Oil & Gas Careers: Freelance vs Staff

For many, stepping out of the corporate world and into a freelance role is the fulfilment of their oil & gas careers.  It represents a chance for personal growth, building your own business, and testing your business skills in a competitive world.  For HR teams, it also offers benefits, but with some risks.  The financial rewards for the individual can be substantial: in good times, O&G day rates of $500 to $3,000+/day are readily achievable.

Why do it?

But of course it’s never just about the money. For some it’s a different way to develop a leadership role – leading projects, leading people, setting up a new business.  Some individuals go on to assume positions of significant influence, perhaps advising Boards, executives or governments – and maybe commanding $5,000 a day or more.  Others may take on the role of a thought leader, shaping opinion through speaking, writing and developing a profile in the media.  Some become so successful at this that their name becomes a brand in its own right.

Some freelancers focus less on business, financial and status aspects and are more attracted by the flexibility of this type of work.  They pick and choose how much (or little) work they do, the location, project type, the clients and level of travel.  Some projects offer the possibility for home working and this can be highly attractive, avoiding commuting for example.  For these freelancers, their business represents a lifestyle choice.

As McKinsey point out in a recent piece on HR in Oil & Gas, technological advances and demographic shifts are changing the old ways of working. Project-related roles are well suited to freelance work for geologists or engineers, and digital expertise in particular is likely to be in high demand; corporate roles, on the other hand, tend to be less well-suited to freelance work, except of course for consulting, facilitating or mentoring activities.

Benefits for the Employer & HR teams

O&G firms have always valued freelancers. They like the flexibility, specialism and focus that they can provide.  Even in today’s O&G world, HR needs to ensure that the firm has the capabilities required to meet its strategic objectives.  With continued uncertainty, bringing in freelancers can be a faster and more flexible way to get those capabilities than hiring permanent staff.  As the O&G recovery continues, building capabilities is likely to again become a barrier to growth.  Added to that, many of those who have left the O&G industry during the downturn will never return.  Many forward-thinking firms will again turn to the freelance talent pool. Oil & gas careers are changing, and HR teams are adapting accordingly. Successful firms will include the freelance community in their talent strategy (McKinsey refer to “blurred company boundaries” and the “seamless integration of external and internal” staff).

Oil & Gas organisations value the fact that they can hire specialist, freelance expertise for a specific project and schedule; can potentially select candidates from a big pool; and can fill a temporary gap in their organisation, while also potentially bringing diversity of thought and experience to the firm.  Additionally, freelance help can be more cost effective: the organisation only pays for work done, and there may be no taxes, holidays; office space, or supplies to account for.

The Downsides

It’s not all positive.  Job security will almost certainly be lower, so those who value a regular pay cheque will probably find it’s not for them.  There may be other financial constraints, especially in the early days, such as difficulty raising a mortgage and obtaining medical insurance.  And of course, the freelance model is a business in its own right and this carries an administrative burden, for example taxes, VAT returns, invoicing; office space and corporate filings. Some find freelancing a lonely business and miss the readily available social interaction in a larger organisation. Hiring companies can let go of freelancers quickly if there are cost pressures, as we have seen in the recent O&G downturn.

For Employers

There are risks for employers too, beyond those normally associated with staff hires. The short-term cost can sometimes be higher than with permanent staff. Freelancers are less likely to be familiar with or supportive of the corporate culture and values. Confidentiality and security can be a risk, especially for those who work offsite. Vital knowledge and experience can be lost to the business when the freelancer moves on. If the firm has the right processes in place none of these should be a major problem.

What do you need to do?

In many ways, the freelancing choice is a trade-off:  you lose some security and stability in your work, but you gain in having more flexibility and freedom.  How you define your own values and motivation – ie what matters to you – is key to making the right decision.  You also need to be clear about your own strengths and weaknesses – not just your technical skills and knowledge but your “softer” skills. Once you have made your decision, you will need to plan and take some practical steps:

  • Positioning: understand what your target clients need and what you offer and position yourself accordingly. Develop skills that are in demand – the more specialised you are the greater the risk/reward balance. Create a learning and development plan to improve your competencies.
  • Marketing: identify your target clients and how you will reach them. Decide where to focus business generation efforts: networking, social media, interim search agencies, direct sales, referrals from existing contacts. Make sure you have a good CV, bio, “elevator pitch”, website and LinkedIn profile, all of which should emphasise the value your offer via your achievements and experience.
  • Make a plan and go to market: Be aware of the oil company budget cycle – typically this runs from Oct – Jan. Set targets with deadlines for different activities. Network as much as possible – join the local chapters of groups such as the Society of Petroleum Engineers, The Petroleum Exploration Society of Great Britain and the Association of International Petroleum Negotiators, the American association of Petroleum Geologists, as well as LinkedIn groups focusing on oil & gas careers.
  • Administration: You will need insurances (e.g. professional liability), pension and health care. Decide whether to work on a self-employed basis or within a company. Build a support network, that includes service providers (accountant, lawyer, marketer, web design etc.) and associates doing similar work that you may collaborate with in the future.
  • Pricing: get to know market rates for your skills. And don’t forget:  you will need to negotiate a day rate – don’t be afraid to push for high rates in the good times!

For the employer/HR team, investing time in a few processes can ensure the most effective use of freelancers:

  • Clear job specs and briefs, so there’s no ambiguity as to what is expected
  • Fast-track induction process so a freelancer can get up to speed rapidly, properly aligned to corporate values and objectives
  • Feedback and appraisal process – good freelancers will want feedback and this is a good way to create loyalty (but avoid a bureaucratic corporate process – this is what many freelancers try to escape)
  • Knowledge transfer – ensure there’s a system to capture any knowledge gained, processes developed, data gathered before the freelancer departs
  • Clear rules about confidentiality, data and IT security

Given the way the world of work is changing, it’s likely that most oil & gas careers will involve a combination of permanent roles with some freelance work at some stage. The successful individuals and firms will make sure they are well positioned to make the most of the opportunities.

Should you wish to step into the freelance world in O&G, the following resources are available:

Good luck!

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