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Streamline - The Talent Issue

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Exclusively in this issue we discuss the trends and challenges associated with the global talent shortage in the oil and gas sector.

Published in: Recruiting & HR
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Streamline - The Talent Issue

  1. 1. STREAMLINE 1404 Global workforce issue impacting LNG sector The skills gap in completions and intervention personnel JUNE2014THE FASTSTREAM MAGAZINE 03 Faststream news THE TALENT ISSUE INSIDE: NAVIGATING EMERGING MARKETS A CHANGING MENTALITY
  2. 2. Throughout this issue of Streamline, we’ll discuss various issues, trends and challenges associated with the global talent shortage in the oil and gas industry or “skills gap” as it is commonly called. The most obvious cause of the skills gap is the mass exodus of the Baby Boomer generation via retirement and the lack of qualified talent to assume their position and inherit their knowledge. With science, technology, engineering and mathematics (STEM) professions on the rise, nearly every sector in the global economy is competing for talent within this shallow pool; unfortunately there just aren’t enough resources for everyone. Further heightening the issue is the rapidly accelerating technology used within the oil and gas industry. While this is often one of the most attractive aspects of the industry to many potential hires – after all, who doesn’t want to work hands-on with the latest and greatest technology available to the world – it also creates quite the challenge. It’s near impossible to stay “ahead of the curve” when it comes to technology’s use and application. It seems there is a new or better tool, system or program every week, and it’s all STEM professionals can do to keep their head above water. Another factor contributing to the skills gap is the globalization of the oil and gas industry. While we’ve long been operating in countries around the world, the discovery of new plays and insistence of foreign governments that operators and service companies hire local content puts a near impossible strain on the industry. Many countries don’t yet have enough qualified in-country workers to perform the needed tasks, and when restrictions are placed on expatriate hires, positions remain unfilled or underutilized. However, many companies are doing everything in their power to bridge the skills gap through robust learning and development programs, university partnerships, and diversity programs. Learning and development is critical to anyone in the oil and gas sector. Most would say it is a major factor in considering whether or not to begin working for a company, as learning and development programs often lead to personal and professional development, career advancement and networking opportunities that are vital to success. By engaging in classroom, information and in- the-field training and development exercises, knowledge is passed from one professional to the next, ensuring skills and information are not lost as one generation retires and the next assumes a more prominent role within the industry. Secondly, university partnerships are becoming increasingly popular throughout the world. As there is no standard curriculum for any STEM degree or engineering discipline globally, it’s often harder to find qualified talent in some geographies than others. Many global companies are working in partnership with universities in their key areas of operation such as Azerbaijan, Indonesia and others in order to collectively create programs that best prepare students for real-world experiences. Often, current and more senior employees and recent retirees volunteer to teach these courses or advise in the course creation process, as their desire to see the industry flourish does not end with retirement. Finally, there is an increased focus on reaching women and minorities, who offer a wealth of opportunity and possibility to the industry. Historically, the oil and gas industry has been male dominated, but great strides have been made in the past 20 years to achieve equitable representation of women and minorities in the oil and gas sector. It’s impossible for an industry to be truly successful and reach its full potential if a large portion of its potential talent is left untapped. Whether it’s internal resource groups, high school and collegiate outreach programs, flexible work schedules that allow for work/life balance or company programs and offerings like childcare and maternity leave, companies understand they must do what it takes in order to attract and retain the top female and minority talent available. Due to the rapidly accelerating technology and amount of drilling opportunities around the world, the skills gap may never completely close. However, companies are doing what they can to alleviate the pressure caused by this issue, and are willing to make big investments in people and programs in order to accelerate professional development and remain competitive in this global industry. MARK CHARMAN FASTSTREAM GROUP CEO 2 WELCO 3 STREAMLINE NEWS LEARNING AND DEVELOPMENT IS CRITICAL TOANYONE IN THE OILAND GASSECTOR LINKEDIN ISNOT FACEBOOK! During Faststream’s visit to the Offshore Technology Conference we spoke to the Houston Chronicle about the “dumbing down” of activity on LinkedIn which sparked interest amongst conference visitors. The sudden surge in people posting things such as what they had for lunch, business quotes from famous people or the unprofessional profile picture represents a “dumbing down” of the social media site designed for business related networking. LinkedIn is a shop window in which you’re displaying your wares. If you’re a job seeker make sure you list relevant information such as the kind of work you do, your skills and your educational background. And when you want to update your status, share an interesting article. Leave the party pictures, famous quotes and any of the other obvious “self-promotion” to Facebook. BUILDINGTHE DREAMTEAM Faststream’s global Oil & Gas team has grown substantially in the last quarter with 12 new consultants added to our teams around the globe. Faststream’s Houston office, now based on the Katy Freeway welcomes Whitney Brady, Kevin Jadney, Michael Sabo, Amanda Turner and Michael Lozano. Warm welcomes also to: Callum Hewitt, Zoe Symes and Douglas Magraw who join the groups UK headquarters. The Singapore office welcomes Evangeline Long, Keav Kho, Wayne Yip and Sital Mandila as recruitment consultants and Kristian Warner as business manager. We are always looking for talented individuals to join the Faststream Group as specialist recruiters. If you are interested in finding out more about working for us please visit www.faststream.com/work-for-us AFACETO THENAME The most common complaint by jobseekers dealing with a recruitment agency is that it can be impossible to speak to a consultant before applying for a job, or even to discover who is managing the recruitment for a particular position. We have listened to this feedback and now all jobs advertised on Faststream’s website are accompanied by the consultant’s full contact details, including direct dial, email, LinkedIn profile and photo. UPDATE We’re delighted to announce the promotion of Matt Conway to the position of Managing Director for Faststream’s Singapore operation. Matt previously served as Director of Faststream Singapore’s maritime and oil and gas divisions, but now takes over full operational responsibility for the groups Asia base. JUNE2014
  3. 3. STREAMLINE 5 move on when a company is willing to offer them more money or a higher day rate for being offshore. Some companies are willing to pay “whatever it takes” to obtain the most skilled, but others simply don’t have the capital or portfolio to support this hiring strategy. Larger service companies like Halliburton and Schlumberger are significantly investing in learning and development programs that will bring employees up to speed and develop their skill sets in-house, but that is still no guarantee that an employee will choose to stay with the company for the long term. Smaller companies are often forced to seek talent from oversees or forgo specific geographic or geophysical experience in exchange for a candidate with the right software skills and experience. However, salary and training costs aren’t the only things to consider. The increased HSE regulations in the offshore drilling space mean the overall cost of a well is now much higher than originally planned, as many of these rigs have been operational for decades. Had employers been able to forecast the increase in personnel expenses and costs associated with HSE compliance, it’s possible that some or many of the smaller wells with lower returns wouldn’t have been drilled at all. In short, today’s oilfield services market is unlike ever before. The challenges to properly meet the staffing needs of offshore players are more daunting than ever, and not just due to the Skills Gap. Government regulation, technological requirements, a changing employee mindset and overall production cost increases all play a critical factor in shaping an industry sector that will see a large volume of work over the coming decade. Many are under the assumption that the skills gap exists primarily in new plays and emerging markets, but challenges unique to well-established fields, like those in the North Sea, are also quite cumbersome for employers and jobseekers alike. The concerns in this space are multi- layered. The first is the dire need for an abundance of highly sought after positions, which are in short supply. Both Wireline Logging Engineers and Mechanical Design Engineers are critical within the well intervention space, thanks to the skills needed to properly execute and abandon wells. Over the next decade, 800 wells are scheduled to be plugged and abandoned in the North Sea alone, and the technology and expertise required to successfully complete these tasks are of great concern to operators. In addition to the experience needed to properly plug and abandon a well, there are also stringent government regulations to consider. Health, Safety and Environmental (HSE) regulations imposed by governmental entities present a challenge for oil and gas companies and make having the best talent in place even more critical. Each day it takes to successfully decommission a well is a significant expense to the operator; experienced professionals can get the job done more quickly and in accordance with regulation – but there simply aren’t enough of these people to go around. For those wells currently in the operational phase, the technical knowledge of downhole software applications required to extract hydrocarbons is highly specific to the industry, adding yet another layer to the staffing challenge. Thus, it is extremely difficult to recruit from outside the oil and gas sector, as the software platforms required in these operations are unique within disciplines. The two primary programs used by Wireline Logging Engineers, Sondex and Warrior, are required for wireline logging data acquisition and analysis. Without explicit knowledge of one of these programs, an employee cannot operate in an offshore environment. Faststream has found that those with experience in these programs are in high demand and today command a salary or hourly wage up to 40% higher than even 12 months ago, assuming individuals have at least five years of experience. Not only are these workers paid a significantly higher wage, but the change in their views on career progression and employer loyalty have altered in recent years, further complicating the issue. Rather than staying with a company for many years and in a full time capacity, many workers are opting to take very short term assignments (6-12 months) and 4 PRESENTEDBYTHESKILLS GAPINCOMPLETIONSAND INTERVENTIONPERSONNEL THE JUNE2014FOCUS
  4. 4. NAVIGATING MARKETS The demand for energy is increasing steadily, and to meet this demand, oil and gas companies are entering new and untapped markets such as Myanmar, offshore East Africa and offshore West Australia. The 20 offshore and 10 onshore blocks recently released by the Myanmar government is just one example of the vast expansion of drilling opportunities available to the industry today. STREAMLINE FOCUS 7 the truth. Each geography in the oil and gas space is unique, home to its own cultures, traditions, lifestyles and business operation styles. It’s important that employers understand this, particularly those who have never before worked in one of these geographies, and this is one area where an experienced global staffing firm can be of invaluable assistance. Staffing Resources But choosing any staffing firm simply won’t do. In many emerging markets, there are two options for hiring a recruiting services agency: a local staffing company or working with a regional office of a global firm not physically located in-country. The downfall of in-country staffing companies is that they lack the global networks which they need to access to properly seek and find the needed talent. Their pool is shallow and very limited, meaning the time it takes to hire an employee could be much longer than what has been allotted. However, working with a global staffing firm isn’t always the best option either. Often, these firms are very broadly focused, meaning they do not have experience specific to and deeply in the oil and gas sector. Anyone who has worked in oil and gas knows that it is a highly technical and specialized industry; one cannot simply place “any” engineer in “any” position. The depth of industry knowledge required to be successful is massive and cannot be overstated. With reserves in existing markets thoroughly explored, the industry is branching out into uncharted waters and geographies. In the last 10 years, the number of exploration and production projects in these emerging markets has increased rapidly, resulting in a sharp increase in talent demand within an already limited candidate pool. Navigating promising foreign markets presents several key challenges for oil and gas companies, including government regulation, limited in- country talent, cultural nuances and available staffing resources. If these issues can be addressed or resolved, the possibilities and production within the industry are unlimited. Government Regulation Just as in established markets, the governments of foreign markets are keen for all companies operating in their land and waters to hire local talent. In fact, the Malaysian government mandates that 70 percent of workers on any Malaysian rig or platform must be an in-country hire; this puts a huge strain on companies operating in new markets, where the talent shortage is a serious issue. Often, governments graduate their local staffing requirements with time, giving companies the opportunity to get projects up and running successfully and then allowing local talent to take over when the time is right. Limiting expatriate workers to five-year contracts and refusing to employ expatriates past a certain age are just two of the ways governments in emerging markets ensure local talent is employed as soon as possible. Limited In-Country Talent Another issue when navigating emerging markets is the limited availability of in-country talent. As there is no standard engineering or geosciences degree program across the globe, universities in these countries are working hard to properly prepare their students to perform the tasks, analysis and management required while working in the oil and gas industry. Additionally, the world is facing a shortage of Science, Technology, Engineering and Mathematics (STEM) graduates on the whole, meaning that every industry looking for these types of graduates and professionals – aerospace, defense, high tech and others – are all competing for the same limited resources. This challenge is compounded by the requirement to hire from within a single country’s talent pool, and presents a huge challenge for those who are desperately searching to meet current and future exploration and production staffing needs. Cultural Nuances Understanding cultural nuances is critical when working to attract and retain talent, especially in the Asian market. There are many great opportunities in Indonesia, Korea, China, Myanmar and Malaysia, and many people mistakenly assume that a good fit within one country and culture will mean the same for another nearby country – this couldn’t be further from UNDERSTANDINGCULTURALNUANCES ISCRITICALWHENWORKINGTO ATTRACTANDRETAINTALENT, ESPECIALLYINTHEASIANMARKET 6 JUNE2014
  5. 5. Each of these situations play a role in the increase in contract employees in the oil and gas industry, and the biggest concern for employers is the risk associated with contract employee classification and insurance. The U.S. government’s recent crackdown on employee classification, which resulted from the Internal Revenue Service (IRS) and the Patient Protection and Affordable Care Act’s (PPACA) recent claim to be more vigilant against companies that don’t meet contract employee classification requirements, means the risk for audit and financial penalty for oil and gas companies in the U.S. is larger than ever. Companies that are unsure whether they are misclassifying employees and at risk of an IRS audit should determine and understand the differences between an employee and an independent contractor by examining the relationship between the worker and the business. Generally, an individual can be classified as an independent contractor if the employer has the right to control or direct only the result of the work and not what will be done and how it will be done. To avoid misclassifying employees, companies can enlist the resources of a staffing firm to ease uncertainty regarding contract employees. Faststream helps address these concerns by assuming the compliance risk associated with temporary, temp- to-hire and interim employees. By directly employing contract workers, Faststream assumes all risk for tax liability, insurance (health and liability) and benefits. In addition to compliance risk, there is also a liability and insurance coverage risk for employers; with contractors, workman’s compensation and liability insurance policies often prohibit companies from including their contractors in existing policies. Choosing a contractor employed by Faststream gives companies the ability to hire contractors without worry. Faststream’s insurance policies cover every possible scenario and are backed by the world’s best insurance providers. Companies also don’t have to worry about the classification risk of contract employees, especially as the PPACA health laws are now being more strictly enforced. Conversely, Faststream also saves money for contract employees who under most circumstances must provide their own insurance; given the dangerous work performed offshore and in the field, it’s often 1) hard to secure coverage at all, 2) often not the correct or sufficient coverage, or 3) not provided by a reputable insurance company. Whether you are an employer looking to fill temporary positions with contract employees or a contractor seeking employment, Faststream can mitigate your risk. For more information contact Eric Peters at Eric.Peters@faststream.com. STREAMLINE FOCUS 98 JUNE2014 INTHEU.S.PARTOF THECHALLENGE WITHTHESKILLS GAPISTHE OVERALLCHANGE INEMPLOYEE ANDEMPLOYER MENTALITYWHEN ITCOMESTO WORKINGONA CONTRACTBASIS. Currently, companies are hiring more contractors and making fewer permanent hires due to rapidly changing technologies, the exploration of new fields, a shift in employee mindset and governmental regulation. Each of these factors mean employers must closely examine employee status – 1099 independent contractor, permanent and direct hire, etc. – and make the appropriate classification of personnel in order to mitigate compliance risk. As technologies change and operations become more efficient, it takes less time and fewer people to complete a task. Therefore, employers often seek to hire on a contract or short-term basis so that they can properly staff projects and minimize downtime on the jobsite. Additionally, the shale boom in the U.S. has led to a boom in field exploration and production. Contractors are especially useful in these short term (6-12 month) engagements and can then move on to assess the next potential drill site. By maximizing their productivity and minimizing the time on each jobsite, employers achieve maximum productivity while employees enjoy a new professional opportunity quite often. This is an important factor in the shift in employee mindset. Employees in the oil and gas industry are well aware of the skills gap and know exactly how important their skills and expertise are – and they know employers are willing to pay a premium for them. By “hopping” from job to job every 6-12 months, employees can demand a higher hourly rate or salary and can often lead to higher levels of job satisfaction due to the diverse range of projects that they can work on. Because the industry caters to these short-term opportunities, employees benefit not just from a bump in salary but also a diverse experience base that makes them even more marketable. CHOOSINGA CONTRACTOREMPLOYED BYFASTSTREAMGIVES COMPANIESTHEABILITY TOHIRECONTRACTORS WITHOUTWORRY
  6. 6. STREAMLINE FOCUS 11 Unfortunately, experience in oil does not necessarily transfer into the gas sector, just as onshore expertise does not equate to offshore. However, many of the things companies are looking to do, such as FLNG, have never been done before – so it’s imperative companies find the right match for a job role, which requires an intense amount of research and knowledge of the sector and candidates. Historically, LNG talent has been sourced from expatriates hailing from the U.S. and UK. However, now that the U.S. is transitioning from a major importer of LNG to a potential exporter, many of these talented people are choosing to stay in their home countries. Not only does this have a major impact on the global economy – increased production could lead to lower prices in the long term, particularly in the Asian Region where high demand in countries such as Korea, Japan and Taiwan is creating extremely high prices – but on the talent pool available to global producers and affiliated companies. “Another challenge in recruiting for the global LNG sector is locating the talent ‘where they are.’ These specialized and experienced candidates are likely currently employed and may not be considering a job move – until they know what’s available,” said Clements. “Undoubtedly, the number of LNG and FLNG projects will continue to increase faster than the available human capital. There is no end in sight for the skills shortage.” With the world’s energy demand only expected to increase over the foreseeable future, production has no choice but to increase in order to keep pace. As detailed earlier in this edition, the retirement en masse of Baby Boomers means that there are an insufficient number of qualified STEM graduates available to absorb knowledge and perform tasks.. Coupled with the wildly increasing number of projects and opportunities planned and underway, qualified and experienced talent is in high demand and short supply throughout the entire value chain. This issue is not unique to any geography or engineering discipline, but with the emergence of LNG and FLNG in new and established markets across the globe, the spotlight shines even brighter on this promising and rapidly developing sector. In fact, Faststream’s executive leadership team recently visited Gastech Asia and came face-to- face with the challenges in the LNG sector, specifically the talent shortage. “There is already a shortage of talent in LNG and the U.S. shale boom, multiple projects happening off the coast of Africa and Australia and more projects and FID’s being taken within FLNG will only put further strain on the workforce shortage, both on and offshore,” said Simon Clements, group commercial director for Faststream Recruitment Group. “Everyone wants to recruit people with experience in LNG; the fact is there isn’t enough talent to go around. To attract top talent in this hyper-competitive space, you’re going to have to be very well networked within the passive candidate labor market and have access to mobile candidates, situated globally. 10 JUNE2014 GLOBAL WORKFORCE ISSUENOW IMPACTINGLNG SECTOR THERIGHTMATCH FORAJOBROLEREQUIRES ANINTENSEAMOUNT OFRESEARCHAND KNOWLEDGEOFTHE SECTORANDCANDIDATES
  7. 7. To find out more about Faststream and to discuss your hiring requirements or career ambitions, please contact your local office: UK Headquarters The Quay 30 Channel Way Ocean Village Southampton SO14 3TG Tel:+44 (0) 23 8033 4444 Email: info-uk@faststream.com @faststreamoil ASIA - Pacific Faststream Recruitment Pte Ltd 10 Hoe Chiang Road #08-01 Keppel Towers Singapore 089315 Tel: +(65) 653 27 201 Email: info-sg@faststream.com @faststreamoil Fort Lauderdale 100 NE Third Avenue Suite 605 Fort Lauderdale Florida 33301 Tel:(+1) 954 467 9611 Email: info-us@faststream.com @faststreamUSA Houston 11451 Katy Freeway Suite 640 Houston Texas 77079 Tel: (+1) 713 636 9514 Email: info-us@faststream.com @faststreamUSA www.faststream.com STREAMLINE

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