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.