Expat Workers

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

For most professionals working in the oil and gas industry, a period of working abroad is expected, especially for those wishing to step into senior and managerial roles. In placing individuals and expats in various locations around the world, we are aware that relocating to some regions is much easier than relocating to others and that there are different advantages and disadvantages to every location. Professionals working in the European Union are free to move between other member states as they wish. For those who do so, state-provided healthcare and education is also provided. However, things can be more difficult for other workers in areas of the world.

The United Arab Emirates offers tax-free employment, an appealing expat lifestyle and 365 days of sunshine. The collection of small states on the Arabian Peninsula possesses nearly 10 percent of the world's total reserves and the energy industry provides a substantial amount of income for economic growth. Whilst in the UK and US, qualifications listed on your resume are often just accepted, in the UAE, it is often expected to be authenticated by both the home country and then again in the UAE. These hurdles can take time and delay project start dates which can prove frustrating for employers and employees. In spite of the hassle involved in getting residency in the UAE, the lure of the tax-free lifestyle continues to attract expat workers. According to data from the UAE's National Bureau of Statistics the population of the UAE more than doubled between 2005 and 2010, with expats accounting for around 88.5 percent of the people living there.

However, this year's HSBC's annual 'Expat Explorer' survey which ranks 100 countries on the financial health of foreigners living there found that Singapore is home to the largest proportion of wealthiest expats. These results were in contrast to previous years when the Middle East topped the table. In Singapore, more than half (54 percent) of surveyed expats said they earned more than US $200,000 a year, compared with a global survey average of just seven per cent. But last year, the Singaporean government introduced two measures which make the city state considerably less attractive to expats hoping to settle down in Singapore. Firstly, a 10 percent increase in stamp duty for any foreigner wanting to buy property in the city and secondly, the scrapping of a scheme which let graduates from foreign universities stay in Singapore for one year whilst they sought employment.

We have previously covered the high levels of compensation being paid by companies wishing to recruit foreign talent in Africa's emerging energy markets. Employers recognize that the incentives have to be high because life as an expat in say, Nigeria, is so different from countries with broader industries and higher standards of living such as Singapore and the UAE. The fact that expats demand more to live in Nigeria is unsurprising considering the amount of above ground risk the country is currently facing.

While working abroad can not only is an exciting period for the employee personally, it can pay great dividends both financially and in terms of valuable experience. Ultimately, professionals should consider all angles of relocating internationally from the taxes, benefits and incentives to political and economic unrest and risks associated with living in certain regions.

About the author
Jamie Ferguson joined Maxwell Drummond's Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond's USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Non-Executive Directors

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

A recent survey found that the average time non-executive directors (NEDs) spend on the job has risen to an average of 24 days a year as increasing levels of regulation and risk have placed greater demands on the NED community. Beyond the boardroom, the important role of the NED is largely invisible and poorly understood. Yet when corporate strategies fail or governance lapses, all eyes focus on the contribution, or lack of, of the NEDs. As the role and responsibilities of NEDs widens, the decision to embark on a fresh directorship must be made with a thorough understanding of the challenges and changes facing a NED in today's boardroom.

In 2003, in light of recent public boardroom scandal such as those at Enron and WorldCom, the British Government commissioned the Higgs Review to examine the role and effectiveness of NEDs. Chairman Derek Higgs strongly backed the existing non-prescriptive approach to corporate governance, also known as 'comply or explain' originating from the UK Corporate Governance Code 2010. He also advocated more provisions with stringent criteria for the board composition and evaluation of independent directors. He wanted to remove some of the discretion that the Code allowed. In the US, the Sarbanes–Oxley Act of 2002, (also known as SOX), set new and enhanced standards for all U.S. public company boards, management and public accounting firms. As a result of SOX, top management were forced to individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors.

Whilst the role of a NED varies greatly depending on the business and sector in which it operates, generally there are four areas where NEDs should focus their attention.

• Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy.

• Performance: Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitoring and where necessary removing, senior management and in succession planning.

• Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.

• People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing and where necessary removing, senior management and in succession planning.

One of the most important attributes of a NED is their ability to offer objective and critical insight into a business. This objectiveness allows them to firstly, protect shareholders' interests and secondly, to ensure that the business is being operated responsibly, both corporately and socially by ensuring that internal controls are in place to mitigate risks. Although only listed companies are required to have NEDs, many private companies are choosing to as they recognise the value of having independent counsel challenging directors. It is an easy option to be on a board that does not challenge itself or implement key performance indicators for the next six months or year. It is a much tougher, but ultimately more rewarding role to develop relevant strategy, tackle challenges and make a tangible impact on a business and its future. The NEDs ability to challenge directors will create richness in debate and thought process in strategy, thus creating better solutions.

The fundamental difference between boards in the US and UK is the separation of a chairman and chief executive role (CEO). As a result of the UK Corporate Governance Code, this has been separated but in the US, it is still common for one person to hold both roles. The benefit of splitting the roles is clear. Who holds the CEO accountable if he or she is also the chairman? Who provides the independent challenge? A rich, independent board, including the chairman, provides for a much better governed and more sustainable business in the long run whilst also protecting stakeholders.

About the author

Jamie Ferguson joined Maxwell Drummond's Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond's USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

CEO Education

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

There has been much debate about the education level required to become a CEO. Technically, any discipline can fill the role, but what makes the best CEOs?

There is no law dictating a tertiary-level education for CEO however most have attended college or university. Completing this level of course demonstrates hard work, exposure to a number of subjects and the ability to work well within a team and also individually- all skills a CEO should have. A degree from an Ivy League school or other highly-rated educational establishment is looked upon particularly favourably because of the competitiveness associated with these courses. Some well-known CEOs, such as Richard Branson of the Virgin Group, didn’t complete tertiary education and have carved out extremely successful careers regardless.

The Harvard Law School Forum on Corporate Governance and Financial Ethics research found that there is no consistent, long-term relationship between CEO education and firm performance. The analysis was extended to six measures of education and three measures of performance; however, it failed to find strong or reliable associations.

The difficulty of evaluating intangible qualities like leadership ability and interpersonal skills means that many hiring committees end up relying on a potential CEOs education, even though studies have proven it has little impact on a company’s performance. When faced with more than one candidate, education is one way of choosing between them. Those making the final decision on hiring a CEO should be careful about the weight assigned to a candidate’s educational background and focus on other factors equally.

An individual’s personality is especially important for the role of CEO. Strong leadership is a trait which is considered essential by many and suitable personality traits can help a CEO rise to the top and most importantly, stay there in tough times. Typically, CEOs are good decision makers, deal makers and communicators, brand advocates enthusiastic about the company’s story and able to gain the respect of employees at every level. A common motto is ‘leaders are born, not made’. Becoming a CEO takes years of hard work and often those who have worked their way up through a company know the firm, its people and culture better than any outsider ever could.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Attracting Talent in Emerging Markets

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

Multinational organizations are constantly challenged with identifying and attracting the most talented leadership and workforce to their companies. While many succeed in doing so in their offices in developed regions, it can be a struggle in the emerging markets they are operating in. As economic activity shifts from North American and European markets to markets in Latin America, Asia and Africa, an accelerated percentage of global growth will take place in these emerging regions, straining the already tight pool of talent.

Talent remains a scarce commodity in emerging economies. Not to say there are not talented individuals within these markets, they just come at a heavy price and this issue makes them hard to retain. A recent report cites paying top people in Brazil, China and India almost double the pay of peers in the United Kingdom. Managers in China, for example, change companies at a rate of 30 to 40% a year, which is five times the global percentage. Obviously, compensation is a key factor in attracting leaders to these regions, though it is a slippery slope as both companies and regions are getting into salary wars, driving inflation up even further. Offering long-term incentives is one way to offer a creative, yet competitive compensation package whilst also aiding the retention of senior leaders.

Global companies must make themselves attractive to locals in the markets they operate in. This includes not only appointing local content to visible roles within the company but also ensuring that the markets in which they are operating in are represented in some way on their Boards. In the US, less than 10% of directors of the largest 200 companies are non-US nationals. Given the international interests of many of these companies, this is a low percentage. Local leadership development is an incredibly important aspect to this. When appointing a local leader to a senior leadership role, these individuals have the cultural knowledge and relationships with key suppliers and contacts, though they may not have the breadth of international experience expats will likely have. In Africa particularly, there is much emphasis placed on local talent. Companies must be aware that if they cannot find an individual with the right blend of experience, they will have to train and develop them. Developing talent will be increasingly important as these markets continue to mature.

When the brand of an organization is developed effectively, this can motivate and excite future leaders to develop themselves and contributes to building a company’s presence on the global stage. The brand story must be authentic and employees must be able to imagine their rise to Board level. Whilst competitive pay and continued training remain important in emerging markets, it is important local employees’ skills and experience gather pace in conjunction with market growth. Employees will value an employer that plays a part in bettering their own country as well as the world economy. Global citizenship is an important value that should be embodied by both companies and employees to ensure the advantages of international business are visible in all office locations.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Gender Diversity on Boards

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

The issue of diversity on Boards of Directors is an increasingly important topic in today’s global oil and gas landscape. Diversity can include ethnicity, gender and experience. By not having a diverse board or executive team, companies can seriously handicap their operations. Having a diversely well-rounded team allows companies to identify and navigate through the human, social, regulatory and political risks that the oil and gas industry constantly faces.

The issue of gender diversity varies greatly between the US and Europe. In February 2010, the US Securities and Exchange Commission enforced new Proxy Disclosure Enhancement Rules to make companies disclose how they considered diversity when choosing new board members. Several EU countries such as France, Italy, Spain and the Netherlands, have already adopted national quotas, but countries such as Britain and Sweden are strongly opposed to doing so. As such, the EU is pushing for legislation requiring that companies with 250+ employees or that earn more than €50m in revenues must report annually on the gender make up of their boards. If this legislation is enforced, failing to meet quotas would subject companies to administrative fines or to barring from state aid and contracts.

The PwC Insights from the Boardroom 2012 survey revealed that racial and gender diversity continue to receive some attention, with 22% and 25% of directors indicating they are “very important” characteristics of new director candidates. Directors at larger companies, (more than $5 billion in annual revenue), assign higher importance to adding racial and gender diversity than do those at smaller companies. Perhaps this is a result of shareholder pressure that tends to focus on larger companies first and then trickles down to smaller companies.

With several oil and gas companies lacking female board members, it is important to understand the importance of board diversity in the first place. A recent study by Credit Suisse found that the more diverse the board, the better the company performs. Diverse boards offer a better mix of leadership skills, access to a wider pool of talent, a better reflection of decision making customers/stakeholders, improved corporate governance and a higher risk aversion.

Executive search firms can play a direct role in aiding companies to diversify their boards. They must act as true consultancies and challenge leaders on the diversity of their boards. When executing board level searches, these consultants must ensure that diversity is addressed on candidate slates to include women as well as diversity in nationality and experience.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Talent Development

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

The complexities of today’s global oil and gas and energy markets have created a rapidly changing role for the Chief Executive Officer (CEO). The Macondo disaster, the economic crisis and the rise of unconventional reserves, to name a few, have created a vast array of regulatory framework and geopolitical uncertainties that now require much of the CEO’s focus.

Gone are the days when the CEO was focused solely on strategy. Many of today’s CEO roles require an extensive understanding of several disciplines from technology and finance to operations as well as a new set of leadership skills. They must have the networking savvy to engage with governments, policy-makers and other regulatory bodies as well as the ability to act as the public face of their company. The industry could potentially face a shortage of future CEOs and executive managers who have the experience and competencies to successfully navigate their companies through the challenges facing the oil and gas industry.

Chief Executives’ cognizance of this threat has added another task to their plates. There is now an added urgency to put more focus on leadership development, though there must be a sound strategy behind it. While companies need to develop their potential leaders quickly, they must also ensure they do not move these individuals into roles before they are ready and run the risk of failure within an often public facing role.

How should they be developed? Historically, leaders have been developed in one of two ways: functional or rotational. Many times, these leaders progress through their company in one functional discipline be it finance, operations or others. While this gives them a deep understanding of one aspect of the business, they may end up lacking knowledge of other departments, thus hindering their ability in a Chief Executive role. Rotational development also proposes challenges in that rotating through different functions within a company may not give individuals the depth of knowledge they need in each area. The key to overcoming these obstacles is to assess for potential early in employees’ careers and start exposing these future leaders to different geographies and disciplines early on so they develop a sound understanding of all business functions.

This practice is a key component to succession planning and may in fact be one of the most important steps in the process. Companies want to promote their own people and talent development gives them the platform to not only accelerate their employees into senior management and executive level roles, but to give them the proper training they need to succeed in them.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Mapping Out an Effective Succession Planning Strategy

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

As companies continue to focus their best efforts on talent management and development, it is important to revisit a key strategy for oil and gas companies’ success in the coming years: succession planning. As many research reports have indicated over the last year, many organizations do not place the emphasis on building this strategy it deserves, thus it becoming a heavily discussed topic. Several questions surround the topic, such as what companies can do to bring these plans to fruition both easily and effectively? How will succession plans differ when preparing for an executive or manager’s departure?

Developing a sound and effective succession planning strategy is not a task to be taken lightly, though a few key practices can go a long way when beginning to map out a strategy. In order for the process to be as effective and painless as possible, there must be buy-in from the Board level and Senior Management from the very beginning of this process. Executives must map out the future of their company and really understand what the company will need in a leader to navigate through the imminent challenges their company will face. There must also be high quality HR leadership to take charge of the planning and to see that these plans are being carried through and to work with the board and senior leadership to set measurable goals. In working with senior management to set goals, the board will gain support for succession planning and establish ownership for leadership development programs. In setting goals, the Board and Senior Management must keep it as simple as possible-measurable goals could include the ratio of internal hires vs. external hires for executive roles or the number of promotions from a company’s high potential pipeline. Too complex of performance criteria could deter those managing the process from executing.

Once these plans have been created at a high level, they can be applied differently to the different roles in need of a succession strategy. The transition from one CEO to the next is a critical moment for companies and puts the organization in a vulnerable state, so a well crafted and smoothly executed plan is essential to the board delivering on their governance responsibility to stakeholders. A plan for CEO succession should be developed and executed at least six months before the current CEO is ready to step down. In the case of an unexpected transition, there should be a pipeline of capable leadership already in place to take the reins if needed. This requires not only a succession plan, but a talent development plan for high potential employees as well. These high potentials should be identified several years before a likely CEO retirement-giving them the time to be trained and developed into C-level managers. This process does differ slightly from mid-senior level management. The timing and transition of this level of role is not as sensitive as C-level positions as they are not quite as visible to shareholders.

As little as a year ago, several research reports were released indicating that the majority of global companies did not have succession plan strategies in place, which is surprising as governance is one of the board of directors’ must crucial responsibilities. Companies are only at the beginning stages of developing succession plans, but we are indeed seeing a rise in positions that are being recruited as a direct result of succession plans being put into place.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

MaxwellDrummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Executive Compensation

By Jamie Ferguson, Vice President US and Latin America, Maxwell Drummond

Executive compensation has been the subject of many, often negative, headlines in the last five years. Almost three quarters of non-executive directors recently agreed with the popular view that remuneration is too high.

Research by GMI Ratings revealed that the average compensation package in the US in 2011 totalled $5.8 million. This increase is on the back of a 28% pay rise the year before. This boom time contrasts sharply with the wider economy, where average wages have been little better than flat.

Investors are demanding more disclosure and recognition of shareholders resulting in increased investor activism. In the U.S, the Dodd-Frank financial reform law of 2010 requires a shareholder vote on pay at least once every three years, but those votes are nonbinding. Known as the say-on-pay movement, it will take effect in the UK in 2013. It would require all listed companies to publish a single figure for each director’s compensation, as well as chart comparing the company’s performance and CEO’s pay.

Shareholders in 44 U.S. companies have voted this year against proposed compensation plans, according to data collected by Semler Brossy. One company facing shareholder rebellion, Chesapeake Energy, said last month that it had made “significant” changes to compensation for its board and CEO. In April, Citigroup shareholders refused to endorse CEO Vikram Pandit’s $14.8 million package after the stock fell more than 44 percent in 2011.

It is the role of chief executive officers (CEOs) and other executives to oversee the company’s strategy and operations and these individuals require compensation for their work. The ‘right’ amount to pay an executive is the minimum amount it takes to attract and retain a qualified individual.

Executive compensation packages generally include a mix of short-term incentives (including salary, annual bonus, benefits, and perquisites) and long-term incentives (including stock options and restricted shares). The package may also include guarantees such as a severance agreement, change in control provision (if the company is bought out), and pension. A good program is targeted at motivating and driving desired behaviours.

Previously, companies in the energy sector were using stock options as the only vehicle to attract, retain and motivate and to align the executives interests with those of their shareholders. Now, it is more common to see companies choosing a mix of long-term incentives to provide a better balance in the overall program design and to better align pay with mid- and long-term performance.

Companies may also choose to move to operational and financial measures that tie into the strategic business plan as compensation to executives. In the cyclical energy industry, a company’s share price can rise and fall due to factors that a CEO has little to no control over. By shifting incentives to company-specific issues like safety performance, production targets and capital program performance, executives can also feel they have more control over the outcomes. Those long-term incentives tied to company-specific performance also help the company to execute its business strategy.

Today’s boards and compensation committees must strike a delicate balance — between developing a program that keeps executives motivated and appropriately compensated on the one hand, and shareholders’ interests and the company’s business strategy on the other. Those with the skills, experience and ambition to take on a president or chief executive officer role are scarce. Compensation should drive a business strategy.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Strategies for the Oil and Gas Talent Crunch

By Jamie Ferguson, VP Business Development, Maxwell Drummond

One of the most talked-about topics in the oil and gas industry today is the ever-present talent crunch. How can it be overcome? Who is responsible for implementing changes and initiatives? It is a topic we as executive search consultants frequently discuss, but, as the industry continues to boom creating an even greater demand for talented and experienced leaders, it is certainly a topic to revisit. Initiatives by both the industry as whole and individual companies must be made to continue attracting and developing talent from entry-level workers to the most senior leadership roles.

The industry must be more proactive in marketing itself to the younger generation. The negative perception so many young people possess about the oil and gas industry could be remedied if the industry better communicated the vast opportunities available to those entering the workforce and countered claims of environmentally unsound practices. Students should also be educated on the investment the made in research and development, the opportunity to work in diverse geographic locations and the challenging technical advances they could be on the forefront of. Partnering with universities may not be enough-young adults should be reached before entering university to plant the idea of the opportunities available early on.

Companies must turn their attention to the talents of international personnel and cultivate “global sourcing” for the health of the industry. Currently, there is a trend in upstream recruitment to create a globally mobile workforce. For example, in India, there is a large market of skilled engineers which North Sea companies can tap in to in order to fill their current engineering needs; companies operating in countries with rich shale plays look to the experience of the US unconventionals workforce to drive their efforts. The creation of an internationally mobile workforce is ideal for the short-term and implementing this strategy into long term talent development and acquisition plans will be crucial in driving future industry growth. Utilizing global talent will unlock business opportunities on an international scale and give companies access to the talent they need to overcome the current deficits.

In addition, it will be critical that companies put a solid strategy in place to steer their organizations through the imminent transitions in corporate leadership and senior management. Succession planning and knowledge transfer are key components to ensure there will not be any gap or shortage of qualified leadership in the industry.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 to focus on executive search in the energy sector. In 2007 he was promoted to General Manager in Aberdeen and in 2009 Jamie relocated to Houston as Vice President of Maxwell Drummond’s USA and Latin America business.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Australia Subsea

By Philip de Waal, Vice President Asia Pacific, Maxwell Drummond International

Australia is one of the most important emerging markets in the global energy industry. With an increased focus on offshore exploration and production, its energy sector has grown aggressively and quickly from a relatively small market to a booming, competitive oil and gas arena. Though the surge in activity is welcome, it is problematic in terms of qualified talent available to man the projects coming on stream. The skills gap being faced by most major oil and gas provinces also plagues Australia’s market, with specific challenges in the subsea sector. As Australia’s oil and gas industry continues to prosper, the industry must be proactive in recruiting and attracting subsea specialists to the region.

The subsea skills shortage is nothing new for the oil and gas industry. These highly technical and niche positions are coveted globally and considered vital to the development and efficiency of the industry. As Australia’s offshore oil and gas industry matures and moves into deeper waters, its subsea market will continue to expand at an ever increasing rate, squeezing the already tight talent pool. In order to rectify the situation, old problems need new and creative solutions. The Federal Government predicts that the oil and gas sector will need approximately 90,000 workers over the next few years to meet demands being created by Australia’s uptick in activity, a large percentage of which will be senior subsea specialists. Global sourcing will be a critical component of the industry’s strategy to mind the skills gap and these practices must be adopted into long-term talent development and acquisition plans to drive future growth in the sector. Between Maxwell Drummond’s Asia/Pacific and Aberdeen offices, we have seen a surge in Australian companies looking to recruit senior individuals from Aberdeen and Norway where there is a high concentration of subsea and offshore expertise.

With the demand of senior leadership positions, project engineers, project managers and niche technical roles such as flow assurance specialists at all-time high, aging generations are remaining in high level jobs for longer. Attractive retention packages are encouraging seasoned industry leaders to stay within the oil and gas sector past the typical retirement age. This gives these skilled professionals the opportunity to share their expertise with the younger generation of leaders rising through the ranks. This transfer of knowledge must continue, as it is inevitable that critical skills will retire along with this generation of workers.

The benefits of life in Australia will be a component of attracting talent to the region. By offering an attractive lifestyle package and competitive salaries, Australia is an enticing prospect for internationally based personnel. That said, more could be done by energy companies in Australia to promote the region as an attractive place to live and work. Raising a company’s profile in these markets of the future will be intrinsic to business success, and ultimately bring experienced employees to the region.

As with all sectors of the oil and gas industry’s skill shortages, the subsea quandary lies in smart thinking. Global sourcing will be of the utmost importance for Australian companies to bring in the critical talent needed to drive the subsea sector’s future projects. Knowledge transfer and talent development will also play a key role in the successful training and on boarding of the next generation of the subsea workforce. Australia undoubtedly has the tools in the form of resources to emerge as a heavy hitting oil and gas country, but proper steps must be taken to fill its subsea sector with accomplished personnel to drive its growth.

About the author
Philip de Waal was appointed as Vice President Asia Pacific for Maxwell Drummond in September 2011. He joined the Houston office of Maxwell Drummond in 2007 as Business Development Manager. From September 2007 until August 2011 he established a presence for Maxwell Drummond in Africa by opening an office in Johannesburg.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

North Sea Oil and Gas Sector

By Sean Buchan, Vice President Europe, Middle East and Africa, Maxwell Drummond

It is more than forty years since oil and gas was first discovered in the North Sea and the region is now recognised as one of the world’s most successful exploration and production reserves. The North Sea’s oil and gas sector, which has played a major role the UK economy since the early 1970s, has effectively doubled its life span, compared to original estimates. Potentially there are still tapped oil supplies equivalent to the 32 billion barrels already extracted.

Today the industry is characterised by a few big firms like Shell and BP and a host of small independent oil companies and employs over 100,000 people in oil and gas related jobs, the majority in the North East of Scotland.

Despite the projections, the North Sea is still an increasingly mature basin. What next? Decommissioning North Sea oil and gas facilities is projected to cost between $48 – 54 billion between 2010 and 2040. Decommissioning is a relatively new business in the North Sea but the expansion of local rig decommissioning brings job opportunities and the potential to develop new technology.

The UK’s March 2012 budget included proposals to create a contractual approach to decommissioning tax relief. The announcement provided a set level of relief for operators which will assist the whole industry – and particularly the smaller breed of operators working in the North Sea – and will encourage more asset sales with prospective buyers now being assured of Government support when the assets reach the decommissioning phase.

The UK sector is at an early stage of its development, with only a small percentage of the North Sea rig structure having been decommissioned to date. In the future, opportunities will exist in Norwegian, Danish and Dutch oil and gas facilities. There will be huge demand for contractors, consultants, service specialists, equipment providers, technology developers and professional service companies from around the North Sea. Increased tax stability will help to reassure the hundreds of supply chain companies and encourage them to consider investment in attracting new staff.

The challenge to overcome is timescales. Constant changes to the predicted timings of decommissioning projects creates difficulties in planning, meaning that no company can rely on just decommissioning work to survive. Ever-changing plans can create problems for contractors unable to make necessary arrangements or plan for a strong workforce and technical support, which can delay the development and implementation of new technology.

As the years go on, with continued fiscal stability and government support, the decommissioning sector will be a large employer in the North Sea and beyond.

About the author
Sean Buchan joined Maxwell Drummond as a Research Consultant in 2006 and was quickly promoted to Consultant where he worked on a range of senior projects across the Oil and Gas value chain for positions in Europe, the Middle East, West Africa, Southeast Asia and the Americas. In January 2009 Sean was promoted to General Manager for the UK and in 2011 became Vice President Europe, Middle East and Africa. He is now responsible for leading these regional teams and driving the consistent delivery of the firm's executive search projects.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

China’s Investment in North American Oil & Gas

By Jamie Ferguson, VP of U.S. Business Development, Maxwell Drummond

According to the International Monetary Fund (IMF), over the next five years, Asian economies will account for about 50% of the worlds growth. The world’s most populated country, China is the world’s second largest consumer of oil and it’s demand for a stable energy supply has made it a serious player in global oil markets. As pipeline and liquefied natural gas (LNG) infrastructure has developed, consumption of natural gas has also increased.

Chinese investment in North America’s oil and gas industry is expected to hit an all time high in 2012, beating the $5.7 billion record set in 2010. Since 2010, Chinese companies have invested more than $17 billion into the US and Canada’s oil and gas industries. The energy hungry nation’s latest push in North American energy is part a wave of investment money from Chinese state-owned companies and private enterprises into the U.S. and other Western nations. This report comes off the announcement of the Chinese oil giant, Chinese National Offshore Oil Company (CNOOC)’s intent to buy one of Canada’s largest energy companies, Nexen.

This type of investment in North American operators is just the beginning. There has been a rise in joint ventures where Chinese firms pay upfront for a stake of an oil or gas field and cover drilling costs. These investments give these firms exposure to technology, management techniques and skills they desperately need in China.

The recent spate of investments from China into North America can bring mutual benefits. North American operators require the Chinese investment to bring projects on stream, while Chinese companies require North America’s technology and expertise to begin developing the vast unconventional resources beneath China’s surface. The increase in investment gives Chinese companies access to the talent that drives North America’s unconventionals success, closing the knowledge gap that exists between the two regions’ industries. The US’s unconventionals expertise will become increasingly important in the next decade as China prepares to exploit its estimated 1,275 trillion cubic feet of gas.

Skills shortages are an ongoing issue in China. According to a recent survey of employers across Asia, almost all (95 per cent) believe that skills shortages have the potential to hamper the effective operation of their business or department. Leading companies and operators in China have a number of new projects coming up which is fuelling strong demand for oil and gas professionals across the board. This will lead to an increase in salaries locally, particularly for candidates who can demonstrate capacity and logical thinking, good communication skills in Mandarin and English and leadership skills. Additionally, there may be opportunities for Chinese workers to visit American acquisitions.

China alone will account for approximately 30% of the world’s economic growth over the next five years so it is widely acknowledged that the Nexen deal is one of many expected in the future.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 and by July 2011 was promoted to Vice President of U.S. Business Development. Jamie has extensive experience managing executive level searches for clients spanning the oil and gas value chain and has deep industry networks developed from working on assignments in over 20 countries on 6 continents.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Executive Compensation: The Increasing Importance of Equity

By Jamie Ferguson, VP of Global Business Development, Maxwell Drummond

In today’s economy and amidst the global war on talent within the oil and gas industry, companies must leverage their equity and executive compensation offerings to maintain a competitive edge. As current executive leadership approaches retirement age, a company’s ability to retain the next generation of senior leaders will be crucial to their ability to succeed. Boards of Directors have a heightened pressure to address these issues and compensating these leaders with equity is an increasingly important trend.

Equity is a non-cash composition that represents a form of ownership interest in a company. One common form of equity is stock options, giving employees the right to purchase shares of the companies’ stocks at a predetermined price. This right can “vest” with time or performance, so employees can gain control of the option over time. When the option vests, they gain the right to sell or transfer the option thus motivating employees to stay with the company long term. Other popular forms of equity include incentive stock options and nonqualified stock option plans, restricted stock and restricted stock unit awards, performance shares and employee stock ownership elements.

Equity is used in large part to align recipients with shareholder interests. It is also a way of providing appropriate performance incentives and rewarding top talent. It is a critical element and an important way to retain top talent and reduce the risk of employees being lured by other companies. Shareholders welcome this contingent, performance-based compensation and appreciated the necessity of retaining/rewarding the talent that drives their interests in the company.

In a recent survey by Price Waterhouse Cooper (PwC), the majority of companies surveyed projected a continuing rise in compensation; however there will be a shift to compensation being contingent on performance. 43% of companies are expecting an increase in equity compensation levels to executive and senior management in the coming year and 28% expect to increase equity compensation levels to middle management through vice president levels as well. It is also reported that in an effort to move towards linking compensation to performance, companies will base vesting conditions for restricted share units and restricted share awards on performance or market condition.

As talent competition intensifies, oil and gas companies will face pressure to continue creating inventive and appealing compensation packagesMaxwell Drummond urges clients to continually sweep the market, acknowledge trends in compensation packages and adapt theirs to continue attracting the industry’s top talent.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 and by July 2011 was promoted to Vice President of Global Business Development. Jamie has extensive experience managing executive level searches for clients spanning the oil and gas value chain and has deep industry networks developed from working on assignments in over 20 countries on 6 continents.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Health, Safety and Environment in Oil and Gas

By Jamie Ferguson, VP of Global Business Development, Maxwell Drummond

As the oil and gas industry continues exploration in deeper waters and harsher environments and environmental concerns continue, the demand for Health, Safety and Environmental talent is at an all high time high. Supplemented by the increasingly stringent regulatory framework in the post-Macondo industry, companies are required to certify that their operations are compliant with the regulations defined by the regulatory bodies in their respective regions, thus requiring more manpower. Greater supervision is also required to prevent another environmental crisis.

Maxwell Drummond has seen a rise in the demand for HSE talent globally, though recently more so in the Gulf of Mexico region as offshore activity is beginning to pick up. The Bureau of Offshore Energy Management, Regulation and Enforcement’s regulations have increased the need for more processes for inspecting and monitoring operations and equipment and more workers are required in order to properly document these efforts.

Unfortunately, like most other disciplines within the oil and gas industry, there are challenges in recruiting for HSE professionals. There is a missing generation of workers as a gap exists between the baby boomer generation, and the young professionals that are just now entering the workforce. There is also a shortage of professionals that have an operational understanding of the oil and gas industry. Companies must look outside of the industry, and then implement fast-tracked training programs to verse these professionals on oil and gas operations. Specifically in the Houston market, initiatives have been made to recruit engineers from NASA. Ex-NASA aerospace engineers have the relevant, transferrable understanding of health and safety as well as the advanced technical issues that platforms and pipelines face.

Outside the US, the European Commission has enforced laws stating that offshore oil and gas production will respect the world’s highest safety, health and environmental standards everywhere in the EU. Most oil and gas produced in Europe comes from the harsh geographical and geological conditions in the North Sea offshore the UK and Norway, and the increased regulatory demands has caused the risk and safety job market to boom. In July 2012, Oil and Gas UK released its first Health and Safety Report detailing a number of improvements already being made to offshore safety in the UK, proposed regulations and reductions in target hydrocarbon releases. As these proposed regulations come into effect, even more HSE consultants, engineers and managers will be needed in a region that is already facing a severe lack of qualified individuals. The UK must commit to sourcing global talent to meet the demand it is facing.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 and by July 2011 was promoted to Vice President of Global Business Development. Jamie has extensive experience managing executive level searches for clients spanning the oil and gas value chain and has deep industry networks developed from working on assignments in over 20 countries on 6 continents.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Corporate Culture

By Jamie Ferguson, VP of Global Business Development, Maxwell Drummond

In an effort to overcome the skills shortages in the oil and gas industry, there has been much debate about the image of the industry and how it can be improved to attract the next generation of talent. While this is an incredibly important cause, oil and gas leaders must look beyond the industry’s image and ensure that their own companies are exuding stellar corporate cultures as well. Doing so can play a vital role in retaining top talent.

What defines a company’s culture? Corporate culture encompasses all the factors that determine how the people within a company think and act, both as a group and as individuals. It is the mindset, beliefs and shared values of a company. These are often translated through a company’s mission statement and values but the key is to act on these and uphold the set standards and attitudes internally as well as externally.

Corporate culture is an increasingly important area within a company’s HR department and has become essential to attracting, recruiting and retaining talent. Where compensation and benefits play a large factor in individuals’ decisions for employment, so does the company’s culture. A study by Personnel Journal demonstrated that candidates for executive roles inquire about corporate culture almost as much as benefits. Creating a pitch-perfect branding strategy that successfully communicates the culture of an organization is key to recruiting individuals in the war for talent the industry is facing. People want to work for a company they can be proud of, empowering them to pour their best efforts into helping it succeed. Companies with strong cultures have employees that know and believe in their companies’ vision and are committed to fulfilling it. Organizations with clearly defined cultures also benefit from labor cost advantages. Through its culture, companies become better places to work and they become well known among prospective employees. Turnover of current employees decrease, thus decreasing the amount spent on recruiting and on-boarding.

Creating a successful corporate culture is difficult in one office.When companies become multinational, as is often the case in today’s world, it is even tougher.Leadership is crucial in developing and maintaining an organizational purpose, values and vision. This process should begin by examining past earnings and looking forward to where the company wants to be in relation with its stakeholders and environment. Developing a clear vision for how the company will progress in the future is extremely important. Company leaders must also be committed to communicating the vision through their actions and set an example by living the elements of their company’s culture-the behaviors, measures and actions that are set through their values. Seeing top executives portray their company’s standards will cause employees at all levels of an organization to notice and validate the elements of culture. They must also invest the time, money and manpower to see the culture through to every employee within their organization and ensure buy-in over time.

There have been several examples throughout the years of companies developing strong corporate cultures and their success in attracting and retaining talent is proof of their strength. When an organization consistently builds and reinforces such a culture, it creates a tangible competitive edge.The strength of Apple’s corporate culture is infamous and its’ late, but renowned, leader Steve Jobs played a critical role in personally embodying this.A great corporate culture can transcend industry and sector boundaries and generate results that will pay-off for years to come.;

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 and by July 2011 was promoted to Vice President of Global Business Development. Jamie has extensive experience managing executive level searches for clients spanning the oil and gas value chain and has deep industry networks developed from working on assignments in over 20 countries on 6 continents.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Research and Development in Oil and Gas

By Sean Buchan, VP Europe, Middle East and Africa, Maxwell Drummond

To address the world’s increasing energy demands over the next 30 years and beyond, a substantial increase in research and development is vital. Without this, we face a potentially bleak future: adequate and affordable energy for the masses will be inconceivable.

As deepwater reserves, mature fields and unconventional hydrocarbons become the norm, oil and gas is becoming more technically difficult and economically challenging to exploit. The industry requires a new approach.

Long-term thinking is required to push research and development through the boom and bust cycles. Technological innovation has the power to transform processes and operations but our typically risk adverse industry tends to postpone adopting new technology due to unfamiliarity, preferring to let others make the first move. This means the research and development budgets of oil and gas companies tend to lag behind those in other sectors, such as consumer electronics, software and pharmaceuticals, even though some aspects of the technologies may be transferrable.

Employees involved in research and development include development engineers, design engineers, engineering managers, product development managers and technical authorities. Like all roles within the energy industry, there is high demand for people with the right qualifications and skills.

As one of the most mature exploration and production regions, Aberdeen has become renowned for its pioneering culture and ability to extract precious hydrocarbons from a volatile environment. Due to the high concentration of local subsea and offshore production expertise, Maxwell Drummond’s Aberdeen office frequently places individuals globally, particularly in Australia, to overcome skills shortages in newer markets.

Known locally as ‘black gold’, oil and gas has been extracted from the North Sea since the early 1970s. Given the maturity of many of the North Sea’s fields, the recovery of remaining reserves will be maximised by an investment in extended oil recovery techniques. Tiebacks and subsea infrastructures are more common in the North Sea and as a result, subsea specialist and EOR specialist roles are a very specific need within the region.

Investment in research and development in the North Sea is critical to ensure talent remains in the local market. Government officials must continue to attract investment to prevent a knowledge gap from one generation to the next. Specific technical challenges created by declining oil production in mature fields can be overcome by investment in technical training and developing new technologies. These should be important priorities for companies operating in the region and will help ensure the North Sea’s role in the global energy mix for years to come.

About the author

Sean Buchan joined Maxwell Drummond as a Research Consultant in 2006 and was quickly promoted to Consultant where he worked on a range of senior projects across the Oil and Gas value chain for positions in Europe, the Middle East, West Africa, Southeast Asia and the Americas. In January 2009 Sean was promoted to General Manager for the UK and in 2011 became Vice President Europe, Middle East and Africa. He is now responsible for leading these regional teams and driving the consistent delivery of the firm's executive search projects.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.

Utilizing Executive Search Services

By Jamie Ferguson, VP of Global Business Development, Maxwell Drummond

A recent survey by Lloyds’ Banking Group indicated that the strained supply of talent in the oil and gas industry is having a detrimental effect on future growth with 46% of respondents deeming the skills shortage as a hindrance if companies fail to overcome it. As these shortages continue, surges in demand, the need for niche and highly specialized experience and an aging workforce have forced companies to implement new talent acquisition strategies to overcome the present deficits. A common element in many strategies is partnering with retained executive recruitment firms to aid in the search for certain types of talent.

Companies use executive search consultancies for various reasons. Recruiting for unique mixtures of characteristics and skills and for executive leadership positions can be very cumbersome. The time that it takes to properly research prospective candidates, generate interest and qualify them for the position is often more than hiring managers are able to spend on one role. The extensive research involved in executive recruiting ensures that the most highly qualified individuals are not over looked. In a recent study from the Association of Executive Search Consultants (AESC), HR executives surveyed conveyed that they were most likely to use retained executive search for confidential searches, cross border searches, when they are seeking market intelligence and when there are strict time constraints. Executive search is also heavily relied upon to conduct the most challenging and important searches to a company and the practice is highly regarded among leading HR executives, especially for roles in the higher compensation ranges of $200,000 and above. At this level, if the wrong candidate is hired there is a potential for a catastrophic effect on the company’s position with its shareholders or their position in the market place.

Oil and gas companies are beginning to look internationally for talent. Australian companies are looking at the Canadian workforce for skilled workers; companies with unconventional operations in international markets are looking to the US for experience. With the globalization of the industry, the workforce is becoming globalized as well, and streamlined immigration and visa policies are allowing this to continue at a rapid pace. Executive search consultancies with global capabilities can offer companies a more international slate of candidates with various skill sets and experiences.

Deloitte’s TalentEdge 2020 report indicates that recruiting hard-to-find skill sets as a top area of concern for the coming years. With the development of new technology and more innovative methods of extracting hydrocarbon reserves, niche technical skill sets are becoming increasingly important. The networks built by search consultants allow them to quickly identify these types of individuals and build relationships with them. If there are 10 qualified individuals for a certain position in the world, chances are that an executive search firm has access to the majority of them through their internationally developed networks.

Utilizing executive search services takes the guess work out of recruiting for these positions and offers shareholders and company leaders peace of mind that due diligence is being paid to the task.

About the author
Jamie Ferguson joined Maxwell Drummond’s Aberdeen team in 2006 and by July 2011 was promoted to Vice President of Global Business Development. Jamie has extensive experience managing executive level searches for clients spanning the oil and gas value chain and has deep industry networks developed from working on assignments in over 20 countries on 6 continents.

Maxwell Drummond International is a world leading retained search consultancy offering professional search services to clients in all sectors of the energy and natural resources industries.