Finding Solutions: The Oil and Gas Skills Gap (Part One)
Talent shortage: two words that are synonymous with the Oil and Gas industry. The allocation of talent across the sector is a hotly debated topic and one that has been causing havoc for over a decade. Whilst current economic reports may have disguised the ‘staffing crisis’ well, the main factors that originally sparked this debate still exist.
When oil prices initially began to plummet, mass redundancies became a regular occurrence. Yet, as with every boom and bust cycle, it is inevitable for employment rates to rise again; recent reports suggest that the industry is now bouncing back. According to Goldman Sachs, the U.S Oil industry will need to hire ‘tens of thousands of workers’ within the next two and a half years in order to survive, as the price of oil recovers and projects regain momentum.
Whilst this news appears promising, it's of fundamental importance that the industry learns from its previous mistakes. In the past, Oil and Gas companies have made the mistake of re-evaluating their hiring plans and immediately halting graduate recruitment during a downturn, simultaneously cutting most funding for training and development programmes.
During difficult times, proactive hiring is crucial and Recruiters are well aware of the domino effect that a skills shortage can have on an industry. Equally, they also recognise how a downturn can haunt the industry once it leaves the bust cycle.
To add to the issue, enrolment in Degree programs (such as Petroleum Engineering) has dramatically fallen across the United States.
Source: Global Energy Talent Index Report 2017
Attracting Millennials to the industry is certainly tough, which is why companies must now redefine their recruitment approach. Highly sought-after candidates are attracted to structured, realistic career progression that nurtures technical skills and further advances leadership skills - capturing their attention is not impossible. Companies can appeal to this candidate market through a range of different mediums: by engaging directly on campus, participating in University ‘Career Days’, or becoming more involved with University career websites. By offering information that is compelling and beneficial for entry-level candidates, companies have a greater opportunity to compete with popular industries.
ExxonMobil demonstrates how this can be achieved. Over the past 18-months, the company continued to hire young people throughout the recession to avoid a repeat of the mistake that was made in 1980s.
“We’ve stayed on University campuses and continued to bring in new talent, because we’re going to need them,” said Exxon’s former CEO, Rex Tillerson.
Like any employee, graduates who are engaged and feel invested in the organisation they work for are likely to stay loyal. It should be visible to prospective talent that strong learning and development programmes exist across the Oil and Gas industry
Failing to attract the best talent is not the only issue to discuss. Operators are also facing increasing pressure to up-skill their existing workforce.
The effect of the industry’s lack of investment in talent in the early 1990s was extensive, and a problem that eventually developed into a structural skills gap that we see today.
There is now a greater need for Corporations to always keep an eye on future workforce requirements in the event of when the industry recovers. By creating a long-term staff engagement solution that supports the realisation of employee potential for existing employees will encourage loyalty and trust. Such examples of learning and development can come in the form of; internal training workshops, and informative seminars that keep workers up-to-date with new technologies and procedures.
If available funding for training remains limited, it would be sensible for Corporations to extend their support to institutions and organisations that are putting in the work to attract, educate and mentor Oil and Gas workers to further excel in the industry.
Lately, companies have shifted their attention to the large number of experienced, high-income workers who have now entered retirement. A record number of retiring workers are leaving the industry, and the ranks of suitable skilled replacements are wearing thin. According to several recent surveys, the average age of the Oil and Gas workforce is 41.
Actively engaging with ‘industry retirees’ to stay connected can be rewarding for both the individual and company. Establishing mentorship programmes where experienced workers can guide the next generation, as they navigate through a new era, presents an evident win-win situation.
Seasoned workers can offer newcomers much-needed tips and advice on how to survive and thrive whilst working in the industry. It’s this form of knowledge sharing that becomes naturally rooted in the culture of the organisation, and helps to establish an environment where collective growth is made possible.
Casting a Wider Net
Critics of the skills gap argument, often suggest that companies are exhausting local talent pools in an effort to avoid higher recruitment costs when sourcing overseas candidates.
This strategy may appear cost-effective in the short-term, but it introduces significant risk for future projects.
In Malaysia, the industry has lost most of its ‘Tier One’ candidates, specifically workers who have more than 30 years industry experience. As a result, many mid-level workers sourced from the local candidate market were forced to fill senior positions without as strong credentials.
Though the answer may appear obvious, “The international recruitment solution is not readily available to most companies,” explains Sandeep Narashima, Services Team Leader at Spencer Ogden. Operators who can afford to be assertive in their approach to recruitment will likely pay above the market rate for the best talent.
He adds, “There are some operators across Asia who are willing to pay more for talent. They have the investment available to pay recruitment firms the fees to headhunt candidates and offer the salaries to entice highly experienced candidates. These same companies are not afraid to look further afield for manpower that can fulfil complex project requirements.”
On the other hand, smaller companies will face the continuous struggle to secure talent. “Smaller companies do not have the available funds to source international talent. They can only fight for local talent. Compare this to larger Corporations who have sizeable chequebooks to pay for the elevated wages that the best candidates demand,” says Narashima.
Convincing companies to widen their recruitment nets is problematic. To much surprise, many companies (both large and small) are choosing to disregard all candidates that are currently unemployed. A requirement that is often met with difficulty, seeing as most experienced aren’t engaged in the industry and have found alternative jobs.
Additionally, operators are starting to avoid marketing initiatives to lure engineers and scientists from other industries, such as Construction and Power Generation. Throwing away potential talent that have transferable skills and are able to benefit from training is arguably senseless. Acquiring talent from competing industries is by no means a sustainable business practice, however it does provides more options.
Click here to read Finding Solutions: Oil and Gas Skills Gap (Part Two)
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