A substantial portion of redundancies were settled with employees nearing retirement. Although these measures were taken to secure immediate financial savings, they have come at a cost; firms have lost critical knowledge and experience from their workforce. As an aging workforce continues to reach retirement, replacing this expertise is critical to the continued development and success of energy firms; but global commercial and sociocultural pressures are a challenging barrier to overcome when attracting and retaining talent across the industry.
Attracting and retaining talent is an immediate challenge for energy firms. As global commercial and sociocultural pressures change in the next 5, 10 and 20+ years, the challenges and opportunities for energy firms will shift significantly.
A survey of participants across North America, Europe, Asia, and the Middle East reported that 44% of STEM Millennials and Gen Zs are interested in pursuing a career in oil and gas, compared to 77% in the technology sector, 58% in life sciences and pharmaceuticals, and 57% in healthcare1.
As future generations prepare to enter the workplace, the attraction of the energy industry is being diluted by:
A global focus on climate change and social responsibility are serving as core drivers for career decision-making and experts have identified a growing trend. Oil and gas companies are struggling to attract talent, particularly if oil features prominently in the branding. Meanwhile, public protests and the proliferation of groups such as Extinction Rebellion have bolstered this message. This global sociocultural movement has had an immediate and direct impact on energy firms; potential joiners feel that they have a responsibility to pursue careers in alternative industries with perceived socialist commitments.
Shifting social values - new generations are growing in a time of radically shifting sociocultural behaviours. Considerations such as a work/life balance, job satisfaction and job security are all valued increasingly by new joiners and their value is beginning to outweigh salary as core decision-making factors. Although salary remains a core driver for career decision-making, the rise of renewables and decline in hydrocarbon fuel usage is likely to reduce firms’ profit margins. With less available capital, salaries may begin to fade and without a financial incentive, new joiners are more likely to pursue a career in alternative industries with additional benefits.
Technology is another core driver for STEM Millennial and Gen Z decision-making. Recent reports indicate that graduates show the most interest in industries that they believe will be most impacted by new technologies. Globally, just 42% believe that new technologies will have a major impact on the oil and gas industry, compared to 73% in the technology sector2. On assessing potential career paths, the energy industry pales against the appeal of technology giants in Silicon Valley. This perception translates into attraction, and STEM graduates are increasingly transferring their knowledge and skills to alternative industries.
According to the GETI, three in ten respondents are doubtful that they will remain with their organisation over the next three years.
Traditionally, the promise of a strong salary directly translated into high workforce engagement, but changing sociocultural values are contributing to employee disengagement:
Alternative industries are increasingly seeking experienced energy employees, as their transferrable skills and experience make for a smoother transition into their industry. Although new joiners are typically more receptive to the promise of benefits packages and access to innovative technologies, the increasingly challenging commercial environment of the energy industry is increasing the appeal of transferring to alternative industries for existing employees.
Career progression is highly valued. Since the energy industry is undergoing rapid change, and COVID-19 reduces demand, firms are currently in a state of survival. With capital being redeployed elsewhere in the business, investments in ongoing training and development have slowed. GETI reports that 44% of employees in the energy sector say that their company does not regularly invest in their training and development and 32% report no access to training with their current employer in the last year.3With limited access to training and development opportunities, employees are more motivated to pursue opportunities either with competitor firms, or alternative industries altogether.
Relocating - efforts to attract new joiners are pushing energy firms to operate in new territories. To establish the business and operate effectively in new regions, existing roles are being relocated. Although GETI data suggests that many employees would be willing to relocate, the reality of relocating and the risk of lower salaries in developing countries is a driver for employees leaving their roles or the industry altogether.
VIDEO
James Stretton
What are the challenges energy firms face in attracting new talent?
Within 5 years
Energy firms will need to focus on addressing the immediate skills shortage and experience gap by attracting new joiners and retaining the existing workforce.
Considering the unprecedented talent shortage and employee readiness to switch roles or even sectors, retaining talent is a critical challenge for energy firms.
Within 10 years
Driven by divestment in oil and gas, and the insurance market shifting away from traditional coverage, commitments to carbon neutrality are pivotal to securing investment and by extension, long-term survival. The shift towards renewables will gather momentum, demanding new skills and providing new opportunities for energy firms to develop their workforce.
Efforts to reinvent branding and perception is already underway, particularly in the Scandinavian region where activity has involved reinventing brand names, assets and pursuing research projects. For firms which rapidly invest in renewables and commit to ‘net 0’, their efforts to align with sociocultural values is likely to increase the appeal of the energy industry.
As the industry shifts towards sustainability, STEM programmes are likely to be revived. The investments made in STEM initiatives will engage new generations by guiding and supporting study and career decision-making.
New technologies and operations will create new opportunities at entry and experienced levels.
New joiners will be attracted to new technologies and opportunities to fulfil their social responsibilities; their work is contributing to creating a more sustainable world.
For existing employees, the shift towards renewables will provide new opportunities to develop new skills. Aside from individual career progression, sharing the success and growth of the business will boost employee engagement and loyalty.
20 years and beyond
Hydrocarbon fuel usage is likely to fall away and the market share of oil and gas firms which are unable to develop a sustainable business model focusing on renewables, will reduce substantially.
The value of carbon commitments is set to increase exponentially, and competition to secure investment will continue to motivate evolution across the industry. As insurance markets join the shift towards renewables, a lack of coverage will force firms to develop their methods and activities to remain operational.
Well-capitalized firms will have pursued opportunities emerging in renewables, and smaller players may fall away from the competition; a wave on transactional activity will restructure the energy industry.
The talent curve is likely to flatten as the current challenges are addressed by the transition to renewables:
The new technologies and operations will become integral to business models, and firms will seek to fill new roles
STEM initiatives may receive a substantial uptick in investment and support, as changing operations across the energy industry demand new skills in increasing volumes of employees as businesses grow
The industry will be increasingly attractive to new joiners, as technology continues to advance, salaries increase, and the role of the energy industry becomes more established as a gateway to fulfil sociocultural obligations.
Renewables with increasing - and potentially a majority - market share, will stabilise the industry, providing employees with job security as well as opportunities to develop their skills and progress their career. For firms which invest in training and development, their employees will remain engaged and loyal. For firms who fail to invest in progression opportunities for their employees, competitors with comparable technology and opportunities and scope, will be more attractive and there may be some exploratory movement in new roles.
1 https://www.fircroft.com/blogs/to-attract-youth-oil-and-gas-companies-must-adopt-new-technologies-97213113829
2 https://www.fircroft.com/blogs/to-attract-youth-oil-and-gas-companies-must-adopt-new-technologies-97213113829
3 https://cdn2.hubspot.net/hubfs/3277184/Gated%20PDFS/GETI%20Report%202020%20digital-web-version.pdf