PREPARE FOR A NEW

WORKING ENVIRON

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PREPARE FOR A NEW

WORKING ENVIRON

MENTDeirdre O’Donnell, managing director of specialist petroleum

recruitment company Working Smart, discusses oil and gas

workforce challenges, an emerging new organisational structure,

and its impact on the industry’s workers.

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I think we can all agree that the last 18 months or so have been rough for our

industry, and signs of recovery are fleeting to say the least. As in all downturns we are inundated with headline writers and analysts predicting conflicting stories of doom, gloom and imminent upturns. The reality is that we are all at the mercy of the global stock markets. For every operator in distress, we are witnessing two or more service companies announcing emergency measures or bankruptcy. Ewan Whyte, business development manager at LR Senergy, expects that ‘better-funded com-panies will increase their market strength by watching niche competitors tumble out of the market and snapping-up any differ-entiating intellectual property, assets and key personnel’. We hear about the need to collaborate, adopt new technologies, improve efficiencies, and drive down costs - all the rhetoric of recent years!

Although we are currently in a market of oversupply and reduced growth in demand, there is little doubt that the global need for hydrocarbons will rise and demand will continue, leading to a healthier exploration and production (E&P) business environ-ment. The question is what will this recov-ery look like and what impact will it have?

WORKFORCE NEEDS VERSUS WORKFORCE SUPPLYIn all downturns, cuts are inherent and we have witnessed unprecedented layoffs in the region of hundreds of thousands, with some estimates exceeding 350,000 job losses. Casualties have been severe across many sectors of the E&P value chain, and especially worrying is the numbers of technical professionals we have lost, a high percentage forecasted never to return. This is not a new phenomenon – we have been aware of the impact of the ‘great crew change’ for more than 15 years and the need to capture knowledge, transfer it, build our graduate pipeline ... the list goes on! The long-term effects of losing valued individuals will only be realised when the industry rises from the ashes and we try to coax them back. If the day rates are high enough we may be successful, but many have already banked ample redundancy

packages and are getting used to spending more time on the golf course.

To exasperate the looming workforce problem, our current mid-tier demographic (i.e., staff with 15-20 years’ experience) represents only about 9-12% of the resource pool, because following the 1999 crash we failed to hire graduates for several years. This demographic is the most sought after, commands high salaries, and many are already well groomed to take over senior management positions. Now this is great news for them and they are well placed in their 40s to be running E&P companies in the near future, indeed many already are. However, with such a low resource of this demographic, we are likely to face some major leadership gaps in the future.

Those in the mid-low demographic, i.e., 5-15 year staff) are well placed to take on more senior level roles. Since the 2008 crash they have seen their workload increase and they have been given greater scope to expand their knowledge of the wider E&P value chain.

But where does this leave our graduates without work and those with less than five years’ experience, many of whom have lost their jobs in this downturn? I despair when I see my company’s recruitment database bursting with graduates, many with highly relevant MScs and PhDs, but few job pros-pects. We as an industry have once again failed this generation and reinforced an already negative perception amongst talented young people considering their future career paths. The reasons are many but we appear to have become focused on short-term gain, shareholder dividends and security of our own jobs to worry too much about the future! As Adrian Burrows, VP, E&P at Circle Oil, states ‘quarterly financial out-turns have caused knee-jerk reactions in many organisations before proper con-sideration of the longer term can have been fully discussed’. The situation is indica-tive of any depressed market but for an industry that claims to focus on resource sustainability we appear to merely pay lip service to workforce sustainability.

It may be that we never again reach the same level of staff requirements and over

time it will reach its own natural equilib-rium. Ewan Whyte states that ‘supply and demand market restrictions in equipment, suppliers, staff, consultants and IP will mean that costs will rise sharply to keep pace with any future oil rise - the widening gap between cost and value will rapidly close and the human capital aspect will again become critical’.

FROM FLEXIBILITY TO AGILITYFollowing the 1999 crash, organisation structures changed within months, and the ‘Flexible Organisation’, which had been around in other industries for many years, was forced upon us. Many companies decided to gain financial, numerical and functional flexibility through outsourcing what they considered ‘non-core’ activities. This trend has proliferated over the years and has served the industry well.

However, a new breed of organisation is now emerging, the ‘Agile Organisation’, providing benefits in cost, productivity and sustainability that benefit the business and employees. A lot of talk on this subject is focused on ‘Agile Working’ but it has a much greater meaning and will impact how we work, how we are employed, how we supply goods and services, how we collabo-rate and most importantly how service sup-pliers engage with their clients. It is not a new concept but merely ‘working smarter’ - focused on results and performance. This will develop a culture that removes barriers to efficient working and empowers people to create more balanced, motivated, inno-vative and productive teams.

Although an organisation can help shape the culture by providing the framework, it is people’s behaviour, attitudes and actions that will influence its overall effec-tiveness. However, Adrian Burrows warns that ‘in our sphere of operations uncer-tainty is everywhere, so key performance indicators (KPIs) are hard to define and even harder to police without distorting behaviour in undesirable ways’. We are faced with major change but we are adept at evolving. New communica-tion technology enables virtual desktops

and functionality such as video-confer-encing that enables improved sharing of ideas and data with global colleagues with much less travelling. Trust is key to the suc-cess of this approach. Tim Larcombe-Birks, geotechnical recruitment advisor at Nexen North Sea, advises, ‘To be truly resilient, you need to develop a culture that challenges entrenched ways of working, one which introduces new beliefs and experiences that empower everyone to be accountable, demonstrate transparency across all levels of staff and consultants, and embrace con-structive feedback. Nexen has operated a robust organisation for the last few years, which has a clear focus on cultural beliefs, and has integrated this with efficiency improvements, such as our marginal gains campaign – which has resulted in improved production and shaped a more motivated and responsive workforce.’

Impact on work Agility demands a culture of trust from the top down – people will be empowered to work independently and imaginatively to achieve business objectives. There will be a much greater focus on work-life balance; staff may not have a fixed desk or a fixed building to work from but will increasingly work from home or at rented hot-desks with network links to work colleagues around the world sharing data, technology and ideas. Simon Berkeley, an oil industry change management consultant, advises

that ‘trust is paramount across all stake-holders, especially in projects that span both field and office-based operations. The industry has huge potential to become more agile, for example in the application of technology in real-time operation sup-port centres’.

Impact for graduates Young people entering the industry will thrive in this new culture as they have not been preconditioned to traditional organisational beliefs. Technology is sec-ond nature to them, both in its use and application, and they embrace new ways of working. Competition will be fierce as opportunities will be few, due mainly to less internal company resources to provide support and training. Graduates need to be proactive, taking advantage of free courses and networking events, offering their time freely to gain experience or get involved in joint research projects with interested parties. Graduates will also benefit from finding mentors with specialist industry knowledge of their intended area of career direction. The better equipped and knowl-edgeable they are, the more attractive they will be to potential employers.

Impact for staffIn any cyclical market there is no such thing as a job for life. The managing direc-tor of an energy private equity company states that ‘technical staff in particular

will have to work both as consultants and permanent staff to survive through cycles and the short-time horizons of com-panies backed through private equity.’ Short-term employment with a salary or day rate will become more prevalent and managing one’s work time, career development, networking, marketing and revenue stream within this backdrop will be paramount. Staff may need to develop transferrable skills and new technologies to exploit opportunities across multiple industries.

Impact for consultants Oil companies will continue to have their core teams of excellence supported by consultants. However, engagement with the consultant has changed as has the downward pressure on rates. As in any downturn, long-term planning takes a back seat and consultants’ projects become shorter with clearer objectives and KPIs. Gone are the days when consult-ants remained in situ for years on end; they are now more likely to be contracted on a three-month basis for a piece of work with payment terms set for well-defined deliverables. Consultants will have to become a lot more active in marketing their portfolio of skills across many organisations – not just the same oil company they have worked with for the last ten years. They may need technology and software licenses to work independently, or collaborate with

"Young people entering the industry will thrive in this new culture as they have not been preconditioned to traditional organisational beliefs."

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others, and have flexible business terms. With some of the oilfield service compa-nies abandoning their consulting service offerings in this downturn, the landscape has definitely changed – the opportunities for consultants, as independents or in col-laboration, will be many and it is time to get ready to take advantage of them. The consulting-based flexible virtual oil com-pany will increase in importance.

Impact for companies As they compete for a finite skill resource, salaries and day rates will increase and com-panies that are prepared with strategies to source, develop, remunerate, and best uti-lize the available competencies will prosper. A structured mixed approach to skill man-agement, utilising internal staff, consultants and external service companies, will be key to driving competitive advantage. Gehrig Schultz, CEO at Surus Geophysical, advises that ‘building teams with knowledgeable execution capabilities will be one of the key challenges. Another significant challenge will be adopting new technology’.

Impact on tools and technologies A refreshing feature of these downturns is our proven ability to identify advance-ments outside our industry that can be used to drive efficiencies. For example, IBM states that ‘robotization, autono-mous vehicle and drone technologies will reduce the need for on-site staffing, enable remote real-time monitoring and observa-tions regardless of location and greatly reduce the risks of investigating hazardous

incidents (Source: IBM Big Data & Analytics Hub). Gehrig Schultz states ‘we have seen great advancement in the use of drone technology in our industry ranging from inspections of flare stacks, platforms and pipelines through to evaluating environ-mental damage and other concerns, and there is much more to come’. As agility becomes key, those that understand the adoption of new technologies will become a valuable resource.

Impact for recruitment agencies Petroleum Exploration Society of Great Britain (PESGB) research in 2014 highlight-ed that only 21% of member companies hired staff through agencies. Company HR departments have seen their share of job cuts, and when the business environment improves an increasing part of the recruit-ing function is likely to be outsourced. As in any upturn, projects will arise quickly and unexpectedly and recruitment agen-cies will need to respond rapidly to provide the required resources. Like all suppli-ers, agencies must add value throughout the entire recruitment process, and be commercially and technically competent to service the specific needs of industry project and technical managers. Being ‘business ready’ is key - knowing the cli-ent’s business and candidates’ experience and aptitude, plus having the technologies to help streamline the process, will be vital to adding value. Working closely together with E&P companies, specialist recruit-ment agencies can help overcome the industry challenges of the future.

TIME TO PREPAREIn today’s global competitive marketplace, the name of the game is change. Only businesses that make the evolutionary leap beyond conventional structures and a ‘project-of-the-month’ approach to man-agement will succeed.

Today’s new breed of agile, high-perfor-mance organisations are those in which all stakeholders are active participants in managing these ever-accelerating and unrelenting changes. Technology advance-ments and efficiencies will proliferate, but I still believe the old adage – the greatest asset an organisation holds is its people and the recruitment and development of its people is paramount to its success.

Organisations need to seriously consider their workforce resourcing strategies with a key emphasis on building their pipeline for the future, succession planning and defining skill gaps and training require-ments. It is a time to reflect and prepare for the new world order of the oil and gas industry.

ACKNOWLEDGEMENTSThe author would like to express her thanks to Working Smart clients who kind-ly provided their insight into challenges we face today and in the future. These include Tim Larcombe-Birks, Ewan Whyte, Adrian Burrows, Simon Berkeley, Gehrig Schultz and David Harper, HR consultant at EOG Resources UK.

Working Smart initiativeWorking Smart, now in its 20th year, is a specialist upstream oil and gas recruitment company providing permanent and contract staff to the global upstream oil and gas industry. Having survived the crashes of 1999 and 2008, it is already preparing for the next upturn. The company will soon launch a new business venture called Book-4 that will consolidate the marketing and management of training courses and events in our industry. It also intends to promote free educational tools, courses and events for graduates and unemployed industry workers. For more information visit www.working-smart.co.uk and www.book-4.com, or call the author on +44 1483 721794.