A shortage of talent in the renewable energy sector is inflating salaries as companies strive to halt defections to competitors, according to a new study by global management consultancy Hay Group.

• Two-thirds of firms are concerned over skills shortage in renewables sector
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• Salaries are at a premium in renewables sector despite current economic climate

In contrast to the rest of the UK market in general, organisations are pushing up pay in order to hold on to key talent, according to a flash survey of 25 HR professionals at 20 major businesses operating in the renewables sector.

The latest research complements the 2009 salary research survey for the sector, which looked at pay trends, by examining the drivers behind the trends. The 2010 survey will take place over summer 2010 in conjunction with RenewableUK, the trade and professional body for the UK wind and marine renewables industries.

Hay Group spoke to organisations across the renewables sector, including major utilities, manufacturers, developers and consultancies, to discover how businesses are planning their HR strategies over the coming year.

Gavin Brown, reward information consultant at Hay Group, said: “Even during a very difficult economic period, growing sectors like renewables are defying the rest of the employment market by increasing pay as companies try to establish themselves as market leaders.”

The people premium

Across the employment market, HR professionals are having to work within increasingly constrained budgets, pushing down salary increases and bonus payments.

In the renewable energy sector, where many businesses also operate in other, extremely lucrative, areas of the energy market, talented individuals can command a premium over comparable pay grades in other sectors.

Some 69% of respondents said they found recruitment difficult in the current market as the salary inflation bubble grows.

A gap in the market

A skills shortfall was felt keenly by the majority of respondents (64%), who reported concerns about growing the business in the future. Half cited strong competition for talent within the market as the main factor.

In an attempt to overcome the problem, 75% of companies are looking to overcome the problem by training existing staff to a higher level.

However, more than two-thirds (67%) are advertising positions further up the payscale in the hope of directly attracting the most talented individuals to their organisation.

Beyond the bubble

As a result of fierce competition for talent, renewables employers fear an unsustainable salary inflation bubble, with one respondent saying: “Company budget constraints might not meet employee expectations in terms of compensation.”

In total, 73% of employers reported concerns about retaining key talent this year. Only one in five (21%) are offering cash or non-cash incentives – e.g. a long-term shares scheme – to differentiate themselves from the competition.

However, the survey showed that money was not the main motivator for renewables professionals. Most businesses (72%) reported that career progression opportunities were the primary reasons cited for employees leaving the company. Only 21% left for financial gain.

Despite the pressures felt by the industry, staff turnover is not unusually high, at just under four per cent over the last 12 months. Staff involved in offshore projects, such as offshore technicians and project managers, were most likely to leave.

When staff do leave, they don’t go far. 86% of employees head elsewhere in the industry while competitors attract a smaller proportion, with 14% going to a direct competitor.

Gavin Brown said: “Our 2009 reward survey showed us that the renewables industry is among the best rewarded sectors in the UK economy with salaries consistently above the UK average.

“The relatively small talent pool of employees and the competition to attract and retain expertise within the sector has created an employee driven salary market in which organisations are paying what they have to in order to attract the right candidate.”

Source: global management consultancy Hay Group

Further Information

For more information or an interview with Gavin Brown, please contact Jane Robertson or Charles Cameron at The BIG Partnership

T: 0141 333 9585

E: firstname.lastname@bigpartnership.co.uk