The energy sector is in the midst of an immense transformation, with a high level of uncertainty. The climate crisis, geopolitical issues (including the war in Ukraine), volatility in energy prices, and a sharp political focus on the security of current and future energy supplies are combining to present businesses in the sector with a set of unique challenges and opportunities. As the energy transition continues to gather pace, existing businesses will need to adapt and new businesses will enter the market. From a HR/employment perspective, companies in the energy sector will need to embrace change and adapt in terms of workforce structures and reorganisations, reskilling and upskilling workforces and fulfilling the ongoing and urgent call for talent.
Some of the key HR trends in the sector are as follows:
Environmental, social and corporate governance remains an important item on the agenda. There is increasing legislative focus on worker protection, particularly in the EU where a number of directives aimed at improving workers’ rights and increasing equality have been or will soon be published. These include:
All of these will necessitate changes to the way businesses recruit and manage their staff, and an increased compliance burden overall. In addition, there is increased focus on ensuring that businesses encourage workers to speak up about unethical or illegal behaviour and then stamp out this type of conduct. In the EU, the Whistleblowing Directive has now been implemented in most member states, placing businesses under strict obligations to set up proper internal channels for whistleblowing and to protect those who submit reports against retaliation. It represents a significant shift in the legal landscape in many jurisdictions and multinational businesses will face particular compliance challenges.
Ethics and compliance are of course relevant in all sectors, but businesses in the energy sector which present themselves to customers and users as being at the forefront of green technology / tackling climate change can expect to be subject to greater scrutiny and pressure from their investors, management and employees. As well as the pure legal need to comply there is a significant reputational aspect – a business portraying itself as “doing good” for the world must be seen to do the same for those who work for it.
An increase in automation and implementation of emerging technologies and the opportunities and challenges associated with employee mobility, together with the move to clean energy generation, have prompted many businesses to reconsider their workforce structure. This is not only in terms of overall number of heads required to meet the needs of the business, but also in relation to the skills they need, where they are needed and how their people are engaged.
The change in business needs in the sector and increased focus on technological/IT skills means that businesses in the energy sector are increasingly finding themselves competing with the tech sector for the best staff, and needing more generally to widen the pool of potential candidates for roles.
The recent and ongoing retrenchment in the tech sector, which has led to thousands of redundancies globally, may be helpful to ambitious businesses in the energy sector who can potentially pick up skilled tech workers who can no longer find work in “pure” IT businesses. However, those people potentially bring with them different expectations from their employers in terms of pay, benefits, and policies – particularly around flexible work and Diversity, Equity and Inclusion. This may require businesses in the energy sector to look again at their employee value proposition and culture, and make changes to attract new talent.
As fossil fuel power generation assets are reduced and the world transitions to clean energy sources, there is an obvious need to upskill people to operate new and emerging technologies. This will continue to drive employers in this sector to review their operations and restructure them to reflect the operating environment.
Many employers have identified that upskilling and reskilling can be preferable to making personnel changes in order to retain talent. However, the scale of change may require the outsourcing, offshoring or even divestment of certain functions or business areas, with resulting transfers of staff out of the organisation or redundancies. Businesses may also seek to make greater use of contingent labour, in place of direct, permanent headcount in order to maintain flexibility and scale up or down as business needs require. The HR and employment implications of these changes can be significant and will need to be evaluated carefully ahead of implementation.
Our experience in the recent wave of tech redundancies shows that where headcount reductions are needed, an employer’s need to keep the best people is not always mirrored by legal requirements, especially in mainland Europe where strict criteria apply when selecting people for redundancy, which are in many cases entirely unrelated to job performance. This means that companies may need to search for pragmatic solutions to navigate these rather prescriptive rules on redundancies without losing their top talent, carefully balancing legal risk against business need. A further challenge is posed by the increasingly international nature of businesses: this can also mean that employees are much more “global” in their view and may be more inclined to challenge decisions or proposals that result in jobs moving outside of their jurisdiction, or push for a move overseas as an alternative to redundancy. This can create complexity for employers who may need to consider how a varied patchwork of laws and requirements in different jurisdictions interact with each other, and justify their business decisions not only by reference to local requirements but to their global development needs.
Employment law and regulation is an area that tends to develop and change rapidly. For businesses in a sector which is in the throes of a seismic shift in focus, and has the potential for massive growth in the coming decade, the employment “to do” list will be a long one.
Sep 22 2023
Sep 22 2023