Navigating the Renewable Energy Transition with a Contingent Workforce

In response to the 2022 Inflation Reduction Act Program, U.S. energy and utilities organizations are accelerating efforts to reduce greenhouse gas emissions and transition to 100% renewable energy by 2035. This shift has created numerous job opportunities and is expected to stimulate economic growth, as well as position the United States as a global leader in renewable energy.

Accomplishing 80% renewable energy generation by 2030 will require the support of a large and skilled workforce. As a result, leading energy and utilities organizations are refining their workforce management strategies to meet the increasing demand for talent, counter workforce challenges, and carry out their environmental responsibilities. 

The Energy Sector’s Workforce Challenge

With 50% of the workforce approaching retirement and employee tenure decreasing by 37% in the past decade, attracting and retaining skilled talent has become a pressing concern within the energy and utilities industry. As one generation exits the workforce, the next generation enters with little to no support from professional development programs to build the appropriate skills needed to maintain this new infrastructure.

Companies are also making significant investments into their supply chains to reduce fossil fuel emissions and incorporate renewable energy sources. This effort is part of a broader strategy to achieve Net Zero Emissions by 2050 and meet the Biden-Harris Administration climate crisis goals.

Paired with the ongoing talent shortage, rapid industry growth has compelled organizations to improve or adopt new workforce management strategies to fill skills gaps. One of these strategies includes leveraging contingent labor to quickly respond to staffing needs and achieve business goals. 

Leveraging Contingent Labor 

Over 40% of an organization’s workforce is comprised of contingent employees, a number expected to continue to grow by the end of the decade. By extending your organization’s workforce, it casts a broader net, increasing access to skilled talent to quickly and efficiently fill business-critical roles.

For organizations looking to maintain competitiveness, decrease employee turnover, and enhance the worker experience, it is vital that diversity, equity, and inclusion (DE&I) efforts are also at the forefront in your contingent workforce program.

Supplementing your workforce with contingent labor will offer your organization the flexibility to engage with workers to achieve project-based goals that will promote long-term ROI. This approach will ensure significant cost savings for short-term engagements in comparison to long-term employment.

An effective contingent workforce program will also create the opportunity to convert talent into full-time employees (FTEs), providing companies a more permanent fix to their staffing issues.

Key Strategies for Workforce Optimization

Energy and utilities organizations are exploring various opportunities to effectively optimize their workforce as their businesses mature. These include:

• Incorporating Statement of Work (SOW) Spend
  Unlock cost efficiencies and improve talent management by integrating SOW spend into your contingent workforce strategy. This approach will also help optimize visibility and strengthen compliance.

• Tapping into Alternate Talent Sources
  Energy companies that leverage referred talent pools typically achieve greater access to specialized skills, faster time to fill and higher talent quality. And as cost-conscious organizations tap into self-sourced talent and increase their payroll utilization rates, they also get more value out of their budget. That’s because with the right expertise, organizations can drive significant cost savings on every engagement that's filled as a payroll order versus an agency order. The larger the payroll utilization rate, the greater the savings. 

• Worker Redeployment
   Worker redeployment involves moving pre-vetted workers into different roles and projects within the organization. This practice helps to increase talent quality and mitigate risk by prioritizing reliable, trusted talent over hiring new staff. Since these workers are already familiar with company policies and processes, this reduces onboarding time as well. Maintaining engagement with existing skilled workers will also promote talent retention and is more cost effective compared to the expenses associated with recruiting and onboarding new hires.  

Selecting a Workforce Management Partner

There are several important factors that energy and utilities organizations should consider when evaluating a workforce management partner. These characteristics will enable organizations to proactively address potential workforce challenges and help with future planning to bolster the success of a contingent program. A strong workforce management partner will have:

• Global reach and a partnership with diverse suppliers
  Offering access to a broad and diverse supplier network can expand talent access and strengthen DE&I efforts by creating strategic partnerships with diverse suppliers and establishing broader access to diverse, skilled talent.

• Vendor Neutrality
  There is power in maintaining complete independence from anyone staffing agency. A vendor-neutral Managed Service Provider (MSP) can significantly optimize your contingent workforce program by enabling you to source from anywhere. Since a vendor-neutral MSP doesn’t prioritize one staffing agency over another, suppliers are incentivized to offer their best candidates at optimal rates, helping to provide unbiased access to a broad pool of talent.

• Proven expertise in the energy and utilities sector
  Having established client relationships in the energy and utilities industry will put you ahead of the competition. It takes specialized knowledge and extensive experience to understand key business priorities, revenue drivers and pain points within a company. This insight will enable a partner to make meaningful contributions and enhance workforce processes. 

(Related reading: Xcel Energy Navigates Clean Energy Growth with Magnit Solutions)

Leveraging contingent labor to align with demanding industry trends in the energy and utilities sector offers numerous advantages. This new pool of talent will help you fill the skills gaps in your workforce, tackle labor shortages, and advance environmental goals, all while keeping costs down.

As the industry’s first AI-powered, integrated workforce management platform, Magnit is uniquely positioned to be a strategic partner in sourcing candidates at competitive rates, managing the entire contingent worker lifecycle, identifying cost savings opportunities, ensuring worker compliance, and much more.

Discover why managing flexible workforces through holistic platforms is becoming a key C-suite priority in our white paper.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.