With the emergence of digitisation and Big Data, artificial intelligence and the increased use of automation, the oil and gas industry is examining how these advanced, and sometimes disruptive, technologies will play a role in improving performance and securing a long-term future, albeit one that eventually will represent a very different industry from today. Even in the interim, while hydrocarbon fuels still represent a large proportion end product, increased digitisation is driving greater innovation and improving productivity and efficiency in the field.
In any industry, people are the most important commodity. When it comes to implementing the digital strategies that oil and gas companies are pursuing to improve operational efficiency and retain profitability, people are even more important.
The trepidation for the oil and gas sector is that the skills required for this new age of
digital oil and gas differs immeasurably from what has long been the traditional skillset and largely resides with a younger generation. Failing to elevate the skills of a workforce is the most common pitfall in unsuccessful transformations. To advance the skills needed in the oil and gas sector, in particular, will require a combination of recruiting fresh talent from outside the industry – including data scientists, software engineers and other digitally savvy professionals – as well as recent graduates, plus updating skills for operational staff already within the industry. Disciplines include digital risk security, cloud architecture and infrastructure, control networks (SCADA), robotics, Progressive Web applications, among others.
The requirement for younger, technologically savvy individuals is compounded by the natural but significant attrition from the industry of retirement-age oil and gas employees – or the “Great Crew Change” – with the potential loss, not of digital skills, but of process know-how that technology will enable and advance.
With impending knowledge loss and digitisation gaining ground, now is the time to recruit new talent from the vast amount of highly capable people available but who may not have considered the oil and gas sector as a potential employer.
Petroplan, one of the world’s leading oil and gas recruitment companies, produced their second Talent Insight Index earlier this year. In addition to being a barometer of the sentiment of oil, gas and energy professionals more generally, a key finding was that digital natives may not be looking at the oil and gas sector as a career choice, verifying earlier indicators within the industry.
While attracting younger, digitally-conversant talent is undoubtedly a challenge facing a number of industry sectors, it is somewhat more of a concern for the oil and gas industry. In a now well referenced speech from 2016, Bob Dudley, chief executive of BP, forewarned that the oil and gas industry was in jeopardy of falling behind in the competition to attract talented younger employees. Citing a McKinsey research study1 listing the industry sectors where digital natives (often synonymously referred to as “Generation Y” or “millennials” and born between 1982 and 2004) would least like to work, he announced that the dubious honour went to the oil and gas industry – with 14% of respondents admitting they would not seek a career in the sector, due to its perceived negative image. This negative response was higher than for any other industry, including defence – and considerably higher than banking which has received a particularly bad rap in recent years. In a further study from EY2 the news got worse with the generation after millennials, commonly referred to as ‘Z’, rejecting the idea of oil and gas careers.
Millennials are often mistakenly considered to be recent university graduates, but in reality, they are now occupying junior to mid managerial roles and are beginning to ascend into executive ranks. According to McKinsey’s report, millennials will constitute a majority of the US workforce by the early 2020s. They have already formed their own attitudes and viewpoints around a host of work related issues from sustainability, ethical work structures and accountability to diversity, equality and technology – and they are not only very different from those of the baby boomer generation, but will come to define corporate culture going forward.
Their negative perceptions of the oil and gas sector, held legitimately in many cases, include it being seen as a “dirty” hydrocarbon-based industry versus one which can help support a cleaner fuel future; having a reputation for “unfairness” and lobbying borne of self-interest; maintaining a rigid hierarchical management infrastructure where innovation and ideas are overlooked; a lack of employee diversity; slow to embrace newer ways of operating including remote working and flexibility towards time management; and an underappreciation of the potential of digital technologies and what they can deliver to the business.
Millennials dislike rigid corporate structures and want open collaboration rather than a siloed approached to working. They view the workplace as being built around tasks and projects, rather than top-down decision making, where teams may have no formal leader, instead leaving decision making to whoever has the relevant expertise. In an interview for PwC’s 2011 Millennials at Work3, Vineet Nayar, the recently retired Chairman and CEO of one of India’s largest technology companies, HCL Technologies, stated “With Generation Y coming into the business, hierarchies have to disappear. Generation Y expects to work in communities of mutual interest and passion – not structured hierarchies. Consequently, people management strategies will have to change so that they look more like Facebook and less like the pyramid structures we are used to.”
Millennials have ambitious aspirations and want rapid career progression with a plan for continual learning and personal development and an expectation for immediate feedback – with a more crowdsourced approach than the traditional line manager assessment. In multiple surveys undertaken, this aspect of working was seen as more important than remuneration. Organisational agility and fluidity in team working and the ability to innovate in a rapid, iterative, “fail-fast”, test-and-learn approach is seen as the way forward rather than the old test-to-destruction method, with cascading layers of approvals.
They also expect a genuine work/life balance and have been described as “loyalty lite”4, ready to change employers when their expectations are not met.
Digitally savvy millennials have grown up in an era of rapid technology evolution and expect access to it at work. For this younger generation – often referred to as “digital natives” -technology accessibility means immediate response times, group collaboration, enablement of remote working, even in some instances, location-agnostic employment. What it doesn’t mean is having a company Instagram or Facebook page yet facing a rigid hierarchy and being chained to a desk after a long commute.
The power of the employer brand can’t be underestimated. In a study undertaken by Cone5 a staggering 76% of millennials surveyed were seeking employers with corporate social responsibility (CSR) values that matched their own and most would consider leaving an employer whose values no longer matched their expectations. As Bob Dudley commented, “The millennial generation don’t just want career growth, they also expect to make a positive contribution to society.” It will be important for oil and gas companies to communicate to millennials how their transformational strategies will lead to a cleaner environment so potential hires don’t feel like they are at a moral crossroads. Bob Dudley further emphasised that the industry must do a better job communicating its commitment to help the world shift towards cleaner forms of energy or risk losing the young people needed to lead the transition. “We need people who are curious, people who can challenge the status quo and come up with new solutions,” he said.
From my perspective as CEO of Petroplan, when it comes to attracting digital natives into the oil and gas industry, we see many companies struggling literally – and metaphorically – to connect.
Organisations that have successfully attract talented millennials such as Google, Ebay, Amazon, Microsoft and Apple have since their inception been pioneering employers who have rarely been constrained by traditional notions of the workplace. Their flatter management structures, positive attitude to diversity, ground-breaking adoption of technology and overall corporate culture attract the brightest millennials, making them formidable competitors for the best talent.
For some non-major, more regionally focused oil and gas companies – who are able to benefit from greater agility and the ability to connect more directly with their local talent base – attracting millennials is proving less of an issue. Bold, publicly communicated initiatives around transformation away from hydrocarbon motor fuels and embracing changing consumer habits around mobility and retail services, have allowed organisations like The MOL Group in Hungary, for example, to successfully attract not only much needed digital natives but also the engineering talent to replace outgoing baby boomers. “The success of our transformation strategy depends on our people, so hiring a younger generation that fits a more customer service oriented – even start-up – mentality, must be supported by not only innovative recruitment initiatives, but the right mindset internally,” commented Zdravka Bubalo, VP of Human Resources at MOL. “MOL has grasped the fundamentals of what millennials and digital natives need in the workplace – from a focus on continual development and promotional advancement to gender parity and support for innovation.”
MOL recently announced its future headquarters which will be opened in 2021 and be designed by UK firm Foster and Partners. For those who know Foster’s work, it will be no surprise that the new MOL HQ will rival the best working environments in Silicon Valley in terms of sustainability, ergonomics and interconnectivity and will reflect MOL’s vision and commitment to hiring the very best millennials.
However, these oil and gas companies are in the minority. The majority of organisations do not find themselves in this position and need to take urgent steps to foster the internal changes required in order to attract millennials. They also need to take a more proactive approach to specifically seeking out technologically advanced candidates from other sectors. As Rory Ferguson explained, “It’s hard for the psyche of the oil and gas industry. For decades they have been used to recruiting from within their own ranks but they now need to source that talent not only from other industries but from geographical locations often far removed from their home bases, such as high-tech hubs like San Francisco and Seattle. Oil companies see it as a gamble but if the selection and interview process is well considered, they should benefit from these potential hires’ learning.”
Petroplan believes the industry also needs to take a fully engaged, hands-on approach to recruiting IT-based technology graduates in addition to the latest engineering high flyers. It needs to direct its recruiters to do the same, reaching out to universities and colleges to communicate that the oil and gas industry is a vibrant, relevant and rewarding industry. Some academic institutions based in oil and gas hubs such as Houston are looking to expand their offerings around data science. RICE University, for example, has an initiative to significantly grow its faculty in this discipline with a view to supporting Houston’s major industries.
It’s clear that millennials will be a powerful generation of workers and that those with theright skills will be in high demand. As well as commanding strong remuneration packages, they will have influence over how and where they participate in the workplace.
However, in order to attract and retain the next generation of engineering and leadership talent, oil and gas companies need to work harder on understanding their motivations. They will also need to make deeper changes to their organisation and cultural constructs in order to meet the younger generation’s needs for meaningful work and social responsibility – and they will need to actively seek candidates from beyond the usual energy-based hunting grounds.
There is a significant amount of transformation and innovation happening in the oil and gas sector which if harnessed and well communicated should engage millennials, but companies need a clear and attractive storyline.
Rory Ferguson is the chief executive of Petroplan.