Retention of Key Employees in the Oilfield Service Sector

Abstract

Abstract Prior to 1994 Core Laboratories offered its employees little in the way of company benefits. The company moved from being part of a multinational to an independently owned organization in 1994. At this time, there was recognition that if the newly created company was to be successful in a competitive environment then retention of its key employees was essential. A series of concrete measures were introduced in October 1994. This included health, long term disability and dental benefits and a profit share component to all employees. In addition, for key employees, discretionary bonuses for non-management employees, management incentive plans and stock options were introduced. This paper discusses the benefit and incentive plans, its cost and the impact it has had on the company's employees. Introduction Core Laboratories (Core) was formed in 1936 in Dallas Texas. In 1949, the company created its first international office-in Edmonton, Canada. During the next five decades the company expanded its overseas locations and now operates in more than 50 countries and has over 100 facilities worldwide. In 1984, the company was purchased by a multinational organization. Ten years later, in 1994, a management buy out of the company took place. In September 1995, the company became publicly traded. Prior to 1994, the company adopted local country benefit plans as stipulated by the Government of the day. The company at this time viewed the lack of or minimal benefits plan as a cost saving venture. The parent company did not take into account the affect on morale, employee retention and loyalty that these limited plans provided. The change of ownership in 1994 presented the opportunity for Core to re-assess its benefits package and introduce an incentive plan for its worldwide employees. Benefits In some countries of the world, health and dental services are provided free of charge while others provide limited or no benefits to its employees. It was these latter categories that Core wished to address. The benefits introduced to Core's worldwide employees were based upon modified Canadian and United States plans. Basic health care and hospital accommodations for the employee and dependents were introduced to all regions. This was compulsory for all employees. Core and the employee share the cost. Additional extended health care was introduced, on a voluntary basis, to cover items such as home nursing care, physiotherapy, etc. Both employer and employee again share the cost. Dental coverage was introduced at the same time and covers basic and major dentistry as well as preventative treatment. Two compulsory insurance plans were implemented. The first is life insurance, with all premiums paid by the employer. A voluntary life insurance is offered for further coverage for the employee and dependents. The second, a split cost between employer and employee is the long-term disability insurance. In the event of disability, 60﹪ of an individual's base salary is paid until they either return to employment or reach retirement age. The short-term disabilityis covered by internal procedures and is dependent upon length of service.