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Industry must invest in people, or impact of incompetence could be severe

Posted on 07 March 2008

The session was moderated by Ford Brett, president of Petroskills Oil and Gas Consultants International. Pointing to the last oil boom, when a significant number of inexperienced new-hires flooded in the industry, Mr Brett said that, more than 20% of the workforce had less than five years of experience over a 12-year period. That correlated to a 20% to 33% reduction in industry performance, he said. “The impact of incompetence could be severe.” 

Further, Mr Brett pointed out that the upcoming crew change may be even worse than the previous one because it will be a demographics-driven effect, not an activity-driven effect. In 2005, a majority of industry personnel were already ages 40 or older. Assuming a reasonable retirement rate and personnel replacement over the coming years, he said, a majority of industry personnel will be 30 or younger by 2010, continuing into 2020. “It will soon be a different world in the industry.” 

Ross Richardson, director, HR, HSEQ and training for KCA DEUTAG, discussed his company’s efforts to staff for the future and said he hopes more companies will develop similar personnel development plans.

In KCA’s recruitment vision, the focus is on entry-level positions for rig crews, on college technicians/outside industries (marine, automotive, mining) for maintenance crews, and on graduates with 2-3 years of experience for rig management/technical personnel and fast-track functional managers. 

KCA DEUTAG grows its own people, he said, starting with entry-level new-hires, training, and moving them up through the hierarchy. The effort focuses on management/support functions, with fast-track programs that include a mentoring program; senior rig crews, with focused self-study and a competence program; maintenance crews, including partnerships with equipment manufacturers; and junior rig crews, involving local greenhand programs.

Experienced retirees can also become useful as trainers/coaches/mentors, he mentioned, and a robust competence assurance program is necessary so that knowledge can be collected from experienced workers, then passed on to new employees in a professional and structured way. 

It doesn’t make much sense for companies to make all these efforts alone, he said, and a big challenge will be for the industry to work together. The cost of not doing it right will far outweigh the investments needed to make this happen, he warned.

Didier Charreton, vice president – human resources – BHI Corporate for Baker Hughes, discussed the many factors playing into the industry’s personnel problems. For one, there are shifting workforce demographics. Developed nations’ populations are not only aging, but their growth rates continue to slow down. Globalization is providing huge pools of talent – often cheaper and eager to acquire new skills – in areas like China and India. Still, there continues to be a critical shortage of skills globally. 

Mr Charreton also noted that Gen Y workers are bringing new attitudes to the workplace. Companies must understand and adapt to their values, which are often different from those of the older, more experienced leaders. For example, the younger generation is more prone to changing companies/careers, and they prioritize the ability to balance their professional and personal lives. Gen Y workers also have more experience with modern media and are typically open to innovation and change. With oilfield workers fast becoming knowledge workers, Mr Charreton said, the nature of work in the industry is evolving as much as the workers.

More specific to the oil/gas industry, a tarnished public image isn’t helping companies’ recruitment efforts. Previous booms and busts have led to “brutal” downsizings, something that must be avoided in this cycle. And the industry still needs to work towards branding itself as a part of the solution, not the problem, in issues such as the environment and corporate citizenship, he said. 

Currently, service companies have three courses of action in its people strategy, Mr Charreton noted. One is recruitment, and he pointed out that already, 25% of their workforce has less than two years of experience. Second is training capacity expansion, although it will still take time to bring up the experience level. Third is the “war” for talent and experience, which he called “an expensive exercise.”

Mr Charreton suggested alternatives to these actions, including:

  • • Educating energy professionals through better collaboration with universities, funding scholarships/research, etc. 
  • • Embracing diversity. As workforce demographics shift and service companies’ customer base changes from West to East, the industry must train and develop to global standards.
  • • Optimize learning by aligning learning with capabilities and improving the learning process using blended learning/technology and mentoring. 
  • • Deploy talent effectively by matching capabilities to position requirements and employee interests, using short-term development assignments, leveraging technology and enabling knowledge sharing. 

Walter Simpson, general manager operations and well engineering for BG Group, tackled the issue by urging a basic change in mentality. More than 20 years ago when he started in the industry, he said, it was accepted that people got hurt while extracting hydrocarbons from the ground. Since then, the industry has put in tremendous efforts to improve safety, and now it’s no longer acceptable to injure anyone during drilling operations. The same change is needed for people development, he said. It shouldn’t be acceptable not to develop personnel.

Key issues include: 

  • • Retention. The competition must be considered, as well as how to accommodate early retirement.
  • • Development. Experience levels need to increase, and the best graduates must be tapped in global areas
  • • Recruitment. Understand that there is a tight external market. Know where to hire fresh graduates and how to manage them.
  • • Mobility. This is a barrier, Mr Simpson said, with more experienced personnel rejecting travel or assignments far away from family. 

Three tools are already in place today for companies: resource management, succession and development. But one more tool is needed to improve the working relationship among these three processes, he said, and that is the competency tool. It will give individuals ownership so they can know what skills to develop to get to their desired positions.

Finally, Mr Simpson pointed out that the performance of any company depends on two things: the technology it uses and the people it uses to run that technology. “We invest so much in technology, but what about people?”

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