Utility companies face a pressing challenge: nearly 29% of their workforce is nearing retirement, and the shift to renewable energy demands entirely new skill sets. Without proper succession planning, this could lead to operational disruptions, costly turnover, and loss of institutional knowledge.

Here’s what you need to know:

• Aging workforce: The average utility worker is over 50, with 50% retiring within a decade. Leadership gaps could delay emergency responses and modernization efforts.

• New skill demands: Transitioning to renewables and modern grids requires expertise in AI, big data, and cybersecurity.

• Financial risks: Replacing employees costs up to twice their annual salary, making proactive planning critical.

To address these issues:

• Identify critical roles: Focus on positions vital for grid reliability, compliance, and renewable integration.

• Develop internal talent: Use mentorship, cross-functional training, and leadership programs to prepare future leaders.

• Leverage external solutions: Programs like train-to-hire initiatives and global recruitment can fill immediate gaps.

Succession planning isn’t optional - it’s the key to maintaining operations, meeting regulatory demands, and securing a reliable energy future. Let’s dive into the details.

Succession Planning: How to Do It Right

Identifying Key Roles and Future Leaders

The starting point for creating a solid succession plan is pinpointing critical roles and aligning them with the right talent. This step lays the groundwork for understanding how to meet the organization's future needs effectively.

Analyzing Organizational Needs

Take a close look at your long-term goals to identify roles that are essential for maintaining grid reliability, meeting regulatory standards, and ensuring smooth operations. Key positions often include those in operations, control rooms, engineering, compliance, and fieldwork. These roles are vital for tasks like maintaining grid stability, upgrading systems, adhering to regulations, and managing power restoration during outages.

Your succession plan should align with your strategic goals. For example, if you're integrating renewable energy, focus on developing leaders skilled in both traditional systems and newer technologies. Similarly, when regulatory changes drive grid modernization, prioritize positions responsible for overseeing these transitions.

A good example of this approach is Paducah Power System in Kentucky. They asked supervisors to identify employees nearing retirement and evaluate the training needs of their potential replacements [2]. This structured process helped them see not just who might leave but also the critical skills that would be lost. It's also worth considering the financial impact of each role. Even seemingly routine positions can become crucial during emergencies or large projects, highlighting the importance of preparing leaders who can avoid costly disruptions.

Recognizing High-Potential Employees

Once you've defined the key roles, the next step is identifying employees with the potential to step into leadership positions. This goes beyond simply looking at top performers.

While performance reviews are a helpful starting point, they shouldn’t be your only tool. High performers in technical roles don’t always make effective leaders. Look for traits like resilience, strong communication skills, and the ability to mentor others. Using a thorough review process can help standardize evaluations and reduce bias [3].

Cross-functional experience is another valuable asset. Employees who have worked in multiple areas of the organization are often better equipped to handle leadership roles during challenging situations [5]. For example, an engineer with hands-on operations experience or a field technician who understands regulatory requirements can bring a well-rounded perspective to leadership.

Keep track of potential successors and create development plans that outline the skills and experiences they need to grow. Regular talent reviews ensure that these plans remain aligned with the organization’s changing needs [3][4].

Building a Strong Talent Pipeline

Once high-potential employees have been identified, the next step for utility organizations is to create a steady pipeline of future leaders. This involves designing structured programs that not only develop critical skills but also align individual career growth with the company’s broader goals. By addressing talent shortages early, organizations can avoid disruptions and ensure a smoother transition when leadership roles need to be filled.

Training and Mentorship Programs

At the heart of effective talent development lies structured mentorship. By moving beyond informal pairings and implementing deliberate mentorship programs, organizations can achieve measurable outcomes.

Here’s a compelling statistic: companies that invest in leadership development programs see revenue growth between 1.4 to 2.2 times higher than those that don’t. Additionally, for every $1 spent on leadership training, organizations have reported an impressive $7 return on investment [8].

One strategy that stands out is cross-functional mentorship. Instead of traditional seniority-based pairings, companies like Mastercard and Novartis match employees based on their skills and career goals. This approach breaks down organizational silos and fosters a deeper understanding across departments [7]. For utility organizations, this could mean pairing field technicians with engineers, regulatory specialists with operations staff, or experienced line workers with emerging project management leaders. These pairings facilitate the transfer of knowledge and ensure that institutional insights are preserved while grooming the next generation of leaders.

Leadership training programs should also emphasize hands-on learning and tailored development plans. For example, MEA’s Utility Leadership Accelerator offers a cohort-based program lasting six to eight months, priced at $1,995 for members and $2,500 for non-members [6]. Schneider Electric has successfully used mentoring as a tool to improve employee retention, offering growth opportunities and promoting internal mobility through its talent marketplace [7].

Aligning Individual Growth with Organizational Goals

A strong talent pipeline isn’t just about filling roles - it’s about aligning personal career aspirations with the organization’s long-term vision.

Today’s workforce, particularly younger employees, values skill-building over traditional, linear career paths [9]. To meet these expectations, utility organizations can create opportunities for lateral moves and skill diversification. For instance, an operations technician might gain expertise in both traditional grid management and renewable energy integration, positioning them for leadership roles in modern grid projects.

Organizations that focus on building critical skills early - like leadership, technical expertise, and safety awareness - are better equipped to handle the evolving demands of the industry [9]. Personalized development plans can target specific growth areas while aligning with the company’s strategic goals [8]. Regular workforce assessments help identify skill gaps, ensuring that training programs remain relevant and effective [9]. These efforts naturally complement external workforce solutions, which can further strengthen the talent pipeline.

Workforce Solutions for Talent Development

When internal training programs need a boost or face limitations, external workforce solutions can step in to fill the gaps. These solutions provide scalable and immediate support, ensuring the organization remains agile and competitive.

Train-to-hire programs, for example, allow candidates to gain utility-specific skills while giving organizations the chance to evaluate their fit and performance. ServiceHub’s train-to-hire initiatives are a great example, transforming inexperienced hires into industry-ready professionals while minimizing hiring risks.

Other solutions, like adaptive workforce programs, bring in utility-experienced professionals who require minimal additional training. These programs are particularly valuable for addressing skill gaps in critical areas like renewable energy, smart grid technologies, and advanced distribution systems. For organizations looking to tap into global expertise, workforce solutions that include visa and sponsorship management open up access to international talent pools.

The impact of strong leadership on financial performance is undeniable - organizations with robust management capabilities are 1.4 times more likely to achieve solid financial results [8]. By combining well-structured internal training with strategic external workforce solutions, utility organizations can create a comprehensive talent strategy that meets both immediate needs and long-term objectives. This integration strengthens internal capabilities while ensuring the organization is prepared for future challenges.

Implementing and Maintaining Succession Plans

As mentioned earlier, succession planning is essential for ensuring smooth operations and avoiding costly interruptions. To make it truly effective, think of succession planning as a living framework that supports leadership transitions. Without consistent follow-through and updates, even the most well-thought-out plans can lose their impact.

Creating a Documented Succession Framework

Start by documenting key roles, responsibilities, and timelines. Form a dedicated Succession Advisory Team (SAT) to oversee progress and maintain clear communication channels [10]. This team acts as the driving force behind your succession planning efforts, keeping everything organized and on track.

Set clear timelines for both expected and unexpected leadership changes. Define who is responsible for what, and create smaller project teams to handle specific tasks [10][12]. Include a written mission statement that outlines a shared vision and establishes goals for the plan [12].

When done correctly, this documentation not only helps avoid the high costs of unplanned leadership gaps but also lays the groundwork for continuous improvement.

Reviewing and Updating Succession Plans

Frequent reviews are crucial to keeping your succession plan aligned with the organization’s changing needs [12]. Regular evaluations can help determine if successors are progressing as expected, if new roles have emerged, or if external factors have altered leadership requirements.

For example, consider workforce demographics and retirement trends. If a large number of senior engineers are nearing retirement, you’ll need to adjust your transition timeline accordingly. As your organization evolves, make sure successors are building the skills needed to tackle future challenges.

Assess the effectiveness of your development programs. Are mentorships delivering the desired results? Are training sessions equipping successors with the right competencies? Gathering feedback from participants and supervisors can highlight areas that need improvement.

Keep an eye on market trends and industry shifts, especially those driven by new technologies or regulatory changes. Incorporating these factors ensures your plan stays adaptable and relevant for both current and future leadership needs.

Once your plan is updated, active involvement from leadership becomes critical to bringing it to life.

Engaging Leadership for Effective Implementation

Senior leaders play a pivotal role in championing succession planning and ensuring it aligns with broader organizational goals [10]. Without their visible support, even the best initiatives can lose momentum.

"Succession planning is an important strategic process that has broad benefits for organizations and employees alike."
– SIGMA Assessment Systems Inc. [10]

Leadership involvement starts with fostering a workplace culture that prioritizes succession planning. Leaders should actively mentor potential successors, participate in planning sessions, and emphasize the importance of preparing future leaders [10][12].

Engage stakeholders across all levels - from frontline supervisors to external groups like regulatory agencies and community representatives. This inclusive approach builds trust and demonstrates fairness in your leadership transition process [11].

To keep things moving, leaders should regularly evaluate progress, allocate necessary resources, and make adjustments as needed. Treating succession planning as a continuous strategic priority ensures smooth transitions and sets the stage for long-term success.

Overcoming Challenges in Utility Succession Planning

Even with strong leadership and well-documented frameworks, utilities face steep challenges in succession planning. The energy sector is grappling with a workforce shift as 50% of the current energy utility workforce is set to retire within the next decade [15]. This, combined with rapidly advancing technology and changing employee expectations, puts immense pressure on maintaining operational continuity. To tackle these issues effectively, utilities need strategies that complement leadership efforts and structured training programs.

Addressing Knowledge Silos and Resistance to Change

One of the biggest hurdles in succession planning is the presence of knowledge silos. When seasoned employees hold critical technical expertise without sharing it broadly, utilities risk losing decades of institutional knowledge. In fact, over a quarter of U.S. infrastructure workers are expected to retire or leave their roles within the next ten years [14].

To prevent this, utilities can implement structured knowledge transfer programs. Pairing retiring experts with successors through formal mentorship ensures that key skills and processes are passed on. Additionally, documenting essential workflows creates a lasting resource for future teams.

Resistance to change is another common challenge, often stemming from uncertainty about new roles or career paths. This can be addressed by involving employees in planning discussions and highlighting the personal benefits of these changes, rather than imposing them unilaterally.

"Most utilities aren't telling their story well to talent. They usually focus on the stable nature of the business, on safety and reliability. But in career discussions, this historical framing can undermine their future-oriented story of innovation, excitement, and growth. Stop saying your job is to keep the lights on - It is to help design a 100% clean energy future and the world is counting on us!"

• Mike Rowland, National Leader for Customer Experience Strategy at West Monroe [13]

Another critical element is fostering a culture of continuous learning. With over 60% of utility workers reporting outdated workplace technology, investing in modern learning management systems and regular training opportunities can help employees view change as a path to career growth rather than a threat [13].

Leveraging Workforce Solutions to Bridge Talent Gaps

While internal development is vital, external workforce strategies are increasingly necessary to address the looming retirements and skill shortages. The numbers are stark: only 6% of utility leaders feel their organization excels at recruiting younger or technical talent, and 48% doubt their recruiting efforts can meet future demands [13].

This is where external workforce solutions come into play. Programs like train-to-hire initiatives, tailored consulting, and global talent recruitment offer immediate support during leadership transitions. ServiceHub, for example, specializes in workforce solutions for electric and gas utilities, offering resources like contract evaluation hiring, direct hire solutions, and international talent access.

Global recruitment is especially important as utilities compete with other industries for skilled professionals. With employee tenure in the power and utilities sector dropping by 36.8% over the past decade, casting a wider net for talent is no longer optional [16]. International hires can bring fresh perspectives and specialized expertise that may be hard to find locally.

Adapting recruitment and retention strategies to align with evolving workforce expectations is equally critical. Today’s workers prioritize alignment with their values and a better work-life balance.

"Younger workers want to work to live, not live to work. They want to be engaged. They want to work for a company that aligns with their values and priorities."

• Jodi Bednar, Director of the Energy and Utilities Practice at West Monroe [13]

Conclusion: Key Takeaways for Effective Succession Planning

Effective succession planning isn’t just a box to check - it’s a critical step in ensuring your organization remains resilient during workforce transitions. By focusing on skills assessment, mentorship, and external support, utilities can navigate these challenges with confidence and secure their future.

As Caitlin Humrickhouse from Baker Tilly's Public Sector Advisory Practice explains:

"Succession planning is not about 'cherry-picking' the next in line to fill a position. Rather, it is an opportunity to strategically assess the current skills, knowledge, and competencies in your organization, and determine how you can better prepare the workforce - both internal and external to your organization - to fill critical vacancies when they arise." [1]

Start by identifying critical roles, evaluating internal talent, and documenting institutional knowledge. Shockingly, only 21% of HR professionals report having a structured succession plan in place [17]. Don’t let your utility fall into the unprepared majority. Tools like the 9-box assessment can help you evaluate employee performance and potential while safeguarding essential knowledge.

Investing in mentorship and training programs is equally important. These initiatives not only prepare employees for leadership roles but also meet the growing expectations of today’s workforce. Trish Holliday of Nashville Electric Service highlights this point:

"Studies indicate that top talent want good leadership, to be a part of the decision making at some level, and to be developed for future roles." [2]

By creating mentorship opportunities, offering clear career pathways, and addressing skill gaps with targeted training, you’ll build a workforce ready to step into critical roles when needed.

External workforce solutions can also play a key role. ServiceHub’s train-to-hire programs and global talent access provide a valuable safety net during leadership transitions, complementing internal development efforts and ensuring continuity.

Succession planning should be treated as a continuous, strategic priority. It’s not just about filling roles today - it’s about anticipating future needs, adapting to new technologies, and preparing for shifting market conditions [17]. By combining internal development with external workforce solutions, utilities can maintain operational stability and stay competitive.

The time to act is now. Organizations that prioritize succession planning will thrive, while those that delay risk losing critical knowledge and facing disruptive leadership transitions.

FAQs

Which roles in utility companies are most important to include in succession planning?

In the utility industry, succession planning needs to zero in on critical leadership and technical roles that keep operations running smoothly. This includes top-tier positions like CEO and COO, senior management roles, and highly specialized technical experts in fields such as transmission, distribution, and energy generation.

Equally important are operational managers who handle essential tasks like grid maintenance, substation operations, and energy storage. Prioritizing these roles and preparing capable successors ensures the continuity of services and strengthens the industry's ability to adapt and thrive over time.

What are the best strategies for utility companies to pass critical knowledge from retiring employees to future leaders?

To keep knowledge flowing seamlessly, utility companies can introduce mentorship programs where experienced employees nearing retirement work closely with newer team members. This practical, one-on-one guidance not only helps pass down valuable institutional knowledge but also nurtures the next generation of leaders.

Another effective approach is maintaining comprehensive documentation of essential processes and leveraging centralized knowledge-sharing platforms. These tools ensure that critical information is always within reach for future teams, safeguarding operations while building a solid foundation for leadership development.

What workforce solutions can utility companies use to quickly fill skill gaps during leadership transitions?

Utility companies can tap into targeted workforce solutions to bridge skill gaps during leadership changes. Options like train-to-hire programs, direct hire services, and flexible workforce resources offer access to skilled professionals with the expertise needed to address specific challenges.

Collaborating with services that specialize in the utility sector - particularly those with knowledge in electric and gas operations - helps organizations effectively navigate talent shortages. This approach ensures leadership transitions happen smoothly while keeping day-to-day operations on track.

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