Securing Human Capital in Natural Resources

Securing Human Capital in Natural Resources
Natural Resources and Energy Transition

03 of 04

This insight is part 03 of 04 in this Collection.

February 26, 2024 11 mins

Securing Human Capital in Natural Resources

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As new job roles and technologies emerge in the natural resources industry, employee expectations are also shifting. Leaders must rise to the challenge of securing talent to meet the world’s future energy needs.

Key Takeaways
  1. Natural resources organizations are challenged to attract and retain skilled talent in emerging sub-sectors and job roles.
  2. As wellbeing and work-life balance become more important to employees, businesses must look beyond competitive pay to foster purpose and belonging.
  3. Through data, employers can develop an attractive EVP and embrace diverse working models with more relevant benefits and rewards.

The natural resources industry strives to advance technology at pace, playing a key role in the pathway to limiting global warming to 1.5 degrees Celsius by 2050. In the transition to carbon neutrality, organizations compete to attract and retain the talent required to make breakthroughs possible.

Employment in the energy industry has continued to rise from 67 million people in 2022,1 with sub-sectors committed to clean energy seeing the highest growth. These include solar photovoltaic, wind, electric vehicles and batteries. Today, there are 13.7 million global renewable energy jobs; by 2030, renewables jobs are predicted to total 38.2 million and other energy transition technologies will reach 74.2 million.2

However, inflation, shifting employee expectations and pay regulations have led to increased human capital costs. In navigating these macro-economic conditions and the new world of work, 49 percent of businesses budgeted for higher salaries in 2023.3

Natural Resources Industry Landscape

Business interruption is the number one current risk in the natural resources sector — and the number of disruptive events keeps increasing.5 A higher inflationary environment further intensifies recovery from events due to changing weather patterns and geopolitical situations. Impact-based events arising from environmental, social and governance (ESG), ethical considerations and reputational risks are also increasingly significant. Geopolitical instability requires business adaptability and resilience, as highlighted by restricted trade flows in the Red Sea. Russia’s invasion of Ukraine also impacted the demand for natural resources, such as the surge in liquified natural gas imported by the European Union (EU).

Although fossil fuel industries have witnessed year-on-year job growth, clean energy employment represents over half of total energy sector jobs.6 An estimated 30 million new clean energy jobs are set to be available by 2030, while close to 13 million jobs in fossil fuel-related sub-sectors are at risk.7

Due to ethical concerns around fossil fuels, the sector is potentially threatened by a shrinking talent pool as employees look for employers with positive environmental impact. This highlights the need for competitive salary and attractive employee experience, while clearly communicating and delivering on ESG commitments.

4.5%

The average salary increase forecasted for 2024 in the global natural resources industry.4

The uptick of clean energy jobs has occurred in every region of the world, with China being home to the largest energy workforce globally. While the expansion of natural resources is clearly focused on clean energy, mineral mining critical to the new energy economy has created 180,000 jobs in the last three years.8

However, between job roles harnessing new technologies and advancements in renewables, the natural resources industry is missing a generation of workers to step into evolving positions that didn’t exist ten years ago. The International Energy Agency’s World Energy Employment report highlights that the number of workers pursuing degrees or certifications relevant to energy sector jobs is not keeping pace with growing demand.9 The need for vocational workers, as well as professionals in science, technology and engineering, has never been more urgent.

Talent Challenges in Natural Resources

The imminent need for diverse talent across the industry, from traditional roles to emerging sub-sectors, brings with it new human capital risk and opportunity.

While global inflationary pressures have generally eased from the peaks seen in 2022 and 2023, economic volatility and geopolitical tensions continue to drive pressure on organizations’ decision-making. At the same time, employee expectations are shifting, increasing pressure for organizations to deliver attractive and sustainable total rewards and benefits that meet the needs of critical talent.

Below are some of the key workforce challenges the industry is facing:

52%

of employees would change jobs for better benefits.10

  • Retaining Talent Against Pressurized Budgets

    A continually evolving healthcare landscape, escalating insurance premiums and rising salary demands have left employers battling to reduce their risk and control costs. While endeavoring to improve employee health and protect workforce wellbeing, organizations face inflated insurance costs, with the cost of treating patients increasing 10.1% in 2024.11

  • Shallow Pools for Green Skills

    There isn’t a deep pool of experienced talent for emerging roles in clean energy — only one in eight workers have green skills.12 Organizations in natural resources can’t expect to access readily available green talent pools. Instead, they must support the development of these skills internally and work collaboratively as part of a sector-wide approach to address the skills shortage.

  • Competition for Talent

    Cross-industry competition for jobs in natural resources is rife. 80,000 new jobs will be created by 2030 in U.S. offshore wind.13 As a result, reskilling offshore workers from traditional oil and gas sectors could be a necessary action to fill the talent pool. However, the natural resources industry also faces fierce competition from innovative industries such as technology and life sciences. Competing with industries that potentially have deeper pockets and more alluring EVPs, makes it even more critical for natural resources organizations to define unique employee offerings that are competitive and cater to the values and priorities of different generations.

  • Shifting Employee Expectations

    The shifting expectations of employees mean organizations are under pressure to support their people’s work-life balance, wellbeing and purpose. According to Aon's Global Wellbeing Survey, 52 percent of employees would change jobs for better benefits.14

  • Pay Equity Regulations

    Regulations on pay transparency mean businesses in the EU should act against pay discrepancies, including addressing the gender pay gap. Companies should start by assessing and updating existing pay and related people practices.15 In addition, new salary transparency legislation in several U.S. states has become a timely issue for businesses. Even in jurisdictions with no formal pay transparency laws in place, the trend of disclosing pay ranges to applicants and employees is growing. With the rapid adoption of wage transparency policies across the U.S. region, many businesses are rushing to comply and embrace this new culture.16

“We have a generation that is retiring. We have a lack of specialist engineering and geoscience graduates. But at the same time, there are new sub-sectors and technologies that are developing, with roles that have never existed before. We’re missing a generation of workers with the skills to supply the global population with energy.”

Charles Philpott
Global Natural Resources Leader, Enterprise Client Group

A Developmental Approach to Overcoming Talent Challenges

Across emerging and traditional sub-sectors in the natural resources industry, leaders must reimagine their workforce strategy to address human capital challenges. Although pay increases can be meaningful to employees,17 organizations should move from a talent-buying to a talent-building mentality.18 In order to achieve a solid talent pipeline, leaders should:

  • 1. Define and Communicate an Attractive EVP

    Organizations that reimagine how they deploy, reward and listen to their people will develop a resilient workforce. 90 percent of companies have considered flexible compensation programs to build and maintain an agile and adaptable workforce.19

    Beyond pay and traditional health benefits, organizations can lead the charge by delivering rewards that embrace diverse working models, attract future skills and deliver on employee expectations. Rewards decisions should be made with three principles in mind:

    • Agility: Flexible compensation structures will support an agile and resilient workforce.
    • Simplicity: Simplify rewards for new ways and definitions of working.
    • Transparency: Make changes to rewards and communicate these transparently with employees’ preference in mind.20
  • 2. Meet the Needs of a Diverse Workforce

    Organizations must recognize the unique skills, needs and desires of individual employees to build a thriving workforce. Talent assessments can also be used to assist with hiring candidates and monitoring the performance and capabilities of current employees. Designing talent assessments that recognize and celebrate individual differences is also fundamental to goals around diversity, equity, inclusion and belonging (DEIB).22

  • 3. Address Skills Gaps and Reskilling Opportunities

    Organizations must act quickly to create agile and resilient workforces with the skills to meet future challenges; yet only 58 percent of companies are identifying future skills gaps, and only half are investing in career paths.23 Employers should future-proof their workforce by identifying future skills critical to business success and creating plans for reskilling and upskilling their people to bridge any identified gaps.24

  • 4. Use Data for Better Informed People Propositions

    Leaders can build a better picture of their employee experience and competitor offerings through data that improves talent propositions. Armed with extensive and up-to-date market data from across the natural resources sector, organizations can offer competitive pay that secures financial wellbeing, while supporting employees with competitive rewards and benefits. Using a connected online benefits system provides companies with important people data.25 Then integrating this data with wellbeing and DEIB strategies can help support the management and retention of a diverse workforce.

At this monumental turning point for the industry, natural resources organizations are challenged to attract and retain talent with skills to meet the world’s future energy needs. Companies should adopt workforce frameworks that consider environmental, social and governance commitments and shifting employee expectations.

To secure talent with the skills needed for emerging job roles, organizations must invest in developing these skills. With growing employee expectations, supporting wellbeing, work-life balance and clearly communicating values will help organizations attract adaptable talent — increasing resilience and openness to upskilling.

Detailed analysis of human capital data enables employers to better understand the needs and motivations of their workforce, while supporting the implementation of diverse working models with more attractive benefits. By embracing diverse working models and communicating reimagined data-driven EVPs, businesses can build the workforces they need to address the energy challenges of today and meet the targets of tomorrow.

87%

of companies have at least one workforce wellbeing strategy.21

Aon’s Thought Leaders
  • Charles Philpott
    Global Natural Resources Leader, Aon

1 Clean technologies are driving job growth in the energy sector, but skills shortages are an increasing concern, IEA, 2023
2 Renewable Energy and Jobs: Annual Review 2023, IRENA, 2023
3 Aon’s The Impact of Rising Inflation on Employee Benefits 2022
4 Aon’s 2023 Salary Increase and Turnover Study
5 Aon’s Global Risk Management Survey Key Findings
6 IEA reports boom in global green energy jobs, Edie, 2023
7 Clean technologies are driving job growth in the energy sector, but skills shortages are an increasing concern, IEA, 2023
8 Ibid.
9 IEA reports boom in global green energy jobs, Edie, 2023
10 Aon’s 2022-2023 Global Wellbeing Survey
11 Aon’s Global Medical Trend Rates Report 2024
12 Global Green Skills Report 2023, LinkedIn, 2023
13 Biden Creates 80,000 Jobs with Offshore Wind Plan, World War Zero, 2022
14 Aon’s 2022-2023 Global Wellbeing Survey
15 Aon’s Navigating the New EU Directive on Pay Transparency
16 Pay transparency is here. Corporate America is still catching up, The Washington Post, 2023
17 Aon’s Tips for 2024 Salary Increase Planning
18 Aon’s Human Capital Solutions
19 Aon’s The Future of Pay
20 Ibid.
21 Aon’s 2022-2023 Global Wellbeing Survey
22 Aon’s How to Design Better Talent Assessment to Promote DE&I
23 Aon’s The Future of Pay
24 Aon’s Closing the future skills gap to drive business success
25 Aon’s Online Benefits Platforms

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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