Talent Management in Energy – Strategies for Success

The autumn months are traditionally the time for businesses to start planning for the coming year and updating their strategies in various areas. For HR teams this often means re-visiting the talent management strategy – and the challenge of justifying training and development budgets to a Board with many other calls on resources.

Over the summer we conducted an informal survey of our Oil & Gas audience to identify the primary business reason for investing in training. Nearly half cited increased productivity as the main reason (or benefit) for investing in staff training – “People [will] contribute more because they know more and can do more”; this tallies with a recent McKinsey study that linked business outperformance to effective talent management (see below). A fifth of respondents mentioned “motivation”, and of course training opportunities can be a crucial and positive part of the employee experience – leading in turn to higher productivity. The figure for “Retention” was surprisingly low, at 15%: in our experience, staff who know there’s a career development plan available are more likely to stay with the company: but the question was about the primary reason for investing in training and this is clearly a secondary benefit rather than the main driver. As the market for talent heats up, it can be a key element of a positive employee experience.

Motivation 

Understanding what motivates employees is essential to creating a positive employee experience.  Management thinker Frederick Herzberg talks about the “Hygiene Factors” – basic elements such as salary, benefits, conditions, policies – as potential “Dissatisfiers”, or demotivators. Get them wrong, and you will create a negative employee experience.  But it’s not enough simply to get these right. To create a really positive experience, particularly for high-potential managers, other factors – “Satisfiers” –  have to be considered. These may vary from one individual to another but will include opportunities for personal growth, training, promotion, public recognition, autonomy and also a close fit with the company’s values and culture. This last one is a key part of “intrinsic motivators” identified by another management writer, Daniel Pink – a sense of purpose and belonging.

Hiring the right people

Of course, effective talent management starts with the hiring process. For hiring managers, whether in HR or within a function, the challenge is to make it more than an administrative process that focuses only on qualifications. As mentioned above, making sure there’s a good fit with a company’s culture and values is crucial. For the line managers, the goal should be to hire someone with the potential to be better than them – a goal that some find uncomfortable. But succession planning is a key task for any leader, and developing talented staff for the future is often the most important contribution a manager can make.

Hiring externally always brings risks – and costs. Erin Vaughan, writing for TrustRadius, a B2B procurement service, quotes studies that show external hires expect 18-20% more in salary than those promoted from within. They are also more likely to move on to other companies rather than stay long-term, and may take time to adjust to the company’s culture – especially if they come from a business with a strong, and different, culture of its own. Effective talent management therefore means putting a lot of emphasis on internal development and the employee experience. Remuneration, as long as certain basic expectations are met (ie as a “hygiene factor“), tends not to play a huge role in talent management.

Three steps for effective talent management

Getting the employee experience right is the key message of a recent McKinsey study, which demonstrated how effective talent management leads to long-term outperformance. It identified three interlinked practices that underpin a successful talent management strategy:
• The fast movement of talent among and between projects
• HR taking responsibility for a positive employee experience
• HR having a comprehensive understanding of the firm’s business and its strategic priorities

The first of these is fundamental to the development of leaders: as we illustrate in our Leadership in Energy programme, moving between projects, functions and regions early on in a career is an excellent way to accelerate the development of the soft skills that are required in senior leadership roles. Exposure to the different worlds of production and reservoir management, or contract negotiations and marketing – and of course HR – is as important as gaining expertise in different regions.

The second item, the employee experience, can be a challenge for HR departments, especially those that are perceived by the Board to be administrators of the “hiring & firing” or “pay and rations” processes, because it means getting involved in – and even describing – how managers should behave, how they run their teams and how they plan for the future. HR heads in the large international oil companies may already have this responsibility, but it’s often harder in smaller companies, in regional offices or in the NOCs.  It means working closely with colleagues in brand management and internal communications, on how the company’s values are expressed and matched by employee behaviour. And above all, it means working closely with the CEO and board to make sure that the whole management team supports the positive employee experience: as the saying goes, “people don’t leave companies, they leave managers.”

That saying isn’t entirely accurate: people change jobs for a whole raft of reasons, but usually the most important is the lack of development opportunities – or recognition and promotion (often because they are blocked by an incompetent manager). Again, this is where HR can play a key role, applying the third of McKinsey’s three practices – having a comprehensive understanding of the firm’s business and strategy.

Armed with this knowledge they can identify skills gaps (where training can help) and career opportunities for high-flyers elsewhere in the firm who may be looking for a move. Developing this knowledge isn’t always easy, especially for a function that may be confined to head office administration. Obviously training is an option – we have frequently had HR managers join our 3-Day MBA in Oil & Gas courses to gain this understanding; and another possibility would be a stint as a line manager within a function or region.

Another McKinsey survey from earlier this year talks about the need for “right-skilling” in the age of automation and digitalisation – something that pre-occupies most oil company executives as they seek to benefit from new technologies. Providing the opportunity to develop new skills as the industry changes is key to delivering a positive employee experience and will enable firms to retain talent more easily (and avoid lay-offs, with all the social, political and reputational issues they bring). For those of us in the oil and gas world there’s a double challenge: the automation of existing processes, and also the threat to the industry as a whole from changing demand and new energy sources. So “right-skilling” should not be restricted to narrow technical skills – this risks swapping one set of redundant skills for another that will be automated away later. “Right-skilling” should also involve knowledge and skills that are transferable across functions and even industries – if Google employees can move into car manufacturing, surely oil companies should be able to move into renewable energy or infrastructure development…. And of course many already are doing so.

Comments

  1. We need for more learning by all system and strategy operating management oil and gas ,strategy leadership oil and gas company..

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