Recruiting and managing the next generation of energy leaders

Estimates show a net outflow of 5,500 people at the petrotechnical professional level in the oil and gas industry. The immediate ramifications of this decline in experienced human capital will be heavy recruitment of staff from competitors, which will continue to drive salaries higher. Even with fluctuating prices for a barrel of oil, many projects will continue to be economic, thus increasing the need for experienced hires. But a loss of skilled labor means that companies may be unable to properly staff these projects, resulting in delays or the possibility of less experienced staff running them.  Production rates could suffer from potentially risky outcomes in safety and downtime. All of these factors increase costs for oil producers.

Lack of staff is not the only risk; quality (i.e., real-world experience) is also a factor. The over-promotion of less experienced professionals put projects at risk for safety and downtime problems as well. The proper balance of the quality of work, timing, supply of equipment and people, safety, and bottom-line profitability must be observed for all parties to be satisfied.

These management and leadership skills can be found in other industries, many of which have devised and implemented best practices around project management. If the proper general manager of a project is selected, he or she will surround himself with technical experts, thus allowing a focus on the core skills and abilities that he brings to the company, rather than strictly the technical knowledge of the project. This opens up the industry to looking at midcareer leaders in the heavy industrial and civil construction industry, mining industry, or even the military.

Effect on Senior Management

So what do these midlevel staffing issues mean in the long term? For starters, the industry will have a smaller pool of talent to choose from when looking at senior management succession planning. There could also be the real possibility that there are no qualified employees from which to choose within a company. This may cause the company to look outside for talent, which could lead to higher wages, higher turnover due to competitors poaching from one another, and increasing one-time costs attributable to new hires.

If this gap is not filled, the companies run the risk of perpetuating the problem from which the industry currently suffers. When those at the top retire, the pool of talent to choose from within the industry will be considerably younger. When this younger crop of talent is appointed to top positions, they will naturally remain in those roles for a longer period of time, making those behind them wait longer to rise to executive roles. For some high-potential midlevel management individuals to reach the top, they may consider leaving the industry to see their career aspirations come to fruition.

A Balanced Approach

 

To help slow or stop this skills gap cycle, we recommend a four-pronged approach that incorporates short- and long-term strategies, thinking outside the norm when making hiring decisions, and implementing organizational development strategies that put the onus on both the company as well as employees.

  1. Be open to hiring managers, both mid- to senior-level, from outside the industry.

By opening up managerial roles to those from other industries, we can “import” best practices into the energy industry that we may not have knowledge of or experience with, as well as help fill some of the gap that exists in mid-career employees.  Consider an individual who currently works for a company that provides field development and production contracting services to the energy industry, and is particularly technology focused.  This individual worked in the medical industry as an engineer leading groups of other engineers providing installation and operations support services to clients for almost a decade.  They then moved on to provide engineering and construction project management services to the construction and infrastructure industries.  This large and technically complex project management background has proven invaluable to this individual’s current employer and has given the company an edge of some of its competitors with new approaches to old problems.

 

  1. Use organizational and talent development as a strategic and competitive tool.

Strategic HR is the management of human resources aligned to the organization’s future direction. Focusing on longer term human capital issues and macro concerns about structure, quality, culture, values and matching resources to future needs of the organization allow HR managers to help drive profit in the company

Talent is no longer an issue confined to the HR department, but is getting the attention of senior executives and board members.  Companies within the energy sector must facilitate the involvement of HR at strategic decision-making levels to ensure a culture is created that sends a clear message to current and future employees that leadership talent is highly valued within the organization. This can be supported by leadership development programs tailored to meet both the employee’s specific development needs and the company’s profile for future leaders.

HR professionals must be seen as true strategic partners. As this issue of talent management is not restricted to the energy sector, those senior executives seeking competitive advantage from attracting, developing and retaining more than their fair share of industry leadership talent must seek and hire the best strategic HR practitioners regardless of their sector backgrounds.

 

  1. For entry level to mildly experienced hires, consider individuals with complementary skillsets from other industries or educational backgrounds.

There are a number of intelligent first-year college students who do not initially set out to become engineers or scientists. There’s a good chance that a person with an undergraduate degree in mathematics or economics knows enough about crunching numbers and analysis that they could be taught how to apply those skills to the energy industry.  Most energy-related companies are courting engineers, but not everyone is going to get them.  Why not consider looking at strong analytical types and putting them in to a rotational development program within your company to find out where they best fit?  Also, companies should commit to leadership or leadership potential as a desirable skill when recruiting these individuals.  Selling upside career opportunity to new graduates may just net the organization individuals that may have chosen another offer otherwise.  In addition, using this criteria when recruiting less experienced employees may aid organizations in their quest for succession planning in their ranks.

This is true for slightly more experienced people as well.  Military personnel enter into the energy industry without having engineering degrees. Others have gone from civil engineering roles designing roads for government projects into subsea design engineering, and have done quite well for themselves and the companies they joined.  Many times in an experienced hire, one needs to look more closely at the creativity and leadership capability of the candidates as opposed to merely checking the boxes of preferred hard skills and experiences.

 

  1. Consider long-term options to increase the pipeline of talent into the industry.

Looking for talent development at the collegiate level is not enough.  While it can be helpful for recruiting efforts to provide internships, scholarships and work-study options to undergraduate students, more needs to be done to entice students to become STEM majors. Companies should be looking at increasing awareness of STEM education at the middle and high school level or potential engineers and scientists may be lost to another major in college.

 

Conclusion

Though there is concern over the skills gap within the energy industry, all is not lost. While our suggestions may be non-traditional and not always easy to implement, companies desirous of getting ahead in the war for talent could use them to have an edge on their competitors.   The strategy will not see immediate effects today or tomorrow, but will be advantageous for the long term.

Character matters

The title of this post is a simple sentence that I have been thinking about more and more lately – particularly in light of the ongoing caustic and frequently disturbing Presidential primaries.  However, I have also been considering this in regard to leadership in other areas.  It seems all too often we allow leaders to act in ways, that frankly we wouldn’t allow our children to behave.  This has me wondering two things; why – and how do we fix it?

On the question of why, I suspect it is that we tend to excuse idiosyncrasies or objectionable behavior in exchange for some other contribution (real or perceived).

  • We overlook the sexual indiscretions of the senior Professor because they have publications, relationships or stature that adds prestige to the University.
  • We ignore the belittling and micromanagement leadership style of the Business President because they are exceptionally gifted in strategy and squeezing out earnings per share.
  • We explain away the political manipulation, self-aggrandizing and fiscal irresponsibility of the Charity Leader as necessary evils to get someone actually willing to take the role, coupled with “any good done is better than none at all.”

It is also possible that this is a function of “the devil we know,” we fear the unknown alternative may be far worse.  It may seem too hard, too much work or not worth the effort to replace a leader with a critical character flaw.  We may even convince ourselves that in the great scheme of things, their flaws aren’t really all that bad.

While we could probably do a much deeper psychological and sociological dive into why we tolerate these types of leaders, I am much more interested in how we can fix it.  Let’s start with some simple thoughts.

Tie character into HR practices.  This is the most straightforward action we can take.  We can use character related criteria at every step of the workforce cycle: attract, select, develop, promote, retain, and retire / fire. While we must pay attention to labor law, our HR practices are often substantially more conservative than legal requirements.  This may make sense to keep organizations protected from litigation and penalty, but it also undermines our tools to deal with significant character failures.  We should empower these practices to ensure we have the leaders of character we need.

Values must serve as standards and expectations.  As members of organizations, communities and societies, we have to talk about, understand and then reinforce our collective values; our deepest beliefs.  As leaders in those institutions, we have to do the same on a personal level.  We owe it to our people to hold ourselves accountable to the highest level of those standards.  Leaders are ultimately standard bearers.  Both performance and developmental conversations should address character fault lines as much as capability gaps.  We should have the courage to direct these conversations upwards as well as down.

Leaders are responsible for their own character.  Goethe said that ‘character is formed in the stormy billows of the world.’  This may be true, but the leader decides the lesson they will take from those storms.  This is about choosing the right values, aligning behaviors and being accountable.  Leaders must take as much responsibility for who they are as what they do.

This is the most difficult of fixes as it requires the leader (who may see no problem with certain aspects of their character), to change how they act – if not what they believe.  Over time – with strong self-awareness, sound role models and available mentors / coaches – the leader can develop the full character expected of those who wield significant influence.

Given these three thoughts on addressing character flaws, let’s turn to a pragmatic view of why we should care about it at all.

Character makes long-term business sense.  Along with the strong moral and ethical arguments to be made for leaders of character, it is also good for business.  To see this impact we must look at a simple, yet powerful model of individual and team performance.  Ultimately, performance comes from the intersection of three areas; the capabilities of a person or team (skills), the discretionary effort they apply to work (motivation) and the resourced psychosocial and physical space in which the work is done (environment).

When leaders act as described at the beginning of this post, it is more likely that people who work with/for them will be less motivated, have lower passion and commitment to the role at hand, be less trusting and more guarded in their communication.  We see much more compliance than inspiration in this circumstance.  Further if they see the organization allowing such behavior (and sometimes apparently rewarding it), they are also more likely to become cynical, disengaged and less connected to the organization itself.

On the other hand, if leaders demonstrate strong and positive character  we are much more likely to see higher levels of follower commitment, passion, engagement and overall identification with the organization.  These in turn lead to higher long-term performance, and more positive organizational outcomes.

Take a look around your organization. Do you have leaders that just don’t seem to understand the worth of character?  Are they causing harm, either unwittingly or with intention? What can and will you do about it?

Two friends recently shared some thoughts that seem to sum all of this up.

  • The first is a seasoned and experienced developer of leaders.  He came across a quote that said “if you want to become a better leader, first become a better person.”
  • The second is a CEO whose thoughts perfectly mirrored my own: “I would rather hire a leader with character than capability.  Given the right person, I can develop capability – character is infinitely more difficult to create.”

We need to keep reminding ourselves to not tolerate leaders who don’t live up to our most critical standards.  Ultimately we should send the message that if a leader thinks that the value they provide allows them to act poorly, knock it off!

 Character matters.

New Head of Veteran Talent

We are pleased to announce that Mike Pettengill will become our newest Principal, responsible for leading our Veteran Talent practice area.  [some of Mike’s bio here]

Culture change

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Climb out of your foxhole

A participant of an executive education program I ran several years ago asked me to retell a simple story I shared with his cohort. He said it stuck in his mind and he would like to share it with his junior leaders.