The PESA Human Resources and Supply Chain Committees jointly hosted a Recovery Planning Seminar on May 23 at GE Oil & Gas. The seminar addressed recovery planning activities and the impact of current market instability. Leading industry executives shared strategies on positioning organizations to maintain lead times while controlling costs through human capital management.
The seminar began with a market indicators presentation from R.T. Dukes, Research Director, Wood Mackenzie, and labor statistics insights from Reid Morrison, Global Energy Lead, PwC. With an optimistic outlook, Dukes predicts $60-$70/bbl oil and increased demand growth by 2020. He shared statistics around recovery in the high-profile Permian Basin as well as other plays.
Although the Permian represents roughly 40% of new rig additions this year, the SCOOP/STACK and Eagle Ford have also yielded impressive rig additions that have increased by 20% since January. Dukes reported that the Permian plays absorb the largest share of operator spend. Core areas will continue to yield attractive returns despite inflation with break-evens expected to increase. Dukes advised following oil as closely as natural gas and NGLs in the future. With a combination of larger operators and small, private operators throughout the Permian, Dukes encouraged service companies to seize this growth opportunity.
Addressing the current state of the labor market and implications for the O&G industry, Morrison provided insights on CEOs’ views on the impact of globalization and change on growth, talent, trust and society. Morrison reported 64% of CEOs fear key skills shortages with 70% citing leadership as the most difficult skill to find. As U.S. drilling activity increases and labor markets tighten, the biggest challenge to the oilfield services industry is drawing talent back. As conditions improve, Morrison sees a critical need to positively brand and promote the industry as a whole. As companies develop ways to advocate for the industry and recruit employees in a down market, those same strategies can be applied when the market improves. Morrison concluded that companies who align talent strategy with business strategy will realize performance gains.
Continuing to focus on positively rebranding the industry and providing leadership in a transitioning market, the Board of Directors panel provided insight from a leadership perspective. Moderated by PESA Chairman Burk Ellison, President – Supply Chain Services, DistributionNOW, the panel included PESA Board of Directors Members Chuck Chauviere, President – Drilling, GE Oil & Gas; Charles Davison, President & CEO, FairfieldNodal and PESA Advisory Board Member Roderick A. Larson, President & CEO, Oceaneering. Through engaging discussion with attendees, the panelists addressed questions about the current market place and the uncertainty the industry is facing.
“Although there will be pockets of recovery, there will be pockets of continued challenge as well,” said Davison.
Understanding the importance of recruiting new talent and retaining current employees, the panel unanimously agreed on the importance of promoting the industry and easing feelings of hesitation towards oil and gas careers. “It is important that we are advocates for this industry, to each other and within our communities, and promote it as a career path,” said Chauviere.
To prepare organizations for recovery, from a leadership standpoint, Larson believes “You have to always think about what you need next. Having the right people in place and empowering those people to make changes, especially in a changed workforce environment, is essential.”
As the uncertain market unfolds, Davison advised individual emerging leaders to be resilient and flexible. As the workforce changes, he encouraged them to embrace change and take the opportunity to “raise your hand and have your voice heard.” In an industry as cyclical as oil and gas, Chauviere reiterated the importance of not taking the challenges personally and remembering that none of this is permanent. Instead, he challenged the attendees to take the opportunity to “get in there, make an impact, and then decide which direction you are going next.”
As the market inevitably improves, another focal point was the criticality of getting in front of customers and understanding how to better serve them.
“We can pay attention to leading indicators and what the analysts are saying, but we need to spend time with our customers and know how to make them more successful. This requires leadership and inclusiveness in this current environment,” said Davison.
While innovation continues to drive the industry, a renewed focus on lean practices remains key. As companies prepare for a brighter future, efficient spending must continue to be prioritized.
“Don’t confuse innovation with technology development. Innovation can happen all the time and can come from anywhere within your organization. Think about innovation in the broadest sense within your organization if you want to make an impact,” stated Larson.
Weighing in on how their organizations are preparing for the market in its current state, members of the PESA Human Resources and Supply Chain committees shared their insights. Moderated by Lara Isaacs, Director – Human Resources, DistributionNOW, the panel included Addy Farou, Vice President, Global Sourcing, CPO, Gardner Denver; Melissa Calhoun, Director of Talent Management, Halliburton; Darnell Streat, Sr Director of Procurement Operations, Key Energy Services and Bonnie Houston, Chief Administrative Officer, NOV.
While some practices are specific to the downturn, other skills can be applied to any market. “Flexibility and adaptability are imperative to success. The effect of cross-functional collaboration creates a positive impact, regardless of market conditions.”
“You have to be flexible and adaptable. Successful, cross-functional work makes a big difference in both a challenging and not-so-challenging environment,” stated Farou.
Dedicated people who lead by example positively impact an organization regardless of their seniority. Strong internal and external communications combined with an inclusive and collaborative work environment are imperative to a company’s success. “Collaborating across teams is difficult to do but if we have leaders who do the same, working and teaming quickly outside of their hierarchies, we can be successful,” stated Houston.
Regarding training and development in the current environment, Calhoun shared her insights. “The downturn has made us do things differently, approach problems differently. And we have realized it’s often a better way regarding training and development plans,” she said.
Addressing the recurring theme of promoting the oil and gas industry, Streat discussed a program at Key Energy Services that mentors high school students interested in a career in the industry. “Don’t underestimate mentoring and don’t miss that opportunity to educate and share experiences,” said Streat.
Houston echoed that sentiment by emphasizing the importance of educational partnerships across all grade levels. “Branding this industry, getting out and talking about the exciting challenges, sharing our stories…that is how we are going to tap into the talent we need as the industry innovates and evolves toward digital,” she stated.
Citing that only 2% of college graduates pursue a career in oil and gas, Aleek Datta, Managing Director, Accenture Strategy – Energy, reiterated the importance of promoting the industry in his presentation on Exploring Workforce Planning.
Workforce planning can enable HR and Operations to collaborate on key talent decisions. Determining an organization’s core workforce as well as the gaps can help on the overall planning horizon time line. Datta explained the business case for workforce planning has never been more clear. Due to the challenging economic climate, compounded by potential talent shortage, organizations are recognizing the implementation of workforce planning is critical. There are multiple tools available to industrialize workforce planning such as analytic tools, on premise applications and cloud applications. All can provide assistance in developing a workforce planning capability and as you move across these tools, the value increases.
Despite technology enablers, Datta discussed remaining workforce planning challenges including activity forecast reliability, scattered/inconsistent data, and the biggest challenge – trust between HR and Operations. When developing workforce planning models, establishing a collaborative relationship between Human Resources and Operations is essential.
“If the business understands the issues and problems in their entirety, and both are involved in on-going conversations, the better off both will be,” stated Datta.
While progressing through an uncertain market, HR and Supply Chain need to keep an eye on trends, focus on collaboration, and always find a way to make an impact. The over-arching themes of this joint Human Resource and Supply Chain Recovery Planning Seminar were clear: get in front of customers, work collaboratively across the business and most importantly, continue to promote and advocate the oil and gas industry as a viable career path.