Leading Talent Management in the Nuclear Industry

Leading Talent Management in the Nuclear Industry

By Gordon Orlikow, Yannick Binvel, Iain Manson and Richard Preng

Key Takeaways n The nuclear industry’s new era of significant growth will be challenged by constraints to its talent supply, including leadership talent, and supply chain constraints. n Addressing these constraints requires a blend of long-term and short-term approaches, including partnerships that help sustain the future talent supply; internal leadership development programs; new retention and knowledge transfer approaches; and external talent sourcing that addresses immediate talent needs. n A comprehensive leadership development program should employ a rigorous, evidencebased approach to identifying and cultivating next-generation executives. n Innovative external sourcing practices are emerging, including hiring global expertise; targeting other industries with similar demands for select positions; and pursuing project sourcing arrangements.

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ew opportunities and new challenges confront the nuclear industry as its worldwide renaissance accelerates. Some of the most important questions facing

organizations throughout the nuclear supply chain involve resource constraints. These issues, which boil down to steel, technology and people, will obstruct the nuclear industry’s resurgence if they are not properly addressed.

“In order to deliver on the high potential for the industry, we have to recognize that the sector is not at the strongest point right now,” notes Duncan Hawthorne, President and CEO of Bruce Power, Canada’s first private nuclear generating company and the source of more than 20 percent of Ontario’s electricity. “[The industry has] a vulnerable supply chain, gaps in the demographics of the industry and we are challenged by our capacity to recruit and grow people … talent is the limiting factor. We can always manage the technical issues but if we don’t have the leadership or skill sets, no organization can move forward.”

These challenges parallel the issues confronting the oil and gas industry, where a war for talent and volatile commodity prices are greatly hampering the ability to bring in new projects on budget and on time.

Similar volatility and talent challenges confront the nuclear industry, which has witnessed the pool of new engineering talent slow to a trickle due to the lack of attractive and/or abundant career prospects in the industry until only recently.

“The need for nuclear engineers has never been higher,” reports a BusinessWeek article on Europe’s nuclear growth, “with many analysts predicting a shortage of highly trained staff if new employees aren’t recruited into the industry.”1 Additionally, the global economic climate poses challenges and opportunities. Access to credit remains tight around the world, which could potentially slow new construction and delay current refurbishments. However, slower global markets also might reduce inflationary pressure from contractors, making project costs less difficult to forecast and manage.

“In the current economic climate, our customer segment is solid because nuclear utilities are the lowest cost generation,” points out Jerry Grandey, President and CEO of Cameco Corporation, the world’s largest uranium producer accounting for 19 percent of world production from its mines in Canada, the United States and Kazakhstan. “Our customers are the ‘go-to’ source of generation in all economic phases. Cash flow will remain robust. That said, all of us in industry must be especially prudent about our expenditures and the amount of debt we carry.”

Addressing these issues requires a balanced multi-pronged response. Dealing with the industry’s immediate talent crunch while cultivating future leaders requires a combination of long-term and near-term approaches.

This white paper will discuss the talent demands confronting the nuclear industry and examine leading practices within each of the four talent management approaches listed above. Each approach is crucial, and industry organizations that enjoy the greatest success in addressing talent issues employ a combination of all three.

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A Global Nuclear Renaissance “The nuclear industry is still in the very early stages of globalization,” reports Andy White, chairman of the World Nuclear Association. “The coming decade will see a full internationalization of the market for civil nuclear technology, skills, and manufacturing capacity. In the intermediate term, market pressures will fill a rapidly growing need. On the way, as the renaissance builds speed, we will see companies competing for limited human and productive resources.”

While there are currently 439 operable reactors in the world, that number is projected to increase by at least 50 percent in the coming decades as 36 reactors are under construction, 97 are planned for construction and another 221 have been proposed globally. China, the United States, India, Japan and Russia represent the countries with the largest number of planned reactors, according to the World Nuclear Association.

“On the way, as the renaissance builds speed, we will see companies competing for limited human and productive resources.”

Andy White Chairman World Nuclear Association

China expects its installed capacity to increase five-fold by 2020, Russia plans to double its nuclear capacity by 2020 and India intends to increase its installed capacity eight-fold by 2022, according to the International Atomic Energy Agency.

“If anything, the current published statistics on planned reactors could be understating the powerful momentum of the global nuclear renaissance,” White adds. “In two dozen countries already generating nuclear power, and in a dozen major countries that don’t yet have it, planning is underway for long-term programs of nuclear energy. All of the key factors, including predictable and affordable cost, energy independence, and environmental preservation, are aligning to support these plans. China and India alone will account for hundreds of new reactors by mid-century.”

Increasing Demand for Skilled Labor While the growth represents excellent news for an industry that was widely considered on the wane only a few years ago, it also poses challenges – namely, a war for talent.

“The need for nuclear engineers has never been higher … with many analysts predicting a shortage of highly trained staff if new employees aren’t recruited into the industry.”

—BusinessWeek

“There is always room for good people,” asserts Cameco’s Grandey. “Our needs are increasingly global and we will take advantage of a softening in the resource sector to recruit good people … talent management is one of our most pressing business challenges. We face the same difficulties around sourcing people and filling openings created by those who leave or are preparing to retire.”

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“There is always room for good people. Our needs are increasingly global and we will take advantage of a softening in the resource sector to recruit good people.”

Jerry Grandey President and CEO Cameco Corporation

The industry’s renaissance is causing “increasing demand for skilled labor at all levels,” asserted a Nuclear Energy Institute director before a U.S. Senate committee hearing. “Each new reactor will require between 1,400 and 1,800 workers for construction with peak employment of up to 2,300 workers. Once built, these 31 potential power plants would require 12,400 and 21,700 permanent, full-time workers to operate the plants and additional supplemental labor for maintenance and outages.”

The current talent crunch is a result of the minimal hiring conducted within industry for much of the past two decades, before the current resurgence.

Throughout the world, Academic programs designed to produce nuclear engineers responded in kind. For example, in 1980, 65 U.S. universities offered nuclear engineering programs; today, fewer than 30 universities do so.2 That said, many countries, including France, China, India and the U.S., more recently have made progress in reinvigorating nuclearengineering programs within their universities.

The talent crunch also extends the full length of the industry’s supply chain. Like many college-level nuclear engineering programs, numerous manufacturers and vendors that supplied nuclear power plants in the 1970s have closed their doors. For example, currently there is only one steel company in the world that produces the reactor vessels at the core of a reactor.3

A Multi-Pronged Approach Over time, the market will respond with more reactor vessel manufacturers, more university programs and more talent. Until that occurs, organizations throughout the nuclear industry are well-served by using the following blend of approaches that address their immediate talent and leadership needs while simultaneously increasing the future supply of leadership and other talent: Forging New Partnerships To help expand the future nuclear workforce, a growing number of organizations in the industry, including competitors, have worked together to develop new partnerships with educational institutions, labor organizations, community organizations and federal, regional and local government agencies. These partnerships seek to raise awareness about careers in the nuclear industry, train and prepare future nuclear workers and, in some cases, strengthen the retention of the current workforce.

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In the U.S., for example, Public Service Enterprise Group (PSEG), a diversified energy company headquartered in New Jersey whose large operations include two nuclear generation stations, is currently working with select universities to help them develop curriculum for nuclear engineering programs.4 And, like many other companies in the North American nuclear and utility sectors, Southern Company is working through the Center for Energy Workforce Development (CEWD) – a joint effort of NEI, the American Gas Association, Edison Electric Institute and the National Rural Electric Cooperative Association – that “pursues partnerships with educational institutions and other stakeholders to create national models and collect and share good practices in work force development across the utility industry.”5

Strengthening Leadership Development Nuclear energy companies are addressing more immediate talent needs by bolstering their leadership development programs.

Although the industry’s recent progress in attracting younger engineers to the workforce has been encouraging, addressing the current gap in the middle of most nuclear organizations remains a formidable challenge. The number of industry employees in their 20s and early 20s has increased dramatically in recent years, and the supply of industry experts in their late 50s and 60s remains strong. However, the pool of future leaders (rising managers who are currently in their late-30s to early 50s) remains far too small.

Tips for Dealing with the Talent Crunch n Forge partnerships with industry groups, academic institutions and governmental agencies to help develop and sustain the nuclear talent pool over time n Institute leadership development programs within organizations to groom the next generation of executive talent n Develop new ways to retain leaders (while transferring their knowledge to future leaders) n Hire executives and middle managers from outside the organization to address current leadership and talent needs

The process of retaining current leaders and long-time employees is complicated due in large part to the attractive nature of the industry’s pension plans. Many employees reach full-retirement eligibility in their early to mid-50s; today, the median age in the nuclear utility industry is 48. Exacerbating this trend is the fact that professionals with strong technical skills have multiple opportunities in engineering consulting firms. For their part, consulting firms immediately acquire the technical horsepower they need by hiring recently retired nuclear executives and engineers; meanwhile, the individual is well paid or can meet their lifestyle goals by collecting their pension benefits while providing consulting services to their former employers or to others in the industry.

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To address the succession gap of a shortage of mid-career professionals, leading organizations are developing more thoughtful, deliberate and rigorous leadership development approaches that are part of more comprehensive talent management strategies. (See Bruce Power Case Study).

“Many of the people with this institutional knowledge will retire from the industry over the next 10 to 15 years. This knowledge isn’t transferred through the essential academic training the new workers will receive, but rather from the current nuclear workforce.”

Bill Coley CEO British Power

These programs use evidence-based scientific methods to target the best leadership candidates and then equip these candidates with development, mentoring and coaching opportunities that, over time, accelerate their growth. These programs also are crucial to a company’s performance and success, says Bill Coley, CEO of British Power, the United Kingdom’s largest electricity producer.

“One of the cornerstones of safety and operational excellence is developing a culture in which every individual is fully accountable for their actions, rigorously uses proven human performance techniques and has a questioning attitude that causes them to think about the implications of every action,” he asserts.

Innovative Approaches to Retention and Knowledge Transfer While the current global economic climate and its painful impact on many retirement accounts may be doubling as an “unintentional retention plan,” a growing number of organizations are taking a stronger look at strengthening retention programs – both to keep top talent longer and to ensure that their knowledge can be transferred to the next generation of leadership.

“Following the incidents at Three Mile Island and Chernobyl, the world wide nuclear industry has built a massive wealth of knowledge and experience that has resulted in an exemplary record of safety and operational excellence,” notes Coley. “This knowledge is essential to today’s nuclear facilities and must be carried forward to ensure the safety and operational excellence of the next generation of nuclear units. Many of the people with this institutional knowledge will retire from the industry over the next 10 to 15 years. This knowledge isn’t transferred through the essential academic training the new workers will receive, but rather from the current nuclear workforce. Thus it is critical to have a process for transferring this information from one generation to another.”

One of the best ways to foster the development of future leaders is to expose high-potential managers to current leaders through mentoring, rotational assignments and similar programs.

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If the nuclear industry is going to mitigate the potential negative impact of its current workforce demographics, it will need to devise new ways to transfer knowledge from veteran leaders and employees to the next generation.

Already, some companies in the industry are hiring retirees from other organizations to assist with this knowledge transfer and leadership development challenge. By doing so, the company gains access to a deep supply of industry knowledge and the retiree is able to supplement a lucrative pension with highpaying work, often of the part-time or consulting variety.

“Mentoring and the ‘parallel running’ of executives as they hand over roles will help – as will the retention of ‘wise elders’ in consulting and advisory positions,” Coley adds. “But I believe that the industry also needs a structured, global approach to knowledge transfer, perhaps by establishing a databank of experienced people who are leaving the nuclear workforce who would agree to be available for the industry to call on for consulting positions or project assignments.”

Tapping External Sourcing Although it is not the only talent management approach, external sourcing represents a solution that provides the most immediate results.

Given the fierce competition for a talent supply in need of expansion, companies with the most effective hiring practices often consider and pursue innovative practices, such as hiring from other geographies, hiring from other industries and outsourcing portions of their recruiting processes to third-party experts.

Since a significant number of job roles require specific industry expertise and experience, it makes sense to extend recruiting efforts into other geographic regions and countries. North American companies also are beginning to extend their recruiting efforts to Europe. In the longer term, there also exist opportunities to extend those international recruiting efforts into Asia, where the majority of new investment in nuclear energy is taking place.

North American companies that have begun to recruit in Asia generally find talent that is extremely well trained from a technical perspective, possesses experience running some of the world’s best-performing facilities and frequently speaks English, which effectively qualifies as the industry’s primary language. Additionally, some companies have discovered that many overseas candidates express a desire to relocate to North America.

At the same time, the business environment in Asia is very different than North America and Europe and candidates moving across those global 7

boundaries will require more cross-cultural integration. Some companies have taken an early lead on the cross-cultural integration front through their partnerships with companies in other countries.

Automotive Skills Applying to Nuclear Industry n An engineering mind-set n A strong quality and safetyculture orientation n A highly disciplined approach to process management n A rich heritage of developing process efficiencies n Given its current struggles in North America, a large number of leaders and skilled workers who may be highly motivated to leave the sector

In addition to looking beyond their home country, more organizations are beginning to extend recruiting efforts beyond the industry.

While a number of job roles require unequivocal nuclear experience because of credential requirements, there are a large number of roles suitable to candidates who currently work in other sectors with similar skills requirements.

In North America, for example, the automotive industry has emerged as a ripe source of potential candidates for select positions in nuclear organizations because it possesses a number of appropriate requirements and qualities.

The petrochemicals, aviation and process manufacturing sectors along with military organizations mark other potential targets of beyond-industry recruiting efforts.

Finally, nuclear companies will have roles which explicitly require nuclear experience and will focus some portion of their recruiting activities on other companies in the sector. While admittedly not a solution for the sector as a whole, it would be naïve to suggest it is not a well-proven solution to address specific technical needs.

Understanding that competition for talent is only going to get more fierce, organizations are well-served by ensuring they have fully engaged their workforce and have a well-designed and highly effective retention strategy in place.

In many cases, organizations cannot extend their recruiting efforts as required due to staffing limitations. Many companies simply do not possess sufficient resources or expertise within their human resources departments to fill highly specialized positions – especially when the number of open specialized positions grows too large – and when the primary vehicle for in-house recruiting is a passive approach posting in the media (paper or electronic). Additionally, as noted, the industry’s tight labor market frequently requires recruiting efforts to target competitors, which can be politically difficult for a company to do.

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For these reasons, some companies have partnered with external suppliers to outsource elements of their recruiting needs to third-party experts. For example, Ontario-based Bruce Power recently enlisted Futurestep, a Korn/Ferry company, to handle all of the partnership’s middle-management recruiting. Futurestep dedicated a project team to work exclusively with Bruce Power to hire middle managers. The project team, which is managed by Bruce Power, resides both on-site and at Futurestep’s Toronto office.

To date, the arrangement has succeeded in filling over 100 middlemanagement roles, some of which had been open for close to two years prior to Futurestep’s recruiting efforts. Bruce Power reports that the project-recruiting arrangement has proven more effective and more cost-efficient.

Conclusion External recruiting does not represent a systemic solution for the sector; however, when it is executed effectively, it helps companies fuel near-term growth as they employ other approaches – such as forging new partnerships and strengthening their leadership development programs – designed to lessen the talent crunch over the long term.

Endnotes 1 “In Europe, New Life for Nuclear” by Mark Scott, BusinessWeek. January 8, 2008.

2 “Who Will Staff the Nuclear Renaissance?” by Christina Rexrode, St. Petersburg Times.

June 10, 2007 3 “The Case for Terrestrial (aka Nuclear) Energy” by William Tucker.

Adaptation of a Hillsdale College lecture. Jan. 29, 2008.

4 “The Human Element: Utilities and Their Stakeholders are Developing new Programs to Help them Compete in Today’s Labor Market”

by Eric Krell, Electric Perspectives.

July/August 2008.

5 “Nuclear Industry’s Comprehensive Approach Develops Skilled Work Force for the Future,” Nuclear Energy Institute Fact Sheet. April 2008.

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Bruce Power Case Study

Leadership Strategy Ontario-based Bruce Power has a bold mission: to build Canada’s first private nuclear generating company into a global entity that operate nuclear power plants around the world.

Carrying out this ambition represents a challenge at a time when a globally resurgent nuclear industry has sparked a war for talent and when large portions of the current nuclear workforce (including roughly 50 percent of Bruce Power’s 3,700-plus employees) are eligible for retirement within the next five years.

To address these challenges while executing their growth strategy, Bruce Power CEO Duncan Hawthorne and his top executives enlisted Korn/ Ferry International to conduct a multi-year, multimillion-dollar strategic initiative. “We are the busiest nuclear site in North America,” notes Hawthorne. “People who are ambitious in their careers will want to make a contribution to a company like Bruce Power. It is important that we align their expectations with ours …. Central to realizing that opportunity is providing our people with a plan through which they can be confident there is a career path where they can grow professionally.”

The approach begins with the creation of a leadership model that is closely aligned with Bruce Power’s strategic objectives. The outputs from this leadership model enable new performance management, leadership development, succession planning and recruiting processes – all of which are in synch with the company’s overarching strategy.

One important component of this solution includes a proprietary assessment tool that measures how well a leadership candidate will match a specific company and culture. The tool includes Korn/Ferry’s database of 500,000 executives, in which the behavioral characteristics and career motives of the top 20 percent (in terms of success/ performance) have been identified. From this information, the firm has 10

at Bruce Power developed a library of “best-in-class” profiles. Additionally, Korn/Ferry has developed a research-based library of Korn/Ferry Advantage™ Leadership Characteristics critical to organizational success that Bruce Power and other clients use to identify specific competencies needed for an open position. Depending on how the client prioritizes these Leadership Characteristics, the best-in-class profiles are then customized to reflect the client and job situation more accurately.

Bruce Power and Korn/Ferry began by translating the company’s strategy into specific competencies leaders need to possess for the organization to demonstrate the capabilities necessary to achieve its strategy. This customized leadership model drives the rest of the work.

For example, the leadership model articulates to what is expected from leaders from a performance management perspective. Bruce Power’s new performance management process lays out how to: n n n

Set objectives that link back to the strategy; Conduct a review of the leader’s performance based on those objectives; and Identify specific developmental opportunities as a result of the leader’s performance.

Equipped with a clear picture of performance at the leadership and middle-management level, Bruce Power uses this information to seed a succession plan that identifies high-potentials, technical experts, solid employees and underperformers. This talent map is used to tailor development opportunities (e.g., executive coaching at select levels, mentoring, and new project and job assignments) and to assist recruiting efforts.

Rather than recruiting externally for all of its open positions, Bruce Power can better mine the high-potential resources in its own ranks.

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Gordon Orlikow is a Senior Client Partner in Korn/Ferry’s Global Energy Sector, based in Toronto.

Iain Manson is the EMEA Leader for Korn/Ferry’s Global Energy Sector, based in London.

Yannick Binvel is a Senior Client Partner in Korn/Ferry’s Global Industrial Market, based in Paris.

Richard Preng is the Global Leader for Korn/Ferry’s Global Energy Sector, based in Houston.

About The Korn/Ferry Institute

The Korn/Ferry Institute was founded to serve as a premier global voice on a range of talent management and leadership issues. The Institute commissions and publishes groundbreaking research utilizing Korn/Ferry’s unparalleled expertise and preeminent behavioral research library. It also serves as an exclusive destination for executives to convene and hone their leadership skills. The Institute is dedicated to improving the state of global human capital for organizations of all sizes around the world.

About Korn/Ferry International

Korn/Ferry International, with more than 90 offices in 39 countries, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to identify, deploy, develop, retain and reward their talent.

For more information on the Korn/Ferry International family of companies, visit www.kornferry.com.

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