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The Topic: Skills UTILITY WEEK | 1ST - 7TH APRIL 2016 | 7 UTILITY WEEK | 1ST - 7TH APRIL 2016 | 7 "The old story of how your chief executive was once one of the packer boys, or the apprentice technician at the age of 17, are few and far between. There needs to be far more of these sto- ries, not just because they make lovely stories to tell around the dinner table, but because our country needs you, from an economic perspective." Adam Hayes, director, JTJ Workplace Solutions Comment: Utility firms need an upskilling strategy, or they'll struggle to fill future management positions T he profound consequences of boom and bust investment cycles for the water industry are well acknowledged, including the damage done to sector's abil- ity to retain the best skills and talent. What is less well observed is the impact that cyclicality has, particularly on skills levels in our middle ranks right across the sector, from water companies to contractors and equipment suppliers. It affects culture, operating effectiveness and the ability to embrace innovation. Essentially, it's helping the industry to shoot itself in the foot. As long as the water industry is tied up in an asset management plan (AMP) straitjacket, that artificially creates times of plenty and scarcity, the entire sector will be forever frustrated in its power to attract and retain the best people. At one end, we are seeing the veterans of many AMP cycles retiring, taking with them their skills and knowledge. Meanwhile, the younger people who joined our industry as talented graduates and promising appren- tices become thirty and forty-somethings with families and mortgages, who need to make difficult choices based on their best prospects for job security. Why would anyone with talent stay in a roller-coaster industry that threatens job security in the down times when there is growing demand for engineering, scientific and construction skills elsewhere, both at home and overseas? As a result, the biggest challenge for skills retention is among our middle ranks. Yet it's precisely in these middle ranks where we need people with flair, imagina- tion and multi-disciplinary outlooks to power the industry into the 21st century. The totex (total expenditure) approach is offered as one solution to smoothing the investment cycle. However, to combine capital and operational asset management effectively requires a strong integration of the best financial, commercial and engineer- ing knowledge of the asset base and how best to operate and maintain it. Hydro International recently supported industry research into the acceptance of totex in the water industry. The feedback reinforced the view that while water com- pany senior managers were fully signed up to totex, there was considerable inertia among middle managers to accept new ways of working. Could it be that we have a chicken and egg situation here? Totex is needed to tackle boom and bust – but the skills lost to boom and bust are preventing totex from being accepted. We could wait and see if this stag- nation lis in AMP7, or we could take more action now as an industry – including Ofwat – to make sure that change happens. Keith Hayward, sales and marketing manager, European wastewater, Hydro International Boom and bust The boom and bust AMP cycle is deskilling the middle ranks of the water industry as veterans with a lifetime of skills retire and their successors seek opportunity elsewhere. TOTAL INDUSTRY NET CAPITAL INVESTMENT 1990/91 TO 2014/15 Total capital investment (£billion) Actual capital maintenance Actual capital enhancements Forecast capital maintenance Actual capital enhancements 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 6 5 4 3 2 1 0 Source: Ofwat AMP1 AMP2 AMP3 AMP4 AMP5 Eon employees by age Percentages at year 2015 2014 30 and younger 17 17 31 to 50 55 55 51 and older 20 20 Eon proportion of female employees Percentages 2015 2014 Generation 13 12 Renewables 19 19 Global commodities 32 32 Exploration & production 36 34 Germany 27 28 Other EU countries 34 33 Non-EU countries 30 30 Group management/other 38 41 Eon group 29.9 28.8 EON AND DIVERSITY Eon views diversity in its workforce as "a key success factor". The util- ity giant has embraced this, sign- ing the Charta der Vielfalt (German Diversity Charter) in June 2008. A "special focus" for the company's diversity management is gender. It targeted doubling the number of women it had in execu- tive positions in 2011 by the end of 2016, through a variety of meas- ures. One initiative is that at least one male and one female must be considered as potential succes- sors for every vacant management position.