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HR Strategies in the Oil & Gas Sector

Organizations in the Oil and Gas sector are realigning their HR strategies to match their core business objectives. The roles of HR personnel are becoming increasingly challenging due to the talent-crunch in the sector that is staring right in the face.

The HR discipline is becoming a lot more central to any organization today. It’s a truism that the best asset that most organizations have are their people. The traditional functional department that managed people is HR, and this function is becoming more strategic in its scope. There is a widening of activities managed by HR teams- change management, succession and retention planning, continuous learning, and 360 career planning.

More and more companies in the Oil & Gas sector are now recognizing the importance of HR in the entire value chain.  The talent crisis is making their task of organizing their resources all the more difficult.  A key issue for HR managers is to operate in harmony with the constantly changing business imperatives.  Hence, they are not given enough time or wherewithal to design long term strategies to handle the talent crunch. Typically,, most business strategies are reviewed and modified periodically whereas the management sometimes fails to review the HR strategies whereby making the task of the HR manager all the more difficult. The good news is that in recent years some of the companies have realized that there is a grave problem if the role of the HR function is not addressed by the management. New managerial techniques such as professional recruitment - based on systematic assessment tests and executive searches; competency based management; career and succession planning and tailored compensation plans have been increasingly gaining ground. Key focus areas for regional players are: HR marketing and recruiting; staff development and motivation; rewards and compensation, and performance management. Companies should demonstrate exceptional performance in each one of those areas in order to achieve long-term success. For a potential employee, rewards and compensation matter greatly, but  training and development opportunities are just as important to differentiate a company from its competition.

Emphasizing the role of HR department is more important in the Oil & Gas sector as nationalization of the labor force is a major driving force.  Additionally, every GCC (Gulf Cooperation Council) country is looking towards implementing innovative HR strategies. The HR departments of a large number of regional Oil & Gas Producers are currently facing one of the biggest challenges they have encountered in recent years. The prevalent talent pool comprising mainly of engineers who are vital for the sustenance of the entire industry may retire soon. Research indicates that the average age of production engineers in the region is already at around 51 years. Further, recent studies show that by the end of this decade there will be a 38% shortage in the influx of talented engineers and a 28% shortage of instrumentation and electrical workers.  There is a tremendous pressure on the HR to replace the ageing workforce within the coming years. Training young professionals to replace senior employees, who often have more than 25 years of relevant experience, is not at all an easy task for HR departments.  Additionally, job opportunities created in booming sectors such as IT and Outsourcing appeals to today’s youth which further leads to high rate of employee turnover every year. This talent shortage, along with other recruiting issues creates a big challenge for today’s HR executives.

Another big challenge faced by the HR department is employee development and retention. Motivation, performance appraisal and reward management contribute greatly towards employee retention and satisfaction. Satisfied and trained employees, rarely consider quitting their current profession, even when offered comparatively higher compensation packages. The HR department is deploying newer and modern techniques to retain existing employees and to attract talented young professionals to the Oil & Gas sector.  One technique that is gaining a lot of recognition is e-learning and several companies are slowly implementing it.

Besides, the Herzberg’s hygiene factors including company policy and administration, supervision, working conditions, interpersonal relations (co-workers), company policies, and job security also play a major role in recruitment and employee retention.

It is important to note that creating a strong Human Resources department is not going to show results immediately.  It is a journey where the fruits are borne over a longer term.  The way to get started is to link business objectives to HR objectives; and build a continuous feedback loop: business strategy drives people management, and people issues influence strategy.

- The Global Energy Talent Editorial Team

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