new technology investments, upgrades to Human Capital are essential.

Organizational structures will adapt to include sophisticated risk management and mitigation practices to address challenges such as managing legacy infrastructure while simultaneously pivoting to a diversified power operating portfolio.

Traditional business silos are giving way to integrated end-to-end capabilities that leverage data and technology for effective planning and execution of development activities, including maintenance, supply chain, and capital projects.

New wearable technologies and automated workflows enhance workforce safety, while advanced tooling and data intelligence streamline maintenance strategies, boosting uptime on aging infrastructure.

References:

*European Commission - Do we have sufficient skills for the energy transition in the changing labour market?

**CEWD-2023-Workforce-Report-Executive-Summary_2023-FINAL-1.pdf