Power Industry Needs to Focus on Grooming the Next Generation of Leaders

In an interview at the IHS CERAWeek conference in Houston this spring, Steven Goodman and Trent Aulbaugh of Egon Zehnder International stressed that companies need to focus on identifying employees with long-term potential and help them develop the skills they need to lead.

One approach for talent development is accelerated integration of future leaders. "People are put into roles that perhaps they may not be ready for," Aulbaugh said, but they’re given the coaching and support they need to become effective and get to the level they need to be as quickly as possible.

The next generation of leaders may come from a variety of backgrounds. In this respect, Aulbaugh said, the power generation industry has some advantages over other energy sectors, as it has needed a mix of outside skill sets because of increasing deregulation. The skills that are needed in the future will depend on the direction the industry takes. However, over the long term, Aulbaugh noted, the bulk of these new leaders needs to come from within the industry.

Aulbaugh expects that, as gas-fired power becomes more important, it’s likely more future leaders in the industry will come from gas backgrounds. Likewise with renewables, which have drawn many executives from high-tech fields. The power industry is going through significant changes, and executives have to increase their competencies to meet those changes.

Leadership Potential is Key

Still, when considering future leaders, companies need to focus primarily on potential. "Identify that potential, regardless of background," Goodman said. "What is the potential of this individual to really get to this next level?" Don’t get overly concerned with where the employee came from; instead, focus on where he or she can take you.

In the near term, companies with leadership gaps should focus on filling middle-management ranks with high-potential employees, Goodman said.  "Give them big roles, let them acclimate, see their potential, and let them rise." Support is also crucial, Aulbaugh said: "Give them safe places to fail."

The reality is that this is a problem with no quick answers, regardless of approach. "That gap in the middle is going to take a while to rectify," Aulbaugh said.

Plan From the Top

Good succession planning is most important. "If you think about the most fundamental responsibility of a board," Goodman said, "it’s to make sure that the next selection of CEO is a good one." To get there, you need to have a robust succession plan, starting with the CEO, and working down to the next levels.

The next generation of leaders will also need to have keen instincts for corporate responsibility. This is a "very significant trend, that the industry can’t ignore," Aulbaugh said. "There is a real mindset shift."

Future CEOs will need to be able to navigate political, ethical, and regulatory concerns that previous generations have not faced, and be prepared to partner with regulatory agencies rather than throwing up roadblocks. Said Goodman, "It increases the complexity associated with becoming a CEO of a company. Navigating that landscape is just a skill set we haven’t had."

—Thomas W. Overton, JD is POWER’s gas technology editor.