Face up to skills shortage, says consultant
Energy companies must make themselves appealing to a wider potential workforce and put human-resource (HR) management at the centre of their thinking, says Booz Allen Hamilton. Otherwise, given the low number of graduates that are entering the oil and gas industry, the resulting skills shortage could cripple the business.
In a report, entitled Resourcing the challenges of maturity – an oil industry view, the consultancy says around 50% of professional exploration and production (E&P) staff are aged 40-50, while only around 15% are in their early 20s to mid-30s. It forecasts that up to half of the workforce will retire within 10 years and that technical segments of the industry, where staff shortages are acute, are likely to feel the most pressure to replace skills.
With graduate recruitment to the oil industry in decline, finding a solution to the problem will not be straightforward. But, says Varya Davidson, a senior consultant at the firm, the alternative is unpalatable. "If companies do nothing, this could lead to the permanent loss of differentiating technical capabilities." In turn, that means – in as little as five to 10 years – reserves replacement slowing down, capacity becoming shut in and operating costs ballooning. The report's conclusion is that human resources "must become a critical element within strategic planning".
Booz Allen Hamilton argues that making employment decisions on a local or regional basis is no longer the most efficient way of staffing oil companies. To make the best use of a scarce resource, job allocation should be done from a central viewpoint. "The function of regional HR management should be to facilitate and fit the global directives to local circumstances," the report says.
For example, says Otto Waterlander, vice-president at Booz Allen Hamilton, expatriation is generally being over-used because that is the way that oil companies have operated historically. By establishing a new resourcing framework, in which expatriation is substituted in some cases with other options, such as regional commuting and local market recruitment, significant benefits can be achieved, he argues, allowing firms to manage staff deployment more effectively. Ultimately, that means greater efficiency and, potentially, cost savings.
Companies should also think in terms of job function as well as in terms of asset location, adds Waterlander. "In a functional organisation, disciplines such as geology, engineering or finance drive staff deployment, resulting in excellent access to necessary expertise." Yet local knowledge is also critically important to many developments – for example, when dealing with subcontractors and unions – meaning elements of the asset-based structure should also be retained.
Booz Allen Hamilton also notes that "technical talents are not sufficiently rewarded and executives gifted in this area are systematically siphoned off into management, resulting in depleted technical know-how." The consultancy says it has "explored the possibility of creating an extra rung in the technical promotional ladder, where talented staff could rise to a level of leadership in the technical field".