An Industry Upturn with a Downside: Talent Needs Still Loom Large

Abstract

Talent & Technology The oil and gas industry faces many challenging issues, now and in the future. Most industry participants are acutely aware of what they are. The knowledge gap created by “The Great Crew Change” that exists in most companies has been well documented and discussed. The problem is not one of filling the gaps. There are sufficient numbers of people entering the workforce to do that. The problem is one of “experience attrition,” and it is a challenge that must be addressed (Fig. 1). The characteristics and expectations of “generation Y” or the “new millennials” have been examined and debated. The real issues at hand are the growing multigenerational aspects of the workforce with its mix of four distinct generations with disparate life experiences, varying ways of communicating, and distinctly different goals for their professional careers. The first of the baby boomers reached age 60 in 2008. In perspective, the average age for retirement in the oil and gas industry is 59. Along with the recent global economic slow-down has been a rise in the average retirement age. These three impacts—boomers, industry retirees, and economic changes—are all interrelated and impacted by the cyclical nature of the oil and gas industry. This cyclicality is our industry’s hurdle in trying to resolve issues surrounding the employment of top talent going forward. Cyclicality is also the area over which the industry has least control. It is inevitable that the industry will be cyclical because it is based, quite simply, on supply and demand. Why is cyclicality so important? The answer becomes clear from the perspective of career time spans and talent management. Most employees in the oil and gas industry are responsible for developing a career spanning an average of 35 to 40 years. During the last 40-year time span, there have been seven business cycles. Driven by Wall Street and shareholder interests, the industry has always reacted to these cycles by reducing fixed costs as they would in any downturn in the economy. However, the main element of fixed costs is employee expense. So if the oil and gas industry is driven by quarterly earnings, as are many other industries, then it will respond by driving down fixed costs and therefore, employee costs.