Attracting graduates to industry

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

The oil and gas industry offers new entrants a diverse range of challenging career options with longevity, variety and opportunities for world-wide travel. However, the public's perception of the industry is often distorted. Many people living outside energy hubs like Aberdeen, Calgary and Houston are unaware of the importance of the oil and gas sector in the global economy, supporting hundreds of thousands of jobs, contributing billions of dollars every year to Governments and supplying the vast majority of the world’s energy needs. How to attract young professionals to the oil and gas industry is high on the agenda at OTC 2012 with a whole event dedicated to the subject on the opening day.

Figures from the World Petroleum Council found that 50 percent of its 60 member countries’ workforce is due to retire in the next ten years. Over the years, environmental disasters and safety breaches have contributed to a somewhat negative public opinion of the energy industry. Last year, research by the Gallup Organization found only 20% of participants viewed the oil and gas industry positively- ranking second last.This negative perception has a direct affect on the ability to attract emerging talent.

Parents of 20-somethings considering their career path may warn their children of what was previously an unstable industry. The energy market is dictated by oil prices and fluctuating prices in the 1990’s meant downsizing and less hiring. As a result, average workforce age in developed economies is somewhere in the mid to late 40s.

The ability to locate hidden reserves and extract precious hydrocarbons is based on a comprehensive understanding of science, maths and engineering. These are subjects fewer students in the Western World are keen to pursue.In contrast to India and China where 1 million engineering students graduate annually, 120,000 engineering students in the U.S is extremely low.

How do we re-position the oil and gas industry as an attractive career choice to today’s young graduates? As an industry, we should do more collectively to engage talent in the countries we operate. We need to collaborate with academia and with government sectors. Many major oil companies for example, have long-term research commitments with major universities around the world. We must be proactive in our attempt to reach the young as they are about to enter university and again whilst they are contemplating career choices. We should educate the public about the investment that the industry makes annually in research and development, the diversity of the geographical locations in which they could live and work, the many technically challenging projects executed each year, the advances in environmental safety and how lucrative a career in the oil and gas industry can be compared to others. There is mileage in the idea that the career choices of the young should be seen as the largest investment that the industry makes. It should be tackled with all the same effort, cunning and intelligence that a consumer company harnesses when it looks to attract its customers; especially so, as energy and the humans that play a part in producing it, are the life blood of our civilization.

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.

Recruitment Challenges in Emerging Markets

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

As developed nations begin to recover from the global financial crisis, emerging markets such as China, India, Brazil and several African countries continue to grow at an unprecedented rate. The oil and gas industry is a key player to this development in many of these markets whilst it continues to aid the further growth of established markets. CEOs of global multinational companies operating in emerging markets see these regions as integral to their companies’ future growth and success. According to a survey conducted by The Economist, Latin America, the Middle East and Northern Africa were among the top regions that senior leadership felt would hold the greatest opportunities for their business in terms of revenue and growth. Another study by PriceWaterhouseCoopers states that over a quarter of CEOs anticipate an international acquisition in 2012, demonstrating the faith they have in emerging economies. However, the vast potential for opportunity does not come without associated challenges. As expected in an emerging market, talent shortages are at the top of many oil and gas leaders’ minds.

Despite rapid economic growth in many emerging markets, qualified senior leadership is one of the biggest hindrances on a company’s success and future growth.How can this challenge be overcome? An obvious answer is compensation. Many times it costs to attract the most highly qualified leadership to emerging markets, explaining why these markets top the charts when it comes to leadership compensation. Competition for talent also drives salary wars between companies and between regions, causing salary inflation to skyrocket.In a recent salary report, leadership roles in emerging countries such as Nigeria and Ghana were among the top compensated with the highest bonuses in the world.

Another challenge contributing to emerging markets’ leadership crunch is expatriates versus local leaders. Companies must remember that when pursuing local talent in emerging markets they might require different recruitment strategies than utilized in western markets. Traditional methods such as professional databases and networking may be less effective and cultural differences may hinder the ability to identify and meet future candidates. Executive search companies have the ability help clients navigate through these challenges by utilizing internal networks to identify and attract local leadership candidates. Multinational companies may sometimes prefer a local leader to fill leadership and management positions due to their local cultural knowledge and familiarity with suppliers and local contacts. However, these local individuals may not have the same breadth of international leadership experience as expats who have held leadership positions in several regions, so leadership development in emerging regions is key. An increasingly common request from our African client base is to re-attract the national diaspora back to their home country. As this region matures we expect this trend to continue and become increasingly important.

We urge clients to ignore geographical boundaries and focus on attracting the right talent for the specified role.

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.

A Global Approach

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

According to RenewablesUK, 60,000 new recruits will be needed in the sector by 2020, whereas numbers of oil and gas industry workers are set to drop. Early findings of Maxwell Drummond International’s 2011 Annual Energy Survey support this: in the next fifteen years, unconventional gas and renewables are expected to overtake oil and gas as the most substantial contributors to the energy mix.

More than 440,000 people are employed in the UK energy sector.Industry debate is defined by segregated thinking of oil or coal or nuclear or renewables.Yet each discipline is increasingly interlinked. As a global executive search consultancy specialising in the energy industries, we have observed this trend person by person.Talented executives have found their expertise has a new currency, and this is just the beginning.Industries must start to share knowledge and experience, technology, business models, operations and maintenance practices.

There is a natural synergy between energy industry disciplines. Skills and project experience gained in the subsea and marine arenas will transfer well into offshore renewables such as wave energy, for example.There is an existing supply chain ready and waiting and there is a willingness from the offshore industry to transfer its capabilities into renewables.

Established oil and gas companies are beginning to take advantage of lucrative opportunities in the renewable sector, particularly offshore wind.But we need more, active, engaging collaboration to ensure top talent is prepared for this change.Search consultancies play an important role in pre-empting skills shortages, increasing awareness and providing solutions for business who may otherwise struggle.

For oil and gas companies who want to enhance their renewable offering organically, as opposed to venturing into acquisitions, hiring indispensible, top level talent can help.Renewable industry leaders can filter their knowledge and expertise down the organisation to promote internal learning.

Companies often move people from region to region, so why not also consider the transfer of skills between sectors and geographies?This will benefit the industry, individual companies and their employees.By implementing a cross-fertilisation of ideas worldwide, we can take the best parts of each offering and undoubtedly improve overall energy sector efficiency.

Imagine what could happen if we truly acted as a global energy industry, not as oil or gas or wind or wave? The future is bright.

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.

Succession Planning

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

As the energy industry prepares for a hectic week at Houston’s Offshore Technology Conference (OTC), this seems a suitable time to reflect on an issue affecting all businesses, in all geographic locations. One of the most commonly overlooked responsibilities by Boards of Directors and an issue that we see quite frequently as Executive Search Consultants- a strategically planned and executed succession plan. Surprisingly, as governance is one of the board’s most crucial responsibilities, 60 percent of large US companies’ HR Directors said their firms have no CEO succession plans in place.

Understand the Challenge

Directors must look into the future of their company and ask themselves not “What do we need in a CEO”, but, “What will we need in a CEO”? Developing an in-depth forecast of what the future will hold for both the company and the industry over the next three to seven years will allow them to determine what skill sets and experiences the successor must possess to successfully lead the company through the imminent challenges ahead.

Analyze the Organization’s Human Capital

According to a global study, only 15 percent of companies in North America believe they have enough qualified successors for key positions. Board members must begin to analyze their potential candidates several years before a likely retirement date for the CEO. This should begin with an in-depth review of the management team that reports directly to the Chief Executive. A thorough review will give insight into the bench strength of an organization as well as identify internal candidates who have the skills and experiences to address the company’s forecasted challenges in the CEO role. These individuals can then be developed over the next several years.

A second step in this exercise is to identify external candidates who can enter the company through alternate positions and be developed in preparation of CEO succession. This allows the Board to bring a new dimension and set of skills and experience to an organization that it may lack, while entering another future executive into the pipeline. We regularly identify these external candidates for clients as they will likely be in the high priority pool of their current companies.

Many studies have been conducted to determine if the most successful leaders come from internal or external appointments. Across the spectrum, both insiders and outsiders have performed similarly-both falling into the top and bottom of performance charts. Much of the outcomes depend heavily on the state of the company at the time of the transition. An interesting yet successful trend is Board Members filling the CEO role. They have a blend of insider company knowledge including financials and expectations, and still have an outsider status as they aren’t part of day-to-day operations.

Whoever the candidates may be, the boards still must put an active effort into development. This may include appointing potential leaders at roles with increasing responsibility, giving these individuals to manage across many sectors and locations of the business, mentoring them and aiding them in building a track record of delivering while building long term results. This whole process deters companies from the “ready now” mentality that hinders their ability to place the absolute right candidate to transition the company into its future.

Measure Implementation and Outcome

Those organizations that do develop succession plan strategies too often let them slip through the cracks when it comes time to execute. Boards must invest in high quality HR leadership to see that their plans are carried through and goals are being set and met. Executives respond to measured successes. In working with senior management to set goals, the board will gain support for succession planning and establish ownership for leadership development programs. Establishing measurable goals will also allow the board to reward those who execute, keeping the problem of uneven execution in check. A potential measurable could include goals such as the ratio of internal hires vs. external hires for executive level roles or the number of promotions from a company’s high potential list. Whatever goals a board sets, it is important to keep it simple. Complex performance criteria could deter those managing the process from executing.

Effective Transition

A succession plan must be developed and executed at least six months before the CEO is ready to step down. This will allow a smooth and effective transition of the candidate’s responsibilities. The board and the entrant must agree on the first year plan, including key performance indicators and milestones and communicating these milestones to the entire leadership team. The CEO must then spend time building effective relationships. Communication is key in building trust in the new team and the team building trust in the Chief Executive’s leadership capabilities.

These practices can be applied to any organization’s succession plan strategy and should give directors the ammo to gain support from within their company’s senior management and HR departments to execute. The handover of one CEO to the next puts the company in a vulnerable state, so a well-crafted and smoothly executed plan is essential to the board delivering on their governance responsibility to stakeholders.

Abuout 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.

Canada

By Graeme Edge, General Manager, Canada, Maxwell Drummond

As Canada’s oil and gas industry continues to expand, competition for skilled labour in the energy sector is likely to intensify.Although this is a trend common in the oil and gas industry globally, HR leaders in Canada are facing even greater challenges to manage seasonal demand, cope with high employee turnover and continue to attract and retain workers in harsh locations. Further growth in the industry could be impeded if the country fails to overcome these hurdles.

Currently the oil and gas industry employs over 500,000 people and the Canadian Energy Research Institute forecast that this figure will nearly double to over 900,000 people by 2035. This is based on the large oil sands projects around Fort McMurray, due to come on stream in the next five to 10 years, and the associated pipeline projects to transport the bitumen to the west coast. Ernst and Young’s, Human Resources in Canada’s Oil and Gas Sector, report predicts that as the talent shortage intensifies, Alberta will be 77,000 workers short in the coming decade.

Therefore, competition for skilled employees is critical. There is already high labour demand for drilling and service supervisors, all disciplines of engineers, geologists, geophysicists, production managers, land men and purchasing agents. As a result, companies are becoming a lot more aggressive in how they recruit and retain staff. Ernst and Young’s report also revealed many companies in Canada have had success in attracting workers by partnering with executive search firms.

Much has been said about the transferring of skills and many workers with experience in other natural resource sectors such as mining have applied to work in Canada’s oil sands. We would encourage this trend to continue but also urge caution.Some skills are less transferable such as those of petroleum or reservoir engineers or people working in drilling and completions. Therefore, it’s important for the industry to attract the young qualified engineers into the sector and into Canada. The country is now competing on a global stage with other active regions such as Australia, Southeast Asia, Brazil and West Africa. However, as it won’t be possible to satisfy demand domestically, Canada needs to address the challenges in terms of bringing in workers from abroad. The immigration process is slow and cumbersome and in order to provide the numbers of people required for the growth predicted, this process needs to be streamlined.

Once companies have succeeded in getting workers into the region, the next step is keeping them. In Calgary alone, there are approximately 500 oil and gas company’s offices within a square mile. Close proximity makes it very easy for companies to recruit from other each other creating two problems. The overall workforce is not increasing and the competition is creating an upward pressure on wages.

Overall, a number of strategies need to be adopted to address the skills gap. Canada needs to make it easier for international talent to work here and companies need to be more flexible to create the right culture and opportunities in order to retain staff.With these points addressed, Canada can take advantage of its vast natural resources and become a world energy leader.

About the author
Graeme Edge joined Maxwell Drummond in 2007 as a Senior Consultant in our Calgary office. In 2011 Graeme was promoted to General Manager, Canada. Graeme has worked in most sectors of the upstream oil and gas industry including major independent operators, EPC contractors, oilfield service companies, subsea and the SME technology sector.

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.

Africa

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

For years, Exploration and Production activity in Africa has been primarily focused in West Africa. In recent years, the landscape of this activity has changed, and East Africa and is now emerging as a new hotspot for oil and gas exploration. Exploration and Production expenditure in Africa is expected to increase by 14% in 2012 with a substantial amount coming from emerging developments such as those in the deep East African waters. The continent as a whole has long been tainted by above ground risks and lack of regulatory framework but as companies are gaining an understanding of how to deal with the local political environment, more attention is being drawn to the newfound oil reserves.

As the region continues to boom, more Exploration and Production are shifting their focus to the discoveries being made offshore on the eastern side of the continent. Significant reserves have already been found offshore Mozambique and Tanzania and Kenya has recently announced an auction of 18 offshore blocks that is sure to attract a number of operators looking to enter the local market. Morgan Stanley has predicted that the number of new offshore drilling sites will double in these countries this year.

As Maxwell Drummond would expect in an emerging market, new activity is leading to a talent shortage in the region. However, African countries are already making a significant attempt to attract top managerial talent to the region. There has already been a rise in both permanent and contract salaries and it is expected the increase in average executive compensation will continue. In a recent study, data has confirmed that country managers appointed to positions in Nigeria are among those earning the top bonuses in the world. Expatriates looking to broaden their international management experience in emerging markets should take a serious look at the opportunities the region is offering.

Operational challenges in Africa are not limited to geopolitical risk. Many companies face a number of challenges including high labor litigation risk, stringently enforced government requirements to localize the workforce, cost pressure and difficulties in obtaining work and housing permits. In order to avoid FCPA and Bribery Act compliance issues, companies must remain transparent in their operations and develop sound relationships with their suppliers. This can be done by ensuring local talent is being utilized as much as possible. While senior and middle management typically comprises expats, technical and technical specialist roles are more commonly being filled by local citizens, and indication that developments in training the regional workforce are gaining pace. We have seen a flurry of activity coming from companies looking to recruit senior and middle management for their East African operations, particularly in our London and Aberdeen offices. UK based companies have a significant presence in Africa due to their proximity and good relations with African governments, but with the upcoming block auctions looming, more and more international companies will gain a presence in the region, opening up even more opportunities for the Exploration and Production workforce.

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.

Singapore

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

Singapore is continuing to evolve as a key market in the international energy industry. Already the undisputed oil hub of Asia and one of the world’s top export refining cities after Houston and Rotterdam, it is predicted to become a major international LNG trading centre. By 2015, Singapore will account for 3.87 percent of Asia Pacific’s regional oil demand despite having no natural resources in the form of oil or gas.

In 2006, the Singapore Government announced its plan to import LNG and build the nation’s first LNG receiving terminal to fulfil the rising demand and to diversify its sources of natural gas. The LNG receiving terminal will have an initial capacity of 3.5 million tonnes per annum (Mtpa), with provision for expansion to 6 Mtpa or more if required. Operations are to begin in the second quarter of 2012 and a second and third terminal are set to be developed in 2014. The terminals will further establish the city-state as a trading hub and will drive the creation of job opportunities for Singaporeans. The investments going into supplying LNG demand in Asia, which include prospective unconventional gas projects in places like China, Indonesia, Malaysia and Australia, are enormous. Skills in this part of the industry are still scarce globally and the right recruitment partner will be able to help companies tap into resources to staff these projects.

In a recent study, the International Energy Agency predicted that the global energy demand would increase 30 percent by 2035, with Asia as the clear leader in driving this demand. Production activities in Brazil, the Gulf of Mexico and elsewhere in the Asia-Pacific region will supply much of the demand. This growth is reflected in Singapore in the buoyant turnover of the offshore marine industry. The Singaporean Ministry of Manpower has created the Strategic and Skills-in-Demand list to outline the occupations key to continued economic growth.Energy sector roles include: petroleum engineer, project engineer, reservoir engineer and well engineer. These skills gaps are echoed by leadership teams within Singapore-based companies who stress the need for technical talent in exploration, drilling, business consulting and construction. All of these individuals must have the ability to apply their knowledge to international projects. A rise in global investments in this sector will also drive demand on the contractor side. This demand will affect contract companies in Asia, regardless of the operators’ locations. For example, contractors based in Asia are expected, in places like Brazil, to provide local content which adds to the complexity of executing projects from your home base. Continued international success will be determined by the quality of their delivery model, which relies on the people they hire.

The net effect is likely to be increased demand for individuals who are able to execute large projects and for experienced staff that could move internationally within the region. Companies are faced with recruitment challenges and those with the best strategies to secure top talent will come out on top. Contact Singapore has been developed by the local government to entice talented Singaporeans overseas to return home. The number of Singaporeans studying overseas who signed up for Contact Singapore's career sessions in 2011 has more than tripled compared to 2010’s figures, indicating heightened interest in returning home to work. The most effective strategies combine the recruitment of local talent with outsourced recruitment to firms with the capability of locating international talent in specialty roles. People with the right skills become a valuable commodity in a global market and Maxwell Drummond’s global network and local expertise allows us contribute to clients’ projects and business aims across the Asia Pacific region and beyond.

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.