HR: Workforce Dynamics Are Driving Change In Oil And Gas

Craig Kindleman and David Shimbo

As an oil and gas HR executive, you know that downsizing, restructuring, and mergers and acquisitions are a way of life. There’s the boom-and-bust cycle – including the rampant hiring when things are going well.

Business success depends upon people’s engagement in the company culture. And we see many factors driving the shifting oil and gas workforce, including demographics, technology, and globalization.

Tech-enabled workers

The industry will require a surge of tech-enabled workers for many engineering, maintenance, and operations positions. Access to talent was rated the most critical issue facing oil and gas companies, according to Oxford Economics’ and SAP SuccessFactors’ Leaders 2020 joint study.

The industry’s talent profile is changing. Traditional disciplines such as subsurface and surface engineering are still important, but they must be balanced against new demand for expertise in digital operations.

As companies build their capabilities in software engineering and data science, for example, senior executives in talent management will need to figure out the right weighting of technical staff (engineers) versus technological staff (data scientists and software engineers) and how the sector can attract the latter.

Key characteristics of digital HR leaders

Digital HR leaders are more willing to take risks and are more future-focused. They are also data- and analytics-savvy and enabling, not controlling. In fact, successful digital HR leaders are distinguished by a few characteristics that will help position their business for success:

  • Strategic thinking: The caliber of an organization’s talent will increasingly become a key differentiator. Those responsible for leading talent acquisition, growth, and retention will increasingly be in pivotal roles.
  • Capability-rich: HR leaders will need to bring curiosity to their roles, identifying trends that could present challenges or opportunities. In an increasingly fast-moving environment, those who are curious and quick to learn will gain advantages. Agility will be another key differentiator because HR leaders will increasingly recognize that, just as product and delivery cycles accelerate, HR solution lifecycles must also accelerate.
  • Business-driven: HR leaders who are most immersed in the business and who understand and actively participate in strategic business leadership are most effective in delivering talent and people strategies to meet business goals. It is perhaps a reflection on how many HR leaders fail to do this that over 40% of new chief HR officers (CHROs) are now being appointed from the business – not from HR at all (Deloitte, 2015).
  • Champion and negotiator: HR leaders will need to bring the negotiation and political skills necessary to secure the resources needed to provide world-class HR in the digital age. If an organization’s talent force is going to provide a competitive advantage, the caliber of the HR team, the investment in learning and leadership, as well as the investment in HR technology and analytics will all be critical.

Digital HR organizations positively affect business outcomes

Digital HR winners are more engaged, more educated, and have higher stock market returns.

  • Mature talent strategies: According to SAP/Oxford’s Leaders 2020 Study, 75% of organizations that are “digital winners” report stronger revenue and profit growth, versus only 55% of organizations that are non-digital.
  • Higher employee retention and engagement: Also according to SAP/Oxford’s Leaders 2020 Study, 87% of employees from digital organizations are happier, more engaged, and overall more satisfied with their jobs, compared to only 63% at organizations considered to be digital laggards.
  • Culture of continuous learning: According to Gallup’s State of the American Workforce, organizations that embrace learning outperform their competition with having 21% high profitability.
  • Embracing digital analytics: According to Bersin, organizations at the highest level of talent analytics maturity generate 30% greater stock returns than average.

The command center for the oil and gas talent pipeline

Your talent pipeline is your talent lifeline. Three key initiatives can be the difference between which companies succeed and which struggle:

  • Total workforce management: Leverage insights across full-time employees and contingent labor to manage the total workforce lifecycle in oilfield operations.
  • Actionable insights: Use data to predict, plan, and measure HR needs and strategies while supporting the business with actionable talent insights and analytics.
  • Comprehensive reporting: Extend utilization of HR metrics from workforce analytics by allowing consolidation with cross-enterprise reporting for insights that will reduce operating costs or increase productivity.

Customer success story: Petroleum refiner and distributor

This customer wanted to improve insight and decision making in personnel management and reduce HR administration to allow more time for strategic work. Plus, it had turnover issues due to an aging workforce.

The customer had a long-term relationship with SAP and successful deployment of SAP for oil and gas solutions and the SAP Business Planning and Consolidation application. And it was using SAP cloud solutions for fast time-to-value.

The customer deployed SAP SuccessFactors solutions in just three months, consolidating disparate HR tools and processes.

Going forward, it plans to implement the SAP SuccessFactors Succession & Development solution and streamline regulatory compliance and contract labor management with the SAP Fieldglass Worker Profile Management application.

In addition, it plans to improve tracking, analysis, and reporting of corporate spend with the SAP Ariba Network and solutions from Concur Technologies.

An HR capability roadmap

This is your roadmap to organizational change and organizational value:

  • Build your HR foundation: Deliver HR services across the organization. Return time to employees and managers by introducing self-service capabilities to manage HR transactions.
  • Use advanced analytics: Access comprehensive analytics that provides a real-time view into the organization, allowing for proactive workforce planning and rich insights into areas for opportunity or gaps.
  • Build workforce agility: Build relevant capabilities, track compliance, and provide employees with the skills and capabilities to move across the organization as organizational priorities evolve. Identify areas where a more agile workforce is necessary, providing the ability to adjust to changing needs.
  • Amplify high performers: Create a more accurate, clear, and engaging review process for managers and employees to instill an objective meritocracy that rewards high performers and helps develop others. Provide opportunities for rising leaders to grow and develop while simultaneously narrowing leadership gaps that exist due to a large retiring workforce.
  • Find and retain future leaders: Optimize organizational alignment and ensure leadership continuity by incorporating succession strategies into workforce planning. This will help optimize organizational alignment and ensure leadership continuity. Drive motivation and engagement by linking meaningful development plans and career opportunities with employee needs and expectations.

A sophisticated system

Ultimately, you need a very sophisticated HR system to juggle your own employees and multicultural contract workers, one that helps you tap the full potential of your employees, elevates your company to greater heights, and gives your people purpose in their jobs.

Learn more about SAP SuccessFactors.

Craig Kindleman

About Craig Kindleman

Craig Kindleman is a senior director in the Oil and Gas Industry business unit at SAP. He advises customer executive teams and leads priority shareholder value initiatives for the oil and gas industry at SAP. Craig has acquired vast knowledge in operations, asset management, marketing, and technology – all based on his experience designing global initiatives for multinational businesses and specializing in high-impact projects.

David Shimbo

About David Shimbo

David Shimbo is responsible for business development and value creation for energy and natural resources accounts at SAP. With a focus on upstream, midstream, and downstream oil companies and oilfield service businesses, he has deep expertise with upstream financials, asset management, maintenance, operational analytics, business case modeling, and benefits quantification. David has oil and gas industry experience with Exxon, BP, and Halliburton and technology experience with IBM, Oracle, and two startups. David is determined to make all SAP projects related to increasing productivity and reducing operating costs.