Navigating the leadership and talent landscape: A blueprint for the energy transition
Will talent be your company’s greatest impediment in energy transition? Or will it be a source of strength and competitive advantage? Energy companies across the globe are coming to terms with the energy transition. However, the industry is also faced with deeper talent issues as it strives to adapt to new technologies, market conditions, and regulatory environments. Understanding and navigating the talent landscape will be core to success not only for companies, but also for the transition to sustainable energy.
Key leadership competencies and strategies for charting the energy transition journey
Successful navigation of the challenges and opportunities presented by the energy transition starts with leadership. In our experience, clients who are adapting quickly to these opportunities possess several core characteristics and competencies. Chief among them is the ability to establish a compelling vision and devise an effective strategy. This includes setting long-term goals, securing buy-in from stakeholders, and navigating the complexities of transforming business models. In addition, effective change management is essential for guiding organizations through the transition. Leaders must manage resistance, communicate effectively, and ensure that employees understand and embrace new ways of working.
Much is spoken about the importance of innovation. Encouraging innovation and fostering a culture that supports experimentation and risk taking is critical. Leaders must be open to new ideas and approaches, and support teams in developing and implementing innovative solutions. No less important, leaders must engage a wide range of stakeholders, including employees, customers, regulators, and investors. Building strong relationships and maintaining open lines of communication are key to gaining support for transition initiatives.
Along with the support of the Board of Directors or Advisory Boards, managing the financial aspects of the transition, including investment in new technologies and infrastructure, requires careful financial stewardship. Leaders must ensure that financial resources are allocated effectively to support long-term transition goals. Furthermore, understanding and navigating the regulatory landscape is complex but essential. Leaders need to stay informed about policy changes, advocate for supportive regulations, and ensure compliance with legal requirements.
To top it all off, it will be imperative for leaders to proactively engage in talent planning and consider the requirements across all functional areas. This strategic foresight is crucial, as the success of the energy transition will be equally dependent on a company’s ability to attract, develop, and retain qualified individuals across multiple functional and technical roles. The importance of securing suitable human capital to drive this significant change cannot be overstated.
Overcoming the skills and talent shortage
Within the broader energy ecosystem, a foundation of skills necessary for the successful adoption of the energy transition is already in place. Yet, as the landscape evolves, the emergence of new skills requires deliberate development and adaptation.
In Net Zero by 2050 – A Roadmap for the Global Energy Sector, it is perhaps no surprise that the International Energy Agency (IEA) suggests the sector is facing fundamental challenges in finding qualified employees for the energy transition. Several factors contribute to this struggle and foremost amongst these is the skills gap. The transition to renewable energy and advanced technologies requires new skills that many traditional energy sector workers do not possess. Specific areas where skill gaps are prominent include:
- Renewable energy technologies (solar, wind, geothermal)
- Energy storage systems (batteries, hydrogen)
- Smart grid technologies
- AI, data analytics and digitalization
- Cybersecurity for energy systems
To underline the point, the IEA calculates that 14 million new jobs in energy supply will be created by 2030. Balanced against an anticipated loss of 5 million jobs in the traditional fossil fuel industry, this nevertheless projects a 9 million net gain in jobs in the energy sector by 2030, thereby intensifying the demand for new talent.[1]
While other sub-sectors within renewable energy are experiencing a similar phenomenon, solar is perhaps most illustrative of the challenges facing the industry at large. A survey conducted by the Interstate Renewable Energy Council (IREC) on behalf of the National Solar Jobs Census, found that 89 percent of those who responded reported difficulty finding qualified candidates.[2]
We are finding that the fundamental skill gaps are exacerbated by the rapid pace of technological advancement in the energy sector, leading to a continuous need for up-to-date knowledge and skills. The traditional energy sector has an aging workforce, many of whom are nearing retirement. The loss of experienced workers exacerbates the skill gap and creates an urgent need for new talent to fill these roles. Moreover, there is a lag between the evolving needs of the energy sector and the educational programs available. Universities and training institutions are still catching up in providing relevant programs and courses that align with the demands of the energy transition.
In the current environment, no one can ignore the impact of the regulatory and policy world. A persistent and recurring theme in all energy industry discourse is that frequent changes in energy policies and regulations can create uncertainty, making it challenging for companies to orient their leadership trajectory and plan their workforce needs effectively and for professionals to commit to careers in the sector.
Of course, no discussion of talent in the sector would be complete without mentioning the competition for talent. Unsurprisingly, the energy sector competes with other industries, such as tech and finance, for top talent in areas like data science, engineering, and IT. This competition makes it harder to attract and retain qualified professionals. Added to this, there can be a perception issue, where younger professionals may not see the energy sector, especially traditional fossil fuel companies, as attractive or aligned with their values regarding sustainability and climate change.
However, as life teaches us, wherever there are challenges there are also opportunities. For companies committed to charting a distinctive course with respect to purpose, vision and culture, there are means to create the kind of environment that both attracts, motivates and retains the best. The energy sector, particularly in traditional energy industries, has historically struggled with diversity and inclusion. This can limit the pool of potential candidates and hinder efforts to innovate and adapt to new challenges. That said, a robust and authentic culture of diversity and inclusion, coupled with empowering people to innovate and create, contributes immeasurably to cultivating the kinds of leaders and teams who will excel and thrive in the energy transition.[3]
We have assisted many companies with this talent conundrum in energy transition. Below are a few strategies we support and encourage:
- Attracting the Right Leadership: Critical thinking, strategic planning, and effective communication are essential leadership skills that transcend industries. Attracting and securing top tier leaders — individuals who possess these attributes, regardless of their specific industry or subsector and who are committed to addressing complex challenges like the energy transition — is paramount.
- Attracting Young Talent: Outreach and engagement with young professionals, including promoting the environmental and societal benefits of working in renewable energy, can help attract new talent.
- Diversity and Inclusion: Implementing robust diversity and inclusion initiatives can broaden the talent pool and foster a more innovative and adaptable workforce.
- Reskilling and Upskilling: Investing in training programs to reskill and upskill the existing workforce is crucial. Partnerships with educational institutions can aid in aligning curricula with industry needs.
- Collaboration with Academia: Strengthening ties with universities and technical schools to develop specialized programs and provide real-world experience through internships and co-op programs can help bridge the skill gap.
- Incentives and Support: Offering incentives such as relocation assistance, competitive salaries, and career development opportunities can make positions in the energy sector more attractive.
By addressing these challenges, the sector can better position itself to attract and retain the qualified employees needed to drive the energy transition.
Leading with purpose
We like to say that culture starts at the top. In addition to vision and purpose, leaders must prioritize sustainability and ethical considerations in decision-making. This includes balancing short-term financial performance with long-term environmental and social goals. Finally, the energy transition is a global challenge, and leaders need to adopt a global perspective. This involves understanding international markets, policies, and trends, and positioning their companies to compete on a global scale.
By addressing these talent and leadership issues, energy companies can better navigate the complexities of the energy transition and position themselves for long-term success in a sustainable energy future. As an executive search and leadership advisory partner, we are committed to helping the energy sector attract, develop, and retain the leaders who guide us through this transition. We recognize that the path forward is complex and fraught with challenges. However, we believe that the opportunities for innovation, growth, and sustainability are manifold and that there is every reason to move expeditiously.