Recruiters are facing many challenges in today's world of employment needs, placing them in a time of great change. The aging workforce is slowly retiring while members of Generation Y, or the millennial generation, are rapidly becoming the go-to candidate to fill the vacant spots in the oil and gas industry.
It is essential for business leaders to do more than just observe the changing times and demographics--they must understand them and be at the forefront of recruiting efforts in order to successfully attract and retain the next generation of oil and gas talent.
"Companies' commitments to employees and career expectations have evolved drastically," said John-Frederick van Zuylen, group manager of Power & Renewable Energy at Allen & York and president of the Dubai chapter for Young Professionals in Energy (YPE).
"Only well-established companies with long-term goals and stable business can afford to have a real recruitment and retention strategy. Other companies need to adapt more frequently and more quickly to changes in the market."
The oil and gas industry contributes significantly to the U.S. economy and is one of the nation's largest employers. Even though the country is still facing a struggling economy, the nation's energy companies provide well-paying jobs, revenue to governments and bountiful opportunities for Americans – totaling an economic contribution that continues to outpace other major industries in North America.
Specifically, the energy stimulus contributed $476 billion to the U.S. economy in 2010, equal to about 60 percent of the 2009 federal stimulus, according to the American Petroleum Institute (API). And the energy industry currently employs about 9.2 million full-time and part-time jobs, accounting for 5.2 percent of the total employment in the country, according to research data analyzed by PricewaterhouseCoopers.
While America is going through a boom in U.S. oil production, the shortage of skilled, educated workers is hurting the industry's recruiting efforts. There are four big shifts that have radically redefined the workforce and corresponding recruitment, retention and training strategies, according to a white paper released by McCrindle Research in May 2009. These shifts are: an aging population; transitioning generations; increasing options/information; and a redefined work life.
The Aging Population
In 2010, there were 40.3 million citizens aged 65 or older in the United States, accounting for 13 percent of the total population, making it the largest age group than in any other decennial census, according to the United States Census Bureau. This number is up from 31.2 million in 1990 and 35 million in 2000. Furthermore, this age group accounts for 57 percent of full-time workers and 42 percent working in management, professional and related occupations. In just 15 years, by 2028, the last of the baby boomers will be reaching retirement age and leaving the labor market. This aging workforce is even more evident in the oil and gas industry; the average age of an O&G worker is 49, considered among the oldest of any industry, according to API.
As veterans and baby-boomers retire, recruiters are forced to focus on the upcoming generation – Generation Y. This generation, which currently makes up about 10 percent of the U.S. workforce, was born between 1980 and 2000. Gen Y, the largest American generation at 92 million strong, compared with some 76 million baby boomers, will make up roughly three-quarters of the work force by 2028 and the oldest millennials will be entering leadership positions by that time, if not sooner.
With generations mixing in the workplace, the need to understand the younger group is ever crucial. Having a mix of generations in the workplace is not new but traditionally, juniors performed menial work while their senior coworkers held managerial positions – roles juniors would eventually fill as they moved up the ranks. This dynamic does not always ring true today. The new reality is that older leaders are managing teams consisting of several generations with diverse backgrounds or young graduates are managing older workers.
Members of "Gen Y will continue to transform the workplace to better suit their needs," stated Stefanie Hanz, a recruitment consultant. "This generation is work-oriented and consistently searching for development opportunities while making sweeping changes to the way organizations and their people work."
Generation Y's wants and needs can vary from those of older workforce generations, according to the whitepaper "The Talent Crisis in Upstream Oil & Gas," by Deloitte Research. Unfortunately, the newer generation grew up with some negative perceptions of the oil and gas industry, fed by events such as the 1989 Exxon Valdez oil spill in Alaska and suspected price manipulation in the aftermath of hurricanes Katrina, Rita (2005) and Ike (2008).
Furthermore, the millennials witnessed the layoffs of their parents during this period - people who stayed with the same employer for years, if not decades -so by understanding and engaging them, Gen Y will be better facilitated at connecting with older staff and customers.
"Gen Y [wants] clear expectations of work so that they can reach assigned goals but also older generations must allow for Gen Y to prove themselves so that they can exceed expectations instead of being micromanaged," said Hanz. "They want the ability to contribute as individuals and team members but they also want to have the opportunity to make a difference, learn and prove themselves."
This generation also expects feedback, consistently and regularly. Immediate, effective feedback allows millennials to produce better, quicker and more efficiently. The key is to provide constructive criticism in a timely manner.
"Regular feedback is very motivating and is something Gen Y yearns for," said Hanz. "The official 12-month performance review isn't typically enough, and if there is an opportunity for development, let them know in a timely manner. They aren't just looking for praise but are searching for constructive feedback in order to produce better work and grow as individuals."
Increasing Options & Information
It has been said that it has never been more difficult to attract, recruit and retain staff than now. But surprisingly, this generation is the most educated workforce ever, and has the ability to travel, work overseas or to retrain for yet another career.
Members of "Gen Y have so many resources at their fingertips that they feel everything should be given to them when wanted," said Matt Gelotti, vice president in Aon's client development group in Houston and YPE's Houston-chapter president.
"Gen Y has the education, and have access to a multitude of information, and they want the paycheck, the notoriety and to be in charge. But as a senior individual at a company, when looking at Gen Y on paper, they lack experience. So this Gen Y person has only mastered hypothetical theories versus real-life experience that molds and teaches an individual through trial and error experiences from the workplace. Overall, Gen Y lacks the patience."
Gen Y is looking for long-term career development but does not have long-term employment loyalty. Those aged 20-24 are three times more likely to change jobs in a year than those aged 45-54, according to Deloitte Research.
"Moving around is just nature of the beast," said Hanz. "Gen Y is posed to now work on projects or be hired as contract employees [instead of being] hired full-time because employers are shifting away from the typical employment model. Yes, they are known for moving around quite a bit and they will leave if opportunity isn't present."
"The lack of loyalty in Gen Y is looked down upon by baby boomers," commented Gelotti. "Gen Y will easily jump from one employer to another for a dollar or two whereas previous generations wouldn't. They have to move, jump and relocate in order to get more compensation."
This decline in tenure can be viewed as a character flaw in Gen Y but the cause is not a lack of loyalty, nor a poor work ethic; it's merely a response to the changed times.
"So, for most players in the job market, many key functions have become more short-term," reiterated Frederick van Zuylen. "This may sound negative, but it is not necessarily so. The younger generation is more flexible for this new approach and most often welcomes change as an opportunity to experience and get involved in different projects or even different functions."
Employers can capitalize on this generational difference by "developing" Gen Y by providing opportunities to learn through experience; "deploy" them by designing effective organizational roles and environments; and "connect" them by creating seamless networking infrastructures, noted Deloitte Research's white paper.
The organization created the develop-deploy-connect model that helps for organizations to generate capability, commitment, and alignment in key workforce segments, which in turn improve business performance. The organization says that when this model is implemented, the attraction and retention of skilled talent largely take care of themselves.
By "developing", one can provide real-life learning opportunities that employees need to master a job. Not traditional classroom or online education but by "trial-by-fire" experiences that stretch their capabilities and the lessons they learn from peers, mentors or others.
"Mentors are vital, [even] critical to Gen Y," stated Gelotti. "A mentor that can oversee their growth, watch over them, and lead them is a huge plus in a work environment. It shows that the company is invested in them and their overall professional development. So in the next five to 10 years, this generation can help grow the business."
To "deploy", Deloitte Research suggests working with key individuals to (a) identify their deep-rooted skills, interests, and knowledge, (b) find their best fit in the organization and (c) craft the job design and conditions that help them to perform.
"If companies can show Gen Y that they will have the opportunity to engage with senior management that is also a huge benefit," said Gelotti. "Being in meetings with senior management, their boss' boss, listening to ideas, witnessing how ideas are played out, giving them opportunities to see, hear, learn, to find their niche, are huge bonuses to this generation. They help them to better perform because they feel challenged and excited."
The third talent strategy Deloitte Research suggests is to "connect" by providing critical employees with the tools and guidance they need to (a) build networks that enhance individual and organizational performance, and (b) improve the quality of their interactions with others.
Redefined Work Life
Typically, one would complete levels of traditional education or forgo them entirely, move into the workforce– maybe have a career change or two – and then head into retirement, all the while cautious about separating the work-life balance.
However, Gen Y is open to different roles, phases and careers. The education phase is extending well into adulthood and throughout the work life which in turn helps them form their long-term career goals. This generation needs work arrangements that align individual and organizational needs in flexible ways. Gen Y will experiment with different industries and may revamp their career multiple times, all while looking for opportunities that will take them to other states and countries.
"Relocation opportunities are considered a perk to Gen Y. They are looking to work overseas [and] explore the world while gaining operational experiences globally," said Gelotti.
This generation is work-oriented but requires the flexibility of having multiple employment perks, such as flexible work arrangements that accommodate personal circumstances and working styles. This generation searches for employers that allow for flexibility, opportunities to embrace their entrepreneurial ambitions and the opportunity to use social networks at work without strict corporate guidelines. Gen Y is used to working anywhere and everywhere at any time of day or night on their laptops, tablets and smartphones.
"Often times, people get over worked, burnt out and then have the urge to move on. Employers need to offer opportunities that blend professional and personal time," Gelotti said.
To help with the work-life balance, upstream oil and gas companies can adopt innovative rewards programs that build creativity and flexibility into their work environments, thereby attracting and motivating employees, according to Deloitte Research. Examples of these initiatives can be supplementary rewards programs, such as annual incentive plans, deferred compensation, profit-sharing, stock options, recruiting incentives, flexible work schedules and virtual work alternatives.
The organization also noted that one leading upstream oil and gas firm raised its retention rate to 30 percent above the annual industry norm by funding hands-on training for all drilling employees. These types of strategies target Gen Y and reward performance with flexibility while helping to develop the social infrastructure needed to collaborate effectively stated the organization.
Engage, Recruit and Retain
While being criticized as fickle, self-focused, lazy and needing to be coddled, the reality is that Gen Y is just a reflection of its time. Economic cycles come and go, jobs aren't guaranteed and profits are seemingly preeminent--so it is not an inherent selfishness but a response to corporate realities, stated McCrindle Research.
"When companies can offer something unique and compelling that sets them apart from other industry competitors, whether compensation, access to ground-breaking technology, or flexible work arrangements, then employers will attract the best and brightest," said Hanz. "Loyalty and commitment from Gen Y can indeed be garnered."
"You have to hang on to your talent and to do so you have to know your talent," added Gelotti. "These are the people you are counting on to take over the reins 15-20 years down the road, so get to know them. If you invest in them early, the benefits will pay off in the long run."
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