Bridging the oil and gas ‘Skills Gap’
If the oil and gas industry is to effectively re-deploy capability once oil prices rebound, it must learn from its past and not engage in short-term expediencies. Looking back to the global drop in oil prices that gripped the industry in the mid-1980s, oil and gas companies responded by reducing a large percentage of their workforce and severely constraining the hiring of new graduates. They also curtailed training programs for oilfield professionals, a trend that carried on through the 1990s. Workforce reductions were an unfortunate but necessary response. Abandoning the development agenda, however, was a mistake—one not to be repeated.
During this same period, the industry made great advances in technology, with new equipment and services in reservoir evaluation, drilling, completions, and production. These advances opened access to reserves from remote deepwater formations and unconventional plays. This, along with increased energy demand, was the catalyst that ignited the exponential growth of the sector.
The combined effect of a demonstrable lack of investment in talent in the early 1990s and the exponential growth of the sector resulted in a structural skill shortage. The result, plainly stated, was a dwindling population of people with the required skills and experience to underpin the sector’s growth.
The industry has been dealing with the ramifications of this skill shortage for more than a decade now. While current economics have masked the shortage, the underlying problem remains and will have to be addressed as the short-term imbalance in oil supply and demand recedes.
Making smart investments in future talent
While some oil-producing regions have fared better than others, the current industry depression is a global one. By some estimates, energy stocks have lost some $1.3 trillion of their overall market capitalization since November 2014—a 60% drop. In dealing with this difficult economic reality, companies must be careful not to mortgage their futures by relying on a traditional toolkit that has proven to be myopic.
Like many operating and service companies in the sector, Weatherford had to undergo painful reductions in its workforce over the past 18 months. These reductions were carefully thought out and executed with the intention of preserving core capabilities and retaining potential. Importantly, the company is enhancing rather than diminishing its talent development agenda. This may be viewed as a contrarian approach; however, it is necessary and will provide the company with a comparative advantage.
Renewal and growth are optimized through strategic investment in programs that attract and engage the best and brightest, while also honoring the critical role that experienced industry veterans continue to play. This is a dual equation with both parts being of equal importance. Managing this promotes the continuity of capability and preserves deep organizational knowledge.
Cultivating next-generation leadership
The first part of this equation focuses on recruiting high-potential graduates and putting them through a structured, rotational career path that fosters technical, business, and leadership skills. Weatherford recently launched a new graduate development program known as NextGen, which provides a consistent framework and infrastructure for identifying and developing the company’s future leaders. Through a structured, 5-year rotational program, participants are given the practical management skills to complement their technical education. Over time, this will yield more effective leaders who are capable of executing in any kind of business climate.
The first 2 years of the program are about the primacy of technical learning and application. NextGen participants begin their journey with a deep focus across a wide range of technical training and fieldwork, which are later supplemented with core nontechnical foundational training. Participants also take an active job in the field, which enables the real-time application of learned skills. This builds a strong technical foundation that articulates into a number of defined career paths. The third year increases the level of nontechnical training and emphasizes skills such as sales, finance, supply chain, people management, and business communication. These skills become increasingly important as employees are exposed to more complex assignments and act as a foundation as they move into leadership roles.
To gain a true global leadership perspective, program participants have assignments that rotate across different geographies, product lines, and functional groups. This focus on rotating through as many roles, responsibilities, and geographies as practicable is critical to developing leaders with a balanced set of skills and experiences. At the end of 5 years, the participant should be ready for their first leadership position.
The program includes periodic individual reviews to assess each participant’s progress and level of satisfaction in their development. This process is designed to facilitate decision making around strengths and aptitude and ultimately, career and development choices.
One of the foundational elements of the NextGen program is mentorship. Graduates are not learning new skills in a classroom in isolation. These skills need to be translated into the workplace and into the industrial environment. It is at this point that knowledge and know-how matters. Connecting our graduates with people who have devoted their careers to solving these questions creates a powerful combination of diverse perspectives and experiences.
The program makes mentorship systematic and automatic, a regular part of daily work. As program participants grow in the company and take on the roles of mentors, knowledge sharing becomes naturally ingrained in the culture of the company.
Honoring our in-house experts
On the other side of the mentorship equation are our industry veterans. Many of these experienced professionals are part of the so-called "big crew change" generation: those who entered the industry before or during the 1980s and who may be considering retirement in the next 5 to 10 years.
It is important not to make generalizations about this group. There have been significant social, economic, and demographic changes this century. Life expectancy has increased, and conventional "hire to retire" models are outdated and in some cases paternalistic. The important point is that individual circumstances, capability, aspirations, and potential differ markedly. Thoughtful career management of this demographic is all about promoting choice and flexibility. Good organizations manage this well; it is a "win-win" that creates value.
Experienced professionals bring unique technical and business insights that, if not transferred to others, may be lost. Recognizing the value of long-serving employees and their vast expertise, Weatherford has built relationships between graduates and the industry veterans into the fabric of its NextGen program.
Encouraging the sharing of skills across generations begins with better communication from the top of the organization. Managers need to demonstrate that their experienced employees are valued. There are many ways to do this. One could argue that a starting point would be to abandon outdated notions of an arbitrary cap on progression based on misconceptions around age. Some careers will flatten toward the end, others will accelerate—these are individual propositions.
Managers must also encourage younger or less-experienced employees to seek the advice of veterans. Asking for and receiving help from colleagues should not be seen as a weakness; it is a life skill and greatly adds to the organization’s operational effectiveness.
The energy sector has matured significantly over the last 20 years. Many organizations have developed considerable global footprints. They are now better leveraging that footprint from a talent perspective. Mature organizations have for some time recognized there is great value in harnessing cultural diversity and building this into the fabric of an organization’s leadership. Despite this awareness, execution has not always matched aspiration.
Weatherford is accelerating a number of programs that seek to drive a culturally diverse employee base and to develop a culture of genuinely global careers. While much progress has been made, there is still much to be done.
One area of ongoing focus is to increase opportunity and remove barriers to participation for underrepresented groups, including women. The value proposition is an obvious one and can be realized with attention and ongoing focus. There have already been significant advances in this area, and rapid progress is expected over the next few years.
Benefits to the bottom line
Building a diverse workforce capable of intelligently navigating an increasingly global market is a core competency of a modern multi-national enterprise. Programs that both renew an enterprise’s talent bench and support the realization of employee potential have long been part of the toolkit of good organizations. Maintaining a steadfast commitment to these tenets in the midst of unprecedentedly strong headwinds—and at a time when short-term thinking can, at face value, be a compelling option—is a marker of organizational maturity and will act as a differentiator.
The commitment to ongoing professional development keeps employees engaged and passionate about their work, which pays dividends to the company’s profitability. It also makes the company well positioned to meet the expectations of all stakeholders—employees, investors, clients, and the communities in which it operates. By learning from the past and breaking the cycle of dismantling investment in talent development in the wake of market turmoil, the industry can preserve capability and exit this deep downturn in a powerful way.
-James Lukey is vice-president of human resources at Weatherford International.