The Future of Our Pipeline for Oil & Gas Talent
As the oil and gas industry navigates its way through this challenging downturn, a growing concern that continues to smolder in the background is talent. Some cannot help but think that we may be doomed to repeat the same mistakes we made in the 80’s. The last major downturn resulted in a sharp decrease in job opportunities leaving an air of uncertainty so thick that it led to a near 20-year gap in talent that the industry still hasn’t fully recovered from.
Only a short 18-months ago, the news was littered with headlines such as… “Terrifying oil skills shortage delays projects and raises risks” or “Energy companies lament skills gap as ‘crisis’ festers”. But that has quickly changed with a constant stream of announcements on corporate layoffs. The workforce reductions in our industry have resulted in a large pool of available talent. On the surface, this means that there are a lot of good people out there for companies looking to strengthen their bench or fill key positions. Recruiting in essence, has become pretty easy. But don’t be fooled. It would be a huge mistake for companies to slip into “cruise control” and take their eyes off of their long-term people initiatives.
With capex spend continuing to be squeezed (already over $130Billion cut this year) and pink slips stacking up above 350,000 worldwide, we should be very concerned about the future of our global workforce. Multiple surveys conducted by recruitment specialists in oil and gas have revealed some interesting insights. Petroplan states that – “28% are likely to leave the oil, gas and energy industry to work in another field” while Hays reported that of the contractors they sampled who were recently laid off – “72% claim to be exploring opportunities outside of the oil and gas sector”.
And what about the next generation of workers? Will companies shut down college recruiting as they did in the 80’s? Hopefully companies won’t be that stupid but even if they aren’t, will bright young scientists and engineers ultimately choose to pick other industries and avoid the energy sector altogether?
Let’s hope that we’ve learned from our mistakes. The glimmer of hope that we have is that companies such as Shell are at least see the light in not repeating past mistakes. The truth is our industry has come a long way in terms of investing in STEM (science, technology, engineering and math) education programs while bringing more diversity into the ranks. But let’s be honest, we still have a very long way to go and we can’t afford to stop these initiatives now. If you are a young scientist or engineer, the energy sector provides access to some of the most advanced and innovative technologies in the market today. We need to bring more awareness around these opportunities.
As painful as it may seem, this downturn was probably inevitable and perhaps even necessary. Low oil prices are in effect forcing energy companies to become more efficient. The real question is what will the industry do, not only to survive, but to get that level of operating efficiency and eventually, to greater profitability? According to former General Electric CEO – Jack Welch, the answer is not making across-the-board-cuts. He argues that it’s the “worst thing ever invented”.
I had the opportunity to be in the audience to see Jack speak at last year’s KPMG’s Global Energy Conference in Houston. He had some really interesting insights about what’s happening in our industry but one that resonated the most with me was when he said… “This is the time to pay your best people more than you ever paid them. You need your best people. You don’t need them feeling insecure. You should be doubling down on them.”
There is no doubt that companies need to continue making difficult decisions in the short term including reducing headcount. But future success will come to those organizations who can cut complexity, develop long-term workforce strategies, and become more efficient in everything they do.