people capability strategy 2013-2020 - … capabilities required to ... within this strategy...

BR01

Grid Systems Strategic Plan - v0.3 © Transpower New Zealand Limited 2007. All rights reserved. i

PEOPLE CAPABILITY STRATEGY 2013-2020

1 October 2013

BR01 People Capability Strategy

2 | P a g e © Transpower New Zealand Limited 2013. All rights reserved.

Table of Contents

1 Background and Context........................................................................................... 5

1.1 Purpose and Scope ............................................................................................... 5

1.2 Document Map ...................................................................................................... 5

1.3 Context .................................................................................................................. 5

1.4 Role of Transpower ............................................................................................... 6

1.5 Transpower Principal Objectives ........................................................................... 7

1.6 Vision .................................................................................................................... 7

1.7 People capability vision ......................................................................................... 7

2 Current State Assessment ........................................................................................ 9

2.1 Current Organisation Overview ........................................................................... 10

2.2 Analysis of Current State ..................................................................................... 14

3 Future State Assessment ........................................................................................ 24

3.1 Introduction ......................................................................................................... 24

3.2 Summary ............................................................................................................. 24

3.3 The context of Transmission Tomorrow ............................................................... 25

3.4 Size, structure and Divisional FTE forecast ......................................................... 25

3.5 Cost implications ................................................................................................. 26

3.6 The challenges of our aging workforce ................................................................ 27

3.7 Future workforce supply ...................................................................................... 29

3.7.1 Engineering Divisions .......................................................................................... 29

3.7.2 Corporate Divisions ............................................................................................. 30

3.8 Future business critical competencies ................................................................. 30

3.9 Future people capability requirements ................................................................. 31

3.9.1 Asset management and PAS 55 compliance ....................................................... 31

3.9.2 Safety .................................................................................................................. 32

3.9.3 Commercial acumen and continuous improvement ............................................. 33

3.9.4 Systems thinking and change agility .................................................................... 33

3.10 Collaboration and convergence ........................................................................... 34

3.10.1 Leadership and performance management ......................................................... 35

3.10.2 Diversity .............................................................................................................. 35

4 Tracking progress against the strategy ................................................................... 37

4.1 HR Analytics ........................................................................................................ 37



4.2 Measuring our strategy performance ................................................................... 38

Appendix A: Transpower Operating Structure ................................................................... 39

Appendix B – People Capability Strategic Opportunities Matrix ......................................... 40

Appendix D – Current People Capability Structures, Frameworks and Channels .............. 46

Appendix E – Capability challenges and opportunities notes per Division .......................... 49

Appendix F: Material Reviewed ........................................................................................ 53

Appendix G: Stakeholders interviewed ............................................................................. 55

Appendix H – Graduate Recruitment 2010 to 2013 ........................................................... 56



Table of Figures

Figure 1 - The People Capability Strategy ................................................................................. 6 Figure 2 - Transpower operating structure ............................................................................... 10 Figure 3 - Divisional Staff per location ...................................................................................... 13 Figure 4 - Position grade age distribution 2011 ........................................................................ 15 Figure 5 - Position grade age distribution 2013 ........................................................................ 15 Figure 6 - Gender and Job Grades .......................................................................................... 16 Figure 7 - Percentage FTE per grade 2012/13. ....................................................................... 18 Figure 8 - Transpower Staff Engagement Scale. ..................................................................... 19 Figure 9 - Staff Engagement – Age .......................................................................................... 20 Figure 10 - FTE and Salary & Allowance Costs (LCI Adjusted) ............................................... 27 Figure 11 - Forecast workforce # and % over 65 years old ..................................................... 28 Figure 12 – Domestic student enrolments 2005 – 2011. ......................................................... 30 Figure 13 - People Capability Strategy overview ..................................................................... 37

List of Tables

Table 1 - Division descriptions .................................................................................................. 11 Table 2 - Workforce age demographic 2000 – 2013 ................................................................ 14 Table 3 - Annualised turnover 2000 vs. 2013 ........................................................................... 19 Table 4 - Draft people capability strategy measures and targets ............................................. 38



1 Background and Context

1.1 Purpose and Scope

The People Capability Strategy summarises current people capabilities (excluding

‘Temporary Non Staff Resources’) across Transpower’s business and identifies the

people capabilities required to support the business through to 2020.The strategy is a

key document supporting Transpower proposals for Regulatory Control Periods

(RCP). These proposals are required by the Commerce Commission who consider

each proposal and then set OPEX, base CAPEX, quality and resulting revenue for the

RCP.

The next RCP (RCP2) will cover five years, from 2015 to 2020. The Transpower

proposal for RCP2 is to be submitted to the Commerce Commission by 2 December

2013.

1.2 Document Map

The structure of this document is as follows:

Section 1: summarises the background to Transpower as an organisation and

provides context for the document;

Section 2: summarises the current state of the organisation and people

capabilities;

Section 3: sets out the desired future state with particular reference to the key

development areas and provides an overview of the strategic opportunities that

require further development and planning;

Section 4: sets out the need to develop initiative plans and HR analytics that

relate to the strategic opportunities identified.

1.3 Context

The People Capability Strategy has been informed by other key strategic documents,

including:

Transmission Tomorrow

Statement of Corporate Intent 2012/13

Business Plan 2012/13

Technical Skills Database

Engagement Survey Results 2011 and 2012

Workforce Report

Divisional Capability Requirements



The People Capability Strategy will form part of Transpower’s long term

organisational strategic plan and RCP2 submission. The figure below shows the

strategic linkage between Transpower strategies.

Figure 1 - The People Capability Strategy

1.4 Role of Transpower

Transpower plays two main roles central to the operation and development of New

Zealand’s electricity power system.

1. Transpower is the owner and the operator of the Grid. It operates and

develops New Zealand’s high voltage transmission network that connects

generators, distributors and major end users in both the North and South

Islands.

2. Transpower is the provider of co-ordination and security (System Operator)

functions of the power system.

Both roles are essential to ensure the reliable supply of electricity and are

fundamental to New Zealand’s economy. The capabilities of the workforce must

reflect this context i.e. the 24/7 provision of an essential national service and the

continued advancement of the Grid.

Transmission Tomorrow Statement of Corporate Intent

Capability Requirements Information Systems

Documentation

Asset Management Policy

People Capability

Strategy

Information Systems

Strategic Plan

Corporate Business

Capability Requirements

System Operator

Capability Requirements

Grid Business Capability

Requirements

Business Service

Strategy

Portfolio Plans

Asset Management

Documentation

Asset Management

Strategy

Lifecycle

Strategies

Fleet

Strategies

Fleet Plans



1.5 Transpower Principal Objectives

Transpower’s principal objectives, as set out in Section 4 of the State Owned

Enterprises Act, are to operate as a successful business and to be:

as profitable and efficient as comparable businesses not owned by the

Crown;

a good employer;

an organisation that exhibits a sense of social responsibility by having

regard to the interests of the community in which it operates and by

endeavouring to accommodate or encourage these when able to do so.

The supporting objectives and targets for its principal objectives are set out in

Transpower’s Statement of Corporate Intent.

1.6 Vision

Transpower is a service company with a vision that ties closely into performance and

focusses on customer and stakeholder needs. The long term vision for the company

is to be the best transmission company in Australasia.

1.7 People capability vision

The rationale behind our people capability vision and how it is developed is outlined

within this strategy document.

Our people capability vision is “To recruit, develop and retain the capability

required for Transmission Tomorrow.”

Between 2013 and 2020, we will:

Recruit future capability by: o continuing to grow and develop a strong graduate programme o leading workforce diversity o increasing our focus on succession planning and progression

management.

Develop future capability by: o embedding asset management competence in support of PAS55

compliance o driving collaboration and develop systems thinking across

Transpower o progressing the convergence of business and engineering

competencies o further developing commercial acumen to support investment

decisions o nurturing our future leaders and promoting their development.

Retain future capability by:



o extending our safety culture o redeploying resource into our business as the major capital

investment programme concludes o ensuring we sustain a competitive labour market position in relation

to remuneration o continuing our focus on staff engagement and associated action

planning to minimise turnover in strategic roles and increase productivity

o improving the effectiveness of our performance management framework to enable leaders to drive improved performance and develop people capability.



2 Current State Assessment

This section describes current people capability areas and the key challenges that

require focus. The key challenges are summarised below and expanded sections 2.1

and 2.2.

Changing workforce demographics create challenges for Transpower

As the “Baby Boomers” and Generation X, who comprise over 40% of the staff, move

towards retirement age over the next 10 years Transpower faces the same issues as

our counterpart transmission companies in other developed countries. These people

hold valuable institutional and technical knowledge and are likely to be found today in

middle management and senior technical roles. We need to develop the best way of

retaining knowledge that we require while at the same time allowing people to

transition out of the workforce. This will help to enable effective succession and

career progression among our younger people.

There is sufficient supply of Graduates to meet Transpower’s needs

Transpower has developed a strong graduate recruitment programme, creating a

pipeline of new talent to meet the demand for graduates within Transpower.

Staff engagement is improving

In 2011 Transpower initiated a staff engagement programme which is providing

valuable insights into the levels of engagement across Transpower. Key engagement

drivers have been identified to inform engagement action plans for each Division and

Transpower overall. The 2012 staff engagement result shows engagement is

improving, but more work is to be done in relation to career opportunities,

communication, work processes, leadership and managing performance.

Although Technical capability is strong, managerial and asset management

capability requires improvement

Transpower has strong Technical and Project Management competency frameworks

in place. Core management and asset management competency (plus other

competency areas such as commercial acumen and systems thinking) require some

improvement or development.

There are a number of people capability initiatives already in place that provide

an initial base to continue the development of Transpower’s people capability

Transpower has implemented a number of initiatives to grow the people capability

across Transpower. These include Competency Frameworks, Development

Programmes and Systems.



There are established development programmes in place with additional

programmes under development

There are two development programmes for staff. Targeting our “High Potential” staff

(i.e. those people who are capable of progressing to general management), and our

“Young Achievers” - our emerging and future leaders.

Progression (across Technical areas) has been historically low and

opportunities for progression into senior management roles are limited

A review conducted in 2011/12 partially addressed this issue with the implementation

of a technical progression career path but there is more work to do here. The

Engagement Survey (2012) highlighted both technical and managerial career

development and succession as an issue where continued improvement is required.

2.1 Current Organisation Overview

Transpower Structure

Transpower has seven Divisions: Grid Performance, Grid Development, Grid

Projects, Information Services and Technology, (IST), System Operations (SO),

Corporate Services, and People and Corporate Relations. These units work together

and are highly interdependent, in order for the company to deliver an uninterrupted

supply of electricity. In respect of Transpower’s commitment to safety, everyone in

every division, plays an important part of developing a safety culture.

An overview of Transpower’s operating structure is provided in Appendix A.

Figure 2 - Transpower operating structure

Corporate

ServicesPeople &

Corporate Relations

Grid

Performance

Grid

Development

System

Operator

Information Services Technology

Grid

Projects

Office of

the CEO

Planning the national

transmission grid,

developing grid upgrade

plans, managing the

regulatory approval processes, and working

with customers to

develop their connection

points

Delivery of the major

capital investment

programme

Building grid

enhancements – project

management,

procurement, supplier

and contract management

System operations –

real-time co-ordination

of supply and demand

for the New Zealand

power system and other security-related

functions

Maintaining the

performance and

operation of grid assets

and property

management related to assets

Finance, treasury,

regulatory, risk

management, business

developmentHuman Resources

management, corporate

and government

relations,

communications and community relations

Maintenance and

development of

information services and

technology

Includes General

Counsel and Company

Secretary

Majo

r Pro

jects



Division Description

Chief Executive's Office Includes General Counsel and Company Secretary

Corporate Services Finance, treasury, regulatory business planning, risk management,

insurance, facilities management

Grid Development Planning the national transmission grid, developing grid upgrade plans,

managing the regulatory approval processes, and working with customers to

develop their connection points

Grid Performance Maintaining the performance and operation of grid assets and property


Grid Projects Building grid enhancements – project management, procurement, supplier


Information Services & Technology Implementation, development and maintenance of both corporate and

critical information services and technology including telecoms, cyber-

security, SCADA and market systems

Major Projects Delivery of the major capital investment programme

People & Corporate Relations

(including graduates)

Human Resources management, corporate and government relations,


System Operations System operations – real-time co-ordination of supply and demand for the

New Zealand power system and other security-related functions, together

with real time management of the Electricity Market

Table 1 - Division descriptions

Organisational Size

At 30 June 2013, Transpower employed 761 Full Time Equivalent (FTE) staff. A

further 120 FTE ‘Temporary (non-staff) Resources’ (TNSR) were employed across

the Divisions.

The table on the following page provides a Divisional overview of FTE numbers

(including TNSRs), and the percentage distribution salary costs.



Division FTE % Net Salary

Costs

Chief Executive's Office 11 1%

Corporate Services 54 6%

Grid Development 101 12%

Grid Performance 250 28%

Grid Projects 100 11%

Information Services & Technology 131 15%

Major Projects 41 5%

People & Corporate Relations (including 27

graduates) 51 6%

System Operations 142 16%

Maintenance, Field Operations and Major Projects

Transpower’s maintenance and field operational work is outsourced, which adds

about 1000 further contractor staff to the total workforce required to operate and

maintain the Grid. A further several hundred (number varies considerably) contractor

staff are involved in delivering our capital projects. Transpower has no plans or

intentions to in-source its field operations.

The delivery of Major projects (such as Pole 3) will continue to be outsourced, with

overall leadership and governance continuing to reside with Transpower.



Location

This workforce is located across a number of operational centres.

Staff are predominately based in Wellington, Auckland and Hamilton. Palmerston

North and Christchurch are other key sites, with mainly Grid Performance, Grid

Projects and Systems Operations employees.

Figure 3 - Divisional Staff per location

Auckland - 109 staff

Wellington - 610 staff

Christchurch - 73 staff

Small site

Large site

Hamilton – 55 staff

Palmerston North – 34 staff



Source: Workforce analysis, June 2013

The geographical spread and the variance in number of site staff bring its own

challenges when developing and implementing the People Capability Strategy

particularly for Staff Engagement, Learning and Development, Succession Planning

and Recruitment.

2.2 Analysis of Current State

Workforce Demographics

There are a number of current demographic factors, which are increasingly influential

on the People Capability Strategy, both at present and for the period 2015 to 2020.

They are:

Age

Gender

Both these factors will influence the People Capability Strategy.

Age

A review of staff age demographic changes since 2000 (shown in Table 2 below) has

highlighted a couple of issues.

1. Staff numbers between the ages of 20 and 34 have declined, while the

proportion between 35 to 44 years has remained the same.

2. There has been a 100% increase in the number of staff aged 55 years and

over.

Age demographic 2000 2013

20 to 24 years of age 8% 6%




55 years or more 10% 20%

Table 2 - Workforce age demographic 2000 – 2013 Source: Workforce analysis, June 2013 (* data estimated from position titles for 2000 data)

Clearly the average age of our workforce is increasing (our workforce is ‘ageing’) and

the rate of turnover is relatively lower across these older age brackets, and these

trends are set to continue as we see more of the ‘Baby Boomer’ and ‘Generation X’

reaching this age over the next ten years.



Figure 4 - Position grade age distribution 2011

Source: Staff list 2011

Figure 5 - Position grade age distribution 2013 Source: Workforce analysis, June 2013

Over the last two years data shows that there has been a small movement of younger

staff into strategic/senior roles (D2 and above). While the age demographic may be

changing this shows that we are progressing younger people more quickly into senior

roles and the impact of the aging workforce should not affect development and

succession. This issue is explained in detail in section 3.6.

Gender baseline

The current gender demographics at Transpower indicate that most team leaders and

management roles are held by male employees and males make up 74% of

employees, as depicted in the graph below.

However the gender demographic is moving and over the past two years the

succession of women into senior management roles has increased (for example three

women have moved into senior management (D2 and above) since June 2013).



Figure 6 - Gender and Job Grades Source: Workforce analysis, June 2013

Female employees make up 26% of our people with 19% holding management

positions.

To have the most capable and talented workforce, we need to attract and retain

women as well as men. Gender diversity provides broader opportunities to address

some of the current workforce challenges we face. These challenges include source

and supply of talent, the level of innovation and innovative thinking and workforce

flexibility and adaptability.

We have partnered with industry players and established internal support structures

to encourage more women to work in our industry so that we can:

increase the future supply of resource

increase our diversity of thinking so that we enhance our ability to solve

problems in an increasingly complex operating environment.

1

48

42

57

39

25

11

7

2

1

15

31

38

100

233

77

87

45

18

8

B1

B2

C1

C2

C3

D1

D2

E1

E2

EXE

# of staff

Po

sit

ion

gra

de

Gender vs. position grade, June 2013

M F

“...demand for electricity in the future will continue to grow and technology will change the way we develop and operate the power system. As a result, there will be more engineering roles and more diverse engineering opportunities. In today’s environment and into the future we can offer a good work/life balance for women who want to combine their engineering work with family commitments and we strongly support and actively encourage women to choose engineering as a profession”.

Patrick Strange CEO Transpower, Retention and renewal of women in engineering IPENZ 2011



We have a dedicated focus in our graduate programme and hiring practices to

increase our female technical workforce. This will continue for the period 2015 to

2020.

Current business critical competencies

We have an established technical and behavioural competency framework that is

used to inform HR practices (including performance management, recruitment, and

talent management for example).

The majority of business critical competencies are associated with our Engineering

Divisions.

In 2010, 135 engineers and 16 graduates from across Grid Performance, Grid

Projects, System Operator, Grid Development and IST were assessed on their

current technical competency level, and developmental goals. The purpose of the

assessment was to provide guidance for development amongst the engineering

groups.

In 2011, 13 new engineers and 20 graduates were formally assessed. This was the

last documented formal cross-Divisional assessment undertaken. It was

recommended that new engineering employees be routinely included into the

technical competency assessment process within the first six months as part of

orientation and on-boarding.

Since 2011 the competency framework has been used by individual staff members

and their managers to determine individual development plans per year.

Graduates engineers are assessed at the beginning and end of each rotational

placement.

To note, in addition to the behavioural competencies listed above, Grid Performance

use the Life Styles Inventory (‘LSI’ by Human Synergistics) to provide both further

competency development for staff within Grid Performance, plus support the

development of relationships with service providers.

All other roles in Transpower include a set of behavioural competencies which are

used for individual development and is tracked and assessed through the myT

performance management system.



Current strategic positions

Transpower uses job evaluation methodology to determine the job-size relativity of

positions across the organisation. The grade structure is shown below, and identifies

grades D2 and above as being critical strategic positions. As the graph below shows,

26% of Transpower people hold positions designated as ‘strategic’.

The graph below shows the current FTE percentage per grade.

Figure 7 - Percentage FTE per grade 2012/13. Source: Staff List, June 2013

Recruitment and Turnover

Recruitment

In 2013 we have recruited 166 staff, 61 (37%) have been sourced internally and 105

(63%) have been sourced externally. Our current recruitment process enables the

company to fill positions within an average of six weeks.

Over the past three years the rate of promotion has also increased from 12% (in

2011) to 14% (2012/13). This change has resulted from our focus on building

capability and developing and implementing more robust competency frameworks.

A proactive recruitment process closely aligned to an internal succession plan is a

current key tool in managing Transpower’s talent moving towards 2020.

Graduates

Another key talent management approach is the injection of fresh young talent.

Transpower, over the past 12 years, has operated a highly successful Graduate

programme. In the last four years (2010 to 2013), this programme has placed over 44

Graduates across the business. Currently there are 23 Graduates across

Transpower with varying length of tenure.

The current Graduate turnover is 6% per annum, which has improved significantly

from the 18 % in 2008/2009 and 38% between 2002 and 2008.

Non-strategic positions Strategic positions

B1 B2 C1 C2 C3 D1 D2 E1 E2 EXE

B11%

B210%

C110%

C2 19%

C332%

D110%

D211%

E15%

E2 1%

EXE1%

% FTE per position grade 2012/13



Turnover

2000 2013

Annualised Turnover 8.1% 9.2%

Table 3 - Annualised turnover 2000 vs. 2013

Source: Workforce analysis 2013

As at June 2013, Transpower’s overall annualised rate of turnover was 9.2%. We aim

for a rate no higher than 9.5% across our staff population and we have set a target

between 8 and 9% for our strategic roles, i.e. roles classified as D2 and above.

As the major capital investment projects draw to a close, we expect a temporary

increase in turnover for 2013 to over 10% and a return to between 8 and 9% for the

remainder of the RCP2 period.

Engagement and Culture

Since 2011 Transpower has conducted an annual staff engagement survey. This has

established a benchmark to measure the overall level of staff engagement and its

underlying drivers.

Figure 8 - Transpower Staff Engagement Scale.

Source: Aon Hewitt Insights Report, December 2012

There has been initial improvement in the Transpower engagement score from 43%

engaged in 2011 to 52% engaged in 2012. Transpower is generally viewed as having

moved from a range where serious and focussed attention on staff engagement is

required, to a range on par with the NZ country benchmark of 54%. However

Transpower’s Executive and Board have set an aspirational target of achieving staff

levels of engagement within the ‘Best employer’ range.

The following graph sets out the differing levels of engagement across different age

groups across Transpower. Points to note include the 10% fall in engagement levels



of the 20 to 24 Age group and the 13% increase in engagement for the 35 to 45 Age

group.

Figure 9 - Staff Engagement – Age Source: Aon Hewitt Insights Report, December 2012

Our engagement survey has identified a number of key ‘themes’ that we are

addressing to improve the business. These are focussed on leadership, performance

management, communication and systems. We will need to continue our investment

in these three key areas; all of which are important as continued focus in these areas

will help us unlock productivity gains.

The challenge we face is to continuously lift the level of engagement. In the inaugural

survey the overall level of engagement was 43% (i.e. the percentage of staff

considered to be “engaged”). Although this percentage has risen substantially, focus

and further concerted effort is required by all Divisions if Transpower is to achieve

and maintain a target level of 65%, which is considered a best employer / high

performance level of engagement.

Staff engagement varies across Divisions and there is further analysis and action

planning to be done across Transpower.

We intend to continue with a consistent engagement survey each year to monitor

trends and progress.

Given the productivity benefits associated with a higher level of staff engagement,

there is a people capability priority on continuing to improve the rate of engagement

over the next five years.

43%

58%

48%

37%

37%

59%

53%

59%

58%

51%

46%

45%

52%

47%

57%

54%

50%

47%

49%

0 20 40 60 80 100

Transpower Overall

Not provided

55 years or more

45 to 54 years of age




Less than 20 years

Age

2012

2012 excl. TNSR

2011



Remuneration and Performance

Transpower has a common job grading and associated salary banding system across

the organisation with limited scope for exceptions or departures.

Transpower seeks to pay employees at or around the median for comparable

positions in the wider job market. Prior to 2011, Transpower’s policies targeted

remuneration at 10-15% above the median but we have revised our strategy to align

remuneration at median levels, with the flexibility to vary remuneration to fill critical

roles.

We have recently benchmarked our engineering remuneration and are now

undertaking further work to assess and separate engineering and technical

remuneration bands from general employee remuneration bands to allow greater

control over, and targeting of, remuneration.

Until 2012/13, staff have, at the Board’s discretion, been eligible for an annual

Performance Incentive Payment (PIP) i.e. a performance related, “at risk” component

of remuneration set at up to 10% of base salary (or up to 20% for senior staff).

The Transpower Board decided, in 2013, to disestablish the PIP for staff, with a

compensating percentage of adjustment to base salary. Performance pay has been

retained only for the CEO and the General Management Team.

Over the time the performance pay system had been established it became more and

more difficult to establish a correlation between performance payments and

productivity increases. Our people also did not respond positively to the performance

pay assessment system and found it increasingly complex and time consuming to

manage.

There is an established Performance Management process within Transpower.

Performance management is seen to be improving although 2012 engagement

results indicate that further concerted focus should be given to performance

management in the future.

As noted above (and within section 3), we need to continue to develop management

capabilities, which in turn will lift performance and productivity within our workforce.

Safety

At Transpower we put safety first. Safety is seen as a core part of our vision and

cultural values. Ensuring public safety around our assets is very important to us.

We are committed to keeping everyone who works on and lives around our assets

safe, and aim to lead the industry in good safety practices.



Engagement data indicated that staff understood and accepted Transpower’s focus

on safety and that it was a positive for Transpower in the way in which the focus on

safety had lifted.

In the most recent review of safety, undertaken by Level 4 Consulting in 2013, staff

engagement with safety values within the company was observed to be very high and

is seen to be a critical factor in improving safety success. There have been some

changes resulting from the focus on safety including the random Drug and Alcohol

testing for all employees, contractors and visitors to all offices and work-sites. The

majority of staff have supported this initiative, including those who work in office

based positions and this is seen as ‘business as usual’ in all offices and worksites.

Technical and Management Capability

Transpower has a high level of technical capability. There is an established

Technical Competency Framework which is operational and is highly regarded across

the business.

We also note that there is a growing requirement to manage Transpower’s assets

more effectively and there is a current project to define the Asset Management

Competency Framework as part of a wider initiative to achieve PAS 55 compliance.

Once the framework is defined and agreed it is anticipated that this framework be

implemented across Transpower.

Management competencies and capabilities across Divisions are mixed. These

capabilities (such as performance management and leadership skills) require further

development across all Transpower’s Divisions.

In addition, feedback from the General Managers indicates that there is a need to

continuously improve commercial acumen and commercial experience.

Human Resource Policies

We have employment policies and practices that are conventional by New Zealand

standards. It is acknowledged that these policies will have to be reviewed on a

continuous basis throughout RCP2 as the strategic initiatives are implemented and

the Transpower workforce evolves.

People Development and Progression

There are two development programmes for staff, targeting our “High Potential” staff

i.e. those people who are capable of progressing to level 2 (General Management)

positions, and our “Young Achievers” - our emerging and future leaders. Both

programmes encompass a learning programme consisting of internally developed

“classroom” and online management training, as well as targeted external learning.



Progression, in some of the technical areas of the business, has been considered

historically low. An engineering review conducted in 2011/12 sought to address this

issue, leading to the development and implementation of a technical progression

career path that is now in place.

Opportunities for progression in senior management roles are perceived to be

somewhat limited across the company. We need to improve our management of

employee metrics to drive more progression and succession in strategic positions.

The development of a diversity targets and programmes to attract and retain diversity

in the workforce is required and will be established in 2013/14. Our workforce policies

support and progress an increasingly diverse workforce.

Tools/systems

In 2012/13, Transpower introduced myT. This is the internal branding for the HR

payroll system with the addition of a performance management module.

The implementation of myT provides a number of benefits including:

improved capability for performance management;

the opportunity to develop a required competency framework for

emerging leaders.

Our intranet is a key internal communications pipeline and our internet our key

external communications channel. We will need to continue to invest in this area as

well as in social media channels to ensure we can communicate with staff and with

external stakeholders, who raise issues about our assets, need to know restoration

times in the case of an outage etc.



3 Future State Assessment

3.1 Introduction

This section sets out our future people capability requirements and associated

strategic opportunities.

Strategic opportunities are highlighted per section below. They are then re-ordered in

section 4 across the following themes:

3.2 Summary

Our people capability strategy identifies the strategic opportunities that drive our

people capability initiatives. The initiatives ensure we are best placed to recruit,

develop and retain the people we need to deliver our business strategy. The following

sections highlight priority future requirements and opportunities.

In summary, ‘systems thinking’, ‘commercial acumen’, and ‘asset management’ will

emerge as new business critical people capabilities. We must develop these areas of

competency, and focus on staff engagement and diversity to position ourselves as an

employer of choice which will maximise our ability to recruit, develop and retain

people capability.

The table below summarises the strategic opportunities identified in this section.

Further detail can be found in Appendix B.

Ref. Theme Title Strategic Opportunity

1 Recruit Diversity Increase the supply of female managers into the electricity sector

2 Recruit Progression management

Proactively manage the progression of talent using smart talent management frameworks

3 Recruit Succession planning

On-going succession planning should continue and include a focus on mission critical positions

4 Develop Asset Management

Embed our Asset Management Competency Framework

5 Develop Collaboration Implement a sustainable framework for collaboration

6 Develop Commercial acumen

Evolve the current business skills learning and development programme to provide ‘commercial acumen’ development opportunities for staff as required

Recruit

Retain

Develop



Ref. Theme Title Strategic Opportunity

7 Develop Systems thinking

Evolve the current business skills learning and development programme to provide ‘systems thinking’ development opportunities for staff as required

8 Retain Engagement Continually measure staff engagement to identify opportunities to improve

9 Retain Flexible working

Plan for flexible working

10 Retain Leadership and Performance Management

Enhance the current leadership development programme to build new leadership capability Review measure and improve the effectiveness of the current performance management framework

11 Retain Redeploy Major Projects critical resource

Absorb Major Projects critical resource into Transpower Divisions

12 Retain Remuneration Verify Transpower’s market position

13 Retain Safety Review and enhance HR related business practices to ensure these practices drive desired safety competencies

3.3 The context of Transmission Tomorrow

Transmission Tomorrow is a document that looks forward at how we will develop and

operate the National Grid over the next 20-30 years.

In 2020, Transpower will be New Zealand’s transmission grid owner and system

operator. Transpower’s workforce size and structure will remain relatively flat

following a decrease in staff associated with the completion of major grid upgrade

projects by the end of 2015.

The organisation’s capability will evolve over the next seven years as it responds to

the future needs for electricity transmission1, and becomes a more fully focussed

service company.

In order to effectively respond to an economy that will become increasingly reliant on

electricity (with increasing expectations of a reliable supply); we must evolve our

workforce capability to ensure it has the capability and capacity required to effectively

operate a highly utilised electricity system and provide a high level of service to

customers. We must have the skills to accurately assess future electricity

transmission needs using new technologies across our assets and systems that will

help the electricity system better manage supply and demand across the entire chain.

3.4 Size, structure and Divisional FTE forecast

1 Transmission Tomorrow, 2011



Transpower’s overall full time equivalent (FTE) staff numbers will flatten over the next

seven years. Following a reduction of 29 Major Projects FTEs in 2014/15 as staff exit

in accordance with planned attrition, subsequent yearly adjustments downward will

occur as efficiency benefits in relation to the organisation’s asset management

capability take effect.

To note, over the last few years, Major Projects Divisional staff members working on

the major capital investment programme have gained invaluable transmission

experience and skills.

Explanatory notes in relation to each Division and its FTE changes are detailed in

Appendix E: Challenges and opportunities notes per Division.

3.5 Cost implications

As previously mentioned the size and structure of Transpower will change between

2013 and 2020. The forecast is an overall nett reduction of 89 FTEs (which includes

current vacancies), over this period. Therefore the cost basis of our people capability

will not change markedly other than increased costs associated with labour cost

market movement.

Labour market movement

Personnel operating expenditure costs will increase in line with predicted labour

market movements that are expected to average between 1.8% and 2.6% per annum

over the period.

The anticipated market movement reflects the impact of an aging workforce and a

shift away from intensive capital investment in the sector. These factors reduce

resource demand and relieve market pressure for engineers.

The graph on the next page shows the trend in FTE numbers and the salary and

allowance costs to 2019/20. Transmission only (RCP2 only) FTE and cost is also

shown and represents approximately 85% of FTE and costs each year. Please note

(*), salary and allowance costs exclude other FTE related costs such as ACC levy

and Kiwisaver for example.

Strategic opportunity: Absorb Major Projects resource into Transpower Divisions

during the 2013/14 and 2014/15 period by redeploying staff into vacancies.

Reference #11



Figure 10 - FTE and Salary & Allowance Costs (LCI Adjusted) Source: Movement Schedule for Full Time Equivalents (including fixed term), July 2013, and RCP2 Departmental Expenditure Calculation Model, June 2013.

Labour market relativity

Comparative ratio analysis of Transpower’s 2012/13 salary data against 2008/09

benchmark salary data indicates that Transpower has maintained a competitive

labour market position since 2009, and is not at risk of unplanned turnover due to

uncompetitive pay. Recent staff engagement survey feedback supports this finding.

However, a comprehensive remuneration benchmark study is required (and will be

undertaken in 2013/14) to verify this estimate market position and assess the true

relativity of Transpower’s salary levels against current sector and NZ labour market

medians.

3.6 The challenges of our aging workforce

Further to the current state demographic assessment in section 2.2, the workforce is

aging as experienced staff remain in their positions for longer2. With over one third of

its staff currently aged over 55, Grid Performance is most impacted by the

implications of an aging workforce.

2 Source: Workforce Analysis, June 2013

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

FT

E

$ M

il

Forecast FTE and Salary & Allowance Costs*

All Transpower Salaries & Allowances

Transmission Only Salaries & Allowances (RCP2 Only)

All Transpower FTE

Transmission Only FTE (RCP2 only)

Strategic opportunity: Conduct on-going benchmark studies into the relativity of

Transpower’s salary levels against current sector and NZ labour market medians is

required to verify Transpower’s market position and enable effective salary budget

planning throughout the RCP2 period. Reference # 12



By 2020, at least 10% of the current workforce (adjusted for average turnover 4.5%

for this age demographic) will be aged over 65 (compared to 2% in 2013), refer figure

11 below.

Figure 11 - Forecast workforce # and % over 65 years old Source: Current staff data analysis, July 2013

There are three primary implications in relation to our aging workforce.

Loss of experience

The increasing proportion of workforce above retirement age means that a significant

group of senior technical experts within the workforce may exit. It is important not to

overstate this issue; to mitigate this risk we have over the past few years invested

heavily in the development and mentoring of younger staff to ensure we bridge the

gap between experienced senior engineering staff and graduate engineers.

Flexible working expectations

Staff expectations in relation to flexible working arrangements (e.g. part time hours,

remote working, non-standard hours) and work life balance will increase as our

workforce ages, fuelled by the increasing emergence of affordable mobility enabling

technology.

We also expect Generation Z to have similar expectations in relation to flexible

working as they enter the workforce during RCP2.

Flexible working (which supports good work/life balance for women who want to

combine their engineering work with family commitments) provides us further

0%

2%

4%

6%

8%

10%

12%

0

20

40

60

80

100

% o

f w

ork

forc

e

FT

E

Forecast workforce # and % over 65 years old

# over 65

% over 65

Strategic opportunity: On-going succession planning should continue and include

a focus on business critical positions occupied by staff over 60 years old. Continue

to maintain systems and frameworks that will transfer knowledge between

technical staff. Reference # 3



opportunity to support and actively encourage women to choose engineering as a

profession.

3.7 Future workforce supply

As reported earlier in section 2.2, the annual rolling unplanned turnover rate is

currently tracking at 9.2% overall for Transpower and this rate is not seen as an

issue. Following a spike in turnover in 2013/14 and 2014/15 as Major Projects staff

exit in accordance with planned attrition, overall unplanned turnover is expected to

stay under 9% for the remaining RCP2 period.

3.7.1 Engineering Divisions

As reported in section 3.7, due to the aging demographic of engineering Divisions,

turnover is expected to stay the same or decrease causing a challenge in relation to

the retention (as opposed to ‘attraction’) of younger generation engineers as the

company enters a period of evolving capability requirements.

There will continue to be demand for hard to fill specialist technical positions.

Succession planning will maintain a focus on these specialist positions, and we will

use leverage our industry networks to maintain relationships with onshore and

offshore technical specialists and undertake targeted recruitment when required.

The programme which currently manages the recruitment, induction and development

of engineering graduates is considered fit for purpose now and for the future and the

future supply of engineering graduates is not considered an issue.

Electrical Engineering graduate numbers have continued increased year on year,

averaging 2% annual growth since 20053, as show in figure 12 on the next page.

3 Education Counts, Provider-based Equivalent Full-time Students: Field of Study, 5/12/2012

Strategic opportunity: Increased demand for flexible working should be

anticipated. Future staff engagement surveys will provide insight into key

engagement driver changes as the workforce ages to enable initiative action

planning. Reference # 9



Figure 12 – Domestic student enrolments 2005 – 2011. Source: Education Counts, Provider-based Equivalent Full-time Students: Field of Study, 2012

There are 22% more domestic students enrolled in Electrical Engineering tertiary

study than in 2005.

There is no evidence to suggest a change in this trend. If a decrease in graduate

supply were to occur, no negative impact is anticipated because the current supply far

exceeds our current and future graduate demand.

3.7.2 Corporate Divisions

Our corporate Divisions represent approximately 19% of our workforce, and they

include our Corporate Services, People & Corporate Relations, and Information

Systems & Technology (IST) and the Office of the CEO.

Increased levels of turnover are anticipated across the corporate Divisions because

these functions are subject to market pressures that are broader to those impacting

the engineering Divisions.

In order to keep turnover at healthy levels and retain critical talent, an on-going focus

on staff engagement for these areas is required.

3.8 Future business critical competencies

The competencies (technical and behavioural) referenced in section 2.2 will continue

to be considered ‘business critical’. The current frameworks for developing these

0

200

400

600

800

1,000

2005 2006 2007 2008 2009 2010 2011

En

rolm

en

ts

Year

Domestic student enrolments in Electrical Engineering tertiary study 2005 - 2011

Bachelors

Post Graduate

Strategic opportunity: Continually measure staff engagement to identify

opportunities to improve engagement across the corporate and engineering

Divisions thereby increasing staff productivity and the retention of talent.

Reference # 8



competencies will continue. The following sections focus on future capability

requirements including new or priority competencies and capabilities.

3.9 Future people capability requirements

Roles and accountabilities are likely to rapidly evolve and morph within shorter time

frames than has been the case in the past. Skills will need to change quickly to

reflect the way in which we will operate the Grid. These skills are detailed in the Grid

Business Capability Plan 2012. The focus of this section is on the critical and

common capability requirements of our people, including:

Safety

Asset management

Commercial acumen and continuous improvement

Systems thinking and change agility

Leadership

Skills and capabilities in parts of the organisation are aligned with technology that is

developing quickly and skills could become obsolete in some areas. There will be a

high cost to the company if we lack change agility.

3.9.1 Asset management and PAS 55 compliance

As part of our commitment to continuous improvement we have embarked on a

number of organisational initiatives, one of which is to achieve compliance with PAS

55: 2008, ‘Specification for the optimised management of physical assets’ (PAS 55).

In relation to the future workforce, the achievement of PAS 55 compliance will involve

embedding asset management practices and competency across our workforce,

establishing an organisational-wide asset management competence in support of

wider Transpower strategies.

There is an existing solid basis from which to further develop staff capability in

relation to asset management. We have robust processes for managing the technical

competencies of both our staff and also for those of our service providers. However,

the definition of these competencies is insufficient to adequately define Asset

Management competency requirements for different roles within Transpower4.

An Asset Management Competency Framework has recently been drafted5. It

includes an accompanying set of guidelines and tools to support the use of the

framework. A three year road-map for the implementation of the Framework is also

included.

4 Transpower PAS 55 Gap Analysis Assessment Report, AMCL, May 2012 5 Transpower Asset Management Competences Framework Project Final Deliverables, Competence Assurance Solutions Ltd., 12 July 2013



To achieve PAS 55 compliance we must refine and embed the Asset Management

Competency Framework to:

i. Define and allocate asset management roles and responsibilities

ii. Decide what types and levels of responsibility should be assigned to individual

staff

iii. Select staff for asset management roles

iv. Identify training and development needs and design appropriate interventions

v. Decide how many staff we need to deliver our strategic asset management

objectives

vi. Assess how well staff in asset management roles are performing

3.9.2 Safety

We must ensure our people have the capability to manage safety effectively because

of the high risk environment and industry we operate within. Safety is a core part of

our vision and organisational culture, and is considered a core Transpower

competence today and the indefinite future. Accordingly, it must be given a high

priority.

Lead by our Safety Director, we must continually look to improve our business

practices (including our people practices) to ensure they drive the right behaviours

required to achieve the safety outcomes we target.

There is further opportunity to define what good safety behaviours look like6 to truly

embed safety as an organisational-wide capability. Our people “get safety in their

heart” (I know why it’s important), but we need to ensure they “get it in their head”

(what and how do I need to do it).

6 Based on senior leadership feedback, June 2013

Strategic opportunity: Develop and implement a detailed plan to embed our

Asset Management Competency Framework within three years, including updating

associated HR practices and frameworks (such as recruitment, and performance

management). Reference # 4

Strategic opportunity: Continue to enhance HR related business practices (such

as the performance management framework) to ensure these practices drive

desired safety competencies. Ensure safety competencies are clearly defined and

embedded within the frameworks that measure and reward staff performance and

continued application of safety practices. Conduct safety training needs analysis

to determine opportunities to further develop our safety capability, and implement

appropriate interventions. Reference # 13



3.9.3 Commercial acumen and continuous improvement

‘Commercial acumen’ capability underpins our ability to make sound investment

decisions and continuously improve our business operations. We need staff able to

make good business judgments and decisions based on a broad understanding of

financial and operational considerations.

In order to meet our customer and stakeholder expectations by increasing the

reliability of electricity supply within a cost constrained future, we must be certain of

future needs; deploying new technologies to get much greater cost-effective capacity

and investing resource only where it makes commercial sense.

We can’t afford to over-engineer solutions and it is incumbent on us to continuously

improve our business and reduce cost by identifying opportunities to be more

effective and efficient. This focus aligns to Transpower’s principal objectives, and

specifically to operate as a successful business that is profitable and efficient as

comparable businesses that are not owned by the Crown7.

3.9.4 Systems thinking and change agility

We need to develop greater organisational capability and a community of system

thinkers within Transpower. Systems thinkers readily make connections, embrace the

big picture, and eagerly share new insights8. This collective intelligence (and future

capability) founded on ‘systems thinking’ will be a basis of our agility and ability to

change rapidly in the future.

Change is the “new norm”. In order to accurately assess future electricity

transmission needs and efficiently operate the Grid, we need staff that are capable

and practiced in knowing how to develop an understanding of interdependent

components within dynamic systems. In other words, it’s more important than ever

that we understand how things influence one another within a whole in order to solve

complex problems and make decisions within an increasingly complex operating

environment.

7 Section 4, State Owned Enterprises Act 1992 8 Developing Systems Thinking Capacity, Waters Foundation, 2007

Strategic opportunity: Define 'commercial acumen' technical and behavioural

competencies, tools and concepts. Evolve the current business skills learning and

development programme to provide development opportunities for staff as

required. Establish measurements of 'commercial acumen' staff capability.

Baseline performance, and ensure the current performance management

framework provides a method to appraise staff performance in relation to

'commercial acumen'. Reference # 6



Across the different Divisions of Transpower ‘systems thinking’ is interpreted within

the context of their accountability. For example, systems thinking in IST means

understanding the interdependency and separation of Transpower’s critical versus

non critical IT systems and the overarching IT architecture to assess level of

resiliency within IT architecture design in order to identify opportunities to improve.

Systems thinking in Grid Divisions is associated with network modelling or integrated

works planning skills (further defined within the Grid Business Capability Plan).

Our power systems engineers won’t be required to have an understanding of the

technical design and electronic and software configurations of new Grid technology,

but they will need to understand the requirements on new technology and the

systematic interdependency of components in relation to the supply of electricity.

3.10 Collaboration and convergence

We need systems thinkers because we need integrated system thinking, and

collaboration across Transpower to make better decisions. This trend is amplified by

a convergence of business competencies which means our staff need will

increasingly require a broader understanding of business in order to make effective

operational decisions. At the engineering level, power systems engineers will require

a greater understanding of the IT tools and systems that will maintain and monitor our

assets in the future9.

In addition to the HUB (a central information management system), we need a new

and exciting framework to embed collaboration as a core Transpower competency.

The framework will harness our understanding of system interdependencies and

collective intelligence, but won’t slow down decision making.

9 Transmission Tomorrow, 2011

Strategic opportunity: Define 'systems thinking' technical and behavioural

competencies, tools and concepts. Evolve the current business skills learning and

development programme to provide development opportunities for staff as

required. Establish measurements of 'systems thinking' staff capability. Baseline

performance, and ensure the current performance management framework

provides a method to appraise staff performance in relation to 'systems thinking'.

Reference # 7

Strategic opportunity: Design and implement a sustainable framework for

collaboration (e.g. a Group Coaching Framework) that encourages cross-Divisional

collaboration and the capability development of individual contributors to the

framework. Reference # 5



3.10.1 Leadership and performance management

In 2013 we disestablished Transpower’s Performance Incentive Payment scheme

with the objective of shifting our focus towards embedding an improved performance

management culture. ‘Managing performance’ has been a key engagement driver

since 2011.

Meaningful staff performance

conversations that drive improved

performance outcomes are dependent

on the effectiveness of our people

leaders.

We need to continue our investment in

leadership development, and we need to give

our leaders easy to use and effective tools to

manage performance.

3.10.2 Diversity

We need to maintain our position as an industry leader in encouraging workforce

diversity.

The pool of talent from which our employees are drawn is becoming increasingly

diverse and dispersed, where people come and go nationally and internationally, in

and out of jobs with different companies and industries. We already have a high

number of staff from international environments and diverse ethnic backgrounds but

we need to lift the number of women we employ, especially in management and

engineering roles.

“It would be great if those

under-performing were dealt

with appropriately”

Example employee comment:

Engagement Survey 2012

Strategic opportunity: Redefine ‘leadership competency’ in response to future

requirements, and enhance the current leadership development programme to

build new leadership capability. Review measure and improve the effectiveness of

the current performance management framework and tools, ensuring integration

with other HR practices (e.g. talent management, recruitment, flexible working

arrangements). Reference # 10

“Today’s leaders were promoted

based on their performance

against a traditional view of

‘leadership’. We need to

redefine what we mean by

leadership and ensure we

develop leadership capability

against new requirements”

Stakeholder comment, June 2013



We have established diversity targets and will reinforce our position us as an industry

leader, thereby increasing our opportunity to enjoy the benefits of a truly diverse

workforce.

We must also maintain our focus on increasing the supply and recruitment of female

Electrical Engineering graduates into the electricity sector.

Female Electrical Engineering graduates and female managers are disproportionately

underrepresented. In today’s environment and into the future we can offer a good

work/life balance for women who want to combine their engineering work with family

commitments and we strongly support and actively encourage women to choose

engineering as a profession.

Strategic opportunity: Be an industry leader and harness the benefits of

workforce diversity and an increased supply of female engineers into the electricity

sector by proactively managing our performance against diversity targets,

implementing a diversity policy, and by maintaining our support for initiatives that

encourage diversity. Reference # 1



4 Tracking progress against the strategy

This strategy document provides guidance to enable the development of initiatives

(and associated business case development and planning) based on the strategic

opportunities and challenges identified in this strategy.

A detailed summary of the strategic opportunities identified in this section is provided

in Appendix B. Figure 13 below provides an overview. The overview is repeated in

Appendix C.

The overview attempts to theme each strategic opportunity and show whether they

are considered a short, mid or long term opportunity. The size of each ‘bubble’

attempts to show the estimate level of effort anticipated for each strategic opportunity.

The distance between ‘bubbles’ has no significance. Bubbles indicate strategic

opportunities, and the rectangles represent business as usual practices that are

important in the context of this people capability strategy.

Figure 13 - People Capability Strategy overview

4.1 HR Analytics

An improvement in our HR analytics capability is required to better align business and

HR objectives and measures and drive better business related people decisions.

HR analytics involves consolidating both the quantitative and qualitative data

available across different data sources and to use this information to not only report

on past events, but to predict future HR events. These future events could include

2013/14 2014/15 2015/16 2019/202016/17 2017/18

Develop

Recruit

Retain

The future contextIn order to effectively respond to an economy that will become increasingly reliant on electricity (with increasing expectations

of a reliable supply), we must evolve our workforce capability to ensure it has the capability and capacity required to

effectively operate a highly utilised electricity system.

11. Redeploy Major Projects resource

1. Diversity

7. Systems thinking

2014/15

2015/16

2016/17

2017/18

Graduate programme

2013/14

Leadership development

Competency frameworks

High Potential

development

Young Achievers

Programme

13. Safety

Recruit, develop and

retain the

capability required for


10. Leadership and Performance Management

9. Flexible working

12. Remuneration

8. Engagement

6. Commercial acumen

4. Asset management

5. Collaboration

2. Progression management

3 Succession planning

2019/20



predicting the quality of hire for an organisation, or predicting the employee attrition

risks or the workforce demand (by role, function or skill).

The development of HR analytics capability will require a considered identification of

key HR metrics and performance measures that will provide insight into whether we

are achieving our goals and realising the benefits of our people capability strategy.

We need a more consolidated people data strategy, approach and understanding of

systems and data.

4.2 Measuring our strategy performance

The strategic opportunities and associated initiatives that are yet to be developed and

implemented will identify appropriate measurements to assess the benefit and return

on investment for each initiative.

We will however establish a core set of HR metrics and targets to measure our overall

performance against the people capability strategy, and our achievement of our

people capability vision.

These measurements require further discussion and Executive agreement. We

envisage measures and targets to include:

Measure Method 2020 Target

Staff

engagement

Annual staff

engagement

survey

Sustain staff engagement levels within

a ‘high performance / best employer’

range

Turnover HR analytics Achieve an annual rate of unplanned

turnover no higher than 9.5% for all

staff.

Achieve an annual rate of unplanned

turnover between 8% and 9% for

strategic positions (D2 grade and

above).

Diversity HR analytics Achieve a workforce gender ratio of

40% women

Internal

recruitment

HR analytics TBC, the rate of internal recruitment is

maintained above 30% per year.

At least 10% of staff are promoted per

year.

Safety HSE analytics TBC, e.g. reduction in lost time injuries

Table 4 - Draft people capability strategy measures and targets



Appendix A: Transpower Operating Structure

Corporate

ServicesPeople &

Corporate Relations

Grid

Performance

Grid

Development

System

Operator

Information Services Technology

Grid

Projects

Office of

the CEO

Planning the national

transmission grid,

developing grid upgrade

plans, managing the

regulatory approval processes, and working

with customers to

develop their connection

points

Delivery of the major

capital investment

programme

Building grid

enhancements – project

management,

procurement, supplier


System operations –

real-time co-ordination

of supply and demand

for the New Zealand

power system and other security-related

functions

Maintaining the

performance and

operation of grid assets

and property


Finance, treasury,

regulatory, risk

management, business

developmentHuman Resources

management, corporate

and government

relations,


Maintenance and

development of

information services and

technology

Includes General

Counsel and Company

Secretary

Majo

r Pro

jects



Appendix B – People Capability Strategic Opportunities Matrix

Ref. Capability theme

Title Strategic Opportunity Why? Transmission Tomorrow strategic linkage

Estimate timeframe (Short / Mid / Long Term)

1 Recruit Diversity Be an industry leader and harness the benefits of workforce diversity and an increased supply of female engineers into the electricity sector by proactively managing our performance against diversity targets, implementing a diversity policy, and by maintaining our support for initiatives that encourage diversity.

We need to maintain our position as an industry leader in encouraging workforce diversity. The pool of talent from which our employees are drawn is becoming increasingly diverse and dispersed

Recruitment of technical engineering people

Short

2 Recruit Progression management Succession planning is not enough. To avoid the emergence of a new glass ceiling (the “grey ceiling”), Transpower must proactively manage the progression of talent through its organisation and the wider sector using smart talent management frameworks.

The aging workforce may limit the career opportunities for staff, and put the retention of talent at risk.

Retention of experienced people

Mid






3 Recruit Succession planning On-going succession planning should continue and include a focus on mission critical positions occupied by staff over 60 years old. To minimise our technical engineer generational gap, deliberate effort is required to establish and maintain systems and frameworks that will transfer knowledge between technical staff.

The current generational gap between experienced senior engineering staff and graduate engineers may widen.

Retention of experienced people Development of skills

Short

4 Develop Asset Management Develop and implement a detailed plan to embed our Asset Management Competency Framework within three years, including updating associated HR practices and frameworks (such as recruitment, and performance management).

We must establish an organisational-wide asset management competence in support of wider Transpower strategies.

Utilise our assets better Development of new skills

Short

5 Develop Collaboration Design and implement a sustainable framework for collaboration (e.g. a Group Coaching Framework) that encourages cross-Divisional collaboration and the capability development of individual contributors to the framework.

A convergence of business competencies requires our staff to have a broader understanding of business in order to make effective organisational decisions. Collaboration and cross-Divisional system thinking will result in better decisions.

Development of new skills

Long






6 Develop Commercial acumen Define 'commercial acumen' technical and behavioural competencies, tools and concepts. Evolve the current business skills learning and development programme to provide development opportunities for staff as required.

It is incumbent on us to continuously improve our business and reduce cost by identifying opportunities to be more effective and efficient.


Mid

7 Develop Systems thinking Define 'systems thinking' technical and behavioural competencies, tools and concepts. Evolve the current business skills learning and development programme to provide development opportunities for staff as required.

It is increasingly important that staff understand how components within a system influence one another within a whole in order to solve complex problems and make decisions within an increasingly complex operating environment.


Mid

8 Retain Engagement Continually measure staff engagement to identify opportunities to improve engagement across the corporate and engineering Divisions thereby increasing staff productivity and the retention of talent.

In order to keep turnover at healthy levels and retain critical talent, an on-going focus on staff engagement for these areas is required.

On-going recruitment and retention of technical engineering and business people

BAU

9 Retain Flexible working Increased demand for flexible working should be anticipated. Future staff engagement surveys will provide insight into key engagement driver changes as the workforce

We must understand what motivates our staff to ensure we increase levels of engagement and productivity.


Long






ages to enable initiative action planning.

10 Retain Leadership and Performance Management

Redefine ‘leadership competency’ in response to future requirements, and enhance the current leadership development programme to build new leadership capability. Review measure and improve the effectiveness of the current performance management framework and tools available to leaders, ensuring integration with other HR practices (e.g. talent management, recruitment).

Meaningful staff performance conversations will drive improved performance outcomes, plus grow and retain our talent.

Retention of experienced people Development of new skills

Mid

11 Retain Redeploy Major Projects critical resource

Absorb Major Projects resource into Transpower Divisions during the 2013/14 and 2014/15 period by redeploying staff into vacancies.

Major Projects staff will exit in accordance with planned attrition during 2014/15. Critical staff capability and knowledge must be retained or transitioned to other staff.


Short

12 Retain Remuneration Conduct regular benchmark studies into the relativity of Transpower’s salary levels against current sector and NZ labour market medians is

Transpower must sustain a competitive market position in order to minimise the risk of unplanned turnover due to


BAU






required to verify Transpower’s market position and enable effective salary budget planning throughout the RCP2 period.

uncompetitive pay.

13 Retain Safety Continue to enhance HR related business practices (such as the performance management framework) to ensure these practices drive desired safety competencies. Ensure safety competencies are clearly defined and embedded within the frameworks that measure and reward staff performance. Conduct safety training needs analysis to determine opportunities to further develop our safety capability, and implement appropriate interventions.

We must ensure our people have the capability to manage safety effectively because of the high risk work environment and industry we operate within.


Short



Appendix C – People Capability Strategy overview

2013/14 2014/15 2015/16 2019/202016/17 2017/18

Develop

Recruit

Retain

The future contextIn order to effectively respond to an economy that will become increasingly reliant on electricity (with increasing expectations

of a reliable supply), we must evolve our workforce capability to ensure it has the capability and capacity required to

effectively operate a highly utilised electricity system.

11. Redeploy Major Projects resource

1. Diversity

7. Systems thinking

2014/15

2015/16

2016/17

2017/18

Graduate programme

2013/14

Leadership development

Competency frameworks

High Potential

development

Young Achievers

Programme

13. Safety

Recruit, develop and

retain the

capability required for


10. Leadership and Performance Management

9. Flexible working

12. Remuneration

8. Engagement

6. Commercial acumen

4. Asset management

5. Collaboration

2. Progression management

3 Succession planning

2019/20



Appendix D – Current People Capability Structures,

Frameworks and Channels

People Capability

Intervention

Type Application Status

Staff Engagement

survey

Survey Measure staff

engagement levels

across key

engagement

drivers

In place since

2011

Technical

Competency

Framework

Framework Used to provide

managers and

engineers with a

set of tools and

processes that can

be used to

articulate career

paths and target

learning and

development

activities

In place, with

current

version 7

introduced in

2011

Transmission

Tomorrow

Business Strategy Used to provide

strategic direction

with regards the

People Capability

requirements to

meet the needs of

the customers in

the long term

In place

Project

Management

Competency

Framework

Framework Used to provide a

guide for

performance

development that

supports the

creation and

sustainment of

meaningful career

paths for our

project

management

In place since

October 2012



People Capability

Intervention


community

Graduate

programme

(including

Graduate

Learning

pathway)

Recruitment and

induction

programme

Provides for the

recruitment of

Graduates

(Technical and Non

Technical) into

Transpower with a

development

learning pathway

for successful

Graduates

In place

Non Technical

Business

competencies

Framework Used to provide a

guide for non

technical

performance

development that

supports the

creation and

sustainment of

meaningful career

paths

In place

High Potential

Development

Programme

Programme Used to identify

and develop those

individuals who

have the capability

to progress into

General

Management

positions

In place

Young Achievers

programme

Programme Used to identify

and develop

emerging or future

leaders of

Transpower

In place

myT HRIS and payroll Used to manage

the HRIS

requirements

In place from

end 2012



People Capability

Intervention


including Payroll

and Performance

Management

Transpower

Intranet

Communication

Channel

Used to

disseminate

information to all

staff across all sites

In place

L&D Internal

Curriculum

Curriculum Used to identify

and deliver

Mentorship Programme Used to provide

mentors across all

Divisions

In place

Study Assistance Programme Used to support to

staff who wish to

participate in

external

development

and/or education

courses

In place

Formal On

boarding

Programme

Programme Used to socialise

all new starters into

Transpower

including its people

and culture and

ways of working

Being

implemented



Appendix E – Capability challenges and opportunities

notes per Division

Qualitative analysis of capability challenges and opportunities notes per Division

based on stakeholder interview feedback.

System Operations

The challenges for System Operations (SO) through to 2020 incorporate regulatory

changes that will require SO to develop an increasingly proactive and commercially

aware workforce. This will necessarily require an optimal mix of both technical and

business skills. The SO will also need to demonstrate leadership through innovative

ideas and industry solutions, establishing the SO’s position as a trusted leading

member of the power community. The SO will continue to have 78% of positions as

technical positions, but needs to develop a greater depth of management skills.

Changes in succession planning, collective SO development plans, mobile workforce

planning are required, in addition to reviewing the performance management pay

system for shift workers.

The System Operator will continue to operate separately from the National Grid, but

the relationship between the SO and the business Divisions will be strengthened over

time, and we will continue to gain the benefits of moving staff between the SO and

other Divisions within Transpower.

Grid Performance

Efficiencies in connectivity and the introduction of new systems (such as the new

asset management system ‘MAXIMO’) will help to enable a more productive

workforce and a leaner, flatter structure in Grid Performance. This will result in a

reduction in the Grid Performance workforce within the next five years. With over a

third of its current workforce aged over 55 Grid Performance is most impacted by the

implications of an aging workforce.

Grid Performance will be equipped to make strategic decisions about which positions

require regular review and change and which positions require long term commitment

from a core group of FTE staff.

An additional 11 FTE will join Grid Performance when the System modelling team is

in-sourced in 2013/14. There is an expected overall reduction of 19 FTE in 2013/14

based on ‘strategy day savings’. Beyond 14/15 the FTE's are assumed to be neutral

even though the mix of roles may change.

Grid Development

Grid Development - is expected to remain at the same critical mass, but the focus of

the work within the Division will change (such as a decrease in economic evaluation,

and investigations) and there will be greater interaction with the System Operator to

determine efficiencies in operation of the grid, in addition to investigation of new



technology to delivery efficiencies. This work is in addition to the ‘traditional’ work of

Grid Development in investigating and proposing grid investment.

Greater commercial acumen and systems thinking is required to make efficient

decisions in relation to grid development. The team’s focus will be to ensure it avoids

unnecessarily adding capacity to the grid and incurring the associated cost.

Engineers within grid Development will need to up-skill in technical asset

management competencies, and become competent at asset lifecycle analysis for

example.

From a culture perspective, grid Development staff need to have more say in their

career development, and managers need to support staff ownership for their

individual development.

Major Projects

Following the completion of major capital investment projects in 2013/14, a reduction

of 29.4 FTE by 2014/15 will occur as Major Projects staff exit in accordance with

planned attrition.

Over the last few years, Major Projects Divisional staff members working on the

major capital investment programme have gained invaluable transmission experience

and skills. There is a need to identify and redeploy critical resources (who have

gained valuable transmission experience and skills) into other engineering Divisions.

Grid Projects

The ‘engineering’ Divisions will require a somewhat different mix of capabilities going

forward than they do at present and these changes are being addressed through the

2011/12 engineering review and Grid Projects re-structure (see Divisional capability

plans).

The size of Grid Projects should closely align with the investments in the Grid as they

are undertaken, with a proportion of staff as contract employees for major projects, to

avoid carrying on-going people costs. Employment agreements that are aligned with

our new performance management system and competency frameworks should be

developed for Grid Project staff, as well as for other technical staff that are required

for specific projects or short term employment.

A few large projects (e.g. TIWAI) in 2015/16 and 2016/17 will require at least 3

additional FTE. Overall FTE forecasts are relatively flat for the period.

Greater commercial acumen is required within Grid Projects, e.g. the ability to

negotiate contracts, resolve contractual issues, understand financial and risk

implications of decisions, and understand behaviours required to influence decision

makers. Economic analysis will be more important. Broader business intelligence

required. There is no current programme to develop these skills.



Information Services Technology (IST)

IST has significant challenges ahead in structuring operations to both ensure on-

going operation of technical services in an increasingly decentralised environment.

The focus of IST 2020 is agility: breaking apart systems to understand critical vs. non

critical systems and architecture to assess level of resiliency in architecture design.

IST are planning the separation of data centres, they are looking more to software

and infrastructure as a service arrangements for non-critical systems. This means

increased investment in architectural capability.

In a multi-sourced IST world, Transpower’s IST staff will need to understand how to

manage relationships within it. It's not contract management, but rather strategic

vendor relations with the goal of increasing organisational resiliency, risk

management. This is linked to commercial acumen and systems thinking.

Engineers will become more IT savvy. It likely that ownership for particular systems

support and development will transition into the business where a particular Division

is ultimately responsible for the systems core development.

Ownership of critical functions transferring to other Grid Divisions and to the SO will

see the IST Division changing structure. FTE will remain flat as new or addition

capabilities are required (e.g. enterprise architecture, business analysis, services

management) and as some IT services are outsourced (e.g. software as a service,

infrastructure as a service).The Division will continue to employ contractors in roles

with fast turnover and a rapid evolution of skill set.

Retention is a current issue and is expected to get worse. There are limited career

opportunities within for IST. Staff tend to leave after 3 or 4 years. IST needs to be

able to provide broader experience retain talent, and this may involve more cross-

Divisional talent management at all levels of the organisation.

Staff engagement needs to be a continuous focus given retention risks.

People and Corporate Relations

The strategy of this Division is to build a partnership with business Divisions to

optimise engagement and productivity across the organisation. The focus going

forward will be on systematically addressing performance management, workforce

development and talent.

The introduction of online systems will enable modest efficiencies in staff numbers

across the group over time. This will be dependent on simplification of the approach

to remuneration and simplifying a number of other people management systems and

processes.

The team will also focus on continuous improvement of the process and practices it

designs and governs.



Corporate Services

The present range of functions and capability of Corporate Services is comparatively

stable and radical changes are not envisaged over the course of RCP2.

Opportunities for increased productivity (and reduced headcount) may arise through:

Improved integration and consistency of financial reporting systems.

Currently, data transfer and reconciliation between AMDB, TM1 and FMIS

is a source of inefficiency and inconsistency.

System improvements may also improve the efficiency of preparing

management reporting information collated from multiple data sources.

Options may be explored to reduce the frequency of some management

reporting (e.g. from monthly to quarterly).

Absent the potential introduction of a new transmission pricing

methodology (TPM), a replacement of the current “pricing engine”

(Zemindar) would allow more streamlined pricing processes to be

developed.

Maturity of the regulatory model. A period of stable regulation may allow

staff to develop both the experience and to embed processes that reduce

the resources needed to support the current regulatory arrangements.

However, this is not expected to reduce headcount requirements in RCP2

due, for example, to the on-going refinements to the IPP/IM model and the

anticipated introduction of new Information Disclosure requirements.

Improved financial capability and acumen in the core technical Divisions

and in capital project teams may reduce the centralised support provided

by Corporate Services staff.

Simplification of both Group corporate structure and Transpower’s

treasury arrangements.

Offsetting pressures on staff requirements (both in terms of headcount and

capability) could arise as follows:

A proposed, potentially radical, change to the transmission pricing

methodology would require an increase in staff numbers temporarily and

to some extent permanently to develop and support the new pricing

systems that would be required.

Additional regulatory reporting and compliance requirements are possible

as the regime develops and is the subject of incremental refinement.

On balance, this assessment suggests that Corporate Services should be declining

in headcount over RCP2. However, this assessment ignores the potential step-

change requirements that would be introduced by a radical change to transmission

pricing.



Appendix F: Material Reviewed

The following documents were reviewed in developing this report. Please note some

are draft documents.

No Document

1 RCP2 Departmental Exp calc model by Division

2 FTE summary David Lee Smith_13 July 2013

3 Transpower Qualifications as per HRIS 21 June 2012

4 Turnover Report April 13

5 Vacancies filled report

6 Workforce analysis

7 Martin Jenkins workforce plan Final August 2012

8 Competency Framework - 8 Nov final

9 Competency Book v 7 May 2011

10 ALL Grades_Upper Quart_non IT_total REM 08 09

11 All Grades_Upper Quart_IT_total REM 09 10.

12 Current Staff Details_pp6020613

13 TP (non technical) Competencies May 2012

14 Grad Learning Pathways

15 Aon Hewitt Transpower Insights Report_FINAL 2012

16 Workforce Report 21 August 2012 for Board

17 Staff lists for April 2011, April 2012 and October 2012

18 Contractors Apr 11

19 PIP Analysis Above Average 2010-2012

20 Further PIP Analysis 2008-2012

21 Grid Skills EEA Conference Presentation.pptx



No Document

22 Technical Workforce Capability Vision and Strategy - Final Highlighted for changes

290513

23 BusinessPlan_GD_Headcount_June13

24 Transpower AM PAS55 Gap Analysis Report vs1

25 System Operations High Level Capability Plan_v6 (2012)

26 Organisation Charts - CEO 20121122, Corporate Services 20121122, General Counsel

20121122, Grid Development 20121122, Grid Performance 20121122, Grid Projects

Structure 20130517, IST 20121122, People and Corporate Relations 20121122 and

System Operations 20121122

27 Remuneration - Average Salary Analysis,

28 Graduate supply

29 Transpower - Corporate Capability Plan v4.2 March 13

30 Transpower - Information Services Strategic Plan 2013-v1.3

31 Transpower AM Framework Final Deliverables Issue 1.0 12 July 2013



Appendix G: Stakeholders interviewed

Name Position

Berna Querido Development Manager

Bob Simpson Chief Engineer

Cynthia Brophy GM People & Corporate Relations

David Knight General Counsel

Fiona Abbott Risk & Performance Manager, Systems

Operations

Garth Dibley GM Grid Performance

Howard Cattermole CFO

Jim Tocher GMS IST/CIO

John Campbell SO Risk & Performance Manager

John Clarke GM Grid Development

Kevin Duckworth CEO Energy Market Services

Kevin Small GM Grid Projects

Kieran Devine GM Systems Operations

Mark Finnigan People & Performance Manager

Marshall Clark Principal Engineer

Mike Carter GM Major Projects

Paul Bagg Grid Skills Manager

Peter Griffiths Grid Reliability & Performance Manager

Ray Basher Principal Advisor

Scott Heard Strategy & Architecture Manager

Siobhan Proctor Strategy & Investment Manager



Appendix H – Graduate Recruitment 2010 to 2013

Year Business/Accounting Mechanical/Civil Electrical TOTAL

2013 2 3 5 10

2012 2 2 7 11

2011 0 4 6 10

2010 1 4 8 13

people capability strategy 2013-2020 - … capabilities required to ... within this strategy...

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