How Do You Engage Your Team For The Long-Term?
This has been debated for decades. No doubt that this challenge can also be viewed as an opportunity. So, where do we start? First we must define the contributing factors.
1. Volatile oil and gas workload
2. Experienced egos
3. Overtime laws and the restrictions of DOT salaries
4. Education vs skill
5. Employee incentives
6. Lack of ambition and vision
7. Knowledge of long-term goals and opportunities
Oil and natural gas plays have been as fickle as fashion in recent years, thanks in large part to technological advances, such as horizontal drilling, combined with multi-stage hydraulic fracturing, which have given companies access to previously unattainable or uneconomic resources. The dramatic changes in the quantities, locations, and price volatility of the hydrocarbons unlocked by technology create a significant challenge in aligning human capital resources with the various market demands.
This challenge is tough for companies with balanced portfolios of natural gas and oil assets; they can theoretically shift manpower from one side of the business to the other as market conditions warrant, but that becomes much more difficult as volatility increases. The challenge is even harder for companies with a heavy tilt toward either oil or gas, as market swings may force them to reach outside the organization to staff up quickly in one area, while needing to rightsize the workforce in other areas.
Adding to this complexity is a shrinking pool of available talent. A wave of older workers is reaching retirement age, and universities in North America and Europe are not
Managing a moving target producing enough skilled graduates to replace them. In addition, workers are increasingly mobile and technology advancements continue to change both the type of work and where it can be done. These factors are exacerbating the war for talent by extending competition beyond local, and even national, labor markets.
In the past, annual estimates of workforce needs proved sufficient. Now, the need for certain skills can change dramatically over the course of a year. The degree to which HR organizations anticipate these changes can spell the difference between being ready to support the company’s growth or inhibiting it due to a lack of skilled people.
Some in the industry have advanced their workforce planning in recent years by turning to resources such as enterprise resource planning systems to compile more data on their existing talent. But many HR leaders have been unable to distill such data into useful and actionable information. As a result, some have turned to blunt instruments such as pay increases and competitive incentive awards, which have shown to be no silver bullet when trying to acquire or retain talent.
Think Like An Economist
In today’s operating environment, it is more critical than ever that oil and gas companies stay on top of the statistics — not just the data they have historically used to map the Earth’s topography, plot acquisitions, and invest in new opportunities, but also the information they need to paint a well-defined picture of their future workforce needs. The industry’s HR leaders have to think like an economist — someone who studies and directs the allocation of finite resources.
By necessity, this may require a change in mind-set. Oil and gas companies, like their counterparts in other sectors, are accustomed to following their own internal “leading indicators.” The dynamic pace of change and competition, though, demand that they now look outward as well. This added degree of data mining may require information as diverse as labor market conditions, employment shifts, employment trends in industries, and the cultivation of talent with transferable skills.
This is not an invitation to dive headfirst into a limitless pool of data. Rather, it is a call to do what economists do: maintain a 360-degree view of the key indicators, near and far, that matter to the business. HR organizations need to apply macroeconomic data and other external knowledge to inform sound decision-making. An economist-minded HR leader can create a business strategy by using specific economic indicators to predict HR changes. For instance, data on international mobility trends can track the flow of talent and help direct a mobility strategy that effectively navigates talent shortages or surpluses.
Traditionally, organizations have focused on data integrity and reporting that is specific to core applications. The need for more meaningful and insightful information is shifting the focus from reactive analysis to foundation and advanced, and/or predictive, analytics, thereby pushing organizations further along the information maturity curve.
The Information Maturity Curve
This maturity curve illustrates the transition from a reactive HR organization to a more proactive one that not only reports on what happened but also anticipates what could happen in the future and takes required action. The deeper HR organizations are able to pursue workforce analytics to account for variables such as regulatory changes, economic outlook, and labor supply shortages, the further out on the information maturity curve they will be able to delve. In the oil and gas sector, three key dimensions may serve as a logical launching pad on this evolutionary journey toward better, more actionable insights:
Workforce planning: preparing for acute market-driven changes that alter a company’s workforce needs
Talent acquisition and movement: understanding the impact of pending retirements and changing business strategies, and adopting data-driven approaches for hiring or developing the next generation of talent
Retention: measuring and managing workforce turnover issues to mitigate the potential loss of the investment required to train and develop new resources