AEP Sustainability - Human Capital Management

Human Capital Management

Human capital management (HCM) is one of the most significant corporate governance issues today. Hiring, training and retaining top talent is a critical enabler of business value. This includes having the right corporate practices and policies in place for safety and health, compensation, diversity, equity and inclusion, well-being and culture. This is even more critical as we shift and plan for the workforce of the future – one that is digital, distributed and diverse.

The Human Resources Committee of the Board oversees succession planning, executive leadership development and other human capital related risks. Executive management is responsible for attracting, developing and retaining employees with the skills and experience needed to provide service to our customers efficiently and effectively is crucial to AEP’s long-term success and strategy.


Culture

Culture serves as the foundation for success at AEP. An engaged, collaborative and appreciated workforce is an empowered workforce. One that is more likely to embrace change, drive continuous improvement, take ownership, and value personal and professional growth. We are committed to cultivating a culture of empowerment at AEP. We recognize this doesn’t happen overnight and that culture is a journey that requires constant focus and effort. If we don’t continuously nurture culture, we risk losing the strong foundation we have worked so hard to build.

We continue to measure our culture journey and progress through our annual employee culture survey. 2021 marks our eighth consecutive year of formally surveying employees about their experiences with culture at AEP, including the opportunity to provide feedback on their perceptions of and fulfillment they receive from their jobs. The culture survey provides a process for leaders to share results with their teams, facilitate discussions for how to improve employee engagement, and take actions toward that improvement throughout the year. In addition, AEP’s Human Resources Committee of the Board reviews the culture and employee engagement results annually, providing additional oversight.

The past two years have tested us in a variety of ways, as the majority of our workforce shifted to a remote work environment during the pandemic. Our workforce will continue working in a distributed environment (remote, hybrid, or onsite and field), requiring us to listen, adapt and learn to ensure employees remain engaged and have opportunities to learn and grow. Part of our culture commitment is that every employee, regardless of where or how they work, has a positive experience at AEP. Our 2021 employee culture survey was conducted with this in mind, giving us the ability to analyze the results by work designation. This allows us to be more mindful of our efforts as we continue to drive one culture at AEP.

Our 2021 culture scores improved across the organization, showing that we continue to make in-roads, even during difficult circumstances. We experienced a slight drop in employee participation compared with previous years. However, we are still pleased that 89% of our workforce was engaged in the process. We strive to make progress year over year, knowing there is room to grow and improve. This survey serves as a foundation for insights on where we should focus our efforts.

For the third consecutive year, AEP has earned the 2022 Gallup Exceptional Workplace Award, which recognizes organizations that incorporate employee engagement into core business values. AEP is one of 41 companies recognized – meeting Gallup’s rigorous standards of excellence.


Talent Acquisition

According to the U.S. Bureau of Labor Statistics, over 47 million American’s voluntarily left their jobs in 2021. This unprecedented mass exit, otherwise referred to as the Great Resignation, was accelerated by COVID-19 but is part of a continued trend of today’s labor market. AEP has been able to mitigate the impact, experiencing an overall turnover rate below 10%, with voluntary turnover and retirement turnover both under 3.5%. We are not completely immune though. We are also impacted by shifting factors that include generational shifts, employee retirement, job movement and relocation. We track and forecast the number of employees who plan to leave over the next several years, and we recognize that turnover presents the challenge of replacing legacy knowledge. It also creates opportunities to identify our future talent needs and diversify our workforce.

The battle for talent in today’s tight labor market is fierce because we are competing with other industries trying to tap into the same talent pool. The highly competitive nature of today’s job market requires us to identify more impactful ways to reach prospective employees. This includes moving from a more traditional talent acquisition approach to a programmatic, purposeful and digital recruiting strategy allowing us to reach broader and diverse networks. This is especially important as our company transitions toward a clean energy future – one that will require new and innovative skillsets.

The global pandemic also created new ways of looking at how and where we perform our work. Remote and hybrid work provides many benefits for our employees and company, including cost savings and flexibility. It increases our access and ability to hire diverse candidates with unique experiences, beliefs, ideas and backgrounds outside of our traditional footprint. We are identifying and anticipating changes within our business that may be needed as we implement new work models. We are working to better understand the types of jobs and talent needed, in along with where the work can be conducted. Leaders are also required to take implicit bias training to reduce the risk of their own biases preventing them from selecting the best candidates to interview or hire.


Workforce Pipeline Development

As we prepare our workforce for the future, we are fostering an environment that encourages collaboration, innovation and communication no matter where we work. Through training, development and growth opportunities, employees are acquiring the skills needed to align with our strategy for a clean energy future. This is especially important as we embrace a digital and more distributed work model that requires a flexible, innovative and diverse workforce.

One challenge we must address is the shortage of skilled labor, such as line mechanics. We have several workforce development initiatives focused on eliminating barriers to hire qualified and diverse line workers. Our latest initiative is focused on creating a pathway specifically for women.

In addition, we partner with federal, state and local initiatives focused on building a stronger talent pipeline. For example, we are participating in a federal work-study program with the Ohio Department of Education and Columbus State Community College. Students hired will have completed at least two semesters of IT coursework and have received “Career READY” status (approved résumé, mock interview and elevator pitch) from the college. Our participation in this experimental site program will provide us with access to a larger IT talent pipeline when these students finish school.

We also have robust co-op and internship programs for high school and college students. Our alliances with community colleges, universities and vocational and technical schools across our 11-state service territory support the development of our talent pipeline. We work with these institutions to develop academic programs that will prepare students for new jobs and career opportunities in our industry. In 2021, enterprise-wide, AEP provided more than 100 intern and co-op students with hands-on learning experiences across our operations.

In addition, we partner with federal, state and local initiatives focused on building a stronger talent pipeline. For example, in 2021 we brought on four co-op students to work with our IT and Security departments through a federal work-study program between the Ohio Department of Education and Columbus State Community College. The students hired will have completed at least two semesters of IT coursework and have received “Career READY” status (approved résumé, mock interview and elevator pitch) from the college. Our participation in this experimental site program will provide us with access to a larger IT talent pipeline when these students finish school.

Women in Linework

In 2021, AEP Ohio partnered with local community non-profit agencies to design and pilot the Women in Linework (WiL) Program. As part of a recruiting effort to address an industry-wide shortage of female lineworkers, the development program will offer qualified participants a direct path into AEP’s apprenticeship program, offering technical and foundational training, career prep and the opportunity to earn credentials. Through the creation of pathways, WiL is designed to remove historical biases that hinder women from entering line work. The 14-month program provides technical training, career readiness, mentoring, wrap-around support services, and pre-apprentice educational assistance that will potentially lead women to full-time employment with AEP as lineworkers. The participants will also obtain a Class A Commercial Driver’s License. This not only sets the stage for long-term career success but also positively impacts the economic stability and prosperity of women within the communities served by AEP.

AEP's Women in Linework program is designed to remove historical biases that hinder women from entering line work.

Supporting our Veterans

We actively support, recruit and hire military veterans. We educate, train and prepare them to successfully transition into rewarding energy industry jobs. Our talent acquisition team builds direct relationships with military facilities across the country to provide veterans with a pipeline of careers at AEP. We invest in attracting veterans because they have the technical training, experience and personal characteristics that make them a great fit for careers in the energy industry. They also bring a mindset of safety, which is a core value of our business, making them attractive recruits for our company.

We encourage veterans to actively seek and apply for jobs at AEP that match their training and skills. We also partner with external initiatives designed to provide veterans with mentoring services, career development opportunities or skills matching services, such as U.S. Army Partnership for Youth Success (PaYS). AEP is a signatory of the Department of Defense’s Skillbridge program that offers employment training, internship and apprenticeship opportunities to more than 1,000 organizations across the U.S. In addition to outreach at local military facilities, we have a dedicated careers webpage at www.aep.com/careers.

AEP was recently recognized for being a veteran employer champion through the 2022 Veteran Champion of the Year in Corporate award. This award honors 30 companies that advocate for veterans in the civilian workforce. In addition, in 2021, Public Service Company of Oklahoma was among a group of 24 companies recognized by the Oklahoma Veteran Alliance as a Veteran Employer Champion for hiring and supporting U.S. military veterans. The Oklahoma Veteran Alliance is a statewide network of veteran service providers, advocates and champions that work together to identify methods to help veterans transition into civilian life and access resources and healthy social connections.


Advancing our Future Work Model

Technology and innovation are deeply rooted into the fabric of our culture at AEP. For more than 116 years, our employees have leveraged their experience and innovation to transform AEP into a clean, reliable and affordable energy company with a highly engaged workforce.

We view technology as an enabler to drive positive change for our employees, customers and communities. Leveraging technology and analytics enables our employees to identify cost-effective and efficient solutions to better inform business decisions. This requires a cohesive business model built on a foundation of strong partnerships, bringing the power of many together. These partnerships allow us to identify potential risks or disruptions and inform our efforts to build modern and transformative products, services and solutions.

Keeping our employees connected is vital to creating a healthy, productive and engaged work environment, especially as the majority of our workforce now operates in a distributed work model that includes remote, hybrid, on site or in the field. We are in the process of expanding our software solutions and technology toolset and allow more efficient collaboration across our geographically dispersed workforce.

As we continue to advance our future work model, developments in technology provide an opportunity to shift more manual, resource-intensive and sometimes dangerous work, to more automated processes. It also allows us to leverage synchronous communication through various channels. We are revamping legacy systems to be more nimble, giving us access to real-time data and the ability to collaborate more effectively. In addition to driving efficiency, this technology frees up resources, creates a culture of engagement, and provides a safer environment for our employees and customers.

Historically, we have looked at making improvements based on the specific work we ourselves or our organization can control. We are now looking to improve our work as it flows from start to finish. That means we are optimizing the end-to-end workflow, which typically crosses multiple organizations, and driving efficiencies across the entire process and not just within a function. This is leading to stronger outcomes in work quality, efficiency and cost optimization. Additionally, as we optimize the workflow, we are doing so with our strategy and future in mind. Many areas of our industry are in the midst of transformation — from traditional fossil fuels to renewables or from manual work to leveraging technology. The newly redesigned workflow takes into account current and future changes in our strategy.

According to Gartner, “Artificial Intelligence (AI) applies advanced analysis and logic-based techniques, including machine learning, to interpret events, support and automate decisions and take action.” In 2021, a new automated process was created to support the “Call Before You Dig” program. This national program is focused on protecting the community by flagging buried utilities to avoid unintentionally digging into an underground line. Hitting a buried line while digging can disrupt utility service, is costly to repair, or can cause serious injury or death.

AEP receives over 1 million “Call Before You Dig” service requests per year. This requires employees to manually check each request to determine if the work warrants contracting with a servicer to go onsite to flag buried lines, or if there is enough clearance that a servicer is not required. By deploying an automated bot, AEP identified an additional 26,000 tickets that didn’t require the need for hiring a servicer. This equates to thousands of hours required to review each request and to work with a contractor to schedule an on-site visit. Not only does the bot deployment save money and time, but also reduces the risk of a potential on-site injury by reducing the number of times a servicer has to drive to the site and perform the physical work of flagging lines.

Through the success of this effort and other similar bot deployments, AEP and our operating companies have saved millions of dollars in capital and operations and maintenance costs. We continue to seek opportunities for additional deployments to streamline processes and increase savings.


Career Advancement

At AEP, we provide development opportunities for employees at every level, whether through informal professional development or formal development programs. In addition, several of our Employee Resource Groups and utility professional groups, such as Women’s International Network of Utility Professionals (WiNUP), sponsor programs and events that focus on employee education, career advancement and personal and professional development.

AEP’s Targeted Development Programs are one way we are building a guided learning path to support career advancement for our employees. The corporate Targeted Development Program is a one-year program focused on providing accelerated development opportunities for potential future leaders company-wide. In addition to increasing leader capability and readiness, this program is focused on growing a diverse talent pool within the organization. This is especially important as we move to a more digital and distributed work environment that requires a flexible, innovative and diverse workforce. Through development planning, mentorship and coaching, relationship building and hands-on project experience, each participant is broadening their knowledge and understanding of AEP and improving their leadership skills. This provides a deeper, stronger and more diverse talent bench to support our future needs.

Transmission & Distribution University (TDU) is another development program focused on enhancing learning, performance and retention. This program focuses on equipping employees with tools and resources needed to optimize learning and ensuring all employees are trained, qualified and competent for work while giving them more control of their learning path and development. Members of the TDU Team are trained and certified through The Ohio State University’s Developing a Curriculum (DACUM) and Systematic Curriculum & Instructional Design (SCID) processes.

We also provide a broad range of training and assistance that supports lifelong learning and transition development. This includes performance coaching; operational skills training; resources to support our commitment to environment, safety and health; job progression training; tuition assistance; and other forms of training that help employees improve their skills and become better leaders. In 2021, our employees completed more than 719,000 hours of training in programs for which we track participation. We invested more than $2 million in employee education, supporting 575 employees through our tuition reimbursement program. In addition, AEP’s educational assistance program partners with a third-party administrator that provides employees with access to discounts at numerous colleges and universities across the United States.

At AEP, we provide development opportunities for employees at every level, whether through informal professional development or formal development programs.

Caring for Our Workforce

When prospective employees are considering their career options, they look for companies that share their values, offer competitive wages and benefits, provide opportunities for learning new skills and achieving career advancement, and allow flexibility to balance work and personal interests.

AEP offers a comprehensive set of benefits and programs to support employees across a wide range of situations, including:

  • Medical (includes same-sex partner benefits)
  • Dental
  • Vision
  • Critical illness plans
  • Accidental death insurance
  • Health care savings and flexible spending accounts
  • Dependent insurance and flexible spending account
  • Life insurance (and supplemental)
  • Long-term disability insurance
  • Training programs
  • Legal services
  • Vacation purchase program
  • 401(k) with matching contributions
  • Wellness program
  • Employee Assistance Program
  • Financial planning
  • Adoption assistance
  • Tuition reimbursement
  • Pension

Supporting our employees in a variety of areas is a commitment that we take to heart. We are committed to the well-being of our employees and ensuring they have a safe and productive work environment; achieve financial security; feel supported, heard and engaged; have access to healthcare for their physical and mental health; have networks and camaraderie that provide social support; and feel included and connected to the mission and values of our company.

AEP is committed to disclosing our human capital management performance because it serves as a strong indicator of our workplace environment and employee well-being. This includes:


Labor Relations

Nearly one-fourth of our workforce is represented by labor unions. Our partnership with labor unions is critical to meeting the growing expectations of our customers. We value the relationships we have with our union-represented employees and believe in the pursuit of a trusting, collaborative and respectful partnerships with our labor unions. We invite employees to participate in our annual employee culture survey and in 2021 saw increased engagement scores among our represented employees. We continue working with our labor partners to strengthen these relationships to ensure we have a culture that attracts and supports employees who can adapt to the rapid changes occurring in our company and industry.

Our relationship often goes beyond the confines of a contract. We are working with labor leaders to support infrastructure development across the nation while developing the talent pipeline and skills needed for the future. Our partnership with organized labor is instrumental to address regulatory and legislative issues. We share many common interests on the policy front and collaborate on issues important to each of us. The labor-management relationship will continue to strengthen as we work together to meet employee needs as we transition toward a clean energy future.

We continue to be a leader in the planning and organizing of the annual National Labor and Management Public Affairs Committee (LAMPAC) meeting. This collaborative effort of labor and management is designed to bring together energy company executives and leaders from the International Brotherhood of Electrical Workers (IBEW) to advance the common objectives of the electric power industry and IBEW members.

Learn about how we are working with our employees affected by the retirement of coal-fueled generating units in the Just Transition section.