The widely embraced strategy of poaching talent from competition is not sustainable in the highly competitive oil and gas industry, and local and global operators need to adopt a healthier commercial approach to recruiting, retaining and developing human capital.
A recent research report from Mercer has found that talent in the oil and gas industry is shifting out of Australia and into markets such as Mexico and the US, and this has created a headache for local employers in the oil and gas sector.
While Australian employers are better positioned than some of their overseas counterparts when it comes to sourcing and retaining talent, workers in the industry are more mobile and this has the potential to threaten long-term growth and profitability.
Employers need to think about different and more innovative ways to attract younger people to the industry, as it is often not attractive to the younger generation due to perceptions around a lack of work-life-balance.
The report also said the top four methods oil and gas companies use to source talent include:
- Current employees from other oil and gas companies
- Experienced hires from outside oil and gas industry
- Contractors/temporary workers/outsource function
- College/university
The most significant proportion of workers in the oil and gas industry comprise those in the 25 to 35-year-old age bracket, followed by those in the 40 to 60-year-old bracket – of which 60 to 80 per cent will be retiring within next five years.
As such, the research report suggested organisations need to start transferring knowledge quickly to the younger generations, rather than poaching employees from competitors.
Talent management: buy versus build?
There has been significant tension between managing compensation and talent engagement, and the report said that organisations are concerned about retention and motivation of talent and top performers in particular.
The report, which took in more 120 companies representing over 1 million employees across 50 countries, also found that organisations have focused more on buying talent (66 per cent) versus building talent (34 per cent).
The option of simply paying more for talent is no longer viewed as a preference by many employers as they are focusing more on intangible rewards such as motivational leadership and career development.
In the process, managers that partner more effectively with HR will provide their organisations a stronger competitive advantage.
More employers also have access to a number of different services which provides information on what competitors are paying their employees, which is another reason for organisations to differentiate themselves in the rewards space.
How HR can help managers
“Equipping managers with better soft skills and technical skills can be a key point of the employee value proposition,” said Philip Nolan, Mercer’s WA state manager and Perth office leader.
HR can play a significant role in coaching and working with line managers to help them in understanding what tools are at their disposal in order to develop and retain talent, according to Nolan.
“Treat the human capital as an asset and manage it in the same way that you would do with the other business assets,” he said.
The culture and attitude of management is also an important factor in the effective delivery of intangible rewards such as flexible working hours, career growth, recognition, leadership and working environment.
HR should tap into their own information system to better understand trends around employees and workforce planning, he said.
“It is a combination of using that information together with information on the broader external market to come up with a workforce plan that has some flexibility to adapt over mid-term and long term,” said Nolan.
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