Talent Void a Top Five Business Issue for Oil and Gas Executives
Nearly 90% of senior human resources (HR) executives at 22 top international oil and gas companies believe their industry faces a talent shortage and call the problem one of the top five business issues facing their companies. Working with Rice University, Ernst & Young LLP recently surveyed HR executives in the oil and gas industry to glean insights on the challenges of workforce recruiting and retention and how to overcome these challenges. Nearly all (88 percent) of the respondents agreed the shortage has the potential to impede growth and financial performance.
Respondents were asked to rank the following issues on a one to 10 scale, with 10 representing a significant problem: corporate growth as a result of inability to staff projects was given an average score of 7; financial performance due to rising costs scored 6; innovation scored 6; operations/safety scored 6; and corporate reputation scored 5.
"It is clear that the talent void in the oil and gas industry has transformed from an organizational challenge into a critical business issue," said Dina Pyron, a leader in the Human Capital practice within Ernst & Young's Global Oil & Gas Center. "The lack of key talent could potentially impact corporate growth, financial performance, safety and reputation. This should raise a red flag to leadership that immediate and innovative solutions are necessary."
According to the findings, the greatest threat to recruiting and retention is competition from counterparts within the industry. Respondents ranked competition from peer companies an eight out of 10, with 10 representing a major challenge. Also nearly unanimous was the industry's response to the problem: increased compensation. Eighty-eight percent of respondents cited increasing compensation as their primary solution to keeping and attracting talent.
"Compensation is important, without a doubt, but the survey results show there is a real opportunity to do something different, stand out from the competition, lure new recruits and create loyalty among existing employees," said Bill Lee, associate dean of executive education for Rice University. "The first company with a break-out strategy could position itself as the leader in a highly competitive recruiting and retention environment."
Some new approaches to turning the tide on the talent shortage include focus on the next generation. Ernst & Young suggests looking beyond Baby Boomers and focusing on recruiting and retention strategies designed for Gen X and Gen Y.
Recruit in bulk. Expand and diversify recruiting methods. Hiring in bulk and providing training programs for a variety of areas can improve and diversify a company's talent pool.
Customize culturally appropriate approaches. Seventy-six percent of respondents said retention issues are different around the world for their company. Oil and gas is a global industry with a global workforce and a one-size-fits-all approach does not work.
Leverage retiring workers' knowledge. Be creative in retirement arrangements in order to retain intellectual capital.
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