A common business cliché is “our people are our business and our business is our people”. This is often said but how often is it true? While the oil and gas industry continues to boom, the global war on talent remains at the top of many industry leaders’ minds. According to Price Waterhouse Coopers’ (PwC) Annual CEO Survey, only 30 percent of CEOs are confident that they will have access to the talent needed to continue on their path of growth. The shrinking pool of qualified candidates can quickly seize this opportunity for growth, leaving many companies with a shortage of quality resources. Because of this worry, the Human Resources (HR) function is beginning to play an integral role in the boardroom.
Gone are the days of the HR department being purely administrative within an organization. When focusing primarily on payroll and benefits, HR lacks the ability to provide strategic direction in managing human capital. Companies must transform their HR teams to become strategic partners to the CEO and be directly involved in business planning. In PwC’s CEO survey, 79 percent of CEOs reveal the Chief Human Resources Officer reports directly to them. This trend will allow leadership teams to align human capital and talent management directly with their business objectives. The HR leadership function should be a consultant to the board and CEO on all aspects of human capital to ensure that talent management and leadership development are being strategically leveraged to maximize their business advantage. They should also be accountable for measuring the success of their company’s talent management and succession planning strategies.
Corporate culture is an increasingly important area where HR professionals’ skills and experience is critical. It has become essential to attracting, recruiting and retaining talent. This is already apparent in the technology industry. For example, many engineers have aspirations to work for ‘silicon valley’ technology companies. Brand development specialists Universum conducted their annual UK’s Ideal Employers survey last year among British students and revealed that software heavyweights Google, Microsoft and Apple were the top three companies considered to be the most attractive to work for among engineering and information technology. There were no oil and gas companies ranked in the 2011 top ten. Successful recruitment and retention lies in a pitch-perfect branding strategy. HR, working closely in collaboration with the Board, can strategically implement an attractive brand strategy and company perks.
HR professionals can also act as trend forecasters to the Board, spotting up and coming managerial talent and likewise, issues on the horizon. Unlike many other C-suite executives, HR departments are one of the few involved in every level of the organization. This unique position should be developed to interpret trends for business growth.
This visibility to the whole organisation can also be beneficial in times of change. In tough times, the HR department’s role can spread into other functions such as internal communications. When employees are confused or concerned about how a change, such as a rebrand or merger, may affect their role, HR can act as translators between the Board’s dialogue and staff. Over the next several years, the oil and gas industry will experience a shift change and the HR department will play an integral role in facilitating knowledge transfer between experienced employees and new hires.
The huge shift in HR’s role in the last 20 years is demonstrated in the rise of the chief human resources officer (CHRO). The newest CHROs collaborate with the C-team to shape strategy, define branding and culture, communicate with employees and the list goes on. They must have a complete understanding of the organization’s business model, operational state and challenges and finances. Boards should invest in a strategic HR role willingly as the ability to anticipate talent needs, optimize a talented workforce and retain their company’s most talented individuals is essential to their competitive advantage. Harold Schultz, CEO of $10 billion Starbucks agrees: “The discipline I believe so strongly in is HR, and it’s the last discipline that gets funded. Marketing, manufacturing - all these things are important. But more often than not, the head of HR does not have a seat at the table. Big mistake.”
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.
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