New energy suppliers are squeezing the utilities recruitment market

A surge in the number of new entrants to the energy market is draining the sector's talent pool and causing salaries to escalate. Malvin Kamara considers the strategies firms are employing to overcome this challenge.

The many “challenger” brands entering the energy market are putting pressure on the industry’s recruitment pool.

The recruitment crisis within the energy sector isn’t new. With 50 per cent of the workforce set to leave and 220,000 new recruits needed by 2023, the government announced plans to tackle a skills shortage within the sector back in 2014. That included £33m of investment to create around 70,000 new apprenticeships and traineeships.

More stringent regulation has also meant that smaller, newer suppliers are struggling to create or attract the right expertise, with the recruitment pool thinning out for specialist roles. This includes settlement and balancing, billings, customer acquisition and experience, marketing, innovation and R&D, operations and compliance specialists.

Readiness for smart metering is also a specific area of concern for smaller, younger suppliers ahead of November’s deadline. Where time and budget are in short supply, these firms may struggle to have the resources to engage the regulator sufficiently, or the inhouse expertise to guide operations.

Across the board, suppliers are more confident about expertise than resource. In a recent Ofgem study, 85 per cent of firms across the market felt they had enough in-house expertise to deal with the codes they interact with. Only 50 per cent of micro-suppliers and younger brands (under five years old) said they had the right resources in place to sufficiently handle codes.

Across almost every metric, the ability to interpret and act on their regulatory requirements decreased with the size and experience of the supplier.

Salaries are also rising rapidly, thanks to the increasingly competitive market. A smart meter fitter’s wage has jumped from an average £27k to £34k in just a year. Suppliers are left with the choice between recruiting specialists at a premium, or drafting in resources on expensive temporary contracts. A lack of resilience in the face of wage inflation will prove particularly challenging for regulated utilities heading into their next price controls.

There are two main solutions to the above recruitment challenges. We see a growing appetite for independent consultancy where utilities are looking to fill the gap between recruiting an expensive seasoned specialist and hiring traditional big-budget consultancy firms. Bringing in expertise from someone who has worked in a senior capacity elsewhere in the market, even on a short-term basis, could help challenger brands to plug their skills gaps.

But a longer-term solution remains to make the industry seem more appealing and dynamic as a career path, much like retail and banking. Challenging old ways of thinking could also be key – and we’re seeing growth in firms wanting to bring in our consultants from other sectors, such as first direct, Puma and Starbucks.

One thing is clear, the only way that the industry can overcome this problem is by putting competition to one side and working collaboratively.