'Perfect storm’ in oil patch labour market
(As originally published in the National Post, 23 December 2011)
By Lance Mortlock, Senior Manager, oil and gas practice, Ernst & Young LLP
While much of the world is focused on today’s fluctuating economic conditions, looming demographic and labour market issues in the oil and gas sector have the potential to shake the very foundations of the industry.
A “skills crunch” is nothing new for the Canadian oil and gas community where boom and bust cycles are the norm. But the current challenge is deeper and more systemic than anything the industry has grappled with before. With several new capital projects on the horizon, oil and gas companies will be looking to expand their workforces as the working-age population sharply declines. Rapid technological change is demanding workers with more sophisticated and up-to-date skills than have previously been required. Meanwhile, the underlying challenges unique to the sector haven’t changed: managing seasonal demand, coping with higher-than-average employee turnover, and attracting workers to remote and hard-to-recruit locations.
These are not simple issues to tackle, and — let’s face it — most of us are driven by more immediate business pressures than larger demographic challenges. But, the fact is, Canada’s oil and gas sector is facing a perfect storm of labour issues that will hamper its ability to harness the outstanding growth this industry offers. Canada has the ability to become a global energy superpower, but to live up to their potential, companies need to start thinking outside of the box. Only those who “think differently” will be positioned for success in the long term.
At a recent EY roundtable, senior HR professionals in the industry gathered to share insights on their common challenges. The following themes quickly emerged:
- Solving the talent challenge
From attracting and recruiting to developing and retaining top employees, HR leaders agree that thinking creatively about hiring plans is the best strategy for coping with the talent crunch. Beyond using search firms and signing bonuses, recruitment solutions may include sourcing qualified workers from other countries and targeting underrepresented groups. Innovative job design is also going to be essential, especially to make the unconventional aspects of the industry more attractive to younger people. From implementing more flexible work models to establishing multifaceted “lifelong learning” programs to support evolving technologies or processes, companies are recognizing the need to create an innovative and long-term workforce management plan.
- Potential for industry collaboration
Collaboration is becoming a more attractive avenue for solving shared problems. This ranges from working together to market opportunities in this industry to high-potential talent worldwide, to working with local governments to provide employee incentives. But even more innovative approaches may be required: increased outsourcing, co‑sourcing with other industry players or creating industry-wide shared supply centres to fulfil needs for specific services or training.
- Employee engagement and capability a concern
As competition for resources heats up, companies are offering more money and seniority to potential employees. But those who compromise on talent may be filling positions with underqualified staff without the skills necessary to be successful. Meanwhile, the concentration of players in small markets means that talent is highly mobile. New drivers and models of employee engagement and growth will be required, as will a greater dedication to leadership and employee capability development as part of an overall workforce strategy.
- Managing change: the dominant issue
Another common theme among senior professionals is the time and attention spent responding to and managing change. This is a departure from the days when HR executives focused their time on metrics and reporting, performance management, succession planning or leadership development — none of which are now identified as the most pressing issue.
Canada’s oil and gas sector is uniquely positioned to reap the benefits of the extraordinary growth potential of this global industry. But a convergence of several major capital projects on the horizon, aging demographics, the need for sophisticated training and a static pool of qualified individuals are driving compensation upwards and challenging traditional recruitment methods. Those companies that embrace innovation, creative alternatives and flexibility will be able to chart a path to a new era of wealth and opportunity.
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-- Lance Mortlock is a senior manager in EY’s oil and gas practice. He is based in Calgary.