Different management ‘DNA’ needed in water sector

“Sticky” workforce and limited “gene pool” in senior management causing talent problems for water

A leading water industry investor has said it is looking to draw on a wider pool of talent when recruiting senior managers in the sector. 

Perry Noble, partner in investment manager Hermes Infrastructure, said at yesterday’s Water UK City conference that the industry’s transition from its engineering roots into a more customer focused environment created demand for new boardroom skills.

“We are increasingly looking outside of the sector to bring different DNA to the gene pool of senior management, particularly from highly regulated environments with a greater longevity of being very customer focused.”

“We are in a highly competitive market for talent in the UK: post-Brexit that challenge becomes greater.”

He also pointed to broader challenges for investors in terms of low turnover amongst what he described as the water sector’s “very sticky workforce”, which made it difficult to offer career progression opportunities to talented younger staff.

“We want to retain corporate memory but it means companies are sometimes not focused on bringing in talent.”

Noble said that the move into a more customer focused environment also posed legacy IT systems challenges for water companies.  “Our systems have not kept up with the rate of change.”

In addition, he questioned whether the water industry’s existing five year periodic price reviews are fit for purpose, particularly as they now run in tandem with the fixed term cycle for elections to the House of Commons.

“Given some of the challenges we are contending with, it bothers me that those periods now coincide with election cycles,” Noble said. Justifying his concerns, he pointed to tensions between short term political considerations around issues like prices and the industry’s investment needs that work on a longer horizon.

However, Noble said that Hermes remained committed to the water industry. The inflation-linked indexation of water prices meant that the industry provided good matching assets for its pension fund clients, he explained.