Workforce Challenges Face the Oil and Natural Gas Industry

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Workers produce oil.

The oil and gas industry’s talent pipeline is in dire need of repair. Skill shortages are damaging productivity, gaps are widening in every sector of the industry and ad-hoc attempts to source qualified workers are akin to wildcat drilling, rarely yielding the results businesses need to execute their plans. O&G companies — particularly those involved in shale, which faces its own set of recruiting obstacles — must shift to a more intentional, innovative approach to talent or risk the well running dry.  

The talent dilemma in O&G is symptomatic of broader demographic and digital disruptions that are reshaping the workforce — and the nature of work itself — across all industries. Global employers are facing the most acute recruiting challenge since 2006. 

With 45% of companies struggling to fill current openings, anxious executives now rank the talent shortage as the number one emerging risk for their organizations. Supply/demand projections are equally grim: By 2030, the world will face a skills gap of 85 million people. The result is fierce competition for talent across all levels and all industries. Blue-collar wages are rising faster than white-collar pay across the U.S., and O&G faces a “great crew change” that will leave too few workers to fill retirees’ shoes. 

As demographics drive underlying shortages, technology continues to further disrupt, opening the door for automation and forcing leaders to reimagine the role of human workers. It’s an uneasy balance. Onshore oil fields are increasingly digitized; AI is already transforming geologic assessments and well inspections; and 40% of field operations jobs could be eliminated by technology. 

Yet at the same time, the talent shortage in O&G — highlighted by massive shortfalls in the Permian Basin — has never been more dire. Nearly half of respondents in the latest Global Energy Talent Index are worried about an impending talent crisis, and 40% say the O&G skills crisis is already here. As technology transforms the nature of jobs, it also requires constant reskilling of the human workforce that must learn to work effectively with tech-enabled processes and tools. 

That workforce, in turn, is increasingly pursuing an independent workstyle that upends traditional recruiting and retention practices. More than 30% of the world’s labor force works independently rather than in full-time employment, and 75% actively choose the independent workstyle. Even “traditional” employees are transforming their approach to work, changing jobs at a record-setting pace, “ghosting” employers across all skill levels and industries, and demanding more flexibility in their careers because they know they have the upper hand in the new supply/demand equation.  

It is within this challenging, churning labor market that companies involved in shale must compete for talent. Moreover, their challenges are compounded by a unique set of barriers — environmental concerns often top the list. 

In a recent survey, more than 70% of U.S. respondents said they were more likely to choose to work at a company with a strong environmental agenda — a trend that doesn’t bode well, given shale’s association with climate change and environmental damage. Younger workers, in particular, are prioritizing the planet over their paychecks, with three-quarters of millennials saying they would accept a smaller salary to work for a company that is environmentally responsible, and 40% saying they have chosen one job over another because of the company’s sustainability record. The study echoes similar research in the UK, where the number of graduates going into O&G exploration has dropped 60% in the last five years due to environmental and ethical concerns. 

For shale, the work environment itself poses another set of recruiting challenges. Shale basins are in remote rural locations, and workers must be willing to live in mobile housing away from family for weeks at a time, juggling ever-changing and non-standard shifts and schedules. Lucrative pay is no panacea. By relying on high wages to attract talent, companies create pools of money-motivated workers willing to switch jobs frequently in pursuit of higher pay, making retention an ongoing challenge. 

Skilled workers present a different story: They favor career progression over salary hikes, and 92% of them are willing to relocate in search of better long-term opportunities. Hiring managers find themselves competing for professional talent against industries with reputations for high-tech innovation, dynamic career opportunities, and flexible work arrangements, all of which are perceived as lacking within O&G. 

It’s a daunting time for talent management in O&G, but there is opportunity amidst the chaos. A handful of progressive industry leaders are rethinking their approach and finding innovative ways to acquire and retain the talent they need. 

While companies have long relied on a mix of full-time workers, technology, and outside partners to execute their business plans, these leaders are pursuing a more holistic talent approach that pushes outsourcing to new limits. The right outsourcing partner can help determine the optimal mix of talent (i.e., full-time, contingent, etc.) and technology — an area of tremendous opportunity in O&G, where automation requires redefining the work that humans do and unlocking new possibilities for how that work is done

In addition to expanding access to qualified talent, forward-thinking providers like KellyOCG offer collaborative service delivery models that range from automation and digital transformation to global business services and shared services to transform each stage of the talent life cycle. 

Attracting and retaining talent — in an environment where talent clearly has the upper hand — also requires looking beyond typical demographics and shaping an employer brand that speaks to workers’ underlying motivations. Progressive companies are creating talent agendas that incorporate best practices traditionally reserved for customers. For example, KellyOCG’s talent segmentation approach defines distinct talent “tribes,” each with its own set of attitudes and motivations that inform more effective recruiting and retention strategies for various roles. As business needs change, talent segmentation can also help leaders better understand whom they want to keep, how best to upskill or reskill workers, and how to best engage (or re-engage) talent in the future. 

Supply and demand dynamics have always driven the O&G industry. When it comes to creating a sustainable workforce, the companies that understand those dynamics and embrace innovative ways to tilt the talent equation in their favor will gain a competitive edge for years to come. 

About the author: Ron Hudik has been providing strategic guidance and recommendations around custom designed, client specific workforce solutions to companies in all sectors of the Energy industry for more than two decades. He specializes in the design and implementation of solutions related to Managed Service Provider (MSP) programs, Recruitment Process Outsourcing (RPO) solutions, Contractor Safety Management programs, Workforce Diversity programs, Talent Supply Chain Management (TSCM) design, Business Process Services outsourcing (BPS), Project Services (PS), Statement of Work (SOW) management and Workforce Analytics.

He holds a B.S. in Industrial Engineering and an MBA from the University of Toledo.  Mr. Hudik has also earned his Lifetime C.P.M. and CPSM designations from the Institute for Supply Management (ISM).


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