Reducing Alcohol and Substance Abuse: A Benefit of Workforce … · 2019. 10. 29. ·...

Reducing Alcohol and Substance Abuse:A Benefit of Workforce Housing in Oil, Gas, Mining and Construction IndustriesBy Graham Chandler, PhD

EXECUTIVE SUMMARY

Alcohol- and substance-abuse costs the Canadian economy C$24.3 billion per year in lost productivity and about 10 times that in the United States. Drinking on the job, working with hangovers, the use of more sick days and higher accident rates all contribute. The figure is much higher when indirect costs related to health care, employee turnover, legal issues, and the recruitment and training of replacement workers are considered. The problem is most prevalent among blue-collar workers, and the upstream oil and gas, mining, and construction industries are among the highest sectors in which safety is paramount. These sector players need to have policies to deal with the problem to reduce costly incidences, while addressing the root causes of alcohol and substance abuse in the workplace. Socio-environmental, which includes inadequate housing situations, is one of the three leading causes of alcohol and substance abuse. Impacts of shift work and isolation and the availability of illicit drugs make the situation worse. Throughout this white paper, solutions to alcohol and substance abuse in the blue-collar sectors are presented. This includes the availability of high-quality housing and lodging that (1) make a welcome place for the other 12 off-shift hours and (2) create a controlled environment with relevant policies. Proper housing will result in the reduction of lost-time accidents, absenteeism and sick days and improvements in productivity and efficiency.

White Paper – 04.14 | Reducing Alcohol and Substance Abuse: A Benefit of Workforce Housing Page 1

INTRODUCTION § Workers with

alcohol problems are 2.7 times more likely to have injury- related absences.

§ 35% of

emergency room patients with an occupational injury are at-risk drinkers.

§ Alcohol is

detected in 16% of emergency room patients injured at work.

§ 11% of the

victims of workplace fatalities have been drinking.

This white paper is presented to illustrate the impact of alcohol and substance abuse in the North American workplace, especially in the oil, gas, mining and construction industries, and the related costs to employers. It also addresses ways to reduce alcohol and substance abuse in this sector. Many government and social organizations contribute to battle the problem; most have some degree of success. But they alone can’t be expected to do the whole job.

Recommendations are offered for employers who need to be aware of just how serious the problem is and what they can do, with an important focus on the value of top-quality workforce housing and lodging in combating alcohol and substance abuse among workers in the oil, gas, mining and construction industries in North America as a solution. In addition, it is important that employers formulate and implement additional strategies and policies to address and reduce the massive costs of continued untreated abuse. It’s a significant challenge that can’t be swept under the rug.

THE PROBLEM AND ITS COSTS

The relationship between drinking and occupational injuries is substantial. One study found that workers with alcohol problems were 2.7 times more likely than workers without drinking problems to have injury-related absences.1 A hospital emergency department study showed that 35 percent of patients with an occupational injury were at-risk drinkers.2 Breathalyzer tests in another study detected alcohol in 16 percent of emergency room patients injured at work.3 That same study reported analyses of workplace fatalities that showed at least 11 percent of the victims had been drinking.

1 Cited in “The Alcohol Cost Calculator,” The George Washington University Medical Center. Available at http://www.alcoholcostcalculator.org/alcohol/co- occurring/#ednp4_ref8. 2 McLean, S. A., Blow, F. C., Walton, M. A., Gregor, M. A., Barry, K. L., Maio, R. F., and Knutzen, S. R. 2003. Rates of At-risk Drinking among Patients Presenting to the Emergency Department with Occupational and Non-occupational Injury. Academic Emergency Medicine. 10(12): 1354-61. 3 Stallones, L., and Kraus, J. F. 1993. The Occurrence and Epidemiologic Features of Alcohol-related Occupational Injuries. Addiction, 88: 945-51.


“Such abuse currently is highest in the financial, upstream oil, forestry/mining and construction industries … with the possible exception of the financial sector, these are the very industries that need to be safety conscious….”

“The direct costs of alcohol and substance abuse to a country’s economy are significant….”

Some far-ranging surveys reveal that 24 percent of workers report drinking during their workday at least once in the past year.4 And it’s not just on the job where alcohol affects work. Drinking outside work hours can cause problems on the job, too – having a hangover, for example, can contribute to an employee’s inattention, lethargy and forgetfulness, all of which can cause accidents. Moreover, the problems can affect coworkers as well: one-fifth of workers and managers across a wide range of industries and company sizes report that a coworker’s on- or off-the-job drinking jeopardized his or her own productivity and safety.5

The problem varies with industry type, but workers in remote areas seem to be particularly vulnerable. A study of the Canadian oil and gas industry showed geographical isolation, performance pressures and work schedules may contribute to the higher prevalence of alcohol- and substance-abuse issues relative to the Canadian norm.6 Moreover, the problem is often worse in remote work camps where recreational and social amenities are at a minimum or nonexistent.

Such abuse currently is highest in the financial, upstream oil, forestry/mining and construction industries.7 Notably, with the possible exception of the financial sector, these are the very industries that need to be safety conscious due to the risky nature of the work.

The direct costs of alcohol and substance abuse to a country’s economy are significant: in 2002, productivity losses in Canada were C$24.3 billion, while health care costs were C$8.8 billion. Measured in terms of the burden on services such as health care and law enforcement, and the loss of productivity in the workplace or at home resulting from premature death and disability, the overall social cost of alcohol and substance abuse in Canada in 2002 was estimated at C$39.8 billion.8

4 Ames, G. M., Grube, J. W. and Moore, R. S. 1997. The Relationship of Drinking and Hangovers to Workplace Problems: An Empirical Study. Journal of Studies on Alcohol, 58(1): 37-47. 5 Mangione, T. W., Howland, J., and Lee, M. 1998. New Perspectives for Worksite Alcohol Strategies: Results from a Corporate Drinking Study. Robert Wood Johnson Foundation and National Institute on Alcohol Abuse and Alcoholism. 6 “Health and Wellness Trends in the Oil and Gas Sector.” Insights from The Shepell·fgi Research Group, 2009. 7 http://www.surehire.ca/pages/facts-amp-statistics/mining-industry-statistics.php. 8 Rehm, J., Baliunas, D., Brochu, S., Fischer, B., Gnam, W., Patra, J., Popova, S., Sarnocinska-Hart, A., and Taylor, B. The Costs of Substance Abuse in Canada 2002. March 2006.


“…the average cost of drug abuse per employee is C$10,000 a year due to employee turnover, workers’ compensation claims, absenteeism, employee theft, violence on the job and the use of health care benefits.”

Costs to individual employers are substantial, too. According to the National Institute on Drug Abuse, the average cost of drug abuse per employee is C$10,000 a year due to employee turnover, workers’ compensation claims, absenteeism, employee theft, violence on the job and the use of health care benefits. The average cost of a workers’ compensation claim is C$1,574, and the average cost of a lost-time claim is C$5,574. Where there is employee drug abuse in the workplace, annually there are five times more workers’ compensation claims, 30 percent greater employee turnover, 40 versus 4 days of employee absenteeism, 36 times higher employee theft, 300 percent to 400 percent more health care benefit utilization and a greater chance of workplace violence.9

Clearly solutions are needed. Viewing the foregoing statistics, one can see that even halving the problem could save companies C$5,000 per annum per employee. The problem and its costs become even more acute as it becomes harder and harder to find replacement hires, as seen in light of the looming skilled labor shortages threatening the industry, as outlined in an earlier white paper on the topic.10

SOLUTIONS

There are many solutions for alcohol and substance abuse, whether the problem arises as a consequence of personal, family or social factors; certain work situations; or a combination of these. These solutions include prevention, assistance, treatment and rehabilitation. However, while the elimination of such abuse is a highly desirable goal, it is not easy. Studies by the International Labour Office (ILO) have shown workplace policies to assist individuals with alcohol- and drug-related problems seem to yield the most constructive results for workers and employers alike, and the ILO indeed considers it an obligation.11

9 http://www.surehire.ca/pages/facts-amp-statistics/general-drug-and-alcohol- statistics.php. 10 Chandler, G. The Other 12 Hours: Workforce Housing as a Recruitment and Retention Tool in the North American Mining and Oil & Gas Industries. Taret Hospitality White Paper, January 2014. 11 “Management of Alcohol- and Drug-related Issues in the Workplace.” International Labour Office, Geneva 1996.


“It is recommended companies ensure they have an alcohol- and substance-abuse policy in place along with their other human resources policies.”

It is recommended companies ensure they have an alcohol- and substance-abuse policy in place along with their other human resources policies. Benefits Canada advises the policy spell out what is considered such abuse, the expectation of drug and alcohol use as it impacts the workplace, what will happen if an employee is impaired at work, and how employees dealing with such abuse will be assisted. In addition, the policy needs to include what is expected of employees with an alcohol- and substance-abuse problem, and a statement of the employee’s rights to confidentiality.12

A thorough step-by-step example and guide is offered by the Atlantic Canada Council on Addiction.13 To best help recognize if an employee has a problem, following are some warning signs of potential alcohol and substance abuse for employers to watch for:

• increase in casual absences, especially on Mondays and Fridays; • extended lunch breaks, long absences from the work station,

consistently late arrivals to work or early departures; • falling productivity or missed deadlines; • coming to work despite illness, injury, anxiety; • difficulty with task focus or concentration; • stories of family discord or dysfunction; • change in appearance; • changes in attitude, increased irritability; and • increased accidents at or away from work, errors in judgment.

Calling attention to an organization’s employee assistance program (EAP) can be used as an initial discussion by an employee’s supervisor when such abuse or dependency is suspected. The EAP can provide counseling services to both the employee and their family and connect the employee with additional resources in the community as needed.

12 “Dealing with Employee Addictions.” Benefits Canada: http://www.benefitscanada.com/benefits/disability-management/dealing-with-employee- addictions-36378. 13 “Problematic Substance Use That Impacts the Workplace: A Step-by-Step Guide & Toolkit to Addressing It in Your Business/Organization.” Atlantic Canada Council on Addiction.


“One important study showed transient workers often exhibit high susceptibility to alcohol and substance abuse due to loneliness, social distancing and lack of social support where inadequate local accommodations are used.”

Another means to detect alcohol and substance abuse on the job is random drug testing, which is used in some states and provinces, although there is some controversy surrounding privacy. Random drug testing also has been shown to be effective as a deterrent. The U.S. Department of Transportation, for example, implemented random drug testing in 1995. The department’s statistics indicate that, since then, random positive tests for alcohol declined by 60 percent, drug abuse by 47 percent, and post-incident positive tests for drugs declined from 3.11 percent to 1.4 percent. A 2001 Cornell University study of testing data from 71 construction companies in the United States concluded that, on average, within two years of implementing a drug testing program, workplace injury rates were reduced by 51 percent.14

In parallel with these measures are approaches that address many of the root causes of alcohol and drug dependency, including biological, psychological and socio-environmental. An example of socio- environmental can be seen in the remote work camps, which only provide food and modest accommodations – not any type of activities for when they have finished their shifts. Studies of oil and gas camps in the Fort St. John, B.C., area have noted atmospheres of all-night partying, where new workers are introduced to the drug scene and older partiers set the standard – with frequent negative consequences for individuals, families and communities.15 Conditions can contribute to pressures on home life and depression, reinforcing the negative behaviours.

And in cases where no camp is provided, and workers are given accommodations in motels or rented rooms, they are more susceptible to alcohol and substance abuse. In this situation, drinking and taking drugs is seen as a way of blowing off steam after work or a normal way of life off- shift. One important study showed transient workers often exhibit high susceptibility to alcohol and substance abuse due to loneliness, social distancing and lack of social support where inadequate local accommodations are used.16

14 “Drug and Alcohol Facts.” Alberta’s Drug and Alcohol Risk Reduction Pilot Project, 2012. Available at http://www.darrpp.ca/webpages/displayblog/11/. 15 “Understanding the State of Industrial Camps in Northern BC: A Background Paper.” Northern Health, October 2012. Accessed at www.northernhealth.ca/Portals/0/About/NH_Reports/documents/2012%2010%2017_Ind_ Camps_Backgrounder_P1V1Comb.pdf. 16 Parkins, J. R., and Angell, Angela C. “Linking Social Structure, Fragmentation, and Substance Abuse in a Resource-based Community.” Community, Work & Family 14(1), 2011.


“Creating the right kind of workplace – a healthy, safe and productive environment – is key.”

“…the ‘best home away from home’… has proven to increase profitability, boost productivity, enhance morale, reduce turnover and improve safety – creating what Taret Hospitality defines as “The Economics of Comfort®.”

Creating the right kind of workplace – a healthy, safe and productive environment – is key. Critically, in the case of remote mines and other resource extraction locales, this extends to the 12 hours that workers are off-shift. Healthy workplaces are physical and social environments that support individual and organizational health. Employees will experience improved health, reduced work-related stress and illness, and an improved balance between their work and family obligations.17 Thus, less psychological maladies such as anxiety or depression and their associated temptations of resorting to alcohol and substance abuse will occur.

Indeed, the ILO believes it’s an obligation. Where it is indicated that certain job situations may contribute to alcohol- and drug-related problems, employers should do what is reasonably practicable to identify and take appropriate preventive or remedial action. These steps can include restrictions or prohibitions on the possession and sale of alcohol on company premises18 in addition to proper work environments and accommodations.

To better understand the effect of providing such comfortable and high- quality workforce accommodations, compare living conditions in the above-referenced basic camps or in situations where employees are in rented rooms or motel rooms with what is offered in some state-of-the-art workforce lodges.

To make the “best home away from home,” Taret Hospitality provides high-quality nutrition, comfort, recreation, entertainment, fitness amenities, camaraderie, security, peace and quiet – all with zero tolerance for public intoxication, drugs and firearms. Together, this has proven to increase profitability, boost productivity, enhance morale, reduce turnover and improve safety – creating what Taret Hospitality defines as “The Economics of Comfort®.”

17 “Problematic Substance Use That Impacts the Workplace: A Step-by-Step Guide & Toolkit to Addressing It in Your Business/Organization.” Atlantic Canada Council on Addiction. 18 “Management of Alcohol- and Drug-related Issues in the Workplace.” International Labour Office, Geneva 1996.


“This type of personalized environment and a spirit of friendship help to reduce instances of depression among those who are prone to it by making them part of a community.”

“Alcohol addiction and family support mechanisms to treat it are major issues in the North American oil, gas, mining and construction industries, and constant vigilance is needed to deal with its impacts.”

Workers enjoy 4,000 calories per day of four-star food 24/7; private rooms with individual temperature control; flat-screen TVs with DVD players; oversized towels; and The Hibernator Sleep System™, with a pillow-top mattress, high-thread-count sheets and overstuffed pillows. Off-the-clock social interaction, a state-of-the-art recreation and fitness center, an Internet café, a convenience store, conference rooms, and transportation to the job site round out the lodge’s luxury.19 This type of personalized environment and a spirit of friendship help to reduce instances of depression among those who are prone to it by making them part of a community.

Playing a leadership role in offering high-quality accommodations is viewed as an effective component of these success measures because it helps retain workers who may struggle with the challenges of living in a remote location, away from home or family.20

THE LONG-TERM FOCUS

Alcohol addiction and family support mechanisms to treat it are major issues in the North American oil, gas, mining and construction industries, and constant vigilance is needed to deal with its impacts. Studies have demonstrated that it is a constant challenge for employers. For example, a report by Shepell·fgi studied the problem in the Canadian oil and gas industry. It examined employee access to EAPs from 2006 through 2008 and found that abuse – alcohol in particular – is a chronic challenge in the industry’s labor force. The report pointed to a 481 percent increase in EAP access for alcohol abuse over the three-year period.21 With strong industry growth since the report, especially in burgeoning remote locations where there is new shale oil and gas production, this is expected to continue.

World GDPs continue to grow, and fueling them are the resource providers that figure prominently: oil, gas and mining. They will drive growth in world energy production, led by booming shale oil and gas production in the United States and Canada. Near-term growth in liquefied natural gas (LNG) activity will soon accelerate the demand side of the equation for natural gas, with billions of cubic feet per day expected to be shipped around the world from North American facilities. Constructing the massive liquefaction plants and shipping terminals in remote locations, particularly on Canada’s Pacific coast and the U.S. Gulf of Mexico and Pacific coasts, will be needed, as will housing for workers.

19 “The Economics of Comfort: Case Study by Taret Hospitality and Client.”

20 “HR Trends and Insights: Workforce Conditions in Canada’s Bakken Oil Play.” Petroleum Human Resources Council of Canada, May 2013. 21 “Health and Wellness Trends in the Oil and Gas Sector.” Insights from The Shepell·fgi Research Group, 2009.


“By concentrating on superior housing, companies are going to drive up productivity and profitability through reduction in turnover, safety incidents and social ills.”

Moreover, as existing conventional mines and oil fields deplete, resource companies are increasingly turning to more remote frontiers. The need for Fly-in Fly-Out camps and remote accommodations becomes more acute, and those companies not stepping up to offer the best will be at higher risk of losses due to alcohol and substance abuse. Those companies leading in benefits such as premium housing will emerge with the best efficiencies and profits. High levels of alcohol and substance abuse will exacerbate problems for those companies facing the aforementioned skilled labor shortages, racking up higher expenses on firms’ income statements. Too large, they directly diminish the return on investment and consequently shareholder value.

Important summary papers have been professionally written on the criticality of food, sleep and quality housing to worker efficiency at remote camps and how they impact a company’s sustainability22 as well as their effect on recruitment and retention.23 This paper shows it can be used as a tool for reduction of lost time and money attributable to alcohol and substance abuse.

CALL TO ACTION In summary, companies in the oil, gas, mining and construction industries need to face the problems of alcohol and substance abuse by employees both on and off the job. Many companies already have policies in place; if not, they should follow some of the aforementioned references and formulate an alcohol- and substance-abuse policy and implement it – to face and reduce the direct costs of such abuse.

22 For example, Rothaus, Richard. “Return on Sustainability: Workforce Housing for People, Planet and Profit.” Taret Hospitality white paper, August 2013; Rothstein, Nancy. “Optimizing Sleep for an Optimal Workforce in the Oil, Gas and Mining Industries.” Taret Hospitality white paper, October 2013. 23 G. Chandler. “The Other 12 Hours: Workforce Housing as a Recruitment and Retention Tool in the North American Mining and Oil & Gas Industries.” Taret Hospitality White Paper, January 2014.


To help those who need it, employ an EAP – this will help those employees whose problems are recognized. To reduce incidences and the consequences of such abuse, challenge its leading causes. One in particular – socio-environmental – can be combated by making sure the workplace is welcoming, accommodating and safe. But significantly, for companies that require remote workforce camps, be sure the off-shift – the other 12 hours – are just as welcoming, accommodating and safe. Ensure provision of all the amenities that make a home away from home to reduce risks of loneliness and depression, which can lead to alcohol and substance abuse, and restrict or prohibit the availability and use of drugs and alcohol at camps and lodges. By concentrating on superior housing, companies are going to drive up productivity and profitability through reduction in turnover, safety incidents and social ills.


About the Author Graham Chandler is a full-time freelance writer, specializing in the oil, gas and mining industries, principally the business and technological aspects. He has published several hundred articles in magazines such as Oilsands Review, Alberta Oil, Earth Explorer, Far North Oil & Gas and dozens more. Other clients include industry organizations and companies, for which he has prepared advertorials, speeches, case studies, white papers, reports and brochures. He holds a BSc in physics, an MBA in finance and a PhD in archaeology. He served 17 years in the RCAF/Canadian Armed Forces, during which time he graduated in flight test engineering from the U.S. Naval Test Pilot School. He spent 10 years in corporate finance in the oil and gas centers of Calgary, Denver and Houston, attaining the position of vice president. When not writing resource-related stories, he contributes features to aviation magazines such as Air & Space/Smithsonian and Canadian Skies and archaeology and heritage stories to international magazines like Saudi Aramco World. He can be reached at www.grahamchandler.ca.

About Taret Hospitality Taret Hospitality, an Algeco Scotsman company, is a global provider of workforce housing and one of the largest operators of turnkey solutions in North America. It operates in some of the world’s most remote environments supporting oil, gas, mining and construction operations, government agencies, disaster relief and large-scale events with temporary workforce lodging, mobile crew camps and extended-stay hotels. Named by Inc. magazine in 2012 and 2013 as one of “America’s Fastest Growing Private Companies,” the company has administrative headquarters in Boston; operational headquarters in The Woodlands, TX; and offices in Williston, ND; Denver, CO; Edmonton, Alberta; and Sydney, Australia. Visit www.TargetLogistics.net or call (800) 832-4242.

Workforce Housing and Feeding Solutions for Health, Safety, Productivity and Morale

By Christopher Wanjek

White Paper – 03.13 | Workforce Housing and Feeding Solutions for Health, Safety, Productivity and Morale

© 2013 Target Hospitality Management LLC

Page 1

Executive Summary

Remote and temporary worksites prevalent in the oil, gas and mining industries present a challenge for housing and feeding workers. The nearest town and accommodations might be hours away by car; often such worksites are fly-in operations. Hostile environments — extreme cold or heat — and inadequate roads and other infrastructure limitations compound the problem of providing adequate food and shelter. Inadequate accommodations can leave workers vulnerable to poor nutrition, sickness, inadequate rest, long-term health problems, low morale and general apathy about the work at hand. This, in turn, can lead to lower productivity and increased risk of accidents. This White Paper examines factors that affect worker health, safety and productivity in remote worksites and provides the rationale of how better feeding and relaxation programs can increase productivity and lower accident rates.



Page 2

Workforce Housing and Feeding Solutions for Health, Safety, Productivity and Morale

“Companies that complement worker safety and training programs with adequate feeding and relaxation programs report lower accident rates and higher productivity and morale.”

In heavy industries such as the oil and gas industry, accidents are your worst nightmare. One wrong switch, one loose bolt, one missed safety check, and the entire system can blow. Workers’ lives are at stake. And, depending on the severity of the accident, the life of the entire community is threatened, too, as well as the very life of the company and the broader business climate for years to come. Years of a carefully cultivated corporate social responsibility practice can evaporate overnight.

But you can't blame the weather…or bad luck. Approximately 90 percent of workplace accidents are caused by human error1, whether originating in poor managerial decisions months and miles away from the site of the accident, or worker errors right then and there that have immediate and devastating effects. And the number-one cause of worker-initiated accidents is fatigue in its various forms, such as exhaustion, weakness or sleepiness.2

This means that approximately 90 percent of workplace accidents are preventable. Training is key, of course. Workers need to understand not only how to operate equipment but to make quick yet prudent decisions, when necessary. Yet no amount of training can prepare a sleepy, fatigued or otherwise unfocused or unmotivated worker from making a poor decision or a wrong move.

Companies that complement worker safety and training programs with adequate feeding and relaxation programs report lower accident rates and higher productivity and morale.3 Food and rest are, in essence, protective equipment, and they serve to lower the risk of serious workplace accidents. As such, food and rest should be viewed as essential to worker safety and health as goggles, ear protection or the sundry protective elements found at any industrial site.

1 Feyer, A.M. & Williamson, A.M. (1998): Human factors in accident modelling. In: Stellman, J.M. (Ed.), Encyclopaedia of Occupational Health and Safety, Fourth Edition. Geneva: International Labour Organization. 2 Chan, M. (2009) "Accident Risk Management in Oil and Gas Construction Projects in Mainland China," University of Sydney. 3 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization.



Page 3

“…remote industrial sites…with poor …accommodations and vast environmental degradation…can belittle an international company's global

Food, in this respect, needs to fit the workers and their environment. Carrying the earlier analogy further, just a simple pair of garden gloves cannot adequately protect a well operator in sub-40-degree weather; and, similarly, fast food or even typical diner food cannot sustain this same well operator for very long. Workers of heavy labor in extreme conditions — for example, in the bitter cold common to many North American drilling operations for at least several months a year — typically need upwards of 4,000 kcal per day in well-designed portions of proteins, fats and carbohydrates. This helps to ensure the proper energy, vitamins and minerals required not only to work 8- to 12-hour shifts but also to recover from the long workday and to stay healthy.4 How ironic, then, that the oil and gas industry, so focused on producing high-quality fuel to power the nation, runs the danger of overlooking the high-quality fuel needed to power the workers' bodies.

Rest and breaks during working hours are well articulated by state, provincial or federal statute, and most companies abide by such laws as a matter of reflex. In the context of remote worksites, however, there is an added necessity for relaxation. Workers need to decompress, and being away from home, in poor and inadequate shelter, can make this difficult for the worker.

Relaxation includes the comforts of home: a warm and clean bed, hot showers, computers with Internet access, TVs and DVDs, games, laundry facilities, private rooms and cooking equipment or access to food any time. Although less scientifically defined as nutrition and less regulated than work breaks, relaxation — that is, the aforementioned comforts during non-working hours — is seen increasingly as being as important as nutrition and work breaks in preventing accidents and in ensuring a healthy, motivated and rested workforce.5

What Workers Typically Get

In many parts of the world, remote industrial sites are synonymous with poor worker accommodations and vast environmental degradation. Think mining operations and shantytowns. Such sites can belittle an international company's global reputation.

4 FAO (1976) "The feeding of workers in developing countries," FAO Food and Nutrition Paper No. 6. Rome 5 Folkard, S. et al. (2006) "Modeling the impact of the components of long work hours on injuries and accidents," Am J Ind Med. 49(11):953-63.



Page 4

“Those living in motels often are forced to eat at the same diner or fast- food restaurant for the duration of their contract…Imagine such an existence, all the while working 12+ hour days.”

Worker accommodations are far better in North America and other economically developed regions, but they still are far from ideal.6 In many remote-site operations, when the call for work goes out, workers must scramble for housing.7 Many workers pile up in local motels, if available, with the word "local" meaning anywhere within a two-hour drive from the worksite. Other workers tow trailer homes close to the worksite, and these are usually ill-suited for long-term use or for extreme heat or cold.

Securing food daily quickly becomes a problem. Even if these workers have access to a stove and know how to cook, they will have difficulty obtaining fresh foods, and their meals will likely be basic and nutritionally inadequate for optimal health. Those living in motels often are forced to eat at the same diner or fast-food restaurant for the duration of their contract, which could be months. Imagine such an existence, all the while working 12+ hour days.

For extremely remote sites, companies are obliged to provide basic food and shelter. This, too, however, tends to be suboptimal.8 Companies in the business of natural resource extraction often have a tendency to provide the most basic accommodations with the assumption that the largely male workforce is there to work and that these men expect to "rough it." This is what these workers are used to, after all. Food and shelter take on the feel of an army camp with just bearable accommodations and with the notion that, because this is temporary, it is acceptable. Food may seem hardy and pleasing — meat and potatoes — but ultimately this lacks essential vitamins and minerals needed by the worker to work at 100-percent efficiency during long, hard shifts.9 This is no "home away from home" but rather a no-frills accommodation that does nothing to attract the most talented labor.

6 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization. 7 Dragseth, D. (2011) "Help Wanted: The North Dakota Boom," New Geography, October 26, 2011. 8 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization. 9 Sherman W.M. & Lamb D.R. (1988) "Nutrition and Prolonged Exercise," In: Lamb DR, Murray R editor, Perspectives in Exercise Science and Sports Medicine: Prolonged Exercise, Indianapolis, Ind: Benchmark Press; p. 213–280.


10 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization.


Page 5

What Workers Need

“For most workers at remote sites, anything the company can do to relieve the stress of long hours and great distances will be a plus for worker health and morale and, by extension, for company safety and productivity.”

Workers at remote and temporary worksites are a diverse crew. They might be college-educated engineers. They might be high-school- educated blue-collar workers. They are likely men, but they are often (and increasingly!) women. But they often have one thing in common: They likely are leaving their families and the comforts of home for hard work and long hours. As with the reader of this White Paper, their home — that is, family, friends and community — is not out there in the wilderness. Maybe they have children in school; maybe they have sick parents. Whatever the case might be, they have a life…and they are far away from that when they are at the remote worksite.

For most workers at remote sites, anything the company can do to relieve the stress of long hours and great distances will be a plus for worker health and morale and, by extension, for company safety and productivity.

What workers at remote worksites need, then, is as simple as this: a relaxing place to come home to.

The Economics of Comfort™

Successful food and housing programs at remote worksites — where "successful" means high morale, high productivity, low absenteeism, low turnover and few, if any, serious accidents — have just a few key ingredients: • CEOs or upper management that truly care about worker safety and

health on and off the job • Thoughtful catering that takes into consideration the nutritional needs

(and not just tastes) of the workforce • Easy access to recreational activities • Opportunities to relax with co-workers • The feeling of a home away from home, as opposed to a bunker away

from home10


12 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization.


Page 6

“…the bottom line is that on-the-job weakness and fatigue translate to lower productivity and more accidents.”

Catering will vary, but the daily menu must find a balance between tasty and healthy. Often meal programs strive for the former and not the latter. Consider, however, the unique nutritional needs of a heavy laborer at a drilling site. Most workers will burn more than 300 kcal/hour. Fast-food or a carbohydrate diet can leave the worker hungry or weak after just a few hours on the job. In general, the body in manual labor requires 1.2-1.7 grams of protein per kilogram of body weight.11 The B-complex vitamins, found in meats and whole grains, are needed for tissue repair and energy conversion. Vitamins A and C, found in vegetables, are needed for immunity. Vitamin D, found in fatty fish (and sunshine, if available), is needed for calcium absorption.

Some enterprises also take into consideration the long-term health of the worker. Certain Canadian mining operations, for example, prepare special meals of whole foods (whole grains, vegetables, wild game) for a workforce largely comprising indigenous workers of the First Nations, who suffer disproportionally from diabetes compared to the rest of the nation.12

But the bottom line is that on-the-job weakness and fatigue translate to lower productivity and more accidents.

Comforts also can vary but, at the heart of the matter, is the feeling of hominess. Every comfortable bed, soft pillow, warm shower, lively pool room, exercise facility, clean laundry facility and so on will engender loyalty and good morale and reduce the risk of fatigue through the 5- to 10-day rotation of 10- to 12-hour shifts often expected from workers.

The choice between living out of a motel, living in a trailer (or car), or living in high-quality all-inclusive temporary housing is an easy choice to make. And among all the remote operations that do offer food and shelter, the choice between a "one-star" and "four-star" accommodation also is easy to make. Workers talk, and word will spread about which companies offer the best working conditions.

11 Lemon, P.W.R. (1998) "Effects of exercise on dietary protein requirements," Int J Sport Nutr. 8, pp. 426–447.



Page 7

“… the Canadian government estimates that wellness, in the form of better feeding, health promotion and relaxation programs, amounts to a CAN$2 to $6 return on investment”

It is this writer's opinion that facilities built and maintained by Target Hospitality, and its "Economics of Comfort™" strategy, meet the very best qualities that I first identified in the book Food At Work, about worker feeding programs, published by the United Nation's International Labour Organization in 2005. These temporary facilities not only offer companies a competitive edge, but they reduce the number and severity of accidents by virtue of promoting a better-rested, better-nourished and better- dedicated workforce.

Return on Investment

Investments in feeding and wellness programs routinely yield profits in terms of higher productivity, fewer accidents, reduced absenteeism and less turnover.13 Husky Injection Molding Systems, Ltd., in Bolton, Ontario, has reported a US$6.8 million in yearly savings from a US$2.5 million investment in wellness. Coors Brewing Company has reported a $6.15 productivity gain for every $1 invested in food and fitness. Similarly, Travelers reports a $3.40 gain for $1 invested in nutrition and recreation; DuPont reports a $2.05 gain for $1 invested in nutrition and recreation; and the Canadian government estimates that wellness, in the form of better feeding, health promotion and relaxation programs, amounts to a CAN$2 to $6 return on investment.14

And food and housing is just that: an investment. No company is required to provide healthy food and comfortable accommodations. Yet it is little coincidence that the best companies to work for, as ranked by Fortune magazine, routinely have superior cafeterias and various recreational comforts.

13 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization. 14 Wanjek, C. (2005) "Food At Work: Workplace Solutions for Malnutrition, Obesity and Chronic Diseases," Geneva: International Labour Organization.



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Every manager desires a skilled and motivated workforce that not only can do the job but can do the job well. Thus, the manager of a remote worksite must ask: Am I giving my workers what they need in terms of rest, motivation and nutritional energy? What is my food and housing solution? Will I offer no such accommodations and take what I can get in terms of workers? Will I allow my drivers to sleep in a truck in sub-zero temperature? Will I create temporary housing with poor preparation that might foul the land and worry the local community — a community already anxious about my being here in the first place? Or will I invest in superior food and housing solutions that will leave my workers well rested, nourished and motivated and leave the community or environment as pristine as we found it?

Conclusion

Remote-site food and housing accommodations, if planned well, can have numerous positive effects on profit and productivity. Tangible and immediate benefits can include well-rested and well-nourished workers with high morale and productivity levels and lower risk for serious accidents. Long-term benefits from such an investment can include community support and a positive corporate image.



Page 9

About the Author Christopher Wanjek is an author and freelance health and science writer based in Washington, D.C. His expertise is in health, medicine, environmental sciences, physics and astronomy. He holds a Master’s of Public Health from Harvard School of Public Health and a degree in journalism from Temple University. Wanjek is the author of three books: Hey, Einstein! (2012), Food At Work (2005) and Bad Medicine (2003). He has also written more than 300 newspaper, magazine and web articles for periodicals such as The Washington Post and Smithsonian magazine. Wanjek is a columnist for LiveScience news website and for Mercury magazine and can be reached at [email protected].

About Target Hospitality Target Hospitality, an Algeco Scotsman company, is the largest turnkey workforce housing provider in the United States. Based in The Woodlands, TX; and with offices in Boston; Williston, ND; Denver; Calgary; and Sydney, AU, the company provides cost-effective and customized site design, construction, operations, security, housekeeping and catering for temporary workforce lodging, mobile crew camps and extended-stay hotels. Named by Inc. magazine as one of “America’s Fastest-Growing Private Companies,” Target Hospitality offers innovative housing solutions in the world’s most remote locations. Visit www.TargetLogistics.net or call (800) 832-4242.

Return on Sustainability: Workforce Housing for People, Planet and Profit

By Richard Rothaus, Ph.D.

White Paper – 08.13 | Return on Sustainability: Workforce Housing for People, Planet and Profit Page 1

Executive Summary

Well-organized workforce housing can be a valuable partner for companies pursuing their sustainable development goals, as well as a component of long-term profitability. Such housing can assist companies in recruiting and retaining skilled workers, as well as insulating workers from the daily life disruptions that are common in areas with insufficient or nonexistent infrastructure. Reusable modular structures offer a green building solution for housing, and have built-in conservation and cost- saving features. Workforce housing also can offer essential services that reduce the environmental footprint of company operations, including wastewater treatment and transportation services. By providing an independent and largely self-sufficient infrastructure, such accommodations can significantly reduce negative impacts on smaller communities caught up in rapid industrial development. By addressing the triple bottom line (TBL) of social responsibility (people), natural capital (planet) and economic prosperity (profit), appropriate workforce housing can be an important component of both short- and long-term business success.


Introduction

“Long-term business success requires attention to not only … economic capital, but … natural and social capital.”

Structured workforce housing presents a valuable opportunity for companies to meet operational goals of sustainable development. Sustainable development has been recognized as necessary for medium- and large-sized companies to remain competitive in a global marketplace.

Successful businesses must be both “eco-efficient” (with the economic value-added being proportional to environmental impact) and “socio-efficient” (with the economic value-added being proportional to social impact). In other words, long-term business success requires attention to not only short- and long-term economic capital, but also long-term natural and social capital.

Tioga Lodge in Williams County, North Dakota, is the largest workforce housing facility in the United States

“Appropriate workforce housing is an area where businesses easily can address some of their sustainable development plans.”

Companies that ignore this reality run the risk of issues in supply chains, workforce availability and access to areas with desirable natural resources. Sustainable development is not an abstract principle, but a real component of 21st century business success.1

Such housing has its origins in the Texas oil booms of the 1930s and 40s, when oil companies attempted to address the untenable situations of workers living in squalor and small towns overrun and paralyzed by sudden population booms.2

Well-organized workforce housing is an area where businesses easily can address some of their sustainable development goals. Such accommodations serve to protect the health and safety of workers, as well as the health and safety of the communities where companies do business. At the heart of long-term health and safety is sustainable development, as it helps guarantee clean air, water, land and communities for future generations.

1 Thomas Dyllick and Kai Hockerts, “Beyond the Business Case for Corporate Sustainability,” Business Strategy and the Environment 11, no. 2 (2002): 130–141; Thomas N. Gladwin, Tara-Shelomith Krause and James J. Kennelly, “Beyond Eco- efficiency: Towards Socially Sustainable Business,” Sustainable Development 3, no. 1 (1995): 35–43. 2 Bobby D. Weaver, Oilfield Trash: Life and Labor in the Oil Patch (Texas A&M University Press, 2010).


Three Pillars of Sustainable Development

“Workforce housing solutions address the three pillars of sustainable development: social, environmental and economic.”

Well-organized workforce housing solutions address the three pillars of sustainable development: social, environmental and economic. For businesses, these translate into the “triple bottom line” of 1) social responsibility, 2) natural capital and 3) economic prosperity, as well as the recognition that none of these can easily substitute for another.3

1) Social Responsibility

Companies recognize they have a responsibility to be positive participants in the communities where they work. For remote industrial operations where workforce housing is required, the influx of workers and their impact on existing infrastructures is a focal point of community interaction and concern. Makeshift Workforce Housing / William Caraher,

University of North Dakota “Man Camp Project”

“Workforce housing also addresses major and very real infrastructure concerns.”

Good relationships with these communities are essential for continued operations in such areas, and quality workforce housing offers solutions to real problems. An influx of workers plays havoc with housing availability and pricing, often creating hardships for locals who can be squeezed out of the market. While this effect is perhaps inevitable in any boom economy, companies that utilize workforce housing keep the majority of their employees out of the housing market, reducing the negative aspects of housing economics.4

Workforce housing that’s professionally managed also can address major and very real infrastructure concerns. Workers, for example, do not overwhelm the existing water and sewage systems, because the housing provides its own. Further, local retailers aren’t overwhelmed, causing periodic shortages and long waits for goods and services.

One of the biggest, and largely unnoticed, impacts of such accommodations is reduced road traffic.5 Like water and sewage, road infrastructure is expensive and slow to catch up with a boom environment.

3 Herman E. Daly, Steady-State Economics: With New Essays (Island Press, 1991). 4 Goldenberg et al., “And They Call This Progress?”; Dyllick and Hockerts, “Beyond the Business Case for Corporate Sustainability”; Gladwin, Krause and Kennelly, “Beyond Eco-efficiency.” 5 Michelle Haefele and Pete Morton, “The Influence of the Pace and Scale of Energy Development on Communities: Lessons from the Natural Gas Drilling Boom in the Rocky


Mountains,” Western Economics Forum 8, no. 2 (2009): 1–17.


“By getting thousands of workers out of private vehicles and onto buses and into van pools, workforce housing can be a strong

While the majority of the wear and tear comes from truck traffic, the thousands of workers also have a major impact, especially on traffic congestion, dust control issues and emissions.

By getting thousands of workers out of private vehicles and onto buses and into van pools, workforce housing can be a strong contributor to reducing impacts on

Workforce Transportation

contributor to reducing impacts on local transportation infrastructure.”

“State and local governments … must exercise caution about overbuilding and overstaffing for what is a temporary situation.”

local transportation infrastructure.6 With reduced traffic and centralized living, quality workforce housing also directly addresses the safety and security concerns of employers, employees and locals. Companies that place their people in such accommodations effectively keep their employees in a secure and monitored environment nearly 24 hours a day.

Over the long term, these benefits help alleviate issues about pricing for housing and consumable goods, waits at stores and service industries, traffic issues and water quality. State and local governments are limited in their ability to address these issues, as they must exercise caution about overbuilding and overstaffing for a temporary situation.

Centralized workforce housing, when done correctly, offers great assistance by providing the infrastructure when needed, and removing it when no longer needed.7 While the degree of actual versus perceived impact on these issues can be difficult to determine, there is no doubt that the issues are quite real.

Appropriate centralized workforce housing is the best way to address a large portion of these concerns. By addressing the concerns, companies fulfill their goals to minimize any negative impact on communities and to leave the communities as healthy as (or healthier than) they were when work began.8

6 William Rohe, Spencer Cowan and Daniel Rodriguez, “Assessing the Environmental, Economic and Social Benefits of Well-Located Workforce Housing,” Social Science Research Network (2012). 7 Haefele and Morton, “The Influence of the Pace and Scale of Energy Development on Communities”; Kibert, “Deconstruction”; Audrey Putz, Alex Finken and Gary A. Goreham, Sustainability in Natural Resource-Dependent Regions That Experienced Boom-Bust- Recovery Cycles: Lessons Learned from a Review of the Literature (Fargo, North Dakota: Department of Sociology, North Dakota State University, 2011); Edwin Dobb, “The New Oil Landscape,” National Geographic 223, no. 3 (2013): 12–45. 8 Gene F. Summers and Kristi Branch, “Economic Development and Community Social


Change,” Annual Review of Sociology (1984): 141–166.


2) Natural Capital

“Long-term business success requires attention to not only … economic capital, but … natural and social capital.”

“When the structures are no longer needed at one location, they can be moved to another.”

Companies that require workforce housing are frequently focused on resource extraction, and they know the costs of wasting natural capital. Such accommodations can help these companies meet their environmental protection goals by adhering to the standard principles of reduce, reuse and recycle.

Appropriate workforce housing will utilize multiple strategies to reduce consumption of resources in the living arrangements of workers. Some reductions are obvious: low-flow faucets, showers and toilets; energy- efficient washers and dryers; thermostat controls and energy-efficient lighting. When housing is supplied for thousands of workers, the reduction in usage of water and electricity can be substantial (and carry with it substantial cost savings).9

Other reductions in the use of resources are less obvious but equally important. When providing centralized food services, workforce housing reduces the packaging and shipping used in feeding workers. Workforce housing providers also can be well positioned to collect cardboard, glass and plastics for recycling, something shift workers in makeshift housing are not inclined to do. Many lodging solutions provide centralized transportation for workers to job sites, replacing hundreds of vehicles with a handful of buses.10

The greenest building is, of course, the building that is never built, and workforce housing that utilizes reusable modular structures is always a greener solution than building permanent structures for a temporary housing need.

When the structures are no longer needed at one location, they can be moved to another. Operated by Target Hospitality, the Muddy River Lodge in North Dakota was moved there after serving as a housing facility for the 2010 Winter Olympics in Whistler, British Columbia.11

Muddy River Lodge Modular Workforce Housing 9 Avi Friedman, “Water Efficiency,” in Fundamentals of Sustainable Dwellings (Washington, D.C.: Island Press, 2012), 169–182. 10 James Barlow and David Gann, “Flexible Planning and Flexible Buildings: Reusing Redundant Office Space,” Journal of Urban Affairs 17, no. 3 (1995): 263–276; Reid Ewing et al., “Transportation and Land Use,” in Making Healthy Places (Washington, D.C.: Island Press, 2011), 149–169. 11 “Muddy River Lodge.” http://www.targetlogistics.net/muddy.php. Accessed 24 May 2013.


“Wastewater treatment is often a major challenge for housing at remote industrial sites.”

“Target Hospitality proactively built its own … wastewater treatment facility … when it became apparent the town’s existing infrastructure was insufficient .…”

Modular structures are also standardized, which means that not only the structures but also the parts within structures can be much more easily reused. When all the sinks are the same, for example, it is easy to replace a broken one with a used one. Modular prefabricated buildings (for example, steel constructed housing) also are made out of materials much easier to reuse and recycle once a building has reached the end of its life cycle.12

Wastewater treatment is often a major challenge for housing at remote industrial sites. When housing is decentralized, existing systems are not likely capable of handling the massive increase in graywater and sewage. The result is a haphazard network of septic systems, overwhelmed local sewage systems, and questionable and illegal dumping practices. When worker accommodations are centralized, so too is the collection of graywater from cooking, bathing and laundry as well as sewage. A responsible workforce housing provider is thus able to utilize the best available treatment techniques.13

In North Dakota, Target Hospitality proactively built its own state-of-the-art wastewater treatment facility, capable of treating 180,000 gallons per day, when it became apparent that the town’s existing infrastructure was insufficient to handle the increased volume from the housing facilities.14 The wastewater treatment plant is located at Target Hospitality’ largest facility, and wastewater and sewage from its other facilities are transported to the location for treatment.

With more than 4,000 beds spread across several facilities in North Dakota, this represents a sizeable effort. The Target Hospitality facility also treats its sewage wastewater sufficiently so that it can (and is) reused for other purposes, including road dust control and agriculture. The importance of this effort is emphasized when put into context: Tioga, the town closest to this facility, has a population fewer than 1,500 and relies on a lagoon system.

12 Lu Aye et al., “Life Cycle Greenhouse Gas Emissions and Energy Analysis of Prefabricated Reusable Building Modules,” Energy and Buildings 47 (April 2012): 159– 168; Charles J. Kibert, “Deconstruction: The Start of a Sustainable Materials Strategy for the Built Environment,” Industry and Environment 26, no. 2 (2003): 84–88. 13 Friedman, “Water Efficiency.” 14 onTARGET 7 October 2011. http://www.targetlogistics.net/email_oct-11.html. Accessed 5 June 2013.


“By developing and relying upon comfortable housing, good nutrition and an array of fitness and entertainment amenities … companies gain multiple benefits.”

In an area that suffers from major water supply and treatment issues, Target Hospitality quickly established a functional treatment system of a sort regional cities are now trying to build.15 Such an effort, associated with workforce housing, represents a major contribution in sustainable development.

3) Economic Prosperity Treated Wastewater Ready for Reuse

While a relative term, economic prosperity is the value created by the organization after deducting the cost of all inputs. Well-organized workforce housing is key to helping create and enhance this value – especially where housing and skilled workers are in short supply.

“Businesses … should keep their eyes on social justice, environmental quality and economic vitality.”

By developing and relying upon comfortable housing, good nutrition and an array of fitness and entertainment amenities (what Target Hospitality has coined “The Economics of Comfort®”) for their workers, companies gain multiple benefits. These include their ability to: recruit and retain qualified staff and thus reduce personnel costs; reduce staff absenteeism and downtime by addressing housing hardship issues; motivate workers with housing quality superior to that locally available; and reduce costs by partnering with efficient and experienced workforce housing professionals.16

Sustainable Development as Good Business Practice

Businesses of the 21st century should keep their eyes on social justice, environmental quality and economic vitality. A focus only on the bottom line of profit will no longer suffice, as clients, customers and the demands of regulation and the international marketplace require more.

The current market is driven not by compliance with minimal standards, but by delivery of superior product design and quality. At the same time, companies both small and large continue to incorporate ethical values and policies into their business plans, and these values are reflected in their choice of partners and suppliers who share similar value systems.

15 Amy Dalrymple, “Wastewater Won’t Be Wasted,” Bakken Today, October 1, 2012; Ernest Scheyder, “Fracking Boom Triggers Water Battle in North Dakota,” May 20, 2013, http://news.ca.msn.com/top-stories/fracking-boom-triggers-water-battle-in-north-dakota. 16 C. Waxer, “Oil-Sands Boom Fueling Perks,” Workforce Management 85, no. 7 (2006): 40–43; S. M. Goldenberg et al., “And They Call This Progress? Consequences for Young People of Living and Working in Resource-Extraction Communities,” Critical Public


Health 20, no. 2 (2010): 157–168.


“… consumers are willing to pay a premium for products associated with sustainable development efforts.”

“Because workforce housing is a resource- intensive business, sustainable solutions are cost- saving solutions that increase profitability ….”

Rapidly increasing global communication has generated levels of transparency and accountability that cannot be ignored, and businesses, customers, employees and communities are increasingly insistent that the environmental impact of product and services be minimized.17

An MIT Sloan Management Review notes that the benefits of sustainability can be intangible and hard to quantify. However, two areas of benefit are of particular concern: consumers are willing to pay a premium for products associated with sustainable development efforts, and employee commitments to sustainability make it an important element in recruiting and retaining quality employees. The study, which surveyed 2,600 executives, reports that 60 percent of companies that changed their business models and had sustainability as a permanent agenda item added profitability from their sustainability efforts.18

Conclusion

Sustainable development that addresses the “triple bottom line” is an important component of professional workforce housing for businesses in areas with insufficient infrastructure. Because workforce housing is a resource-intensive business, sustainable solutions are cost-saving solutions that increase profitability and lower housing costs for clients.

Many of the clients that require workforce housing solutions are involved in resource extraction and environmentally sensitive activities. By partnering with companies that prioritize environmental quality, these clients protect and enhance their own environmental quality standards and initiatives.

When managed properly, workforce housing also directly addresses two major social justice issues. First, it provides safe, affordable and healthy living conditions for the skilled workers who are essential for successful business. Second, it minimizes the impact of “booms” on existing communities, which is key to both continuing operations and upholding the industry’s responsibility of doing no permanent harm to the locations where it operates.

17 John Elkington, Cannibals with Forks: The Triple Bottom Line of 21st Century Business (Oxford: Capstone, 1999); Paul Hawken, The Ecology of Commerce: A Declaration of Sustainability (New York: Harper Business, 1993). 18 David Kiron, Nina Kruschwitz and Knut Haanaes, The Innovation Bottom Line, MIT Sloan Management Review (Boston, MA: MIT, 2013).


About the Author Dr. Richard Rothaus is a historian and archaeologist whose research focuses on human-environmental interaction. He has expertise in the history of housing and vernacular architecture, and has conducted historical and archaeological surveys in North America, Europe, Asia and the Middle East. He is the author of a book, more than 20 scientific articles and more than 300 technical reports. As a researcher in the University of North Dakota Man Camps Survey Project, Rothaus continues to visit and document some of the best (and the worst) workforce housing solutions of North Dakota’s oil boom. Rothaus is the president of Trefoil Cultural and Environmental and a research associate at North Dakota State University. He can be reached at [email protected].

About Target Hospitality Target Hospitality, an Algeco Scotsman company, is the largest turnkey workforce housing provider in the United States, with administrative headquarters in Boston; operational headquarters in The Woodlands, TX; and offices in Williston, ND; Denver, CO; Edmonton, AB; and Sydney, AU. The company provides cost-effective and customized site design, construction, operations, security, housekeeping and catering for temporary workforce lodging, mobile crew camps and extended-stay hotels. Named by Inc. magazine as one of “America’s Fastest-Growing Private Companies,” Target Hospitality offers innovative housing solutions in the world’s most remote locations. Visit www.TargetLogistics.net or call (800) 832-4242.

Optimizing Sleep for an Optimal Workforce in the Oil, Gas and Mining Industries

By Nancy H. Rothstein, The Sleep Ambassador®, MBA

EXECUTIVE SUMMARY

Sleep is as essential as oxygen or food to live. Moreover, sleep is integral to productivity, safety, health and well-being. In the often-challenging environments of remote worksites in the oil, gas and mining industries, providing workers with first-rate living and sleeping accommodations is essential to optimize job performance, enhance mental acuity and prevent injuries. With the added complexities of long working hours and physical demands, companies that provide their workers with lodging that offers optimal sleep comforts, along with tools to promote quality sleep, have seen both performance and economic benefits.

This white paper will examine why sleep is vital and why an optimal sleep environment, along with the provision of basic sleep training, offers a compelling component to add to an employer’s risk-management strategy resulting in optimized workforce morale, safety, health and performance. In addition, it will address the role these factors play in attracting and maintaining the most talented workforce.

White Paper – 10.13 | Optimizing Sleep for an Optimal Workforce Page 1

INTRODUCTION

“Not getting enough sleep has associated economic and health care costs, as well as decreases in productivity and increased safety risks.”

No matter where a person works or what they do, one thing is certain: A good night’s sleep is vital. Or, in the case of someone working a night shift, a good day’s sleep is critical to working effectively through the night. Statistically, however, most workers are not getting the sleep they need. “About 65 percent of Americans report experiencing a sleep problem, such as difficulty falling asleep, waking during the night and waking feeling unrefreshed at least a few times each week, with nearly half of those saying they experience that sleep problem almost every night.”1

The corporate world is just beginning to wake up to the integral role sleep plays in the performance, health and well-being of employees.2 3 Furthermore, not getting enough sleep has associated economic and health care costs, as well as decreases in productivity and increased safety risks.4 Research supports the case for sleep-related strategic initiatives to maximize recovery from fatigue and provide a “work-sleep balance,” including analysis of policies and practices for optimal work/shift schedules. This is especially important for employers of workers in the oil, gas and mining industries for whom sleep directly impacts their safety.5 6 With the abundance of sleep articles in print and digital and the release of compelling research, what may look like a trend is truly a call to action.

Further illustrating the epidemic of a sleep recession, a CDC study estimates that 30 percent of the civilian workforce is sleep deprived.7 Study author Sara E. Luckhaupt told WebMD, “Employers should take steps to make sure their workers are getting enough sleep, such as by tweaking night shift schedules or imposing limits on consecutive shifts. Employers also should have wellness initiatives that encourage workers to go to sleep at the same time every night and create a relaxing bedroom environment.”8

1 National Sleep Foundation (2008) National Sleep Foundation, Sleep in America Poll, 2008: Sleep. Performance and the Workplace 2 Waking Up the Workplace 3 Making a Business Case for Bedtime 4 Rosekind, Mark R. PhD, et al (2010) “The Cost of Poor Sleep: Workplace Productivity Loss and Associated Costs,” American College of Occupational and Environmental Medicine, JOEM Volume 52, Number 1, January 2010. 5 Takahashi, Masaya (2012) “Prioritizing Sleep for Healthy Work Schedules,” National Institute of Occupational Safety and Health, Journal of Physiological Anthropology. 6 Caruso, Claire C. PhD, R.N. et al (2004) “Overtime and Extended Work Shifts: Recent Findings on Illnesses, Injuries and Health Behaviors,” U.S. Department of Health and Human Services, CDC, NIOSH. April 2004. 7 Centers for Disease Control and Prevention (2012) “Short Sleep Duration among Workers - United States, 2010,” Weekly, April 27, 2012 / 61(16); 281-285. CDC Study - Short Sleep Duration among Workers. 2010. 8 Jaslow, Ryan (2012) 41 Million American Workers Don't Get Enough Sleep, CDC Says. CBS News, April 27, 2012.


“The quality and quantity of sleep directly impact performance components including concentration, information processing, judgment, reaction time and teamwork.”

Understanding why sleep matters offers a foundation from which to identify, formulate and implement sleep-wellness strategies that best serve your company, its workforce and the stakeholders impacted by your business. This white paper serves as a paradigm for further action.

ISSUES, RISKS and ECONOMICS

Oil, gas and mining workers are often challenged to find adequate housing in the remote areas in which they work. The demands of the job are strenuous for these workers, with long hours and a requirement of focused, alert attention. Shift work, inherent to the oil, gas and mining industries, adds another dimension to the challenges these workers face.9 Too often, the “home” they return to after a long day’s or night’s work lacks the facilities, comforts and amenities essential to their health and well- being. Instead, the facility they return to must be a place for rejuvenation, nourishment, camaraderie and — for more reasons than generally recognized — sleep.

Why Sleep Matters10

There are few employers who would question the need for sleep for their workers. But there are also few who understand just how debilitating the lack of sleep can be not just to the health of their workers but to the health of their business as well. Research offers insights and validation regarding a number of factors influenced by sleep deficiency, many of which are reviewed here.

Performance – The quality and quantity of sleep directly impact performance components including concentration, information processing, judgment, reaction time and teamwork.11 12 In fact, “The general effect of sleep deprivation on cognitive performance is well-known: Stay awake longer than 18 consecutive hours, and your reaction speed, short-term and long-term memory, ability to focus, decision-making capacity, math processing, cognitive speed and spatial orientation all start to suffer. Cut sleep back to five or six hours a night for several days in a row, and the accumulated sleep deficit magnifies these negative effects. Nevertheless, frenzied corporate cultures still confuse sleeplessness with vitality and high performance.”13

9 Menezes, Pires ML, Benedito-Silva AA, Tufik S. (2004) “Sleep Parameters among offshore workers: an initial assessment in the Campos Basin,” Rio De Janeiro, Brazil, Chronobiol Int., 21(6): 889-97. 10 Why Sleep Matters: Healthy Sleep Website, Harvard Medical School. 11 Czeisler, Dr. Charles, Factors that Affect Performance, Harvard Medical School. 12 Stickgold, Dr. Robert, Sleep and Judgment, Harvard Medical School. 13 Czeisler, Dr. Charles A. (October 2006) “Sleep Deficit: The Performance Killer,” Harvard Business Review.


“The number one cause of worker- initiated accidents is fatigue in its various forms, such as exhaustion, weakness or sleepiness.”

Productivity – In addition to myriad performance deficits, inadequate sleep can result in reduced productivity.14 Sleep metrics confirm the productivity costs related to inadequate sleep.15 Moreover, absenteeism has a cousin, referred to as “presenteeism;” workers are coming to work but operating at subpar levels.16 A 2011 Harvard study found that insomniacs, one out of four U.S. workers, are so consistently tired on the job that they cost their employers the equivalent of 7.8 days of lost productivity each year, equaling an average of about $2,280 in salary per person.17

Safety and Accidents – While reduction in workplace accidents has been a focus of companies globally for decades, recent research confirms the role of sleep deprivation in workplace accidents.18 “The number one cause of worker-initiated accidents is fatigue in its various forms, such as exhaustion, weakness or sleepiness.”19 A study of construction workers in oil and gas projects in China, by Dr. Margaret Chan, illuminates this critical risk.20

Dr. Chan’s research showed that “previously identified factors like failure to use equipment or failure by individual workers to follow safety procedures are heavily influenced by fatigue. If you eliminate fatigue, you also eliminate other so-called ‘causes’ of accidents. Previous research shows fatigue can cause performance impairment equivalent to or greater than 0.10% of blood alcohol concentration, a level deemed unacceptable for driving a crane or operating dangerous construction equipment or machinery.”21

14 MacMillan, Amanda (2011) CNN Health: Insomnia Costs the U.S. $63 billion annually in lost productivity 15 Kessler, PhD, Ronald C. et al (2012) “Insomnia and the Performance of US Workers,” Department of Health Care Policy, Harvard Medical School, Boston, MA, Journal SLEEP, Volume 34, Issue 09. 16 Hemp, Paul (October 2004) “Presenteeism: At Work- But Out of It,” Harvard Business Review. 17 MacMillan, Amanda (2011) CNN Health: Insomnia Costs the U.S. $63 billion annually in lost productivity 18 (2001) “Preventing Accidents at Work,” European Agency for Safety and Health at Work,” https://osha.europa.eu/en/publications/magazine/4 19 Wanjek, Christopher (2013) “Workforce Housing and Feeding Solutions for Health, Safety, Productivity and Morale,” White Paper, Target Logistics. 20 Chan, M. (2009) "Accident Risk Management in Oil and Gas Construction Projects in Mainland China," University of Sydney. 21 University of Sydney (2010) “Fatigue the Major Accident Risk Factor in Construction”.


“Sleep deprivation is implicated in all kinds of physical maladies, too, from high blood pressure to obesity.”

For oil, gas and mining companies and workers, there can be significant costs (equipment, health-related, environmental, etc.) associated with accidents caused by impaired reaction time, judgment or concentration resulting from sleep deficit.22 23

Drowsy Driving and Machine Operation – Driving and operation of machinery is integral to operations in the oil, gas and mining industries. “Moreover, insufficient sleep is responsible for motor vehicle and machinery-related crashes, causing substantial injury and disability each year. In short, drowsy driving can be as dangerous — and preventable — as driving while intoxicated.”24 25 While a company can stipulate zero tolerance for alcohol, sleep deprivation can generate similar risks and should be addressed with the same rigor.26

Worker Health

Another risk to worker health and workplace productivity that often goes undetected, unattended or misdiagnosed is the presence of a sleep disorder. Related medical conditions can compromise the health and performance of a worker, presenting the risk of error and compromised safety. Add to that the related health care costs, and it behooves employers to encourage employees to seek medical care when a sleep disorder is suspected.27

Furthermore, while sleep deficiency may not be associated with a sleep disorder, it can lead to other health compromises and functional limitations.28 Sleep deprivation is implicated in all kinds of physical maladies, too, from high blood pressure to obesity.29 Healthy sleep can result in reduced health care costs,30 as well as improved functioning.

22 ACOEM Presidential Task Force on Fatigue Risk Management: Lerman, Steven, E. et al (2012) “Fatigue Risk Management in the Workplace,” ACOEM Guidance Statement, JOEM, Volume 54, Number 2, February 2012. 23 Fact Sheet - Oil and Gas Industry (2010) “Oil and Gas Industry Fatal and Nonfatal Occupational Injuries,” Bureau of Labor Statistics,” April 2010. http://www.bls.gov/iif/oshwc/osh/os/osar0013.htm 24 Centers for Disease Control and Prevention: http://www.cdc.gov/sleep/ 25 Kuhar, MD, PhD, DABSM, Siobhan (2013) “Drowsy Driving Prevention,” SafeNY: http://www.safeny.ny.gov/drow-ndx.htm 26 Durmer, Jeffrey S., MD, PhD, Dinges, David, PhD (2005) “Neurocognitive Consequences of Sleep Deprivation,” Seminars in Neurology, 2005; 25(1):117-129. 27 Harvard Medical School Division of Sleep Medicine (2010) “The Price of Fatigue: The Surprising Economic Costs of Unmanaged Sleep Apnea, December 2010. 28 Orfeu M. Buxton, PhD, Karen Hopcia, NP, et al (2012) “Relationship of Sleep Deficiency to Perceived Pain and Functional Limitations in Hospital Patient Care Workers,” JOEM, Volume 53, Number 7, July 2012. 29 Czeisler, Dr. Charles A. (October 2006) “Sleep Deficit: The Performance Killer,” Harvard Business Review. 30 Connole, Patrick (2013) “Insurers Use Management Tools to Slow Costs for Sleep Disorder Treatment,” Health Plan Week, August 5, 2013, Volume 23 Issue 26.


“The Economics of Comfort®, coined by Target Logistics, offers a comprehensive service platform to address the housing needs of the oil, gas and mining industries.”

The Centers for Disease Control and Prevention states, “New methods for assessing and treating sleep disorders bring hope to the millions suffering from insufficient sleep. Fundamental to the success of all of these efforts is the recognition that sufficient sleep is not a luxury — it is a necessity — and should be thought of as a ‘vital sign’ of good health.”31

Economics

The Economics of Comfort®,32 coined by Target Logistics, offers a comprehensive service platform to address the housing needs of the oil, gas and mining industries, as well as for other organizations requiring temporary workforce lodging. The basic tenet is that investing in the comfort and nutrition of your workforce pays off in: • Greater productivity• Lower attrition and absenteeism, as well as reduced health care costs• Increased safety and injury prevention• Higher morale

The “Economics of Sleep” also offers a compelling platform and payoffs to best serve your workforce and bottom line: • Productivity – Documented sleep metrics indicate the significant cost of

lost productivity due to sleep deficiency and disorders.33

• Costs – Sleep deficiency and untreated sleep disorders can haveattendant health consequences, health care expenses and othercosts.34 35 36

• Safety – Sleep loss and sleep disorders can also lead to compromisedsafety, a critical factor in the oil, gas and mining industries.37 38

31 Centers for Disease Control and Prevention: http://www.cdc.gov/sleep/ 32 The Economics of Comfort® “Case Study by Target Logistics and Client” 33 MacMillan, Amanda (2011) CNN Health: Insomnia Costs the U.S. $63 billion annually in lost productivity 34 Harvard Medical School Division of Sleep Medicine (2010) “The Price of Fatigue: The Surprising Economic Costs of Unmanaged Sleep Apnea,” December 2010. 35 Orfeu M. Buxton, PhD, Karen Hopcia, NP, et al (2012) “Relationship of Sleep Deficiency to Perceived Pain and Functional Limitations in Hospital Patient Care Workers,” JOEM, Volume 53, Number 7, July 2012. 36 Institute of Medicine of the National Academies (2006) “Sleep Disorders and Sleep Deprivation: AN Unmet Public Health Problem,” National Academies Press, Washington, DC. 37 Colten, HR and Altevogt, BM, Editors (2006): “Functional and Economic Impact of Sleep Loss and Sleep-Related Disorders,” Institute of Medicine (US) Committee on Sleep Medicine and Research. 38 CDC, NIOSH - Workplace Safety & Health Topics: NIOSH Center for Motor Vehicle Safety. See section: Motor Vehicle Safety: Best Practices in the Oil and Gas Extraction Industry.


The Ecology of Sleep

“Target Logistics takes the environment seriously and recognizes that sleep is part of this equation.”

In light of the oil, gas and mining industries’ commitment to the environment, a look at sleep’s relationship to the environment merits attention, from both a public and personal perspective.39 The impact on the environment and society from sleep-related accidents is well documented.40 For the individual, not getting enough sleep is not sustainable.41 For many, there is a need to recycle sleep habits. Most people are not aware of sleep’s intricacies, or of the impact of insufficient quality and quantity sleep. Short of a sleep disorder that requires diagnosis and treatment, it is often simple shifts in habits and behaviors that can result in sleep improvement. Furthermore, the more we are awake, the more resources we use and the less restored and rejuvenated we are for our waking lives and work. We tax our environment, both externally and internally. Target Logistics takes the environment seriously and recognizes that sleep is part of this equation.42

The research and realities send a message: sleep cannot be overlooked. Providing your workforce with an optimal sleep environment, along with nutritious foods and fitness facilities, is critical to their performance, morale and well-being. Your workforce is highly trained to do their jobs, with a focus on safety and acumen for specific tasks. However, they are likely not trained how to optimize their sleep, which is often compromised by shifting schedules and other demands. This is an irony since sleep has a direct correlation to their ability to function optimally at work. Sleep- wellness training beckons serious attention.

SOLUTIONS

The basic requirements for an excellent sleeping environment may seem obvious. But the subtleties are often overlooked or misunderstood. The bedroom is optimally just that, not an entertainment center or auxiliary office. However, the reality for remote lodging is that the bedroom takes on additional functions. Hence, additional strategies and modifications must be communicated to ensure that quality sleep can be achieved.

39 Colten, HR and Altevogt, BM, Editors (2006): “Functional and Economic Impact of Sleep Loss and Sleep-Related Disorders,” Institute of Medicine (US) Committee on Sleep Medicine and Research. 40 Harvard Medical School Division of Sleep Medicine: Sleep, Performance, and Public Safety: Costly, Preventable Accidents. 41 Hans P. A. Van Dongen, PhD, et al. (2003) “The Cumulative Cost of Additional Wakefulness: Dose-Response Effects on Neurobehavioral Functions and Sleep Physiology From Chronic Sleep Restriction and Total Sleep Deprivation,” Unit for Experimental Psychiatry, Division of Sleep and Chronobiology, Department of Psychiatry, and Center for Sleep and Respiratory Neurobiology, University of Pennsylvania School of Medicine; Beth Israel Deaconess Medical Center and Harvard Medical School. 42 Rothaus, Richard, PhD (2013) “Return on Sustainability: Workforce Housing for People, Planet and Profit,” White Paper, Target Logistics.


The Sleep Environment

“Studies have found that mattress firmness has statistically significant effects on both sleep and daytime functioning.”

“Research has shown that there are many influences outside the bedroom that can greatly affect the amount and quality of workers’ sleep.”

Dark – A dark room is integral to falling asleep and to the quality of sleep throughout the sleep period.43 44 Even the dimmest light when sleeping can penetrate the eyelids and affect sleep quality. In addition to having all lights out in the room for sleep, blackout curtains provided in superior lodging omit the risk of sleep disturbance from natural and artificial light from outdoors.

Cool – The body needs to be cool for sleep, with 68 degrees being an average recommendation. Individual climate control makes this possible.

Quiet – The room should be quiet, which a room with good insulation helps ensure. When ambient noise is an issue, quality earplugs offer a solution.

Bedding Comfort – A high-quality mattress and bedding are essential comfort components. Studies have found that mattress firmness has statistically significant effects on both sleep and daytime functioning.45 A mattress and bedding, such as the “Hibernator Sleep System™” used in Target Logistics lodges (including a pillow-top mattress, high-thread-count sheets and overstuffed pillows), provide a foundation for the rejuvenating sleep workers need.

Best Practices for Healthy Sleep

In addition to providing workers with a comfortable mattress, bedding, privacy, and noise and light management, oil, gas and mining companies must also think “beyond the mattress” when it comes to ensuring that their workers are getting the sleep they require to perform their jobs safely and productively. Research has shown that there are many influences outside the bedroom that can greatly affect the amount and quality of workers’ sleep.

43 Wahnschaffe, A. et al (2013) “Out of the lab and into the bathroom: evening short-term exposure to conventional light suppresses melatonin and increases alertness perception,” Institute of Psychology, Charité-Universitätsmedizin, Berlin. 44 Bjorvatn, Bjoern et al. (2001) “Bright Light Facilitates Circadian Adaptation among Workers at an Oil Platform,” Supported in part by The Research Council of Norway. 45 Jacobson, Bert H. & Boolani, Ali & Smith, Doug B. (2009) “Changes in Back Pain, Sleep Quality and Perceived Stress After Introduction of New Bedding Systems,” Journal of Chiropractic Medicine (2009) 8, 1-8.


For oil, gas and mining companies, making the investment with a premier lodging company is an essential step on the road to good sleep for your workforce. In addition, empowering their workers with a basic understanding of how to optimize sleep quality and quantity offers a strategy to ensure a vibrant, productive and motivated workforce. These best practices for healthy sleep can be incorporated in their workforce training. Lodge sites may consider adding sleep tips in the literature they provide their guests.

Light-Related Strategies

Put technology to bed or block the blue light – Exposure to a television, computer, tablet or smartphone in the hour before bedtime can impair sleep due to exposure to blue-spectrum light emitted from these devices. Just when the brain is getting ready for sleep, it receives a confusing signal to be alert. Blue-spectrum light suppresses the release of melatonin, the sleep hormone, potentially decreasing the quality of sleep.46 Additionally, the brain stimulation from these activities further confuses the brain about transitioning to sleep. If the content is stressful, relaxation for sleep is further compromised.

Away from home in a remote location, workers can’t be expected to tune out from technology in the hour before going to sleep. Wearing blue-light- blocking glasses can block 99 percent of the blue-spectrum light, thereby allowing melatonin to be released and the body to transition to sleep naturally.47

Light exposure – Additionally, blue-light-blocking glasses can be useful to wear when returning to the lodge after a night shift if it is light outside on the drive home. The morning light tells the body to stay awake, just when the person is intending to go to sleep. Wearing the glasses en route to the lodge preserves the melatonin for your sleep when arriving home.

46 Harvard Medical School (May 2012) Blue Light Has a Dark Side, Harvard Health Letter. 47 Burkhart K., Phelps JR (2009) “Amber Glasses to Block Blue Light and Improve Sleep: A Randomized Trial,” University of Toledo, Ohio. http://www.ncbi.nlm.nih.gov/pubmed/20030543


“Providing opportunities and facilities for relaxation and stress reduction are important components of a sleep-supportive environment.”

Furthermore, after a good night’s sleep, getting daily exposure to bright light, especially in the first hour of waking, is optimal. However, for most of us, getting exposure to 30 minutes of direct sunlight on a daily basis is not practical and sometimes not available. Light therapy offers an alternative, especially on dark winter mornings to which many oil, gas and mining workers awaken. Such devices (see www.litebook.com) can also serve as a tool to increase alertness in the middle of a night shift when the circadian rhythm, the body clock, is “set” for sleep and the worker is struggling to stay awake. However, it is not recommended to use the light therapy too close to going to sleep.

Sleep-Promoting Habits and Strategies

Sleep quantity and quality – Though sleep needs vary across ages and are impacted by lifestyle, health and other factors, the National Sleep Foundation and most experts recommend from seven to nine hours for adults.48 49 Sleep quality is also paramount to good sleep and dependent on many factors, a number of which are addressed in this white paper.50 Often, the quantity of sleep one requires is challenged, putting all the more focus on optimizing the quality of sleep you do get.

Exercise – Exercise is critical to wellness and helps to support healthy sleep. However, exercise should be avoided in the three hours before going to sleep, as the stimulation inherent in exercise can make falling asleep a challenge.

Relaxation and stress-reduction techniques – Stress, during the day or during the night if on a night shift, can impact the ability to fall asleep and stay asleep. Hence, providing opportunities and facilities for relaxation and stress reduction are important components of a sleep-supportive environment.

Nutrition – Good, healthy foods and beverages are essential to health, day and night. However, in the hours before bed, eating too large a meal can tax the digestive system and compromise sleep. Yet sleep-friendly snacks can help with sleep. Foods containing melatonin and/or tryptophan are good choices, including bananas, oatmeal and almonds. Sleep elixirs such as chamomile tea and almond milk can help the body surrender to slumber.

Caffeine and Alcohol – Limiting caffeine and alcohol several hours before bedtime is important. Caffeine acts as a stimulant and can interfere with the quality of your sleep. Alcohol may initially act as a sedative but can disrupt normal sleep patterns.

48 National Sleep Foundation, How Much Sleep Do We Really Need? 49 Centers for Disease Control and Prevention, Sleep and Sleep Disorders 50 Healthy Sleep, Harvard Medical School, External Factors that Influence Sleep


ACTION PLAN

“Providing lodging that offers an optimal sleep environment is a primary step for the success of your workforce and of your company.”

Ensuring that oil, gas and mining workers have the environment, knowledge and strategies required for good sleep requires collaboration.

The Employer

Providing lodging that offers an optimal sleep environment is a primary step for the success of your workforce and of your company. Research supports a call-to-action to take sleep seriously as a vital component to maximize productivity, minimize health care costs and ensure safety. Integrating sleep wellness into your employee wellness program and workforce training may be one of the most effective business investments you can make.51

Metrics are integral to prudent decision-making and strategic planning. Combining sleep-related initiatives and sound research data offers an opportunity to gauge results and ROI to ensure that future program design, training and results best serve your goals.

The Employee

While the sleep amenities provided in quality lodging are conducive to a great night’s sleep, each person makes behavior and habit choices that impact the outcome of sleep quality and quantity. As with any behavior modifications, sleep habits do not change overnight. Guidance, accountability and experience can support lasting, positive changes in habits.52 Empowered with basic sleep knowledge, as well as strategies to “own” their sleep, workers can take full advantage of the state-of-the-art sleep environment provided, awakening refreshed, rejuvenated and ready to do optimal work.

The Lodging Provider

Providing a well-organized, professional lodging experience for oil, gas and mining workers includes an optimal sleeping environment, superior nutrition, fitness facilities, entertainment and relaxation amenities, strict security and excellent service. Combined, these attributes foster the balance of sleep-work-life, a requirement for optimal performance and well-being.

51 OGP & IPIECA, “Managing Fatigue in the Workplace: A Guide for Oil and Gas Industry Supervisors and Occupational Health Practitioners,” International Association of Oil & Gas Producers and the International Petroleum Industry Environmental Conservation Association. 52 Duhigg, Charles (2012) The Power of Habit: Why We Do What We Do in Life and Business, Random House, New York.


“The companies that invest in a high-quality sleep environment for their workers realize benefits that include greater productivity and safety and less attrition and sick days.”

Hence, collaboration of employers, employees and the companies that serve them is key to achieving the best interests, safety and success for all stakeholders. Looking forward, it is essential for both employers and the lodging companies they entrust to house their workforce to explore and implement research-proven policies to ensure that the workers have every opportunity to get the sleep (as well as the nourishment, relaxation and fitness) they need to support peak performance.

CONCLUSION

While getting the proper amount of sleep is important for any individual, the stakes are higher for oil, gas and mining workers whose health and safety is directly tied to the quality and quantity of the sleep they get. Furthermore, the companies that invest in a high-quality sleep environment for their workers realize benefits that include greater productivity and safety and less attrition and sick days.

Oil, gas and mining companies have an opportunity to embrace sleep wellness, a critical component for the success of their workforce. It starts with the provision of lodging excellence and a quality sleep environment, along with a commitment to train and empower employees with the tools they need to get a great night’s sleep.


About the Author As The Sleep Ambassador® (www.thesleepambassador.com) Nancy Rothstein lectures, consults and educates about sleep wellness to Fortune 500 corporations, institutions, organizations, universities, schools and the public. With an MBA from the University of Chicago’s Booth School of Business and decades of consulting and experience in the financial and corporate sectors, Nancy brings an understanding of how sleep impacts productivity, performance and profitability, as well as employee well-being and health care costs. Nancy collaborates with recognized medical sleep experts, as well as with other leaders, researchers, organizations and resources in the field of sleep. An adjunct faculty member at NYU, Nancy teaches an online sleep course. She is the author of My Daddy Snores (Scholastic), which has sold more than 350,000 copies, and the creator and host of The Sleep Radio Show®. Serving as a member of the Board of the American Sleep Apnea Association further reflects Nancy’s stature in the field of sleep, as well as her commitment to improving people’s sleep and lives. She can be reached at [email protected].

About Target Logistics Target Logistics, an Algeco Scotsman company, operates in some of the world’s most remote environments supporting oil, gas and mining operations, government agencies, disaster relief and large-scale events with temporary workforce lodging, mobile crew camps and extended-stay hotels. Named by Inc. magazine in 2012 and 2013 as one of “America’s Fastest Growing Private Companies,” the company has administrative headquarters in Boston; operational headquarters in The Woodlands, TX; and offices in Williston, ND; Denver, CO; Edmonton, AB; and Sydney, AU. Visit www.TargetLogistics.net or call (800) 832-4242.

Workforce Housing as a Recruitment and Retention Strategy in Oil, Gas, Mining and

Construction Operations: The Other 12 Hours By Graham Chandler, Ph.D.

White Paper – 01.14 | Workforce Housing as a Recruitment and Retention Strategy Page 1

EXECUTIVE SUMMARY

North American oil, gas, mining and construction operations are facing an unprecedented shortage of professionals and skilled tradespeople this decade and beyond. Record numbers and percentages of workers will be retiring due to the aging boomer population and many newer workers are reluctant to take jobs requiring them to be away from home for extended periods. Moreover, many companies have difficulties retaining existing workers due in large part to poor living conditions at remote worksites. Several strategies can be implemented to face these problems; one is to address the “other 12 hours” when workers are off-duty by offering top- quality housing to attract and retain these valuable employees. Such an approach can substantially increase profitability, boost productivity, enhance morale, reduce turnover and improve safety. This paper addresses how examining and focusing on the other 12 hours can be a useful strategy for recruitment and retention.


INTRODUCTION

“… demand for labor is expanding and the pool of workers is dwindling.”

“Together this means 125,000 to 150,000 new hires will be needed by 2022.”

This white paper discusses a serious problem facing North American oil, gas, mining and construction operations and how it can be addressed: a mass exodus of professionals and skilled tradespeople from their industries over the coming decade. It’s not just the exodus. However, replacing them is the larger problem, which means stepped-up strategies to attract new workers and then keeping them. The paper examines the problem and its origins, and approaches to seek and apply solutions, concentrating on one often overlooked solution: that of offering attractive, welcoming and comfortable housing for workers needing to be away from home and family for weeks at a time – the importance of a home for the other 12 hours. Benefits of such a strategy are addressed and recommendations offered for executives and managers seeking to engage and keep workers on board, thus reducing the devastation of high turnovers and growing their companies’ productivity, competitiveness and shareholder value.

THE PROBLEM

The labor challenge in the North American oil, gas, mining and construction operations can be summed up simply as a steadily growing gap: demand for labor is expanding and the pool of workers is dwindling. According to a Petroleum Human Resources Council of Canada major annual study, the gap will grow regardless of industry growth rate.1

The report says three factors will drive demand for workers in Canada over the next decade. Industry activity growth will create between 18,300 and 38,700 jobs. Age-related attrition will result in 44,200 to 45,300 open jobs as 23% of the workforce becomes eligible to retire. Intense competition for talent within and outside the oil and gas industries will create even more demand: a 3% non-retirement turnover rate will add 62,600 to 65,800 job openings between 2013 and 2022, the report predicts.

Together this means 125,000 to 150,000 new hires will be needed by 2022. There’s no relief in sight as oil and gas operations will experience a tight labor market in all sectors: oil and gas services (highest, with turnover up to 50%), conventional exploration and production oil sands and pipelines.

1 “The Decade Ahead: Labour Market Outlook to 2022 for Canada’s Oil and Gas Industry.” Petroleum Human Resources Council of Canada, May 2013


“The top challenge reported by employers is attracting and retaining workers – with fully half reporting retention and employee turnover problems.”

“The oil and gas industry labor situation in the U.S. is not much different: solid growth and shortage of skilled labor are forecast.”

This trend has already begun: rapid growth in Canada’s Bakken oil play between November 2010 and November 2012 increased total employment by 25,100 jobs.2 The top challenge reported by employers is attracting and retaining workers – with half reporting retention and employee turnover problems.

In another survey of 41 companies from seven petroleum industry sectors taken from December 2012 to January 2013, respondents indicated fierce competition for experienced technical staff.3 The top three workforce issues were attracting and retaining workers in remote locations (67%), labor and skills shortages (53%) and employee turnover (47%).

The oil and gas industry labor situation in the U.S. is not much different: solid growth and shortage of skilled labor are forecast. A 2013 report by GL Noble Denton surveyed 428 senior professionals from oil companies and their suppliers from around the world.4 The U.S. topped the list as the most attractive location in which to invest and 42% said North America offers the most growth opportunities. With the International Energy Agency forecasting that the U.S. will become the world’s biggest oil producer by 2017, clearly skilled labor will be in demand.

Skills shortages ranked as a top-five issue among companies polled in 2011. Since then, the report said, worries have risen steadily: in this year’s research, 55% cited skills shortages as their number one “acute” barrier to growth; two years ago, this concern ranked fifth.

North American mining is up against many of the same challenges. U.S. Energy Information Administration projections have the mining industry growing by approximately 50,000 workers by 2019, but will need 78,000 replacement workers due to retirement – a total of 128,000 new positions by 2019.5 The report said the shortage was serious enough that the U.S. could be strategically exposed; relying on foreign suppliers for critical metals.

And from an international survey of 10,000 mining respondents, North America stood out in terms of skills shortages.6 Over 35% see these shortages as a major concern, the most in any region of the world.

2 “HR Trends and Insights: Workforce Conditions in Canada’s Bakken Oil Play.” Petroleum Human Resources Council of Canada, May 2013 3 “HR Trends and Insights: Help Wanted Sign Still Up for Canada’s Oil and Gas Industry.” Petroleum Human Resources Council of Canada, Spring 2013 4 “Seismic Shifts: The outlook for the oil and gas industry in 2013.” GL Noble Denton, 2013 5 Brandon, Clifford N., III, “Emerging Workforce Trends in the U.S. Mining Industry.” Copyright: Society for Mining, Metallurgy & Exploration, 2012 6 “Resources and Mining Global Salary Guide 2013.” Hays/InfoMine


“With such a challenging labor environment looming…. Corporations need to turn to as many traditional and non-traditional sources and methodologies as are available.”

In Canada, mining skills shortages will be exacerbated by the pending retirement of boomer-age workers, too. An industry study projects retirements will rise from 2.2% in 2013 to 2.8% by 2023, a 27% increase.7 That will mean 34,500 to 52,240 new hires by 2015. Over the decade, needs could exceed 145,000 workers – more than half the current Canadian mining workforce.

Intensifying the problem, workers routinely look for better jobs. A world survey found that in the Americas, 79% of all workers in all fields report either having changed jobs or having considered changing jobs in the past year.8 In the U.S., 42% have changed jobs in the past year.

Moreover, oil, gas, mining and construction operations face higher turnover due to the need for remote site working. An Australian mining study team estimates a 25% annual turnover rate for 50,000 fly-in, fly-out (FIFO) workers in Western Australia.9 Turnover costs can be considerable: one of the researchers, Dr. Alan Brown, estimated the cost to replace one FIFO worker at A$10,000 to A$50,000. An earlier study estimated that employee turnover costs for a typical mine with 300 employees and an average annual turnover rate of 17.2% exceed A$2.8 million per year.10 North America is much the same.

SOLUTIONS

With such a challenging labor environment looming, it is critical that oil, gas, mining and construction operations focus on the recruitment and retention of workers. Corporations need to turn to as many traditional and non-traditional sources and methodologies as are available.

7 “Canadian Mining Industry Employment, Hiring Requirements and Available Talent 10- year Outlook.” Mining Industry Human Resources Council, 2013 8 “Employee Engagement and Retention.” Kelly Global Workforce Index, September 2013 9 Brown, A, Sitlington, H, Scott, G and P. Susomrith, “Turnover in FIFO Mining: What Employers Say”, Edith Cowan University, Western Australia, October 2012 10 “Workforce Turnover in FIFO Mining Operations in Australia: An Exploratory Study”. University of Queensland 2003


“… all of these solutions have one underlying aspect in common: the need to attract workers to workforce accommodations by addressing the other 12 hours during which they are not working.”

In a recent Alberta Oil article, industry Human Resources consultants and professionals explored six viable options.11 First, hang on to retiring boomers, creating talent management programs for individuals aged 50 to 65. Second, hire non-temporary foreign workers. Third, engage more contractors – many workers prefer this approach. Fourth, target workers from other areas by offering new opportunities to existing talent, also known as ‘smart hires.’ Fifth, reach out through labor and professional organizations to underutilized workers like aboriginal populations and women. And finally, improve the industry’s image to attract the younger ‘Gen Y’ environmentally aware demographic.

All these strategies, singly or collectively, can help tackle companies’ looming skills shortages. But significantly, in the end, all of these solutions have one underlying aspect in common: the need to attract workers to workforce accommodations by addressing the other 12 hours during which they are not working. Regardless of the approach for recruitment and retention, mines and oilfields cannot be relocated – companies must situate the worker with the resource.

Offering attractive housing therefore needs be a strong element of any strategy. Business researchers such as Professor Alan Brown say housing is highly important, and workers will accept minimum standards.12 Isolated mining sites are often long flights from cities, and workers typically do 11- or 12-hour shifts for rosters from 7-21 days. Without any town infrastructure, these sites must be comfortable homes with amenities like recreation and premium dining facilities for the other 12 hours.

Quality housing has become more critical as rapid growth has created an increase in projects with remote locations, with high employment allowing workers to be more selective as to where they work. Fly-in, fly-out appears a functional solution, allowing workers to combine big-city lifestyles with high-value remote working.13

The provision of premium accommodations can be an attractant even where operations are close to cities. For example, many workers are reluctant to move to Fort McMurray, Alberta, because of the severe shortage and cost of housing.14 Vacancy rates in this oil sands city are consistently zero and it is short some 6,000 new housing units. So where an employer offers ready and welcoming accommodations it can easily tip the scales.

11 Chandler, G. “Steady State”, Alberta Oil August 2011: 28-33 12 Pers. comm. Professor Alan Brown, School of Business, Edith Cowan University 13 “Business risks facing mining and metals 2013-2014.” Ernst & Young 2013 14 “Two Tales of One City” http://www.nationalpost.com/news/story.html?id=a2f47b96- fd8f-427b-9928-e6df18bd7561&p=1


“… a study of labor issues … found employers had difficulties attracting workers where they couldn’t offer accommodations. … The report recommended companies offer accommodations as a recruiting and retention strategy.”

Indeed, a study of labor issues in Canada’s Bakken oilfield found employers had difficulties attracting workers where they couldn’t offer accommodations. Companies reported that the region’s remote location and high housing costs made attracting workers difficult.15 The report recommended companies offer accommodations as a recruiting and retention strategy.

And on the employee side, reports such as those from the Alberta government advise workers seeking jobs in remote operations to proactively ask about prospective employers’ housing offerings.16 They’re advised to enquire directly during the interview about specific details of accommodations offered. In fact, some companies such as Target Hospitality report workers regularly want to apply only to companies with good housing solutions. Thus, it behooves those companies to establish a housing edge when competing in the limited talent pool, and to realize the significance of the other 12 hours.

In fact, companies advertising premium accommodations consistently have the most success in recruiting and retaining workers.17 Where food or conditions are unacceptable, workers just switch employers. Moreover, in the mining industry, remote locations and long periods away from families are frequently cited as unattractive aspects by graduates considering career paths.18

Premium housing is an increasingly recommended strategy. At a recent industry talk in San Antonio, a solutions company executive said his advice to oil and gas companies active in the Eagle Ford Shale is to think more creatively when trying to find ways to keep employees happy and on the payroll, beyond just offering them more money. Finding ways to make their lives more comfortable after a day spent working in the hot South Texas sun could be one approach, he said.19

15 “HR Trends and Insights: Workforce Conditions in Canada’s Bakken Oil Play.” Petroleum Human Resources Council of Canada, May 2013 16 “Wood Buffalo Work Camp Report 2012.” Government of Alberta, May 2012 17 Pers. comm Mark Salkeld, President & CEO, Petroleum Services Association of Canada 18 Wylie, Jon, “Solving the Mining Industry’s Skilled Worker Shortage.” Engineering and Mining Journal, February 2013 19 Gronewold, Nathanial, “’Man camps’ go upscale in response to ‘absolutely abhorrent’ housing situation.” EnergyWire July 2, 2012. http://www.eenews.net/stories/1059966723


“Target Hospitality’ answer is to focus on the other 12 hours: constructing the best home away from home for the workers….”

A 2011 North Dakota case study drives home the point. A global oilfield services company initially got by with local hotels, motels, trailer parks and apartments for workers. But as activity skyrocketed, so did accommodation rates and problems. Consequently, some of the best workers wouldn’t sign on and productivity lagged. Target Hospitality’ answer is to focus on the other 12 hours: constructing the best home away from home for the workers, providing housing in the form of lodges.20 Productivity now has improved through their offering security, nutrition, rest, relaxation and a positive workforce environment with zero tolerance for drugs, alcohol, firearms and cohabitation.

Workers enjoy unlimited quantities of nutritious, four-star food 24/7, bedrooms with private or Jack and Jill bathrooms, individual temperature control, flat-screen TV/DVD players, oversized towels and The Hibernator Sleep System™ with a pillow-top mattress, high thread count sheets and overstuffed pillows. State-of-the-art recreation and fitness centers, an internet café, a convenience store, meeting rooms and transportation to the worksite round out the lodges’ features. It is 12 hours of pure luxury.

As a result, the company quoted an increase in employee retention by 66%, saving them over $10 million a year. Here is where workforce housing actually produces an ROI.

Such a housing solution will indirectly affect all six of the potential solutions previously described. Regardless of their permanent residences, workers need to be accommodated. Companies that offer accommodations and transportation support are more attractive to workers from across the country.21 They will enhance their success attracting and retaining other untapped labor pools including foreign workers, minorities and boomers contemplating retirement. And women will feel more comfortable in secure, safe housing with all the amenities. Reduction or elimination of alcohol and drug abuse amongst workers will be a bonus as well – research has shown transient workers often show high susceptibility to alcohol and drug abuse due to loneliness, social distancing and lack of social support where inadequate local accommodations are used.22

20 “The Economics of Comfort: Case Study by Target Hospitality and Client.” 21 “The Decade Ahead: Labour Market Outlook to 2022 for Canada’s Oil and Gas Industry.” Petroleum Human Resources Council of Canada. May 2013 22 Parkins, J.R. and Angell, Angela C. “Linking social structure, fragmentation, and substance abuse in a resource-based community.” Community, Work & Family 14(1), 2011


“The premium housing approach will complement potential solutions to this serious near- horizon challenge.”

“Important summary papers have been written on the importance of food, sleep and quality housing to worker efficiency at remote camps and how they impact a company’s sustainability.”

In the end, resolving workforce shortages – both current and future – is crucial to long-term profitability and sustainability. Playing a leadership role in offering high-quality accommodations is an effective component of these success measures because they help retain workers who may struggle with the challenges of living in a remote location, away from home or family.23

THE LONG-TERM FOCUS

The premium housing approach will complement potential solutions to this serious near-horizon challenge. It’s not a short-term problem with a short- term solution: it will persist for a decade or more. Solutions require every ounce of help. Companies can ill afford to ignore the problem or hope for some magic bullet. World GDPs are growing, and fueling them are the resource providers: oil, gas, mining and construction figure prominently.

World energy production will keep growing. The boom in shale oil and gas production in the U.S. and Canada will continue. An upcoming related development will soon accelerate the demand side of the equation for natural gas: liquefied natural gas (LNG). Both the U.S. and Canada have facilities on the drawing board and pending applications to export billions of cubic feet of LNG per day for world markets. Not only will new remote production fields need housing; so too will constructing the massive liquefaction plants and shipping terminals, particularly on Canada’s Pacific Coast and the United States’ Gulf Coast.

Existing mines and oilfields are depleting, driving companies to new and more remote frontier areas. The need for FIFO and remote accommodations will only become more acute and those companies not offering the best soon will be suffering the worst of the worker shortage. Those companies leading in benefits, such as housing, will emerge with the best efficiencies and profits. Employee turnover, employee shortages or having to take on lesser-skilled workers and train them is a huge expense on firms’ income statements. Too large, they directly diminish the bottom line, and consequently shareholder value.

Important summary papers have been written on the importance of food, sleep and quality housing to worker efficiency at remote camps and how they impact a company’s sustainability24; this white paper shows it can be used as a strategy for worker recruitment and retention too.

23 “HR Trends and Insights: Workforce Conditions in Canada’s Bakken Oil Play.” Petroleum Human Resources Council of Canada, May 2013 24 For example, Rothaus, Richard, “Return on Sustainability: Workforce Housing for People, Planet and Profit.” Target Hospitality white paper, August 2013; Rothstein, Nancy, “Optimizing Sleep for an Optimal Workforce in the Oil, Gas and Mining Industries.” Target Hospitality white paper, October 2013


A CALL TO ACTION

“View provision of top-quality housing with the perspective, ‘I can not only recruit but also retain more employees if I spend a little more time thinking about those other 12 hours.’”

All this research points to companies’ needs to introduce a workforce housing policy to complement, enhance and bolster any of the suggested six strategies, regardless of combinations being employed, to attract and retain skilled workers. All companies have operational strategies to extract the most resources with the best efficiency, least cost and best safety record – while the workers are on the job.

Now create a strategy that will focus on the other 12 hours.

Salary, benefits and advancement opportunities cannot be overlooked, of course. But for new recruits, considering their premium homes away from home for the other half of their day can be the tipping factor for deciding to work for a company, and once they have signed on, that can make them stay for a long and satisfying career experience. By concentrating on housing as a recruitment and retention strategy, companies will increase profitability and boost productivity by reducing turnover, safety incidents and social ills.

View provision of top-quality housing with the perspective, “I can not only recruit but also retain more employees if I spend a little more time thinking about those other 12 hours.” An entire company shares the burden of having to bring in and train new people and fill the holes every time someone leaves dissatisfied.


About the Author Graham Chandler is a full-time freelance writer, specializing in the oil, gas and mining industries; principally the business and technological aspects. He has published several hundred articles in magazines such as Oilsands Review, Alberta Oil, Earth Explorer, Far North Oil & Gas and dozens more. Other clients include industry organizations and companies, for whom he has prepared advertorials, speeches, case studies, white papers, reports and brochures. He holds a B.Sc. in physics, an MBA in finance and a Ph.D. in archaeology. He served 17 years in the RCAF/Canadian Armed Forces, during which time he graduated in flight test engineering from the US Naval Test Pilot School. He spent ten years in corporate finance in the oil and gas centers of Calgary, Denver and Houston, attaining the position of Vice President. When not writing resource-related stories, he contributes features to aviation magazines such as Air & Space/Smithsonian and Canadian Skies; and archaeology and heritage stories to international magazines like Saudi Aramco World. He can be reached at www.grahamchandler.ca

About Target Hospitality Target Hospitality, an Algeco Scotsman company, is a global provider of workforce housing and the largest operator of turnkey solutions in the United States. It operates in some of the world’s most remote environments supporting oil, gas, mining and construction operations, government agencies, disaster relief and large-scale events with temporary workforce lodging, mobile crew camps and extended-stay hotels. Named by Inc. magazine in 2012 and 2013 as one of “America’s Fastest Growing Private Companies,” the company has administrative headquarters in Boston; operational headquarters in The Woodlands, TX; and offices in Williston, N.D.; Denver; Edmonton, Alberta; and Sydney, Australia. Visit www.TargetLogistics.net or call (800) 832-4242.

Injury Prevention through Cause Analysis and Worker Readiness

By Dan Hannan, CSP

White Paper – 07.16 | Injury Prevention through Cause Analysis and Worker Readiness Page 1

EXECUTIVE SUMMARY

The proclamation that injuries “just happen” is unacceptable. Even worse is to dismiss the contributing factors that set up a repeat of another injury by the same cause. Central to injury analysis is the psychology of risk- based decision making, such as: “Should I use this broken ladder or take an extra 20 minutes of time to obtain another one?” Accordingly, many safety programs are constructed with the hope that an individual’s decision-making process and habits can be shaped for the better. Regardless of their non-work habits, tendencies and frame of mind, we anticipate the employee being able to “turn on” a higher regard for safety once he or she enters the workspace. This is an unrealistic assumption, as we are all creatures of habit. When critical decisions need to be made, we often resort to what is comfortable or what has worked for us in the past, especially if we are under schedule demands or dealing with a stressful work or home environment.

Most injury prevention approaches require that a worker’s training and experience are in line with the required tasks. However, to achieve a complete work-ready state requires the mind and body to function seamlessly together in order to be physically and mentally prepared.

Arriving to work prepared and fit for duty is largely seen as an employee’s responsibility. But, in reality, many employees, especially those working in remote locations for oil, gas or mining industries, may be living in noisy, crowded, substandard conditions where even a good night’s sleep and proper nutrition is hard to come by. In these situations, the worker isn’t arriving on the job in the best position to keep him or her and co-workers safe. An employer who takes a holistic approach to employee safety and risk management will consider all factors that contribute to a high injury rate, even those encountered away from work.

A growing number of employers have turned to Target Hospitality and its innovative workforce housing solutions to ensure that their employees have a secure and quiet home environment, and are arriving on the job well fed and well prepared to perform their jobs. Ensuring that its employees are fit for duty makes sense for many reasons, including increases in worker productivity, job satisfaction and employee retention, but it is also a great step toward injury prevention.

Injury prevention is best accomplished by understanding each injury mechanism and its contributing factors. Once understood, these factors can be dealt with through effective controls and practices. This paper examines the following common elements associated with the cause of injuries and illnesses.


Process controls

Inadequate or poorly executed practices create unnecessary risks.

Complacency

Increased comfort levels can result in reduced safety awareness.

Hazard assessment, recognition and avoidance

The inability to identify unsafe conditions and behaviors, and take appropriate action.

Support and culture development

A lack of resources and improper messaging from leadership communicates to the workforce that productivity is more important than safety.

Fatigue management

When the mind and body are over-stressed, they fail to work together, resulting in poor decision making.


INTRODUCTION AND BACKGROUND

“Fatalities happen across all industries and are often the result of very preventable occurrences. Whether an injury or a fatality, one or more root-cause factors can be identified, which commonly include poor decision making, poorly developed procedures or a culture that promotes risk taking.”

Each year the U.S. labor force loses 4,500 workers due to work-related fatalities. Leading causes of these deaths include falls, electrocution and being struck by objects. Additionally, more than 3 million employees are injured annually while at work, including chronic illnesses such as musculoskeletal disorders, carpal tunnel, hearing loss and lung diseases like silicosis and mesothelioma.1 Fatalities happen across all industries and are often the result of very preventable occurrences. Whether an injury or a fatality, one or more root-cause factors can be identified, which commonly include poor decision making, poorly developed procedures or a culture that promotes risk taking.

In most cases, there is usually some responsibility and accountability to be shared by both the employer and employee. For example, although an employee may identify an unsafe condition, he may fail to report it for fear of reprisal from co-workers or his supervisor. In this case, the employee has the necessary hazard recognition skills, but the employer has failed to ensure a work environment that supports a “see something – say something” policy, favoring safety over production. In the case of a worker falling to his death, the root cause could be a loss of focus while assembling a fall protection system. Pressures to rush a task, workplace distractions and even fatigue due to lack of sleep often underlie this lapse of focus.

A contributing factor that is generally out of the employees’ hands is whether or not a company has made adequate preparations for the well- being of its workforce. A growing number of employers have turned to Target Hospitality and its innovative workforce housing solutions to ensure that their employees have a secure and quiet home environment and are arriving on the job well fed and well prepared to perform their jobs.

Since the creation of the Occupational Health and Safety Administration (OSHA) in 1970, workplace fatalities have decreased nearly 65 percent, while the injury rate has decreased from 11 injuries per 100 workers to about three injuries per 100 workers.2 These federal workplace regulations began with the declaration that workers are not expendable. Since 1970, employers have slowly begun to understand and appreciate the proposition that a safe workplace and a fit-for-duty workforce are vital to a profitable and sustainable business.

1 U.S. Dept. of Labor, Bureau of Labor Statistics (BLS), Data and Statistics, www.bls.gov 2 Ibid.


“The challenges of managing the well- being of a worker are considerably greater when a project is in an isolated or remote location.”

Nobody wants to work where injuries are frequent and his or her employer has little regard for the well-being of workers. Nobody wants to lose a finger or an eye, or develop hearing loss or a lung disease. Companies that understand the complete value of safety realize that injuries and illnesses result in lost productivity, higher worker compensation insurance costs, monetary penalties and negative publicity. Injuries are bad for business, and without a healthy and ready workforce, it’s difficult to remain competitive in the marketplace.

The challenges of managing the well-being of a worker are considerably greater when a project is in an isolated or remote location. Consider a typical commercial construction project occurring in a city where the worker lives in the area. All of the worker’s mental and physical needs are met daily – returning home to his or her social network of family, friends, recreation and creature comforts.

Contrasting that with a remote work assignment such as the construction of an oil or gas pipeline spanning hundreds of miles and several years, the stressors associated with displacement are significant.

The development of a safety-centered culture, one where risk management is embraced at all levels of operation, is viewed as a “journey” and often takes years to attain the status of excellence. To shape the beliefs and values of management and the workforce doesn’t happen overnight, and it requires vision and commitment. The journey begins where employers see safety only as a “have to do” practice, favoring production above all else as they approach safety in a reactive way – waiting for injuries to occur. Unfortunately, realizing that change must happen often takes a qualifying event such as a fatality, OSHA inspection or worker compensation insurance costs that go through the roof.

The journey then continues from Reactive through a series of stages, the next being Compliance Driven – where only minimal effort is applied, and safety is seen as just a series of inspection events.


“Companies develop standard operating procedures (SOPs), practices, guidelines and protocols to reduce risk by applying controls in the form of directions for the worker to follow. However, avoiding an injury or illness is not guaranteed just because a process control is in place – it still requires proper development and execution.”

Then on to Employee Focus where safety responsibility is placed solely on the safety manager, and the question “Why do these injuries still happen?” reoccurs with no answer; progressing to Management Accountability – where safety ownership by management becomes a visible commitment, and prevention is embraced; and finally to Safety Excellence and Leadership – where an interdependent work environment exists, and values are shared and lived by everyone.

The beauty of safety is that at its core a common purpose is shared – the preservation of life. In the short term, we all want to go to work and return home in one piece. In the long term, we want to retire without having sustained a debilitating disease. This can happen, but it requires both employers and employees to make sure their priorities are aligned and commitments are fulfilled.

PROCESS CONTROLS

Companies develop standard operating procedures (SOPs), practices, guidelines and protocols to reduce risk by applying controls in the form of directions for the worker to follow. However, avoiding an injury or illness is not guaranteed just because a process control is in place – it still requires proper development and execution. For example, a confined space entry procedure requires that a permit be completed prior to

entry to ensure all of the hazards are accounted for and the necessary controls are in place. However, if the permit is completed hastily (“pencil- whipped”), critical elements such as available rescue resources may be unaccounted for, putting the entry worker at risk in an emergency situation.

The decision by the worker to deviate from a procedure is a behavior that must be monitored and corrected. The decision-making process to follow procedures, for instance, includes both internal and external motivating factors. This mental process is influenced by a worker’s risk-reward value system, work output expectations and environmental stressors such as lack of sleep, poor social interactions and a substandard living experience.

Unfortunately, it is most often after an injury has occurred or an illness is reported that a deficiency in a process control is realized. Incident investigations play a very important part of process improvement. It is during an investigation that the process controls are scrutinized in search of a root cause and corrective action.


“The tracking of near- miss or ‘almost’ injury incidents allows for trends to be identified and a process correction to be applied prior to an actual occurrence. Peer-to- peer observation programs can also be used to monitor workplace behavior in real time and in the proper execution of procedures.”

Solutions • Inspections and audits

These are periodic and scheduled examinations of a process control to ensure they are being executed properly and are effective. Observation data is used to identify a negative trend, such as skipped procedural steps, that may require disciplinary action or a procedure to be modified. This quality control measure supports the process review life cycle of “plan-do-check-act.”

• Near-miss and observation reporting

The tracking of near-miss or “almost” injury incidents allows for trends to be identified and a process correction to be applied prior to an actual occurrence. Peer-to-peer observation programs can also be used to monitor workplace behavior in real time and in the proper execution of procedures.

• Exercises and drills

Emergency procedures for addressing a fire, severe weather or responding to a medical condition require regular practice and evaluation to ensure they are adequate. These should involve all persons in the response chain to thoroughly evaluate a response procedure. Taking time to develop a “what-if” scenario and discuss it during a safety meeting helps keep workers mentally engaged. A “skill-sharpening” functional exercise, with likely scenarios such as rescuing a dummy from a confined space, should be completed several times per year.

• Another set of eyes

Contracting for an independent safety review/audit via an outside consulting resource provides an unbiased opinion and recommendations.

COMPLACENCY

Complacency is the condition where routine activities result in mental fatigue and a loss of focus. It is the product of a mundane task being performed so regularly that the same result or outcome is expected. Complacency is often found during periods of long driving times where the driver “zones out,” becoming lulled into the same uneventful experience mile after mile. The danger lies in the inability to respond in a

timely and appropriate manner, otherwise known as “letting your guard down.”


“The idea is to communicate the value of safety often enough so that it stays meaningful but not so often that the message becomes watered down. Messages that relate safety to personal experiences, such as avoiding a weekend injury at home, have the most impact and recall.”

Consider an assembly line where a worker must handle the same part several hundred times per day. What is the likelihood that the worker will remain alert enough to respond quickly should something threaten him or his co-workers? Sadly, it is easier to stay on guard or focused if an injury were to occur with some regularity. However, this would be contrary to the goal of reducing workplace injuries.

Solutions

• Engage the worker regularly

The idea is to communicate the value of safety often enough so that it stays meaningful but not so often that the message becomes watered down. Messages that relate safety to personal experiences, such as avoiding a weekend injury at home, have the most impact and recall. Routinely reminding workers of both the human and business costs associated with safety gains and losses is completely acceptable. For example, a short discussion relating injury costs to increased insurance premiums and lower profits can be worked into the daily pre- shift safety huddle. Likewise, a lengthier message from the vice president to the workforce during a quarterly meeting may describe how the workforce is viewed as human capital, highly valued and must be safeguarded.

• Change the task

A change in the work environment or work task helps break up monotony. A change of scenery, personnel and activity keeps the mind engaged.

• Take breaks

Regular breaks allow the mind to rest and the body to stretch. Effective stretching increases blood circulation, refocuses the brain and can help reduce the likelihood of repetitive motion or musculoskeletal disorders like carpal tunnel.

• Decompress

The ability to separate from work and retreat to accommodations of sufficient comfort allows the mind and body to refresh and refocus.


HAZARD ASSESSMENT, RECOGNITION AND AVOIDANCE

“You don’t know what you don’t know, and if safety were just common sense, workplace fatalities would not exist. OSHA requires employers to ensure that employees are properly task- trained before assigning them work.”

You don’t know what you don’t know, and if safety were just common sense, workplace fatalities would not exist. OSHA requires employers to ensure that employees are properly task-trained before assigning them work. This directive means the worker must possess the skill to perform the work safely. At the core of working safely lies the ability to follow procedures, recognize when an unsafe condition or behavior is

occurring and then take the necessary corrective action.

To account for the hazards associated with an activity and prevent an injury or illness, an assessment is completed. The hazard assessment process must start in advance of the work being performed and then applied throughout the work sequence as personnel, equipment and conditions change. Once the hazards of the activity are identified, controls can be applied and injury avoidance becomes more certain.

Hazard recognition skills generally improve in time as greater familiarity is gained, and unsafe conditions are experienced and logged into memory. To support recognition, skill development training is commonly provided to ensure employees have a baseline understanding of safety regulations, acceptable conditions and behaviors, and company-specific procedures. To effectively apply hazard recognition skills requires a prepared employee and one who is alert and focused on his/her surroundings and the task at hand. Achieving a focused state of mind depends on, among other things, a manageable rate of work, limited distractions and a healthy and rested body.

Solutions

• Planning

Planning begins with the evaluation of exposures based on the scope of work and tasks to be performed. A process known as job hazard analysis (JHA) is a straightforward assessment approach that involves breaking a task into steps, identifying the exposures present at each step and applying controls to prevent injury. Each physical, chemical, biological and mechanical hazard is accounted for in completing a JHA. For complex and extended work activities, a health and safety plan (HASP) document is prepared that summarizes all of the critical project safety aspects, including personnel roles and responsibilities, emergency actions, hazards, controls and means of communication.


“Even the best safety intentions will die on the vine without enough of the right type of work environment and resource support. Great safety cultures are defined by employers whose actions show a true sense of caring for employees and even beyond to their families.”

• Procedures Procedures are developed to standardize safety practices. These include written protocols for such activities as lock-out/tag-out, hazard communication and confined space entry.

• Inspections

Inspections are performed regularly to identify unsafe conditions and behaviors, and well-executed practices. Because an inspection captures the condition at a single point in time, the quality and quantity of inspections must be balanced to obtain an acceptable return on the investment. Data from inspections are used to verify training, verify adherence to following procedures and identify negative trends that require intervention.

• Communication

Communication is essential to ensure that all of the collected hazard information is disseminated to the workers. This is commonly done through extended training: on a daily basis during a morning workforce briefing known as a “tailgate meeting,” or on a weekly basis with a mini education session known as a “toolbox talk.” The daily discussion, for instance, could include the forecast of approaching severe weather and facility shelter locations, or the cause of and corrective action for a recent injury.

SUPPORT AND CULTURE DEVELOPMENT

Even the best safety intentions will die on the vine without enough of the right type of work environment and resource support. Great safety cultures are defined by employers whose actions show a true sense of caring for employees and even beyond to their families. The byproduct of this caring attitude and support becomes trust, which yields a greater sense of obligation by the employee to do the right thing, such as heeding the safety requirements to keep themselves

and their co-workers safe. In time, a safety culture develops where employees inherently look out for each other and realize interdependence.

Support comes in a variety of forms, and understanding that employees are valued human capital is central to the need to keep them safe. For example, an adequate amount of time and money must be allocated to ensure that workers are properly task-trained and are supported with the right “tools” to perform their work well. In the case of remotely located workers, employers demonstrate support by offering housing solutions that minimize negative stressors outside of the workplace. Additionally, providing readily accessible medical care in the form of a clinic and registered nurse demonstrates a commitment to the well-being of the workers.


“An employer can demonstrate support to its workforce by providing quality off- hours accommodations. The ability for an employee to receive a restful night’s sleep, obtain quality food, socialize, communicate with his or her family and recreate at a secure location speaks volumes about the employer’s commitment to the well-being of its workforce.”

By simply taking proper care of a cut and preventing it from turning into a serious infection, resulting in lost workdays, returns value to the productivity bottom line. Finally, leadership must demonstrate support by being visibly active through communications so the workforce understands that safety is prioritized above production.

Solutions

• Recognize effort, not just achievement

Although a safety goal may not be achieved, an unconditional support to celebrate and recognize the effort tells the workforce that the commitment is absolute.

• Quality training

There is no greater injustice than sending a worker to an eight-hour training session that is ineffective at developing a skill or knowledge. A quality training experience tells the workforce that the employer wants to do it right. Training that fully engages the worker in the learning process is essential. A theory-to-practice approach is often the most effective. This is achieved, for example, when an employee listens to how fall protection equipment works and then uses the equipment in a hands-on application to demonstrate competency.

• Quality accommodations

An employer can demonstrate support to its workforce by providing quality off-hours accommodations. The ability for an employee to receive a restful night’s sleep, obtain quality food, socialize, communicate with his or her family and recreate at a secure location speaks volumes about the employer’s commitment to the well-being of its workforce.

• Extend caring beyond the workplace

Make opportunities available to the worker’s family such as sponsoring programs that promote safe and healthy lifestyle choices. Health fairs, bicycle safety programs, home security assessments and home fire prevention and preparedness programs are examples of extending safety practices beyond the workplace. A good example includes Target Hospitality’ “Economics of Comfort” proposition, which has shown that ensuring a secure home environment and healthy meals leads to happy and healthy employees, which in turn leads to increases in productivity and employee retention.


FATIGUE MANAGEMENT “Sleep is critical to ensure cognitive brain function and repairing cellular damage to stay healthy. The benefits of sleep are only realized when they are obtained in both the necessary quantity and quality. Not enough or interrupted sleep can result in decreased productivity and puts workers at risk of performing their job duties unsafely.”

Although not commonly recognized by OSHA as a category of workplace injury, unlike falls or electric shock, fatigue is often seen as an underlying contributing cause of many injuries. When the mind and body are not optimally working together, injuries occur. Strain caused by physical fatigue, emotional distractions and harsh environmental conditions can cause an otherwise safety-minded individual to think

and behave in an uncharacteristically unsafe way. Fatigue components include: sleep, nutrition, environmental conditions, physical fitness, work demands and stress.

Sleep

The National Highway Traffic Safety Administration conservatively estimates that 100,000 police-reported crashes are the direct result of driver fatigue each year. This results in an estimated 1,550 deaths, 71,000 injuries and $12.5 billion in monetary losses. Additionally, researchers at Harvard Medical School in Boston surveyed more than 10,000 people in the United States in 2012 and found that insomnia is responsible for 274,000 workplace accidents and errors each year, adding up to $31 billion in extra costs to their employers.

Sleep is critical to ensure cognitive brain function and repairing cellular damage to stay healthy. The benefits of sleep are only realized when they are obtained in both the necessary quantity and quality. Not enough or interrupted sleep can result in decreased productivity and puts workers at risk of performing their job duties unsafely. The loss of just two hours of sleep a night has been shown to have the same impairment effect on the body as a 0.05% blood alcohol content.3

Each individual is different in terms of the amount of sleep he or she requires to function properly, with averages ranging from six to nine hours. Shorting the body of needed sleep, even a little bit every night, can have an additive effect and can cause health problems over time. Combating sleep with the use of stimulants causes the body to fight its natural circadian rhythm. Workers should be cautioned about the use of stimulants and sleep aids, especially when combined in a routine cycle to stay awake and fall asleep.

3 National Sleep Foundation, website: http://sleepfoundation.org/drowsy-driving-advocacy


“A workplace nutrition program encourages healthy eating among all employees, emphasizing fruits and vegetables and whole- grain products; low-fat dairy products, lean meats, poultry, fish and legumes; and small amounts of salt, sugar and saturated fat.”

Solutions

To address the risk of sleep deprivation, consider the following: • Comfortable accommodations

Provide for accommodations that are comfortable and afford isolation for restful sleep

• Effect on work shifts

Manage work shifts to allow for at least eight hours of sleep time • Plan for travel

Where driving is a significant part of the work, develop a “travel plan” that requires rest breaks or the need for two drivers to take turns.

NUTRITION

The body is fueled by what we put into it. “You are what you eat” was the mantra we learned as children. Or to put it another way, in terms of modern-day computing, “junk in equals junk out.” The availability of nutritious food helps ensure that the body is receiving an adequate amount of protein, fat and amino acids, which are essential to cellular function and overall good health. If provided with wholesome and healthy food options, most people will consistently make good choices to eat right. A balanced diet produces a worker with a stable output of energy and mental capacity.

The long-term benefits of making good eating choices are numerous as well. Research has shown that good nutrition can help lower the risk of many chronic diseases, including heart disease, stroke, some cancers, diabetes and osteoporosis. A workplace nutrition program encourages healthy eating among all employees, emphasizing fruits and vegetables and whole-grain products; low-fat dairy products, lean meats, poultry, fish and legumes; and small amounts of salt, sugar and saturated fat.4

Solutions

To promote nutrition in the workplace, consider the following:

• Diet information

Provide resources to better understand the importance of diet, such as access to a nutritionist/dietitian, online consultation or pamphlet information.

4 Centers for Disease Control and Prevention (CDC), Nutrition webpage: http://www.cdc.gov/workplacehealthpromotion/implementation/topics/nutrition.html


“Temperature, humidity, direct sunlight, altitude and other environmental conditions affect a worker’s ability to physically and mentally perform.”

• Quality food Provide access to properly prepared quality food.

ENVIRONMENTAL CONDITIONS

Temperature, humidity, direct sunlight, altitude and other environmental conditions affect a worker’s ability to physically and mentally perform. Each person responds differently to these conditions based on their physiology and physical condition. This becomes a challenge for the employer as, for instance, a heat/cold stress policy may exist, but it is usually left up to the employee to decide when he or she has had enough. How we treat our body, including what goes into it, also affects our ability to withstand the elements. Alcohol and caffeine, for instance, are both diuretics and cause the body to shed fluids faster than they should. Their consumption in large amounts should be discouraged when hydration is critical.

Of all the environmental conditions, the one that commonly poses the greatest threat of an injury is temperature. Both short and prolonged periods of exposure to heat and cold work environments place an enormous amount of physical and mental stress on the body. As warm- blooded creatures, we strive to maintain a core body temperature of 98.6 degrees F. With a swing in our core temperature of just four or five degrees in either direction, the body reacts by sweating profusely or shivering uncontrollably. Eventually organs shut down in an attempt to preserve the heart and brain. Unconsciousness and even death can occur from heat stroke or hypothermia.

Solutions

• Supply water

Make sure that plenty of water and electrolyte solutions are available for both hot and cold work tasks.

• Cycle through work and rest

Develop work/rest cycles and manage the consumption of fluids, even when an employee is not thirsty, as the onset of injuries can occur quickly. Also, sleep accommodations that provide for well-heated and well-cooled spaces are important to allow the body to recover daily.

• Maintain a balanced diet

Maintaining a well-balanced diet helps ensure the body has all of the necessary nutrients to run efficiently.

• Train workers to identify symptoms

Make sure that all workers are trained to identify physical signs and symptoms of overexposure.


PHYSICAL FITNESS AND WORK DEMANDS

“Wellness programs have become a popular employer initiative over the last several years. These programs promote physical fitness, diet, weight loss and smoking cessation in an effort to develop a healthier, happier and more productive workforce. Cost benefits include fewer workplace injuries, as well as non-work- related injuries that keep workers off the job and maintain the employer’s health care insurance premium.”

Age, size and sex have nothing to do with how physically fit and capable someone is to perform a task safely. A person who is physically small in stature may be able to successfully lift a large object if he or she uses the correct lifting technique and is in generally good physical condition. To avoid injury, the employer is well served to promote physical fitness and align physical ability with work demands. For the following solutions, it is recommended that you coordinate with the human resource department prior to implementation to ensure compliance with hiring practices.

Solutions

• Provide pre-hire medical evaluations

A pre-hire medical evaluation and physical fitness exam can determine if a candidate has a pre-existing injury or physical limitation that may prevent him/her from performing the job safely.

• Offer fitness opportunities

Provide for an exercise space/equipment or offer membership discounts at area fitness centers.

• Initiate a wellness program

Wellness programs have become a popular employer initiative over the last several years. These programs promote physical fitness, diet, weight loss and smoking cessation in an effort to develop a healthier, happier and more productive workforce. Cost benefits include fewer workplace injuries, as well as non-work-related injuries that keep workers off the job and maintain the employer’s health care insurance premium.

• Call in an ergonomist

Work demands can be assessed in part by a certified ergonomist who can assist with evaluating the push, pull, drag and lift activities of a job position. Once these have been identified, a pre-hire work-simulation assessment can be developed. Rolling a drum, shoveling sand, lifting boxes to an elevated work table and many other real-world tests can be performed under the watchful eye of an ergonomist to determine whether the candidate has the necessary physical capacity.

STRESS

Mental and physical stresses are caused by a variety of life situations and manifest themselves in many ways. Death of a loved one, marriage difficulties, being away from family for extended periods of time, job demands or losing a job are some of the leading stressors.


“Smart employers extend their safety and health commitment beyond the jobsite to include access to comfortable and secure housing and a supportive residential community, such as the workforce solutions and temporary housing offered by Target Hospitality.”

Stress can physically appear in a number of overt and unseen ways, such as twitching muscles or a migraine headache. In some instances, the effects of stress are so severe that they prohibit a person from functioning altogether, such as clinical depression. The amount and type of stress needed to impair someone varies greatly. The key is for individuals to recognize their signs and symptoms, and apply means to reduce the stress or seek assistance.

Solutions

• Exercise

Moderate and regular exercise has proven to provide relief from stress. A brisk walk can do wonders for the constitution. In some cases, rigorous exercise can cause the release of endorphins that produce the feeling of joy or even ecstasy.

• Meditation

If done at the beginning or end of the day, meditation allows for the mind and body to relax, center and focus.

• Physical therapy

Massage, acupressure and acupuncture therapy have been shown to offer relief from stress.

• Leisure activities

Fishing, hunting, watching TV, playing games or any other leisure activity can redirect the brain to the moment where fun is occurring.

CONCLUSION

Employers are faced with many challenges and responsibilities to keep their workers safe and healthy. Gone are the days of hiring a worker and simply pointing to the job assignment with little regard for the outcome. Smart employers take stock of their workforce, and see them as human capital and an investment for success. Injury prevention becomes a value proposition.

Smart employers extend their safety and health commitment beyond the jobsite to include access to comfortable and secure housing and a supportive residential community, such as the workforce solutions and temporary housing offered by Target Hospitality. Such solutions help maintain a work-ready workforce – one that is fit, mentally and physically, to make good risk-based decisions and able to recognize workplace hazards. Accounting for employees’ well-being, both on and off the job, is smart business and one in which a symbiotic relationship forms: You take care of them, and they take care of you.


About the Author Dan Hannan is a Certified Safety Professional and an Authorized OSHA Outreach instructor with 24 years of applied health and safety experience. Mr. Hannan is presently the Corporate Safety and Health Director for Merjent, Inc., an environmental and social consulting firm serving the world’s leading energy and mining companies, where he is responsible for the safety outcome of all Merjent employees, and supports program and project health and safety needs. Mr. Hannan is an accomplished trainer, specializing in safety leadership development, and has led organizations through cultural assessments and process improvement activities. He is very involved in the greater safety community and is a Board Member of the American Society of Safety Professionals (ASSE), Northwest Chapter, a Board Member of Washington/Dakota Community Awareness & Emergency Response (Wakota CAER) and a member of the National Safety Council’s Executive Committee for Off-the-Job Safety. He is also widely published, providing advice and strategy on a variety of safety topics for industry trade publications, and is author of “Preventing Home Accidents,” a book promoting resources for safe living at home. Merjent consultants have decades of specialized experience supporting the oil and gas pipeline, electric transmission, alternative energy, biofuels and mining sectors through planning and feasibility, environmental permitting, construction compliance, operational compliance, third-party analyses, stakeholder engagement and technology solutions services. Mr. Hannan can be reached at [email protected].

About Target Hospitality Target Hospitality, an Algeco Scotsman company, is one of the largest providers of turnkey housing solutions in North America. It operates globally in some of the most remote environments, supporting oil, gas and mining with workforce housing, mobile crew camps and extended-stay hotels; government departments and organizations with temporary lodging and refugee integration; and capital projects. Target Hospitality was named by Inc. magazine in 2012 and 2013 as one of “America’s Fastest Growing Private Companies.” Visit www.TargetLogistics.net or call (800) 832-4242.

The Great Crew Change: Managing Generational Differences in Oil, Gas,

Mining and Construction Workforces By Elaine Cullen, MBA, PhD, CMSP

White Paper – 06.15 | The Great Crew Change Page 1

EXECUTIVE SUMMARY

A recently released study from the National Academies of Science1 warned that we are facing the “Great Crew Change” in most, if not all, of our skilled labor industries, and that all of the industries included in the study are facing labor shortages in the future. The challenge to companies wishing to stay competitive and productive will be to attract competent workers, to retain them as long-term employees, and to keep them safe and healthy throughout their careers. Mining, oil and gas extraction, construction and others are all facing a dramatic change in the makeup of the workforce as the aging Traditionals and the huge Baby Boomer generations retire, making way for Generations X and Y (commonly referred to as the Millennials). As this change occurs, the workforce cultures are also changing to reflect the attitudes, goals and beliefs of these younger workers. The transition brings with it much that is positive, but it also brings challenges. The workforce of the future will be much more diverse than it has been, presenting challenges that must be faced if we are going to be successful in keeping workers safe and healthy throughout their careers. This paper will examine generational differences and share recommendations from the National Academy study and other sources to address the Great Crew Change.

1 Cullen, E.T., C. Fairhurst et al. 2013. Emerging Workforce Trends in the U.S. Energy and Mining Industries: A Call to Action. National Research Council of the National Academies. Washington, DC: The National Academies Press.


INTRODUCTION

“… Generations have very different ways of looking at the world and, consequently, how they approach work. It is a natural assumption to believe that others know what we know or learn the way we learn. Neither of these is true, however.”

This white paper discusses the Great Crew Change faced by most, if not all, of our skilled labor industries. Construction and extractive industries, such as mining, and oil and gas extraction and production are losing their veteran workers to retirement, and with them, they are losing the skills and wisdom these people have earned over their careers. The workforce of the future will be much more diverse in terms of gender, national origin and generation, and will bring with it many changes. Workforce cultures in these industries must also change, and while that will bring many positive things to the workplace, it will also be a challenge as companies struggle to find enough workers with the skills necessary to do the work, and to retain them over their careers. This paper identifies differences that can be a source of conflict and presents options for mitigating some of them.

THE PROBLEM

The current workforce includes four recognized generations. While there are some differences in how different researchers describe or identify them, they are generally defined as: • The Traditionals (sometimes

known as the World War II Generation): Born before 1945

• The Baby Boomers: Born between 1946 and 1964 • Generation X (known as Gen Xers): Born between 1965 and 1980 • Generation Y (known as Gen Yers or Millennials): Born between 1981

and 20002

Members of these generations have very different ways of looking at the world and, consequently, how they approach work. It is a natural assumption to believe that others know what we know or learn the way we learn. Neither of these is true, however. There is an Arab proverb that says, “People resemble their times more than they resemble their parents.”3 The old ways of working with or training workers are simply not going to work for younger generations because of how these workers learn, understand information or relate to the world of work differently from their predecessors. For safety professionals, it is imperative that these differences be recognized in order for training to be effective.

2 American Association of Retired Persons (AARP). 2007. Leading a Multigenerational Workforce. Washington, DC: AARP. 3 American Association of Retired Persons (AARP). 2007. Leading a Multigenerational Workforce. Washington, DC: AARP, p.6.

4 American Association of Retired Persons (AARP). 2007. Leading a Multigenerational

Workforce. Washington, DC: AARP.


“Looking across the expectations and preferences that each generation brings to the workplace, it is easy to see why conflict and miscommunication can arise.”

A report published in 2007 by the AARP4 identified three trends that were shaping the world of work. • Competition for talent is escalating:

o “Finding skilled employees” is the top concern of companies included in an AARP survey.

o The cost of replacing retiring workers is 50 to 150 percent of the annual salary of the person replaced.

o The workforce is aging. • There are more generations in the workplace than ever before:

o Over a third of the current workforce is over 50 years of age, with both Baby Boomers and Traditionals included in this demographic.

o While Baby Boomers are speeding toward retirement age, 80 percent of them expect to either remain on the job or work part time.

o Millennials (born between 1981 and 2000) are the fastest- growing generation.

• Productivity and work results are strongly linked to the work environment:

o Workers need to be engaged in order to be successful. o Generational differences are common and lead to conflict and

frustration. o Organizations with highly engaged workers outperform their

competitors. “Culture” has been very simply defined as “The way we do things around here.” Cultures provide the information needed by members to make sense of the world, and this is certainly true for generational cultures. These cultures include values, expectations and preferences that are quite different from each other. Looking across the expectations and preferences that each generation brings to the workplace, it is easy to see why conflict and miscommunication can arise.

Traditionalists • Conservative in dress and language • Strong work ethic focused on the common good • Loyal to organizations, disciplined and stable • Not computer savvy • Don’t like profanity/slang • Want experience to be valued • Rewards include plaques, certificates • Expect leaders to be fair, consistent, logical, organized

5 American Association of Retired Persons (AARP). 2007. Leading a Multigenerational

Workforce. Washington, DC: AARP.


Baby Boomers • Work well with others • Strong desire to change the world • Optimistic and confident • Want to be included in decisions • Want their opinions, contributions to be valued • Prefer personal interaction with supervisors • Dislike bureaucratic, micro-managing bosses • Rewards include promotion, appreciation, recognition • Expect leaders to be democratic, personal, open to input

Generation X • Self-reliant, independent, creative, tolerant of chaos and change • Skeptical, distrustful of authority … heroes don’t exist • Expect as much flexibility as possible from supervisors • Love technology and not afraid of it • Keep rules to a minimum • Rewards include free time, new experiences, high-tech toys • Expect leaders not to be micro-managers or too bureaucratic • Leaders must walk the talk, focus on results, not process

Millennials • Have grown up in a multicultural world • Goal and achievement oriented • Concerned about social responsibility • Need mentors, coaches, supervisors who will teach (especially

Boomers) • Like to multitask • Use ability to work with high tech • Need to work on interpersonal skills • Rewards include awards, certificates, other evidence of

ability/credibility • Expect leaders to be consistent, organized, value their technical savvy • Won’t respond to leaders who are condescending, cynical, sarcastic or

who treat them as if they are too young to be valuable5


“Because our collective workforce has become much more global, it is important to consider whether or not the global nature of many of our high-risk industries changes the equation when it comes to dealing with generational differences in the workplace.”

Because our collective workforce has become much more global, it is important to consider whether or not the global nature of many of our high-risk industries changes the equation when it comes to dealing with generational differences in the workplace. Prior to WWII, national cultures most likely had a stronger influence on people than generational ones. As information, and access to it, became more readily available, however, those differences began to shrink. It is generally believed by researchers in this field that the younger the person, the more likely it is that he or she will fit a global model of his or her generation. For people who grow up in rural or impoverished areas with little access to the Internet or television, the model is less applicable.

Education, and access to it, is another source of differences among today’s workers. Because each generation has been taught differently, their expectations and abilities differ. For example, Traditionalists and Baby Boomers tend to be more proficient in such “old” skills as working with hand tools or shop tools, or in fixing machines themselves. They have been characterized as having a “get ’er done” mentality and are more tolerant of a classroom, traditional approach to training. Gen Xers and Millennials tend to be much more comfortable with high tech and with using computers to find or communicate information. Many have had no experience at all with using hand tools or shop tools, and this rather basic skill must be taught to them before they begin work in mines, drill rigs or construction sites.

A major challenge for new workers coming into the workplace concerns their competence in what has become known as STEM skills (Science, Technology, Engineering and Math). The NAS workforce study6 revealed that jobs in the energy and extractive industries are among the higher paid for skilled blue-collar workers, but that they require an ability to understand and work with math, science and technology. (An example would be miners who drive the huge haul trucks in surface mines. These trucks have on-board computers that control such things as scheduling, routes, engine load and speed, and drivers must be able to work effectively with them in order to handle the job.)

6 Cullen, E.T., C. Fairhurst et al. 2013. Emerging Workforce Trends in the U.S. Energy and Mining Industries: A Call to Action. National Research Council of the National Academies. Washington, DC: The National Academies Press.


“The question, then, is how do we keep people safe until they have time to learn their fields and earn the occupational wisdom necessary to spend their careers safely and successfully?”

Unfortunately, U.S. students score far behind their counterparts in other countries and are losing ground every year. A recent ACT report7 showed that only 25 percent of graduating U.S. seniors could meet or surpass College Readiness Benchmarks in science, math, reading and English.

Additionally, according to the Alliance for Excellent Education report,8 7,000 U.S. students drop out of high school every day, and about 1.3 million students do not graduate each year.

We have a dilemma. Industries are desperate for qualified workers and willing to pay a premium to attract them, but students are not being trained to meet basic qualifications. We are faced with unacceptable unemployment rates at the same time we are desperate for workers. This makes the need to keep qualified employees even more imperative.

High-risk blue-collar industries generally agree that the highest injury and fatality rates are found in workers either under 21 or over 55.9 A study done by Texas Mutual Insurance and Texas Oil and Gas Association10 showed that of fatalities suffered by O&G workers in Texas over the 10- year period from 2001 to 2010, 34 percent had less than three months’ experience, 65 percent had less than a year and 89 percent had less than five years in the industry.

Most people in these industries agree that it takes eight to 10 years to become an expert in fields such as these.

The question, then, is how do we keep people safe until they have time to learn their fields and earn the occupational wisdom necessary to spend their careers safely and successfully?

7 ACT, Inc. 2011. Condition of College and Career Readiness. http://www.act.org/research/policymakers/cccr11/pdf/ConditionofCollegeandCareerReadi ness2011.pdf 8 Alliance for Excellent Education. 2010. Fact Sheet, “High School Dropouts in America.” http://www.all4ed.org/files/GraduationRates_FactSheet.pdf 9 Ismail, N. and J. Haight. 2010. Older Workers: Asset or Liability for Your Company? The Case Study: Metal and Nonmetal Mines. Proceedings of American Society of Safety Engineers Professional Development Conference, June 13-16, Baltimore, MD, Session #731. 10 Stephens, J. 2011. Protect Your New Workers. Presentation from the Texas Oil and Gas Association (TxOGA) Worker’s Comp Purchasing Group to the Permian Basin STEPS Network, August, Midland, TX.


“Younger workers, and Gen Xers in particular, expect to have a strong balance between work and life.

The problem is compounded by the fact that none of the industries included in the NAS study11 have enough qualified job applicants. Many are begging for workers and trying to fill their needs by competing with other industries or bringing people in from other areas of the country or even other countries. This is creating a new workforce that is demographically diverse in terms of generation, gender, national origin, geography, religion, ethnicity and family values. Is it any wonder that safety trainers are having difficulty reaching people or teaching them how to be safe on the job?

Work-Life Balance

Younger workers, and Gen Xers in particular, expect to have a strong balance between work and life. Unlike the Traditionals and Baby Boomers, these workers are not willing to sacrifice their free time and “do whatever it takes” to succeed in their jobs. In an area like the Bakken Basin, where housing is at a premium and many workers struggle to find a safe place to sleep or something nourishing to eat when their shifts are over, Gen Xers are much more likely to quit than to put up with substandard housing or meals. In a meeting of the North Dakota Sheriff’s and Deputies Association in January 2012, North Dakota law enforcement speakers reported the following: • Williams County (Williston area) allows no more than three campers

per farmstead. Almost every farmer has three campers on their properties, and they are charging oilfield workers $800 per month per camper just to park. Obviously, no amenities are included.

• There are no more hookups available in regulated campsites anywhere in the area.

• On January 1, 2012, there were 148 campers and trailers parked overnight in the Williston Wal-Mart parking lot. (Wal-Mart subsequently has prevented customers from spending the night due to fights, drinking, littering and blocking of parking spaces for other customers.)

• The Williston McDonald’s offers no inside seating, and the line at the drive-through window is often over a quarter-mile long.

• Restaurants in Williston that do provide inside seating report a minimum wait of at least an hour at any time of the day or night.12

During this author’s visit to Williston, informal conversations with local residents revealed that locally owned restaurants have closed because of the difficulty in hiring staff, and that the Take-and-Bake Pizza store in the city was the highest-volume franchise in the country.

11 Cullen, E.T., C. Fairhurst et al. 2013. Emerging Workforce Trends in the U.S. Energy and Mining Industries: A Call to Action. National Research Council of the National Academies. Washington, DC: The National Academies Press. 12 Informal notes provided by the Williams County Sherriff’s Department. January 2012.


“It is clear that a company wishing to retain its workers (especially the Gen Xers) must find a way to alleviate these types of room and board issues.”

Rather than taking orders for custom-made pizzas, they only made three to four varieties of pizza, which were all purchased as fast as they could be produced.

Workers getting off shift had few other options for fast, nourishing meals, and if they were lucky enough to get one of the unbaked pizzas, they still had to find a place to cook it. Some workers didn’t even have this luxury, as can be seen in the photo of the worker living in the tractor of his truck (see photo). He had covered the windows with cardboard to help retain heat and had a small car parked next to his truck for transportation, but his living situation can only be described as less than optimal. It is clear that a company wishing to retain its workers (especially the Gen Xers) must find a way to alleviate these types of room and board issues.

Workforce Diversity

Extractive industries’ worker populations have historically been quite homogeneous. A NIOSH report13 suggests that these populations have benefitted from common values “often because of the geographic locations of mines and the adjacent communities and also because families included generations of workers: a grandfather, an uncle, a father, a son, a cousin.

Career choice was relatively predictable … but this is not true today.” Today’s companies are facing a workforce that no longer expects to stay with one company or even one industry for a lifetime, that has little or no experience in doing the work required, and that has no strong connection to a work culture that provides a roadmap of how to do the job. Considering the cost to find or replace skilled workers, it is more critical than ever before that companies understand employees in order to keep them.

Demographics data show that the workforce is becoming much more diverse. Industries that have been historically homogeneous must now find ways to deal with workers from different generations, different national origins, different genders and different parts of the country.

13 Kowalski-Trakofler, K., et al. 2004. Safety and Health Training for an Evolving Workforce: An Overview from the Mining Industry. Dept. of Health and Human Services, NIOSH. Information Circular 9474, July 2004. Pittsburgh, PA.


“… The NAS study concludes that high- quality training is needed to address safety and health issues faced by workers at both ends of their careers, so that these employees can be successful.”

In regions of the country that are experiencing worker shortages, companies have tried many strategies to attract sufficient numbers of workers, such as “cannibalizing their neighbors” by offering higher wages, training new young workers to fill needed positions, importing workers from other parts of the country, or bringing in workers from other countries. While these may work in the short term, many companies have learned the hard way that they are not a long-term solution unless paired with additional efforts.

Workers who are imported from cultures very different from their own (this could be a national culture or simply bringing inner-city people out to work in the wide-open plains of Wyoming or North Dakota) find themselves in situations that are unfamiliar, frightening, uncomfortable or lonely. When faced with these emotions, many, if not most, workers become discouraged and choose to leave. This situation can be remedied by guaranteeing that these workers have a stronger support structure, accomplished by ensuring they have a cohort, a group of people who have similar backgrounds and experiences, with whom they can share concerns, work through problems or just plain socialize. If hiring young workers from inner cities, for example (see photo), connect them to others like themselves.

Safety and Health

So what does this all have to do with worker safety? Statistics show that workplace injuries are on the rise, particularly in these types of trades.14 As workers age, they are more susceptible to sprains and strains, or cumulative trauma injuries. Also, chronic illnesses related to long-term exposures on the work site will start to manifest. Younger workers, on the other hand, are more at risk for traumatic injury. They have often been described as “ten feet tall and bulletproof,” and may take risks that more experienced workers avoid, simply because they don’t know any better.

Training is an obvious answer, and the NAS study concludes that high- quality training is needed to address safety and health issues faced by workers at both ends of their careers, so that these employees can be successful. Training is legally required in industries such as mining and nuclear power, and an argument could be made that it is morally required for all of these industries.

14 Bureau of Labor Statistics (BLS), U.S. Department of Labor. 2013. CFOI Chartbook, Preliminary 2012 Data. Washington, DC.


“Rather than policing the workforce and testing on a daily basis, controlling behaviors while workers are off- site is less intrusive and much less expensive.”

This paper, however, will not include either the findings or the recommendations related to training, simply because this is a topic that should stand on its own. Rather, we will look at other H&S aspects that may be addressed.

Many of the thousands of workers involved in resource extraction or construction projects are required to travel long distances to their work sites and to live there while they are working. Angel provides a definition: “Mobile workers – also known as the ‘shadow population’ or Fly-In Fly-Out (FIFO) workers – are those individuals who commute to and from resource development projects and who live temporarily in work camps, lodges or other short-term accommodations.”15

In her paper, she discusses the health challenges faced by these workers and cites a study from Australia that finds that these workers are prone to “a number of negative health issues, including substance abuse, poor diet and physical inactivity, mental health issues (e.g., depression, anxiety) and fatigue-related injury.” All of these can lead to negative H&S consequences or to workers getting discouraged and simply quitting and heading home.

Substance abuse is one of the biggest challenges in areas such as the Bakken and Permian Basins. The Williston County Sheriff’s and Deputies Association reported in 2012 that the drug problem was immense and that law enforcement officers were seeing drugs that had never before been seen in the area, such as black tar heroin. In addition, they reported that they make as many DUI arrests at 10 AM as they do at midnight.16

Responsible companies have a zero-tolerance policy for substance abuse, but ensuring it after entry physicals and drug tests is far from easy. Workers who are far from home, and who may find themselves with more money in their pockets than ever previously imagined, will find ways to alleviate their loneliness. Rather than policing the workforce and testing on a daily basis, controlling behaviors while workers are off-site is less intrusive and much less expensive. This, however, is difficult when workers are living in campers and spread out across a wide geographic area.

15 Angel, Angela. Beyond the “Roughneck” Stereotype: Revealing the Actual Face of Mobile Workers in the Alberta Oil Sands and North Dakota’s Bakken Oil Region and Why It Matters to Health. 2014. Target Hospitality. 16 Informal notes provided by the Williams County Sherriff’s Department. January 2012.


“It is obvious that the skilled labor industries are facing significant workforce challenges. Workers from different generations and different cultures have different expectations for how work and life interact, and younger workers are much more inclined to move on if these are out of balance.”

NIOSH, the National Institute for Occupational Safety and Health, has recognized the importance of dealing with the challenge of keeping workers safe and healthy, and as a result, has recently developed and funded a program known as TWH or Total Worker Health, which is defined by NIOSH as follows: “Total Worker Health™ is a strategy integrating occupational safety and health protection with health promotion to prevent worker injury and illness and to advance health and well-being”.17 NIOSH provides a wealth of information and resources designed to assist employers in creating their own TWH programs, which can be found on the NIOSH website. The basic tenet of this program is that it is equally as important to keep a worker safe and healthy at work as it is off work. Nutrition, physical activity, healthy sleep patterns and work-life balance are all included as building blocks for a healthy workforce.

SOLUTIONS

It is obvious that the skilled labor industries are facing significant workforce challenges. Workers from different generations and different cultures have different expectations for how work and life interact, and younger workers are much more inclined to move on if these are out of balance. Workplace safety is impacted when workers are tired, lonely, unhappy and unhealthy.

Target Hospitality operates under the Economics of ComfortTM model. This model simply states that “keeping your workers safe, comfortable, relaxed and well-fed is what keeps them from missing a shift, getting injured on the job, jumping to a competitor, or just packing their bags and heading home.”18 Target Hospitality and the housing options it provides is an obvious solution to the problems identified. Not only are safe, comfortable beds provided, nourishing meals are available at any hour, removing the workers’ need to waste precious time foraging for food.

The variety of food that is available at Target Hospitality facilities meets the needs and expectations of workers with different nutritional requirements from different generations and different cultures. In addition, leisure time activities are available, such as big-screen TVs, access to the Internet (very important to the technically connected Gen X and Gen Y generations), pool tables, exercise equipment and luxuries such as sauna and steam rooms. These would all be considered necessities to younger workers and could change their decisions to stay in their jobs.

17 National Institute for Occupational Health and Safety (NIOSH). 2015. http://www.cdc.gov/niosh/twh/totalhealth.html 18 http://www.targetlogistics.net/economics_of_comfort.php


“Lodges have zero tolerance for public intoxication or alcohol on the premises, and guests who are in possession of illegal substances will be expelled.”

Target Hospitality lodges provide the opportunities for workers to meet and mix with others who have common interests or backgrounds. People from different generations can meet over meals or when taking advantage of leisure time activities, such as playing pool, working out, playing cards, or watching TV or movies. This reduces the feelings of isolation and “not belonging” that many new workers must deal with and can improve retention rates for companies struggling to keep trained employees. During a week-long stay at a Target Hospitality Lodge in Tioga, North Dakota, the author observed small groups of workers gathered throughout the facility, talking, watching games on TV, enjoying snacks from one of the 24-hour “cafes,” playing pool in the rec room, or taking care of such tasks as getting a haircut at the barbershop, shopping at the small store on the premises, doing laundry or checking email in the computer lab provided to guests.

Lodges also provide the controls necessary to manage alcohol and drug use. All guests must check in to the facility at an outside gate and also at the security office inside the building, and unless working a late shift, generally will not be admitted past 10 PM. Lodges have zero tolerance for public intoxication or alcohol on the premises, and guests who are in possession of illegal substances will be expelled. In an environment where other housing options are either not available, or are extremely expensive or limited, and where the weather is not amenable to “living rough,” this is a severe penalty.

THE LONG-TERM FOCUS

The ancient Greek philosopher Heraclitus taught that the only thing that is constant in life is change itself. Change is inevitable and unavoidable. While we have no control over whether things change, we do have a choice in what we do about it, however.

W. Edwards Deming summed it up rather well. He said, “It is not necessary to change. Survival is not mandatory.”19 When we are dealing with the health and safety of workers, however, survival is mandatory. It makes good business sense to protect workers from both injuries and long-term work-related health effects.

The NAS study has identified the many workforce challenges faced by extractive industries. If we are going to adapt to the coming changes in the workforce, we must understand those challenges and deal with the people who are entering the world of work, regardless of age, gender, culture or natural origin. Companies that wish to retain their workers over the long term must not only keep them safe but also must provide a work-life balance that is acceptable to employees.

19 Deming, W.E. http://knowledgecompass.wordpress.com/2010/09/17/w-edwards-


deming-quotes-quality-knowledge-productivity-change-and-leadership/


Younger workers, in particular do not expect to continually sacrifice leisure time for their jobs. Having a balance between work and life is a strong value for them and could be a “deal breaker” if that value is habitually violated. Companies willing to provide safe, comfortable lodging, as well as opportunities for socializing and leisure time such as those offered by Target Hospitality, could well have a competitive advantage in the future.


About the Author Elaine Cullen spent her career as a researcher for the federal government, first with the U.S. Bureau of Mines and then with NIOSH. She specialized in looking at occupational cultures, particularly in high-risk industries, such as mining, oil and gas extraction, and commercial fishing. She left federal service in 2008 and started her own company, Prima Consulting Services, where she is the President. From 2012 through 2014, she was the Vice President for NW Operations for Safety Solutions International and still works for this company as a consultant. Dr. Cullen holds a BA in English Literature, an MBA in management and a PhD in Leadership Studies, all from Gonzaga University. She is also a graduate of the U.S. Office of Personnel Management’s Women’s Executive Leadership program. From 2008 through 2014, she served as a member of the Committee on Earth Resources for the National Research Council of the National Academies of Science. During that time, she also co-chaired a two-year study on workforce issues in energy and extractive industries. Elaine is a member of ASSE, NSC, ISMSP and SME, among others, and has numerous publications and over 200 presentations to her credit. She makes her home in Spokane, Washington, and can be reached at [email protected] or at (509) 238-6963.

About Target Hospitality Target Hospitality, an Algeco Scotsman company, is a global provider of workforce housing and one of the largest operators of turnkey solutions in North America. It operates in some of the world’s most remote environments, supporting oil, gas, mining and construction operations, government agencies, disaster relief and large-scale events with temporary workforce lodging, mobile crew camps and extended-stay hotels. Target Hospitality was named by Inc. magazine in 2012 and 2013 as one of “America’s Fastest Growing Private Companies.” Visit www.TargetLogistics.net, or call (800) 832-4242.

Workforce Housing as a Recruitment and Retention Strategy in the North American Mining and Oil & Gas Industries – The Other 12 Hours

Part II: New Challenges

By Graham Chandler, Ph.D.

Executive Summary North American mining and oil & gas corporations continue to face a shortage of experienced oilfield workers and professionals. A 2014 white paper1 by the author showed record numbers and percentages of workers in these sectors will be retiring, and reluctance of many newer workers to take jobs requiring extended periods away from home will contribute to the deficit. Several strategies were suggested to face the problem; of overriding importance was to address the “other 12 hours” by offering top-quality workforce housing. Since publication of the 2014 paper, world oil prices dramatically collapsed and in the past six to eight months have rebounded to levels that make drilling and production again economic. This adds fresh problems: attracting back laid-off workers and recruiting new ones. This paper addresses the new challenges and offers new solutions including the now even more critical role played by those other 12 hours as a strategy for recruitment and retention.

Introduction

The aforementioned white paper discussed a serious problem facing North American oil, gas, mining and construction operations and how it can be addressed: a mass exodus of oil and gas workers and professionals over the coming decade. The paper analyzed the problem and offered solutions, concentrating on one often overlooked solution: that of offering a workforce housing solution focused on service, nutrition and sleep– a comfortable experience for the other 12 hours. Benefits and wins of such a strategy were addressed and recommendations offered for executives seeking to engage and keep workers on board thus reducing the devastation of high turnover and growing company productivity, competitiveness and shareholder value. This paper will continue the theme in light of a dramatic change in the oil and gas sector.

1 Chandler, Graham, “Workforce Housing as a Recruitment and Retention Strategy in Oil, Gas, Mining and Construction Operations: The Other 12 Hours.” Target Hospitaliy white paper, January 2014

Massive unforeseen changes came into play, hitting the industry hard. Starting in June 2014 the WTI crude price plunged from $107.20 per barrel (/bbl) to a low of $27.45 by February 2016.2

Not surprisingly, most North American E&P (exploration & production) companies responded with aggressive capital expenditure and personnel cuts.

Since late 2016, WTI prices have recovered into the 40- to 50-dollar range, making most US and Canadian shale plays economic again, particularly with associated efficiency improvements. So as confidence returns, companies are ramping up field activity, rapidly deploying assets to capitalize as crude prices stabilize above breakeven drilling costs. It is setting operators scrambling in competition to hire field staff, notably in the Permian, Bakken, and Eagle Ford plays. The downturn was long and deep, so many of the workers released during the hiatus are settled back home and/or starting new careers—and unwilling to redeploy to the volatile oil and gas sector despite its superior rates of pay. The key challenge now is enticing these workers back plus tapping more of a new demographic: the generation popularly known as the Millennials, or Generation Y—those born between 1977 and 2000.3

The industry picture

The US oil industry is leading the rebound in the oil and gas sector job market, led by the prolific West Texas shale plays of the Permian and Eagle Ford Basins—after the 2014 downturn that saw one in three oil workers lose their job in Texas. According to a report released June 15, 2017 by the Federal Reserve Bank of Dallas, oil company payrolls increased by 3,800 jobs nationwide in April 2017. The vast majority of that development is in Texas.4

The jump in hiring numbers marked the fifth month in a row of increases in Texas oil patch jobs. A breakdown of the increase saw 920 people hired in the exploration field with an additional 2,380 signed by oil field services companies.

In fact, so far this year Houston-based oil field services firm Halliburton is hiring about 100 new workers each month to keep up with surging demand for fracking in West Texas. The company has expanded its active fleet of fracking trucks and pumps by 30 percent in recent months, and its workforce in the region is growing by more than a third to 2,700 employees, according to a recent report.5 To sustain the hiring spree, Halliburton is recruiting a large commuter workforce from outside West Texas, holding job fairs in places like Alabama, Mississippi and Nevada.

2 http://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart accessed June 15, 2017 3 This range varies depending on researcher. 4 “Texas Oil Jobs Surge.” Oilpro, June 16, 2017 5 “Halliburton hiring 100 per month to meet Texas fracking demand.” Houston Chronicle, July 10, 2017. http://www.chron.com/business/energy/article/Halliburton-hiring-100-per-month-to-keep-up-with- 11276593.php?cmpid=email-desktop accessed July 10, 2017.

Canada’s rebound is less dramatic. By the end of 2016, the country’s oil and gas direct workforce had dwindled to about 174,000 – 25% fewer than 2014 peak levels.6 But after losing an estimated 52,500 direct and thousands of indirect jobs over the past two years, 2017 is pivotal. Over the next five years 6,700 to 17,100 net new jobs are expected. In the oil and gas services sector, companies will be scrambling to find field workers.

Continued growth is forecast. For 2017, U.S. crude supply is expected to grow by 430 thousand barrels per day (kb/d) and the year promises to end with production 920 kb/d higher than at the end of 2016.7 The International Energy Agency’s first look at 2018 suggests that U.S. crude production will grow year-on-year by 780 kb/d, adding “it is possible that growth will be faster.” Indeed, the Baker-Hughes Rotary Rig Count for North America stood at 1,092 on June 16, 2017, more than double from 493 a year earlier.

Confidence is firmly on the rise too, according to a new report by GL Noble Denton which surveyed 723 senior professionals from oil companies and their suppliers from around the world.8 Forty-five per cent of the U.S. respondents feel confident in the industry’s prospects for the year ahead, compared with only 27 per cent at the start of 2016. With the International Energy Agency forecasting the U.S. will become the world’s biggest oil producer in 2017, clearly workers will continue in demand.

North of the border, confidence is spurring new recruitment action. In a recent report, 36 oil and gas companies representing approximately 79,000 workers across Canada were surveyed about their current workforce challenges.9 Seventy per cent of exploration and production companies plan to maintain or increase their workforce in 2017, as are 94 per cent of service companies. When asked what are the top three workforce challenges they face, ‘loss of experienced workers’ was second with 70 per cent cited; 39 per cent said ‘attracting and maintaining the right workers’. Of the top three workforce strategies that companies are implementing, 73 per cent said ‘recruitment and recalls’.

The mining industry is lagging this rebound. While maintaining its health, the sector has reduced spending on exploration, bringing expenditures to barely one-third of the record $21.5 billion allocated in 2012, according to research by S&P Global Market Intelligence. But in a survey of the Top 40 mining companies, PwC found improving economic conditions are suggesting large

6 “Labour Market Outlook 2017 to 2021 for Canada’s Oil and Gas Industry.” Petroleum Labour Market Information Division of Enform, March 2017. 7 Oil Market Report. International Energy Agency, June 14, 2017 8 “Short-term Agility, Long-term Resilience: The outlook for the oil and gas industry in 2017.” GL Noble Denton 2017 9 “2017 Industry HR Trends”. Petroleum Labour Market Information Division of Enform, March 2017.

mining companies will reverse that decline this year.10 In the meantime, activity continues apace: some ramping up to reduce unit costs; others to pay off debt.11 When commodity prices rebound, mines will face new worker shortages similar to the oil and gas sector.

The problem

So the trends are there: oil and gas activity accelerates, led by the Permian, the Bakken, and the Eagle Ford plays each of which now produces over a million barrels per day, while the mining sector is on the cusp of expansion. In particular for oil and gas, this means immediate calls for workers. Problem is, Generation X are resisting return, the Boomers are still retiring—many early—and the Millennials bring new sets of standards.

The oil and gas sector is finding many Generation X workers have left for other industries. One oilfield services company in the Permian recently interviewed 60 people and hired only eight.12

The company’s recruiter explained, “All the good people are already working.” Moreover, concern is being expressed over a generational change in the oil patch. Another company is finding that a younger workforce wants a higher hourly wage and less overtime versus their predecessors who would take a lower hourly wage and significant overtime hours to boost pay.

It’s hitting profits directly. One Calgary-based well servicing provider reported missing out on as much as $15 million in revenue in the first quarter 2017 because it lacked sufficient workers.13

Independent US producers underspent their first-quarter 2017 budgets by as much as $2.5 billion collectively, largely because they couldn’t find enough fracking crews, according to Infill Thinking LLC.14

A reason is, after such an extended downturn many experienced workers are reluctant to return. “I think they just got a bad taste to start with,” says Kenny Jordan, executive director of the Association of Energy Service Companies.15 “In this business, 90 per cent of the time you start at the bottom and work your way up which sometimes takes a while. The younger generation just doesn’t seem to pay their dues; they want to get to the top a lot faster.”

10 “Stop. Think…Act / Mine 2017.” PwC 11 “Tracking the trends 2017: The top 10 issues mining companies will face in the coming year.” Deloitte 2017 12 “Pressure Pumping Market”, Credit Suisse Equity Research, January 18, 2017 13 “Alberta's oilpatch finds it difficult to lure workers back after massive job cuts”, Calgary Herald, May 24, 2017 14 Ibid. 15 Jordan, Kenny. Interview with author June 28, 2017

“A lot of that talent is saying enough is enough,” adds Mark Salkeld, President and CEO of the Petroleum Services Association of Canada. “They’ve gone back home and found jobs in other industries that maybe don’t pay as much as oil and gas but it’s steady work.”16

And the retiree pool is further depleting because many Boomers are choosing early retirement offers. Moreover, many positions vacated by retirements are not being filled under strategies to reduce costs and create leaner workforces. A survey of 36 companies in February 2017 found that decisions to replace retirees would be closely assessed.17 Within their five-year forecast, in Canada up to 23,000 oil and gas workers are eligible to retire. Operators, including drillers, oil and gas services operators and field, plant and pipeline operators will account for a third.

Solutions

With these new challenges in attracting people from all three workforce generations, it is even more critical than before the downturn that oil & gas and mining firms focus on recruitment and retention of workers. And the six viable options explored in our 2014 white paper remain valid today: hang on to retiring Boomers, hire non-temporary foreign workers, engage more contract people, target workers from other areas, reach out to underutilized workers, and focus on Generation Y.

Updating the status of that list in light of recent challenges, two generations are now most pressing to attract and retain: disgruntled previous workers and Millennials.

What can employers do to attract and retain workers who have drifted into new jobs? “The biggest thing is doing everything they can to give potential employees the confidence they’ve got steady work – few people want to come back for three months’ work,” says Salkeld. “It is understanding what the workforce wants out of a job. It’s finding those mechanisms, those triggers that appeal to people.”18 Private rooms with private showers, for example can be a tipping factor he says. “Absolutely that has played a significant role in retaining talent, there’s no doubt about it. In fact companies offering high-quality accommodations consistently have the most success in recruiting and retaining workers.”

It’s borne out in fact. In one case study, a large oilfield services company was accommodating workers in local facilities. Problems grew until many of the best workers wouldn’t sign on. The solution was housing in the form of lodges—constructing a comfortable space in remote

16 Salkeld, Mark. Interview with author June 22, 2017 17 Petroleum Labour Market Information Division of Enform, April 2017. http://blog.careersinoilandgas.com/retirements-and-the-shrinking-oil-and-gas-workforce/ 18 Salkeld, Mark, Petroleum Services Association of Canada. Interview with author June 22, 2017

locations.19 Productivity, ROI, and safety records soon climbed by offering security, nutrition, rest, relaxation and a positive workforce environment. To ensure these trends flow after a downturn, companies must stay in touch with departed workers and continue to offer superior housing solutions. It is critical that industry remains engaged with them to ensure that when upswings occur, there is a sufficient talent pool to draw from.20

Companies must adapt to the needs of all life stages by tailoring work-life policies. Millennials may perceive policies to be from a different era—serving a different generation—and may struggle to relate. Coincidentally, while Boomer talent may not require flexibility for childcare, they may wish to retain their job while taking a sabbatical. The appeal of benefits and amenities varies with age, life stage, and gender.21

Studies have been made and published on addressing the unique needs of Millennials in the resources sector with respect to training, health, and safety on the job.22 But how to attract and retain them? How can companies entice them to even consider a career in the oil & gas and mining industries?

In setting HR policy, employers must consider what recent research has revealed about Millennials.

First, the fundamental distinction between them and older employees is their digital proficiency. Millennials are the first generation to grow up immersed in a digital world. Using mobile and social technologies, immediately accessing data, ideas and inspiration, and instantly communicating and collaborating is second nature for them. Employers must get more involved with social media to help promote a positive image.

Second, after salary and healthcare benefits, 65 per cent of Millennials prioritize vacation and other paid time off, and 60 per cent flexible work arrangements.23 And work-life balance is growing in importance for them: from 65 per cent in 2014 to 69 per cent in 2015.

Third, when an IBM survey of 1,784 employees from 12 countries across six industries asked what are the top attributes organizations need to offer to help employees feel engaged at work, Millennials reported their top three were inspirational leadership, clearly articulated vision/business strategy, and work-life balance/flexibility.24

19 “The Economics of Comfort: Case Study by Target Hospitaliy and Client.” Target Hospitaliy 20 “Canadian Mining Labour Market Outlook 2016.” Mining Industry Human Resources Council 21 “Work-life Design: the new balance”, Kelly Services 2016 22 E.g. Cullen, Elaine, “The Great Crew Change: Managing Generational Differences in Oil, Gas, Mining and Construction Workforces.” Target Hospitaliy White Paper, June 2015 23 “Work-life Design: the new balance”, Kelly Services 2016 24 “Myths, exaggerations and uncomfortable truths: The real story behind Millennials in the workplace.” IBM Institute for Business Value, January 2015

Fourth, Millennials desire to be less mobile. According to Census Bureau data, in 2016 just 20 per cent of Millennial 25- to 35-year-olds reported having lived at a different address one year earlier. In 2000, when those of Generation X were in that age group, 26 per cent reported having moved in the previous year.25 This plays into attracting Millennials, many of whom have one or two children and dual careers, into choosing a job featuring high-quality workforce accommodations. It means one spouse does not have to relocate to accommodate the other.

Fifth, these younger employees are demanding changes in work environments and expressing concerns about the negative image and role of oil and gas companies in society. Millennials bring their own expectations regarding technology, collaboration, pace, and accountability.26 It therefore behooves employers to pay attention and create a positive image.

Clearly it takes more than financial offerings. Keeping these in mind, in combination with the value of top-tier field accommodations, companies can shape their HR policies to the workforce. This includes training, mentorship, leadership and partnership programs. Research has shown that workers who have a realistic perspective of the benefits and challenges associated with rotational work are the most successful and able to optimize the financial, social and lifestyle impacts. Workers who engage in rotational work solely for financial benefits tend to be less satisfied and less likely to remain employed in this work arrangement for significant periods.27

Field operators keep data confidential, but accommodation providers note generally that those offering superior housing experience significantly less turnover.

A Call to Action

In light of these new personnel challenges, resource companies must use every tool in the box and appeal to all workforce generations: hang on to the Boomers, spruce up offerings to Generation X, and tailor packages to Millennials’ priorities as discussed above.

Important summary papers have been written on the criticality of food, sleep, and quality housing to worker efficiency at remote camps and how they impact a company’s sustainability;28

this paper reinforces its continuing utility as a recruitment and retention strategy too.

25 Fry, Richard, “Americans are moving at historically low rates, in part because millennials are staying put.” Pew Research, February 2017. http://www.pewresearch.org/fact-tank/2017/02/13/americans-are-moving-at-historically- low-rates-in-part-because-millennials-are-staying-put/ accessed June 26, 2017 26 “The future of HR in oil and gas.” McKinsey & Company, June 2017 27 “Rotating, not relocating: Alberta’s oil and gas rotational workforce.” Petroleum Labour Market Information Division of Enform, June 2015 28 For example, Rothaus, Richard, “Return on Sustainability: Workforce Housing for People, Planet and Profit.” Target Hospitaliy white paper, August 2013; Rothstein, Nancy, “Optimizing Sleep for an Optimal Workforce in the Oil, Gas and Mining Industries.” Target Hospitaliy white paper, October 2013

Whomever is targeted, and whatever the strategy employed, it is crucial to adopt a workforce housing policy that ensures a relaxing environment during the hours workers are away from the job site. It’s complementary to the bottom line. By concentrating on housing as a recruitment and retention tool, companies drive up productivity by reducing turnover, safety incidents and social ills, as well as ensuring employees are well rested and well fed. Resource booms and busts will continue. To ensure a steady labor supply, one constant must always be top-tier workforce accommodations.

About the author

Graham Chandler is a full-time freelance writer based in Calgary, specializing in the oil & gas and mining industries; principally the business and technological aspects. He has published several hundred articles in magazines such as Oilsands Review, Alberta Oil, Earth Explorer, Far North Oil & Gas and dozens more. Other clients include industry organizations and companies; preparing advertorials, speeches, case studies, white papers, reports, and brochures. He holds a BSc in physics, an MBA in finance and a PhD in archaeology. Following service in the Canadian Armed Forces, he launched a career in energy corporate finance, attaining the position of Vice President. During this time—based in Calgary, Denver, and Houston—he successfully marketed and managed scores of large oil & gas client accounts. He holds several business writing and research awards, as well as a Lifetime Achievement Award from the Petroleum History Society. When not writing resource-related material, Graham contributes features to popular aviation and heritage magazines. He can be reached at www.grahamchandler.ca

About Target Hospitaliy

Target Hospitaliy, an Algeco Scotsman company, operates in some of the world’s most remote environments supporting oil, gas, mining and construction operations, government agencies, disaster relief and large-scale events with temporary workforce lodging, mobile crew camps and extended-stay hotels. Named by Inc. magazine in 2012 and 2013 as one of “America’s Fastest Growing Private Companies,” the company has administrative headquarters in Boston; operational headquarters in The Woodlands, TX; and offices in Williston, ND; Denver, CO; Edmonton, AB; and Sydney, AU. Visit www.TargetLogistics.net or call (800) 832-4242.

Workforce Housing as a Recruitment and Retention Strategy in Oil, Gas, Mining and

Construction Operations: The Other 12 Hours By Graham Chandler, Ph.D.


EXECUTIVE SUMMARY

North American oil, gas, mining and construction operations are facing an unprecedented shortage of professionals and skilled tradespeople this decade and beyond. Record numbers and percentages of workers will be retiring due to the aging boomer population and many newer workers are reluctant to take jobs requiring them to be away from home for extended periods. Moreover, many companies have difficulties retaining existing workers due in large part to poor living conditions at remote worksites. Several strategies can be implemented to face these problems; one is to address the “other 12 hours” when workers are off-duty by offering top- quality housing to attract and retain these valuable employees. Such an approach can substantially increase profitability, boost productivity, enhance morale, reduce turnover and improve safety. This paper addresses how examining and focusing on the other 12 hours can be a useful strategy for recruitment and retention.