Talent is a topic that is on the minds of many leaders and CEOs, no matter the industry. Research conducted by PwC for its 14th annual CEO Survey indicates that it is of particular concern in the oil and gas industry. According to these results, 61% of industry CEOs surveyed indicated that over the next three years, they were concerned about "competitors recruiting some of their best people." Additionally, 64% of these same CEOs believed that "there is a limited supply of talent with the right skills."
Due to the unique and often technical nature of the majority of jobs in the oil and gas industry, many jobs have very specific requirements that are not always easily filled. Positions in the engineering, engineering technician, field support, and even financial or accounting areas have specialized knowledge requirements that don't translate to other industries. Whether a company is involved in upstream, midstream, or downstream, the decisions made on a daily basis by employees may have profound financial impacts on the company. A mistake or incorrect decision may subject the company to losses that could reach millions per day, depending on circumstances.
To help mitigate these risks, companies need to ensure that their employees are able to operate autonomously as soon as possible. This "time to autonomy" is important because obtaining and retaining the right type of employees provides a potential cost savings in both training and development as well as in potential losses due to wrong decisions.
Although more science, technology, and engineering students are graduating from universities with specialties in areas of interest to the oil and gas industry, the expected demand for talent still exceeds the supply of graduates. Much of this is due to the fact that the industry went into a state of "suspended animation" during the 1980s and 1990s. Hiring came to a virtual standstill, and many employees were released during the oil bust of the mid-1980s. Major universities greatly scaled back or stopped offering programs in petroleum engineering and other energy-related disciplines. Students either chose not to pursue these degrees because they were not offered or because jobs were scarce.
Three decades later, the average age of employees with these educational backgrounds and skills is 50 years or older. This is true for almost all pivotal industry positions (technicians, field personnel, plant operators, etc.). The Society of Petroleum Engineers (SPE) estimates that to meet currently projected demand for workers in the industry (particularly engineers), there must be a 5.5% increase in hiring each year for these roles between 2008 and 2020.
In its 14th Annual CEO Survey, PwC found that 52% of the CEOs surveyed in the oil and gas industry were concerned that the availability of key talent was a potential business threat to their company's growth prospects.
How to retain talent
With all of these sobering thoughts, what can be done to retain the critical employees that companies have today? The most succinct answer is to be aware and proactive. The employment landscape is different today than it was even 10 years ago. The Internet and particularly the social media tsunami have made the world a much more transparent place. There is simply too much information available about employees and their accomplishments on sites such as LinkedIn, Monster, and Facebook to believe that competitors are not mining the Internet for talent gold. Therefore, it is not only likely but a certainty that recruiters are in constant contact with the best and brightest employees. Furthermore, trying to block contact with recruiters and competitors can backfire, making key employees more likely to leap if they think Big Brother is watching. A better use of time and money is to spend on efforts to engage top talent so that they will not be interested in other opportunities.
A key factor in employee retention is for employers to listen closely to employees. This is especially important when designing employee programs and offerings. Employers should ensure that the programs are not only based on what is good for the company but that these programs are designed through the eyes of the employee. This is critical because it doesn't matter how beneficial these programs may be to the company, either in terms of benefits, compensation programs, time off, education, or other programs. If the programs are not perceived to be valuable or relevant by the employees, they will ultimately cost the company much more than they save. Employees would rather leave and work for a company that matches more closely with their needs.
Employee retention begins with recruitment and is solidified during onboarding. Many companies spend considerable time and effort recruiting future employees, something that is compared to the "courtship" phase of a relationship. However, some companies lose sight of the fact that the most critical phase of the employment relationship is the onboarding process. If employees believe that they are not valued beyond being "courted," or if they perceive that the onboarding experience doesn't match the effort put into their recruitment, it sends a clear message that they are not as important as they were led to believe by their recruiter. New employees may also believe that this is an indicator of how the company will treat them over their career. This misstep early in an employee's career can set up a poor engagement that could conceivably last for the duration of the employee's career, no matter how short or long.
Employees want to believe that they have career options and opportunities with the company. To help ensure that this is a reality for employees, oil and gas companies should examine themselves to identify what unique aspects must be addressed. How do employees continue along a career path that allows for increasing pay, responsibility, knowledge, and perquisites while allowing them to do what interests them? Career tracks that reward both technical and professional as well as leadership/managerial advancement are essential. There is the tendency in this industry, as with most technically oriented industries, to make managers out of the best technicians or engineers. That strategy is often not the best for the company or the employee. The company must structure opportunities for learning and development that support and enable career growth along both tracks; otherwise, they risk losing employees to free agency. The need to focus on development and employment strategy is becoming more evident.
Money well spent
PwC noted in the 14th annual CEO survey that 87% of the CEOs surveyed in the oil and gas industry planned to focus on creating and maintaining a skilled workforce over the next three years and 78% indicated that they would be focusing on improved strategies for managing talent over the next 12 months. PwC Saratoga, a worldwide leader in workforce measurement and employee engagement, estimates that the cost of replacing experienced professional and technical resources is approximately one-and-one-half times their annual salary. It is a logical conclusion that any money spent in retaining employees rather than replacing them is money well spent. Companies that are working to improve their competitive position and growth should be very focused on employee engagement and retention as a means to achieve business success.
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