4 Ways to Keep the Plug on the Oil & Gas Knowledge Drain
April 30, 2012
The looming loss of decades of experience and leadership is not a surprise to those in the energy industry. The recent recession may have forced experienced employees to shelve retirement plans and kept that experience in place temporarily, but the following indicators underscore that the impact of the talent gap was only delayed:
- Skills shortages in the oil and gas industry leapt from 5th to 2nd on the list of barriers to growth over the next 12 months, according to an Economist Intelligence Unit report, “Big Spenders: The Outlook for the Oil and Gas Industry 2012.” The shortage of skills was cited as a key barrier by over a third of respondents.
- 70% of energy industry execs (globally) believe they will not have enough leadership to meet the industry’s future needs according to a recent report citing the Energy Institute.
- More than 50% of current oil and gas employees are estimated to be eligible for retirement in the next 10 years and those with 10 years of experience or more are in very short supply
Despite this inevitable talent gap, few companies have put effective strategies in place to “plug the knowledge drain.” I believe there are four keys to addressing this problem:
- Plan your workforce strategically: Most organizations say they have a workforce plan. The real question is, “Do you have a strategic workforce plan or a workforce strategy?” Exercises in simply forecasting headcount lead to blunt interventions at all levels and leave hard dollars and leadership resources misguided in the search for the right talent. Leaders must begin by clearly identifying the key competencies and skills that most affect company performance. Strategic Workforce Planning involves modeling workforce needs against different scenarios of the current and future (internal and external) labor market. Adding scenario-based planning aids in better understanding talent supply and demand dynamics and allows for a more planful, proactive approach that aligns workforce planning to value creation.
- Acquire talent intelligently: Recruiting is a two-way street. Companies expect contribution; employees expect fulfillment of their value proposition. Leaders are often unclear about exactly what capabilities and competencies they need to effectively execute against their strategy today and in the future. This leads to targeting the wrong talent sources, hiring the wrong individuals and, eventually, losing employees for not providing the “agreed” experience, not to mention the effects this has on overall company performance. Despite the budget-busting price war for talent in O&G, study after study shows employees consider more than financial remuneration when deciding where to work. Recruiting is most successful when communicating the value and promise of a career, continuous development, and opportunity for the individual to influence their chosen career path. Energy companies need to clearly understand what types of talent they need to drive their business strategy and also understand what those candidates value in an employer. These two in conjunction create a platform for changing the game across the industry, allowing employment conversations to rise above the basic hygiene factors, such as salary and benefits, and force the focus on what is important to both parties
- Design for development: Recruiting the right talent is only the beginning. Without a commitment and an organization designed to provide the many and various development opportunities each employee will need to grow and increase contribution to the organization, the promise of career fades and neither the company or the employee benefit. Rigs are complex environments, with real safety and performance concerns for all involved. Moving drillers and leaders from place to place often may not be possible, but better systems of matching opportunities with individual and organizational development needs is crucial to plugging the current knowledge drain and ensuring there is not a reprise. Leaders need to be open and create a platform for career growth, allowing employees to move through the organization, to a new rig or discipline, giving the employee the developmental opportunities he/she needs to advance to the next level in an expedited manner.
- Understand, assess, THEN develop leadership: What is leadership? What does it look like? The answer is specific to your industry and also to your company and its strategy. Understanding what leadership competencies, when demonstrated, improve performance is critical to proper development. Leadership is more than technical skill and functional expertise – effective leaders see through multiple lenses to align strategy – organization – talent. Executives must assess the gaps in the important leadership competencies across the talent portfolio and develop current and emerging leaders in the areas of most need and impact to the business. Leadership development needs to be a continuous process that prepares individual to take the next step in their careers before they actually take the step, enabling a more proactive approach to plugging the knowledge drain within your organization.