Build global talent shortage into planning

The global water talent market looks increasingly constrained, with a shortage of mid-level talent even in countries with high levels of unemployment. I cannot emphasise enough that you should build high salaries and talent-shortages into your business planning.

We are observing the most severe talent shortages in Brazil and China, where it is very difficult for global companies to identify English speaking talent with a reasonable level of techical knowledge and relevant experience. I will reiterate that companies should not expect to pay substantially lower salaries for high-impact professionals in China than they would in Europe or North America.

In Brazil they can expect to pay more.

Australia continues to lead the world on water industry salaries, with another resources investment boom working its way through the economy; mine infrastructure construction is sucking up the tiny amount of spare capacity that was there previously. Expect to pay between 1.5x and 2.5x what you would pay in Europe or North America for junior-mid-level Engineering talent.

For high-impact, strategic hires (H2Otalent‘s specialty) you should be prepared to offer both competitive salaries and a compelling organisational structure and strategy. See my earlier post on attracting leaders here.

Even more critically you should have a policy in place for opportunistically hiring and utilising water leadership talent even when you do not have a formal vacancy in your organisation. The alternative is to make-do with whoever happens to be available when you have a vacancy, which could mean the best people going to your competitors.

talent – THE source of sustainable competitive advantage

One of our market contacts that delivers white label package treatment plants and skids recently informed us that clients are increasingly willing to accept copies of well-known water product brands produced in countries with minimal intellectual property protection.

So with intellectual property increasingly under assault as a source of competitive advantage, how can organisations survive with reasonable margin in the water industry?

It will come as no surprise to readers that in my view, talent is the only true source of competitive advantage. As long as you have an innovative R&D team in your organisation, you can keep ahead of the imitators.

With the water industry capex set to grow at around 6% year-on-year for the next five 5 years (Global Water Intelligence) the competition for that talent will remain intense.

So how do you attract and retain the best people? The good news is that most organisations are not very good at this so it is easy to outperform. The bad news is that your organisation is probably one of the bad ones.

Here are my top three tips.

1. Have a coherent strategy! 

I rarely come across a company in the water industry that has a coherent strategy which all members of the organisation are able to articulate clearly.

Smart people know that working in a company without a coherent, comprehensive strategy can be hell. Have a great story to tell…people love a great story. Make sure it makes sense from every angle because great people will see any inconsistencies.

2. Give real responsibility with accountability

 Great people want agency. You must give your star employees the room to do great things. If you have the high-level strategy in place then micro-management will be unnecessary.

3. Be generous

Reward high achievers. Give your people the best technological support available. Make their work lives comfortable. Give them access to plenty of training and development opportunities.


If you can nail these three things then you are well on the way to attracting and retaining the top people, and achieving sustainable competitive advantage.

Australia Water Jobs Market Update

Things are a bit grim in the water jobs market in Australia currently. The GFC effect has combined with a significant but unconnected drop-off in the volume of infrastructure projects. With $9b Western Corridor project and Gold Coast Desal  wrapping up in Queensland, and design work on Sydney Desal largely complete, the engineering consultancies and construction firms suddenly have a lot of free staff on their books.

With skill shortages fresh in their memories, firms have been reluctant to lay off good people, but are certainly not hiring. This has been compounded by the GFC related slow-down in mining, and overseas markets. Consultancies are moving people across from mining into water projects, and from slow markets overseas into Australia. Consequently large projects like Perth2 Desal and Adelaide desal have not resulted in significant new job creation.

This has been compounded by the situation in regional NSW, where stalled governance reforms have basically stopped all infrastructure work while local governments wait to see what the outcome will be.

Looking on the bright side, there is still some significant treatment plant work on the horizon in Queensland, with governance reforms being finalised. Tasmania, suffering from a changed rainfall regime and run-down infrastructure, has just completed their water and wastewater governance reforms, which will release plenty of work there. Melbourne’s dams sitting at 27% as I write, and with another El Niño on the way, I can see a major  infrastructure round coming up.

On the subject of Melbourne, everyone is waiting with bated breath to see which shortlisted alliance will win the $3b desal project. Depending who wins, this may actually produce fewer new jobs than expected. The Veolia/John Holland Alliance has recently completed the Gold Coast and Sydney Desal plants, and should be reasonably well resourced if they win Melbourne, but substantially over resourced if they don’t. Degremont/Theiss will have some ramping up to do.

My forecast is that things will get worse in the water job market before they get better.

So where are the jobs? There is always a steady trickle of opportunities outside the major cities, particularly with regional water authorities, and for civil water & wastewater engineering consultants willing to work outside the major cities. Most consultancies are still willing to bring on board people who they know will win them business, i.e. locals with an established network and reputation for good work…there is still a shortage of  experienced wastewater and water treatment process engineers for example. Some firms that missed the boat on the 2007/2008 boom are not over-resourced, and are more open to hiring than others.

The longer term prospects are good for water work here. Australia will continue to be a case-study for climate change, and much of the talent in the industry is still due to retire in the next 5-10 years. Watch this space.

World Economic Forum Water Report

The World Economic Forum recently released a draft report on the world’s water supply situation. It is pretty grim reading, with the focus being on the water-food nexus and the water-energy nexus.  There are plenty of indicators in here of where water businesses should be focusing their efforts though.

If you look at the water inputs to produce the amount of food consumed by people on certain income levels, then extrapolate according to income/population growth forecasts, then you find we don’t have close to enough water to produce the food we will need. In fact by 2025 30% of the global cereal crop could be lost through lack of water.

Energy production is also highly dependent on water supply for cooling power stations and in some parts of the world this has already become a limiting factor.

Finally there is the demand for water for cities, which are rapidly drawing down  water available in their catchments.

In this post I try and focus on opportunities, rather than dwell on the negative, and this is where there seems to be an obvious role for business.

Food: Irrigation efficiency is an obvious target, with around 50% of water drawn for irrigation being lost to leaks and evaporation. Demand for pipes should continue! Innovative irrigation systems and low water consumption crops will be another growth area.

Energy: There has to be a market for retrofitting power stations with non-consumptive cooling systems. I have seen a presentation on this, and while it is expensive, it is possible to replace evaporative systems with closed-system cooling. It looks a bit tricky though, so the engineering firm that takes the first-movers advantage in this area should do well. Of course wind-power has almost zero water consumption, which is great, but I would not be putting my money into hydro in many places. Australia’s hydro power schemes have already reduced output due to lack of water.

Cities: As well as the obvious desalination and blackwater reuse option, which is becoming cheaper and more energy efficient every day (particularly with Forward Osmosis on the way), increasing water prices may begin to make stormwater capture, treatment and reuse cost effective in more locations. There is already a big shortage of professionals with experience and knowledge of ecological engineering that is required to do this well however. Increasing pollution levels also mean that innovative advanced treatment solutions should also gain ground.

The mega-trend will be the movement of populations, agriculture and business to areas with good water security, so set up your water supply businesses there!

Skills shortages, water shortages, salaries and the price of water

The skills shortage, particularly for civil design and construction engineers, puts inevitable inflationary pressure on salaries as firms compete for talent. However as a professional you should not automatically expect a dramatic increase in salary when you next change jobs.  The main factor influencing salaries is actually the price of water and wastewater services.

In an increasingly corporatized water sector, the amount of money that will be invested in water and wastewater is largely determined by the potential revenue streams from the investment i.e. the price of water and wastewater services. The cost of supply is one factor, as is level of demand, but they all are all trumped by political imperatives and the decisions of regulatory authorities.

South East Queensland recently faced the prospect of running out of water, and as result engaged in the construction of a massive network of pipelines and reuse plants. The cost of capacity from this scheme is in the realm of US$5000/m³/d according to the October Global Water Intelligence report, as compared to $1333/m³/d for the average global desalination scheme.  The alliance contracting model and tight timelines on the scheme meant that professionals needed to be (and could be) hired whatever the cost. Consequently we saw a significant inflationary effect on salaries for design and construction engineers, making Australian salaries some of the highest in the world. I suspect it will also result in staff being laid off in the future because they will just be too expensive to be deployed on projects where cost is more important than timeliness.

The shortage of water created the political will to spend more on infrastructure, and that will be reflected in water prices down the line. That political will to spend more on infrastructure and charge more for water is only galvanized in the face of a crisis…so if you are looking to make the big dollars, don’t assume the global skills shortage will be enough to push up your salary…look for where the next crisis will be, and head there!