The Role of Talent Management in Oil and Gas Sector

1.
OVERVIEW OF OIL & GAS INDUSTRY
As one of the six core industries in India, the oil and gas industry has a very significant role to
play in the growth of the Indian economy. The petroleum and natural gas sector which includes
transportation, refining and marketing of petroleum products and gas constitutes over 15 per cent
of the country's gross domestic product (GDP).
About a decade ago, the petroleum sector was almost completely controlled by national oil
companies. Presently, there are many players both in the upstream and downstream sectors. With
the significant discoveries of oil and gas in various sites in recent years, India is looking at huge
investments in the sector. Growth continues apace, and the Indian oil sector looks vibrant with
opportunities.
In November 2008, the Cabinet Committee on Economic Affairs (CCEA) agreed to the awarding
of 44 oil and gas exploration blocks under the seventh round of auction of the New Exploration
Licensing Policy (Nelp-VII).
With this, the overall number of blocks brought under exploration exceeded 200.
The allocation is likely to bring in investments worth US$ 1.5 billion. Oil and Natural Gas
Corporation (ONGC), which is India's largest oil and gas producer, along with its partners, won
the maximum number of 20 blocks. Winners of the blocks had also committed an investment of
US$ 3.5 billion for data collection and exploration in these blocks.
As per an Investment Commission report, petroleum exports have also emerged as the single
largest foreign exchange earner, accounting for 11.5 per cent and 15 per cent of the total exports
in 2005-06 and 2006-07, with export of petroleum products touching US$ 20.03 billion during
April-December 2007.
According to an official release by the Ministry of Petroleum and Natural Gas, India's total
exports from the sector during April 2007 to February 2008 added up to US$ 128.15 billion..
University of petroleum and energy studies

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1.1. OIL AND GAS
Overview
Five of the top seven global oil and gas companies use IBM Cognos software to gain visibility
into their business, manage assets, and drive performance. A major global oil company saved an
estimated $140 million using IBM Cognos software to focus on customer profitability and
retention.
Oil and gas organizations use IBM Cognos 8 Business Intelligence and IBM Cognos 8 Planning
software and services to:
1.1.1. Leverage the digital oil field
• Consolidate data from multiple oil & gas systems—production, reserves, accounting, and
well logs—into a single view of your operation based on common data definitions
• Leverage your investment in any ERP (such as SAP, and Oracle-PeopleSoft) and any
platform (such as IBM and Microsoft)
• Identify trends, anomalies, and opportunities, and model the effects of key business
drivers, such as NYMEX prices, against various scenarios using IBM Cognos 8 Business
Intelligence software
1.1.2. Streamline and regulate financial processes
• Perform integrated operational and financial planning in real time for immediate visibility
into resource requirements and future business results using IBM Cognos planning
software
• Automate workflow and aggregation by collecting volume and financial data from oil &
gas source systems
• Replace error-prone spreadsheets with a single, consistent version of corporate
information

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• Structure your data and reporting processes to comply with Sarbanes Oxley and other
regulatory compliance initiatives
Read our white paper on the critical role IT plays in SOX and other regulatory compliance
endeavors.
1.1.3. Manage the big crew change
• Understand the effect of 50 percent of the oil & gas workforce retiring in the next six
years
• Turn the challenge into a competitive advantage through effective succession planning
• Get a view into key oil & gas workforce measures such as headcount and turnover,
demographics, compensation and incentives, benefits, and new talent recruitment using
the IBM Cognos 8 Workforce Performance application
Read our human resources white paper to understand how business intelligence can help you
manage your current workforce and plan for succession.
1.1.4. Maximize supply chain efficiencies
• Monitor and analyze your supply chain with a view to controlling expenses going to
labor, supplies, services, and other areas across the chain
• Identify and rein in rogue spending
• Compare and benchmark oil & gas suppliers in terms of quality, delivery, and price

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2. RESEARCH METHODOLOGY
2.1. Rationale of Study

• To study the talent management in oil and gas sector.
• To determine the talent management in oil and gas sector.
2.2. Objective of the Study
• To identify the challenges of talent management in oil & gas sector.

• To study the talent crisis faced in upstream oil & gas.
• To find the scope of talent management for attracting and retaining employees.
• To study the benefits and values involved.
2.3. Scope of research
• To determine the importance of talent management in employee management and

HR in oil and gas industry.
2.4. Type of Research
2.4.1. Research Design- Descriptive research

2.4.2. Data type & Source of Data
• Secondary
• Internet, magazines, Infraline, newspapers, Journals
2.4.3. Limitations
Low availability of secondary data

Determination of the talent of a person is a time consuming process

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3. ABOUT TALENT MANAGEMENT
Talent management refers to the process of developing and integrating new workers,
developing and retaining current workers, and attracting highly skilled workers to work for your
company. Talent management in this context does not refer to the management of entertainers.
The term was coined by David Watkins of Softscape published in an article in 1998. The process
of attracting and retaining profitable employees has often been referred to as "the war for talent."
Companies that focus on developing their talent integrate plans and processes to track and
manage their employee talent, including the following:
• Sourcing, attracting and recruiting qualified candidates with competitive backgrounds

• Managing and defining competitive salaries
• Training and development opportunities
• Performance management processes
• Retention programs
• Promotion and transitioning
Talent management is also known as HCM (Human Capital Management), HRIS (HR
Information Systems) or HRMS (HR Management Systems), and HR Modules
3.1. TALENT MANAGEMENT CHALLENGE IN THE OIL AND GAS INDUSTRY
The oil and gas industry is in the midst of a period of rapid global expansion. However, will it
have the qualified people it needs to support that growth? Recent research by Oliver Wyman
(formerly Mercer Management Consulting) indicates that over the next decade, attracting and
retaining skilled workers will be one of the biggest risks to industry success.
…over the next decade, attracting and retaining

skilled workers will be one of the biggest risks to
industry success.

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Upstream and midstream business are expected to be the most affected, as large numbers of
experienced workers retire and competition for new talent heats up. This is not just an “HR
issue”: Knowledge, not assets, will be the source of future value growth in the sector, and a
shortage of well-qualified professionals will constrain he abilities both to grow in scale and to
compete in an ever more crowded field. Oliver Wyman’s recent global survey on oil and gas
employment trends indicates that individual oil gas companies interviewed as part of that study
expect to face significant talent challenges over the next five to ten years. The survey revealed a
number of key issues that need to be addressed to improve the future talent outlook. While the
aging workforce is a valid and growing issue, particularly in the Western Hemisphere, the more
prevalent concern across the global oil and gas industry is the ability to find and retain qualified
talent (Exhibit 1). Companies are facing an experience gap, which could significantly impact
their ability to compete in the global market.
As one independent oil company representative

stated, “The people are just not there.”
The ability to find experienced candidates with the skills needed to meet anticipated demand
emerged as the top challenge facing the sample group of companies. As one independent oil
company representative stated, “The people are just not there.” Approximately 70 percent of
participating companies indicated this challenge as their highest-priority issue— a third of all
respondents cite this issue as “critical to solve.” Because the business model of service firms is to
offer oil and gas companies a high-quality workforce with specialized industry knowledge, a
shortage of experienced workers in the labor market will challenge their ability to deliver value
to customers. Attrition and retirement are expected to intensify the demand for experienced
resources.
Two-thirds of survey participants specifically highlighted attrition among employees with over
ten years of tenure as a high-/critical priority issue. Once again, the issue is of greatest concern to
service companies, which provided a substantially higher ranking than independents in this
category. Company concerns regarding the inadequate supply of experienced talent, coupled with
increasing demand, is likely to intensify the current level of competition for workers. As a result,
companies feel increased pressure to retain their experienced employees. The importance of

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retention is reflected in the survey results. However, the industry is beginning to realize that
traditional approaches to retention are not enough. While developing a strong corporate culture
and work environment are important, additional professional opportunities and financial rewards
are expected to be a more successful strategy for retaining experienced talent. Competitive
compensation is widely recognized as a foundation for retention. In the current growth
environment, there are a number of lucrative opportunities available to experienced workers. As
“competitive offers are increasing,” according to the representative of one national oil company
(NOC), so are the opportunities for employees to change their employer. Although most
companies do not aspire to be the highest payer in the market, most recognize the necessity to
offer a competitive package to their current and potential employees.
Although most companies do not aspire to be

the highest payer in the market, most recognize
the necessity to offer a competitive package.
However, it is becoming clear that compensation alone is not a sustainable solution to retain
talent. Instead, the importance of providing clear and challenging career opportunities is
beginning to emerge as a higher priority. Over 85 percent of survey respondents cited providing
“opportunities for career progression and personal development” as a high critical priority issue
to address. Exhibit 2 shows a number of such strategies that companies are employing to address
the issues. The survey results indicate that too many companies have yet to realize the scope of
the problem.
For example, when addressing regional talent gaps, oil and gas companies tend to focus on
internal solutions. However, this approach will not be sustainable in the long term, and strategies
focused on developing local pools of talent are expected to have the greatest impact. Rather than
current piecemeal approaches, what will be needed to address this challenge effectively is an
integrated, top-down talent management strategy that ensures that a company can maintain and
grow its workforce in line with its long-term business goals.

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3.1.1. Where has all the talent gone?
The pressures to find and hold on to qualified people are expected to intensify as the oil and gas
industry expands over the next decade. Exhibit 3 shows the percentage losses expected, by skill
area. The looming “talent challenge” is the result of a number of different, colliding factors. 1.
An aging workforce. The average oil and gas industry workers across the value chain are in their
mid-40s, with more than a third expected to retire by 2012. Companies in more mature
geographies, such as North America and Europe, will be especially hard hit by this loss of
experienced workers. See Exhibit 4.
2. Fewer experienced candidates. Competition is increasing for an insufficient supply of

experienced workers. Integration across the value chain is driving the need for more specialized
(and, hence, scarcer) skill sets. Other trends contributing to this shortage include the slashing of
industry workforces two decades ago, the replacement of tenured employees with entry-level
workers, and training reductions due to operating
margin pressures.
3. Industry globalization. NOCs are expanding operations into new geographies, while the
international oil companies are looking to build local workforces and rely less on flown-in talent.
In many countries, however, fewer people have the requisite skills; thus, those that do are highly
sought after.
4. Difficulty attracting entry-level talent. Although there is expected to be an adequate supply of

entry-level workers with basic skills and knowledge, these workers have many employment
options both inside and outside the energy space. Harsh, remote exploration and production
(E&P) locations and oil and gas industry reputation also have an impact on attracting new talent.
3.1.2. Wanted: top-down talent management
There are some positive trends in terms of talent availability—an increase in college graduates
with usable skill sets, a move toward localized workforces, and the use of creative retirement

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strategies to keep experienced workers in place. However, most oil and gas companies do not
appear to be well positioned to take advantage of these trends. They are still focused on the
“scramble” for a small pool of top candidates (or, in the case of NOCs, on “hire and hold” for an
employee’s professional lifetime), and have yet to develop broader and more innovative
approaches to sourcing workers. Most oil and gas companies are still focused on the “scramble”
for a small pool of top candidates. Most important, most oil and gas companies lack an integrated
talent management strategy that simultaneously focuses at a high level on attracting, developing,
and retaining employees with the knowledge and capabilities required for success. Exhibit 5
offers one such approach.
3.1.3. Source and Recruit
Oil and gas companies must get ahead of the curve in terms of knowing what their talent needs
will be tomorrow and developing an overall approach to sourcing. This starts with an assessment
of operational plans, growth targets, and the existing workforce to identify potential gaps.
Developing new, nontraditional talent pools to address evolving needs is the next critical piece of
the puzzle, as competition for candidates intensifies. To get prospects in the door, the company
will need to ensure that its brand image helps differentiate it and will appeal to candidates’
values. Finally, a structured recruiting process must be developed that assesses candidates from
the perspective of capabilities, knowledge, and cultural fit.
3.1.4. Develop and Manage
Knowledge transfer and investment in staff training and development will be essential to long
term business success, particularly if a company recruits talent with more generalized skills or
from other industries. Structured programs should be put in place to ensure knowledge transfer
from older, more experienced employees to newer employees. In some cases, a mentoring or
“journeyman” approach may be useful for developing very specialized skills. High-quality
employees also value formal career management and leadership development opportunities.
Challenging roles and career path opportunities can help retain the best employees, while there is

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certainly a competitive advantage to be had from proactively building a company’s next
generation of leaders.
3.1.5. Reward and Retain
Competition for talent and the proliferation of other opportunities increase the importance of a
well-defined plan for retention and employee recognition. Failure to invest in retention also can
lead to a prohibitively expensive cycle of recruitment and training, not to mention jeopardizing a
company’s performance. Retention plans should be targeted based on the demographics of the
talent pool, with specific efforts focused on retaining workers nearing retirement age. Also
important are benefits programs that enhance a company’s reputation for “taking care of its
own.”
3.1.6. Oliver wyman’s approach to talent management
In the face of the coming talent crisis, all oil and gas companies will likely need to adjust their
talent management strategies to support shifting business requirements and counteract increased
competition for their most valuable employees. Through recent work for energy companies,
Oliver Wyman has developed an approach to assessing current talent management efforts,
identifying gaps and opportunities, and developing integrated action plans that is results-oriented
and that can be aligned with each company’s unique structure and longterm goals. Wyman’s
approach is shown graphically in Exhibit 6. If you would be interested in discussing Oliver
Wyman’s perspectives on talent management challenges in the oil and gas industry, please
contact one of the authors of this article.

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Fig 1.
Fig 2.

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Fig 3.

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Fig 4.
Fig 5.

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Fig 6.

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3.2. The Talent Crisis in Upstream Oil & Gas :
Strategies to Attract and Engage Generation Y
3.2.1. Summary
Over the last few decades, the U.S. upstream oil and gas industry has shed an astounding 1.1
million jobs. Whether one believes these job losses are the result of normally occurring
competition, attrition, or restructuring, one theme permeates the current discussion around human
capital: how to develop, deploy, and connect employees through the industry’s boom and bust
cycles? This issue has become particularly critical of late, given the sector’s aging workforce,
combined with a diminishing pipeline of new and experienced talent. To guard against corporate
brain drain, companies need to formulate effective strategies to attract and engage the industry’s
newest resource: Generation Y.
It is estimated that Generation Y – also called Gen-Yers – currently makes up only about 10
percent of the U.S. workforce. Nevertheless, the Y generation will soon be called upon to fill the
employment gap brought about by the retirement of veterans and baby-boomers. Generation Y is
a group of the population that currently ranges in age from recent college graduates to middle
school students (birth years 1982-1993). As a workforce generation, they value flexibility,
balance, respect, feedback, as well as access to people, tools, and technologies. They balance
idealism and pragmatism and can be critical of their environments and opportunities. More
specifically, Gen-Yers tend to look for long-term career development, variety of experiences, a
sense of purpose and meaning in their work, open social networks, and work/life balance. This
report focuses on strategies for replenishing the whitecollar workforce within the upstream oil
and gas sector. Specifically, it examines the values of Gen-Yers, and suggests corporate tactics to
engage and sustain the interests of these young people. In doing so, it builds upon Deloitte’s
proprietary Develop-Deploy-Connect Talent Management framework (see Exhibit 3. What is the
Develop-Deploy-Connect Model?). Generally, employers can ‘develop’ their workers by

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providing them with active learning opportunities, ‘deploy’ them by designing effective
organizational environments, and ‘connect’ them by creating infrastructure to foster
collaboration. The report also presents targeted approaches for communicating corporate
philosophies through branding, roles, and rewards programs. While individual tactics may
provide quick fixes, to be enduring it is critical that companies incorporate the underlying values
into their organizational culture.
3.2.2. The Talent Conundrum
The looming labor shortage of oil and gas workers is the result of a slow and evolving buildup of
many factors that will hinder future corporate recruitment efforts. Some of the most concerning
impediments follow:
3.2.2.1. Industry Consolidation
Since the early 1980s, the industry has witnessed a wave of mergers and acquisitions that have
resulted in not only a new group of major oil companies, but also job layoffs. The consolidation
began with DuPont’s acquisition of Conoco (1981) and was quickly followed by Occidental’s
purchase of Cities Service (1982). Similar size transactions took place a few years later, in 1984,
with Mobil’s acquisition of Superior Oil, Texaco’s purchase of Getty, and California Standard’s
(now Chevron) acquisition of Gulf. The oil industry mega-mergers starting in the 1990s
produced new categories of industry players, namely ‘supermajors’ and independent oil
companies, which further reduced the employment pool. BP’s acquisition of Amoco (1998) and
ARCO (2000), together with Exxon’s purchase of Mobil (1999), eliminated almost 24,000 jobs.
The driving rationale behind the mega-mergers was to position the oil supermajors to compete
effectively with the National Oil Companies (NOCs). The deals also enabled the new majors to
acquire enough asset size and political clout to explore for and produce oil from difficult regions
around the globe. Subsequent mergers involving Chevron and Texaco (2001) and Conoco and
Phillips Petroleum (2002) completed the consolidation wave. All told, the industry lost
approximately one million jobs.

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3.2.2.2 Negative Public Perception
Ever since John D. Rockefeller began operating Standard Oil in the 1880s, the industry has been
plagued by negative publicity surrounding damage to the environment, anti-trust practices, and
unproven allegations of gasoline price gouging. In particular, more recent events such as the
Exxon Valdez oil spill (1989, Alaska) and suspected price manipulation in the aftermath of
hurricanes Katrina and Rita (2005), have likely discouraged the Gen-Y pipeline, which tends to
prioritize environmental-consciousness, ethics, and long-term viability. Furthermore, this new
workforce has witnessed the layoffs of their parents, and may view the sector as low-tech and
outdated. For many Gen-Yers, employment in the oil and gas industry, in its current state, is
likely not acceptable in their social networks.
3.2.2.3. Industry Cyclicality
The oil industry is one of the few market sectors whose fortunes are tied to the prices of a few
commodities, namely petroleum and natural gas. As the laws of oil economics typically dictate,
when prices rise, firms are more willing to invest in new and potentially risky exploration,
drilling, and production activities and, as a result, increase hiring of the appropriate workers.
Conversely, when supply outpaces demand, prices fall and layoffs follow. Compounding such
cyclicality is the fact that recent improvements in technology have enabled firms to increase
productivity with fewer workers.
3.2.2.4. Aging Workforce
According to a 2004 survey conducted by the American Petroleum Institute (API), the average
age in the oil and gas industry is 49 and is among the oldest of any industry. This trend is further
illustrated in Exhibit 1, which contrasts the workforce age distribution of the Society of
Petroleum Engineers (used as a proxy for the age distribution of whitecollar technical workers
within an oil and gas company) with that of other firms that employ technical professionals,

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namely high-tech companies, conglomerates, and consultancies. The API’s 2004 survey also
indicates that by 2009, there will be a 38 percent shortage of engineers and geoscientists and a
28 percent shortage of instrumentation and electrical workers. In a similar vein, the National
Petroleum Council projects a personnel shortage of approximately 40 percent as a result of
workforce retirements over the next decade.
3.2.2.5. Diminishing Enrollment in Petroleum Engineering and

Geosciences Programs
One of the more important predictors regarding the future supply of potential employees in oil
and gas are the number of students obtaining university degrees in petroleum engineering and
geo-sciences. As exhibit 2 illustrates, fewer than 1,000 U.S. students are projected to graduate
from such programs in 2006. This is more than a 90 percent drop since 1982. Reasons for the
decline in enrollment in these programs include perceptions that the industry offers:
1) short term jobs versus careers;

2) few attractive opportunities at junior levels;
3) tenure-based advancement versus meritocracy; and
4) little work/life balance.
The time is now for those in the upstream oil and gas industry to take proactive steps to ensure
that their talent pipelines are replenished and vital institutional knowledge is not lost. In order to
avert a damaging workforce shortage, company leaders need to understand the unique values
Gen-Y holds, and then formulate and execute strategies to recruit, develop, and engage this new
resource (this potential improvement is illustrated in Exhibit 2, after 2012). Moreover, by
incorporating such tactics into their organizational fabrics, such leaders should be better able to
connect all the workforce generations.
Fig 7.

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Fig 8.
3.2.3. Targeting Generation Y
So how can upstream oil and gas firms best avert labor shortage? By attracting and engaging the
new workforce: Generation Y.
According to a 2004 study by Deloitte and the Institute of the Future, Generation Y wants and
needs can be very different from that of existing workforce generations (Veterans, Baby
Boomers, and Generation X). Drawing from the study’s findings, the Gen-Y needs most
important to upstream oil and gas leaders looking to replenish their talent pipeline may include:

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• Long-term career development and multiple experiences within a single organization
• Sense of purpose and meaning in the work
• Availability and access to mentors and other company champions
• Work/life flexibility
• Tech-savvy work environment (e.g., online problem solving and learning tools)
• Open social networks that embrace open/honest communication
Exhibit 4 (How to Attract and Engage Generation Y) discusses the implications such workplace
values can have on employers in the industry, as well as the strategies needed to develop, deploy,
and connect these new entrants. The model builds upon Deloitte’s proprietary Develop-Deploy-
Connect Talent Management framework (see Exhibit 3. What is the Develop- Deploy-Connect
Model?). In general terms, employers can ‘develop’ their workers by providing them with
opportunities to learn through experience, ‘deploy’ them by designing effective organizational
roles and environments, and ‘connect’ them by creating seamless networking infrastructures. The
tactics presented vary in scope and complexity. Some, such as online recruiting tools and formal
training opportunities, may take less time to implement, but address only specific workplace
needs. In fact, several Fortune 500 oil and gas firms have already developed proprietary online
recruiting systems, enabling existing talent to be more easily matched with current openings.
Since they are internal, these ‘resumes’ – one firm even calls them ‘Career Networking Profiles’
– can often be more creative and comprehensive, including such information as career goals,
family details, and hobbies. Upstream oil and gas companies should take a twopronged approach:
executing these simpler strategies at first, while at the same time developing and deploying
longer-term shifts in organizational mindset. Specifically, leaders should strive to incorporate the
following fundamental workplace elements, which permeate throughout the aforementioned
Gen-Y values:
Fig 9.

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While fundamental organizational change may seem daunting, it is encouraging to note that
many global energy companies have begun to implement enduring strategies. For example, some
large organizations have formed partnerships with universities that offer petroleum engineering
and geosciences degrees in an effort to encourage the pipeline at its earliest stages of
development. These relationships can often involve scholarships, mentoring opportunities, joint
program design, and corporate donations of technology and other equipment. As upstream oil
and gas leaders forge bonds across incoming channels for talent and existing workforce
generations, they will need to develop and implement their tactics consistently. Further, they will
need to communicate their values through effective organizational branding, roles, and rewards
programs.
Fig 10.

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Fig 11.

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In order to derive maximum value from the aforementioned strategies, upstream oil and gas
corporations should reexamine their mechanisms for communication with Gen-Y, namely their:

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• Branding and Identity
• Organization Roles
• Rewards Programs
To that end, such organizations will need to design unique approaches for each of these elements,
or adopt existing successful practices from leaders within the upstream sector and other areas of
the industry. This section suggests specific tactics for corporate branding, roles, and programs
that communicate the company’s commitment to each of the Gen- Y workplace needs identified
previously (long-term career development, sense of purpose/meaning in work, mentors, work/life
flexibility, tech-savvy work environment, open social networks), as well as to the values that
underlie them: flexibility, balance, respect, feedback, and access to people,
tools, and technologies. (See Exhibit 5. Strategies for Communicating to Gen-Y). Underlying
each mechanism is Deloitte’s Develop-Deploy-Connect philosophy for talent management.
3.2.4. Communicating to Generation Y: Branding and Identity
In order to derive maximum value from the aforementioned strategies, upstream oil and gas
corporations should reexamine their mechanisms for communication with Gen-Y, namely their:
• Branding and Identity

• Organization Roles
• Rewards Programs
To that end, such organizations will need to design unique approaches for each of these elements,
or adopt existing successful practices from leaders within the upstream sector and other areas of
the industry. This section suggests specific tactics for corporate branding, roles, and programs
that communicate the company’s commitment to each of the Gen- Y workplace needs identified
previously (long-term career development, sense of purpose/meaning in work, mentors,
work/life flexibility, tech-savvy work environment, open social networks), as well as to the
values that underlie them: flexibility, balance, respect, feedback, and access to people, tools, and

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technologies. (See Exhibit 5. Strategies for Communicating to Gen-Y). Underlying each
mechanism is Deloitte’s Develop-Deploy-Connect philosophy for talent management.
A) Branding and Identity
Developing and communicating a cohesive, consistent positive image is critical to attracting and
engaging new talent. Industry leaders in upstream oil and gas, in particular, must work to counter
negative stereotypes by demonstrating publicly that they believe in what their companies do.
Branding provides such opportunity. The key to developing successful identity programs is to be
candid about the negative issues of the past, communicate a compelling future, and provide
employees across workforce generations and functions a real role in creating it. In doing so,
managements can assemble cross-divisional teams that span all levels of hierarchy, with a
mission to evaluate, improve, and market corporate branding and identity. Several Fortune 500
oil and gas firms have already implemented successful branding programs to enhance their
image across the Gen-Y age spectrum. For students, these include university scholarship and
mentoring programs, partnerships with community/technical colleges to expand courses in such
areas as instrumentation and operations, as well as support for various middle/high school math
and science programs. In fact, for some companies, internship programs have served as a solid
pipeline for new talent. More broadly, some large oil and gas firms have instituted programs to
reduce environmental damage from emissions and worked with their governments to design
public relations campaigns that emphasize the industry’s importance. By taking a proactive
approach to improving industry branding, and the negative forces that have served to damage it,
such companies gain strategic advantage with this new workforce. Moreover, such advantage
extends to other workforce generations, given the strong influence Gen-Yers have over their
parents.
How do these strategies target Gen-Yers?

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By empowering multigenerational teams to develop and communicate corporate brand and
identity, companies provide Gen-Yers the opportunity to expand their social networks, in
particular their exposure to senior leadership. Through this interaction, Gen-Yers can develop
meaningful mentoring relationships. Moreover, by involving Gen-Y in such efforts, management
can provide these new workforce entrants with a sense of purpose in their work and roles in the
larger organization. They can also ensure that their corporate images embody those values
important to this generation. This is critical given the urgent need to encourage and hone the
younger Gen-Y pipeline.
B) Organizational Roles
Companies that balance hierarchy with flexibility will likely be better able to attract and engage
employees at all levels. Upstream oil and gas managers can take several approaches to realize
such agility, including:
• forming cross-divisional/generational teams to collaborate on critical large-scale projects;

• establishing leadership development rotational programs; and
• creating developmental projects and plans for newer employees.
For example, one leading oil and gas firm implemented an “Executive Business Analyst”
rotational program which enabled the recruitment of experienced MBA students. This
mechanism helped the firm replenish its management pipeline as its senior ranks retired. By
institutionalizing flexibility in employee roles and reporting structures, management can connect
the broader workforce, thereby developing and deploying institutional knowledge.
These approaches for designing organizational roles will provide Gen-Yers with the
infrastructure needed to network effectively and develop their long-term careers in a flexible
way. Furthermore, by setting ambitious goals for the crossdivisional/ generational teams, Gen
Yers will likely develop a deeper sense of purpose and meaning in their work.

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C) Rewards Programs
Through innovative rewards programs, upstream oil and gas companies can further build
creativity and flexibility into their work environments, thereby attracting and motivating their
employees. Examples of such initiatives include:
• learning and development opportunities;

• supplementary rewards programs, such as annual incentive plans, deferred compensation,
profit-sharing, stock options, recruiting incentives, etc.;
• customizable healthcare benefits programs; and
• flexible work structures, such as co-location, part-time schedules, and virtual work alternatives.
It is instructive to note that one leading upstream oil and gas firm raised its retention rate to 30
percent above the annual industry norm by funding hands-on training for all drilling employees.
These tactics reward performance with flexibility: training programs increase employee
marketability and personal growth, accommodative environment and benefit structures enable
better work/life management, and adaptable work structures reduce logistical/hierarchical
barriers, helping Gen- Yers to develop the social infrastructure needed to collaborate effectively.
Moreover, by employing appropriate technologies to enable these initiatives, companies appeal
to Gen-Yers “tech-savvy” bent. Organizational branding, roles, and rewards provide
opportunities for companies to communicate their visions and values. Still, employing the
aforementioned tactics will likely only attract and engage employees in the short-term. To have
enduring effect, managements must create cultures of flexibility, balance, respect, and
collaboration. In this way, companies will not only be better able to develop, deploy, and connect
Gen-Yers, but all the critical workforce generations.
Fig 12.

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4. 4.1. TALENT MANAGEMENT: ATTRACTING & RETAINING CRITICAL
EMPLOYEES
ABSTRACT
In today’s cut throat competitive and turbulent environment employee retention is becoming
increasingly significant. Employee attrition costs organizations dearly since, high attrition rate
not only affects succession planning and employee morale, but also customer satisfaction and
sales. Employment of fresh candidates is also costly Attrition is a symptom not a problem. It is
the manifestation of deeper issues that have not been resolved. This could be due to low morale,
no career path, lack of recognition, poor employee manager relationship etc. The co-workers
feels insecure, and negativity in the environment takes root when the management fails to retain
its key employees. Employees’ attrition is an universal phenomenon and oil industry is no
exception. According to a recent Oil & Gas UK online poll, the biggest threat to producing
3million BOE (barrels of oil equivalent) by 2010 will be a lack of human resources. The
economic situation regarding oil price is such that companies are concentrating most of their
efforts at producing as much oil as possible without thinking much of the long term manpower
situation. Human capital is right now the most important and also the most scare resource for the
oil industry. This situation causes tremendous strategic difficulties for most companies, but it can
create opportunities for others. If oil companies can create a real strength in attracting and
retaining the best workers in the oil industry, we will have a competitive advantage that few can
match. What we need is to highlight our strengths in the job pool and initiate retention measures
which are affordable and aligned with our strategy.
4.1.1. Reasons for employee turnover
The present attrition rate would result into manpower crunch for state-owned corporations,
particularly Oil & Natural Gas Corp, Hindustan Petroleum Corp, Indian Oil, Oil India, Bharat
Petroleum, NTPC, PTC India, Power Grid Corp and the like. The issue of attrition is not that
critical in downstream oil sector as in upstream. But the downstream has gone through that phase
a few years back. A recent study in a downstream company revealed that 40-50%of employees

29
leave for better career prospects and better pay. Place of posting, family circumstances, relations
with superiors, account for just about 25-30% of them leaving the job. The executives and
below-executive cadre of these state-run corporations look for greener pastures in view of
opportunities in the private sector, ASSOCHAM President Venugopal Dhoot said while releasing
a report on 'Possible Attrition Rate in Energy Sector'. The power sector's professionals would like
to cash in on the existing opportunities for better future and would create sufficient space for
attrition rates. There are several reasons as to why the employees decide to quit national oil
companies to join international oil companies. These are categorized as pull factors, some of
which are listed below:
1. Better compensation:
a) Base/variable pay
b) Benefits
c) Recognition of contributions
d) Communication regarding performance
2. Personal Growth
a) How well work utilizes skills
b) “Fit” with job
c) Work/life balance
3. Better over all Opportunities

a) To learn /develop new skills/ talents
b) Corporate commitment to training and development
c) Keeping up with latest technology
4. Nature of job:
a) Perceived career opportunities for advancement
b) Clarity and strength of vision and mission
c) Management style, overall perception of leadership
e) Level of respect and support received.

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Similarly, there are certain factors which push an employee away from the organizations
especially PSUs.
These have been categorized as push factors, which are:
1. Organization related reasons

a) Non conducive work environment
b) Lack of recognition
c) Frequent changes in HR policies
d) Irrational Transfer and Job Rotation Policies
e) Disparity in career growth
f) Sympathy with non performers
2. Work & supervisor related reasons

a) Improper supervision
b) Lack of coaching and mentoring
c) Challenging assignments are few
d) Job dissatisfaction owing to lack of clear role/responsibility
e) PAR does not reflect true performance
4.1.2. Attrition rate in the Oil Industry
Attrition rate is highest among Professionals/Specialists. Issue of retention, therefore, arises only
in their cases, viz. drillers, geoscientists, reservoir, production engineers, in upstream sectors and
finance, international trade, refinery and pipeline technology in downstream sectors. Market rate
of these executives is always higher than the compensation package offered by the PSUs. In
2006, 165 employees left the number one fuel retailer IOC (compared to 92 in 2005). Due to
increased exploration and production (E&P) activities in the Indian sedimentary basins by private
firms, ONGC is badly hit by the talent crunch. Over 328 trained professionals left ONGC in the
same year (compared to 134 in 2005) to join private companies like RIL, Cairn and Hardy.
As far as world scenario is concerned, the top 25 oil companies in the industry have shed more
than one million employees since 1982, and those who managed to hang on are now rapidly

31
approaching retirement age. According to the US Bureau of Labor Statistics, more than 25
percent of the working population will reach retirement age by 2010, resulting in a potential
worker shortage of nearly 10 million. By 2030, with the last of the baby boom generation turning
66, an unprecedented 20 percent of the population will be over age 65. The attrition of these
older professionals is exacerbated by the lack of students to pull from. According to a 1999
National Petroleum Council study entitled “Natural Gas: Meeting the Challenges of the Nation’s
Growing Natural Gas Demand,” undergraduate petroleum engineering and geoscience degree
programs declined 77 percent and 60 percent, respectively, between 1985 and 1998.
4.1.3. Retention strategies
Just as every organization looks for the best, brightest, most dynamic and most productive
workers in its organizational rolls, employees too look for organizations which offer them a
chance to use their skills to the fullest extent, an employer who can tell them what they can do
better, an organization that offer them an excellent scope to grow intellectually, a job that
challenges their wisdom, a leadership that can be relied upon, etc. A survey carried out by
Watson Wyatt Worldwide identified the following factors, which make employees to remain
loyal to organizations (Table 1)
4.1.4. Table: What makes employees to remain loyal to employers?
Trust in senior leadership 14%

Competitiveness of rewards 14%
Chance to use skills on the job 11%
Job security 11%
Quality of companies products and services 10%
Absence of work related stress 7%
Honesty and integrity of company’ business conduct 7%
All other factors 26%

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After having invested considerable time and money in recruiting and training employees,
companies now determine how to make sure those valuable employees are productive and get
them to remain loyal to your firm. Retention of employees is essential to maintain client
relationships and keep recruiting and training costs in line. Losing an experienced employee
almost always results in significant costs to the firm. The keys to employee satisfaction and
retention are founded on strong leadership and sound management practices. If we can master
these arts, you should have happy, loyal employees and clients, resulting in growth, profits and
personal gratification. This article will now discuss key factors in motivating and retaining good
people
4.1.5. Building New Workers’ Confidence
A positive experience in the first few days on the job can be critical to the new hire’s motivation
and success in the organization. Employee orientation, whether it is a large-scale endeavor or a
one-on-one process, can help create a positive perception of the organization. A few simple steps
taken by the organization will ensure that the new recruited employee is comfortable in his new
surrounding For example a well defined and structured induction program with information
about rules, important phone numbers etc. will make a new employee more comfortable in the
new surroundings.
4.1.6. Identifying star employees /Recognition
Managers readily agree that retaining your best employees ensures customer satisfaction, product
sales, satisfied coworkers and reporting staff. Knowledge workers are more important to business
today than business strategy. Therefore, the very first step is the identification of critical
employees:
• Identify the competencies that people will need to effectively carry out an organization’s
strategy.
• Clarify the link between end results expected in a job and the job’s required
competencies.
• Select candidates who possess the characteristics to be outstanding performers.

33
• Develop these characteristics (competencies) in employees.
• Design developmental plans for individuals focused on developing the competencies that
are most likely to improve performance.
4.1.7. Effective utilization of talent
Putting the best people on the most promising projects is a smart and straight forward objective.
According to Peter Drucker “Successful enterprises create the conditions to allow their
employees to do their best work.”
Generally star performers have a desire to be constantly doing things including helping others,
consulting others and even influencing others. The organizations should identify such highly
motivated employees, their skills, their talent and experience and ensure that it is tapped for the
benefit of the organization. It is important to create challenging and intellectually stimulating job
profiles for the star employees. Many employees choose to leave just because their talent is not
utilized properly.
4.1.8. Career Development & Career Path
Career development is an ongoing effort that focuses on developing enriched and more capable
workers Many of the frustrations employees feel, as well as most errors and client problems, are
due to inadequate training. Comprehensive training will make life as a manager much easier, and
our employees happier. The best employees seek frequent opportunities to learn and grow in
their careers, knowledge and skill. A career oriented, valued employee must experience growth
opportunities within your organization. Time bound promotions can be de-motivating for a
habitual achiever. Depending on the value addition by the employee there should be fast track
career progression. Good employees need to know that an organization has room for them to
improve their careers. They should have the option of trying and working for fast track career
path. This will retain the high achievers and also motivate the mediocre to try and reach newer
heights in their work.

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4.1.9. Appreciation & Recognition
Syncrude Canada Ltd., one of Canada's largest energy companies, works hard to keep
recognition fresh, personal and meaningful. Recognition is not a scarce resource. You can’t use it
up or run out of it. The supervisor creates an environment in which people like to work and draw
job satisfaction. Employees more often leave their supervisors than leave the organization.
Bosses’ attitude makes or breaks an employees’ day. Therefore, companies must develop quality
managers and supervisors.
4.1.10. Compensation
At present, the Department of Public Enterprises (DPE) fixes a uniform pay structure for the
entire PSU sector. According to US-based HR consultant Hewitt Associates the public sector
undertaking character is the main reason behind the problem of oil PSUs. It has been suggested
that the government should allow the Board of Directors to set or break the limit according to the
market situation. Hewitt consultants pointed out that satisfaction with salary and other benefits
are extremely low among executives in ONGC. According to an ONGC official, attrition during
the previous year (2006-07) was the highest in the last five years with 328 professionals leaving
the company. “Under the PSU dispensation, ONGC is not able to match the compensation
package being offered by the industry (private exploration and production companies),” an
official said. The study suggested that the oil and gas sector should be treated differently from
the rest of the manufacturing sector, which is also a global practice.
4.1.11. Job title
Titles don’t always mean that much, but they certainly have an impact where people outside of
an organization are concerned. Employees are likely to be more proud of their jobs if their titles
sound good to friends and family.

35
4.1.12. Working conditions and location
“Location” of the job is another tool that is leveraged upon by many big companies to manage
retention. IT companies such as Infosys and Wipro are known to establish their developmental
centers across the country with a view to retain talent within the company by offering choicest
locations to their employees. Even international companies like IBM, GE, Oracle and Microsoft
are known to establish their knowledge centers within the “supply zones” of talents, obviously
with the intent of reducing employee turnover. Such multi locations also facilitate tapping of new
skills by way of attracting competitor’s employees How employees feel about their jobs is
greatly influenced by their office atmosphere. Employees' attitudes are affected by their physical
work environment; so we must make sure it is positive!
4.1.13. Work Life balance
People like to work in an environment that is enjoyable; they can get burned out if the work
environment is totally serious and strictly business. Great companies like Southwest Airlines
have come up with creative ways for employees to have fun. Although growth may create the
need for long hours from every employee from time to time, the company should be sensitive to
the strains this can create in employee’s home lives. The willingness to pitch in by the employees
during busy times should not be taken advantage of by making it a standard expectation of their
jobs all the time.
4.1.14. Co-workers
Employees spend a third or more of their time at work, at least five days a week. This means that
at least part of a worker’s social life is made up of people that are in your company. It is said that
in the good old days pastoral relations were often found difficult to break. Even today, it is
observed that people may be disloyal to the companies but not to their colleagues. It thus makes
sense for organizations to nurse strong social ties among the employees by encouraging them to
form employee clubs and games squads

36
consisting of employee’s family members and close associates. Toyota is known to put
tremendous effort in finding and screening positive employees to ensure excellent individual
performers to constitute a team. Building up of teams at work level and formation of social
groups outside the work place goes a long way in nurturing social bonds among the employees.
4.1.15. Communication
Lack of effective communication from management is usually the greatest cause for employee
dissatisfaction and premature departure. The best managers listen to and communicate frequently
with all employees; and they make it easy for employees to tell them about their problems and
concerns. Employees wish to know in absolute clear terms as to what is expected of them. An
involved, engaged and satisfied employee knows exactly what is expected of him today, in short
term and in the long run. Through periodic feedback, employees can gain a better idea of how
they are doing and what training opportunities they should pursue to develop their skills and
knowledge. They respect organizations that ask for feedback on management and on the agency
overall. If people know that their voices are heard, they feel like they are part of the decision
making process, they will be much happier, loyal and more likely to support new ideas and
programs.
4.1.16. Quick grievances redressal
Most of the times employees grievances are ignored by management because one person’s
problems may seem too trivial in the bigger picture of earning profits and other bigger issues that
a manager faces everyday uniquely in an oil industry. So, human problems gets swept under the
carpet or postponed indefinably for a better time to solve it. The adage of justice delayed is
equivalent to justice denied stands true here too. The small problem gets attached to other such
problems and they fester, creating discontentment in a person. The organizations must provide a
forum, an environment in which employees can speak their minds freely. Their ideas,
contribution and criticism can help in a continuously improving work environment in the
organizations where they have to stay and work.

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4.1.17. Corporate culture
Beyond all the items above, there is a far less tangible aspect of the company that we call
corporate culture. Corporate culture is the part of shared ideas, values and behaviors that affect
the experience of working in a company. People are most attracted to companies with open,
trusting, authentic and empowering corporate cultures. Attracting and retaining the best people
will be asiest if we have aculture of empowerment. None of the oil companies are ever
mentioned in the survey done every year by various magazines for ‘the best places to work’.
World-class companies always have in common World-class cultures. Leaders of such
businesses recognize that their companies exist to satisfy a social need. Profits are not the goal,
but are a byproduct of meeting the needs of customers and employees. A good corporate culture
enables employees to combine their strengths to meet these mutual needs as part of a dynamic
team.
4.1.18. Exit interviews
Exit interviews must not be reduced to mere formality. In a survey conducted by Human
Resource Executive Magazine, 96% of HR managers agree that they conduct exit interviews.
However, in most cases, the information collected is not put to any useful purpose. It appears that
many organizations are failing to recognize the value of a systematic approach to collecting
information from exiting employees. If critical employees are leaving the organization, then it
can be safely bet upon that other people in their departments are looking out as well. Exit
interviews with departing employees provide valuable information which can used to retain
remaining staff. There will never be a more significant source of data about the health of the
organization than this.

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4.1.19. A word about retention
The energy industry has always been cyclical in nature, but the period between 1998 and 2005 is
often referred to as "The Flat Line Years". Earl Heard, president of BIC Alliance, refers to it as
"The Lost Generation". Major oil companies as well as small to midsize oil companies, oilfield
service companies, engineering and construction companies, were all affected. Estimates indicate
that during this timeframe, at least 20 percent of the total workforce was downsized. What
followed seemed inevitable. Oil
companies stopped developing talent and the brain drain began as career-minded students
stopped enrolling in industry-related programs. Attracting and retaining employees is as much a
marketing issue as it is a management issue. Developing and promoting a positive organization
and reminding employees of the value of being part of
it is critical to getting those referral sources and keeping the talent that we have. People want to
feel that they are special and that their jobs are special. This is the single most important point
any company should consider, when deciding how to attract, develop and retain employees. For
an employee to feel that a job is special there must be something about the job that is perceived
as noteworthy and admirable. Ideally, this perception should extend not just to the employee, but
to the employee’s friends and family as well. Any organization committed to its mission and
vision captures the heart and soul of its workforce. Organizations that are capable of retaining
talented people believe that the key to attract and retain the employees lies in some non monetary
factors. Star performers stress more on the fundamental human needs, which the organization
should oblige. Retention is not merely a scheme but a strategy and should address the functional
turnover. Retention strategy should be rooted in a fine combination of organizational culture,
system architecture, methodical mentoring, enriched jobs and performance linked pay
commensurate with the best in business.
Therefore, an entire spectrum of possibilities have to be explored and absorbed to craft a strategy
that would embrace the employees to the organization even in adversity. This calls for
indomitable will to make it happen. The management in most Oil companies has already woken
up to this problem. This is no longer only a HR issue anymore; this is a problem the top
management is concentrating as much as the E&P projects. After all, machines cannot produce

39
oil without the vital support and leadership of HR. This is the most crucial resource for a
profitable bottom line. To sustain itself in the long run in a highly competitive market, it becomes
apparent that finding the right skilled people through a solid recruiting and selection process and
then keeping them with a solid retention strategy is absolutely critical to the health and well-
being of the organization and its people.
4.2. Benefits and Value
IBM Cognos software and services deliver value to the world's leading oil and gas
organizations.
4.2.1. Reporting, analysis, and business intelligence
IBM offers the most comprehensive business intelligence and reporting coverage in the industry.
You can use BI software to:
• Measure and manage your performance and get everyone working towards common
goals
• Identify high and low performing areas, fields, and wells, and standardize and automate
oil field testing
• Get a complete picture of acquisitions, dispositions, and operational and financial
variances
• Communicate performance information across the company with enterprise-scale
reporting
• Share information with key partners and suppliers through a BI extranet.

40
4.2.2. Planning, forecasting, and consolidation
IBM Cognos planning and consolidation software improves performance in the key aspects of
your organization. You can use planning and consolidation software to:
• Automate the collection of budget, forecast, and actuals data, identify key drivers, and
apply financial assumptions to build and consolidate a master budget and forecast
• Collaborate among finance, operations, and other stakeholders, reducing budgeting and
forecasting workload and improving strategic analysis and timely decision-making
• Consolidate information from common core applications (reserves, production,
accounting) to conduct proper variance analysis on volumes and revenue
• Understand the implications of increased and decreased production volumes on cash
flow, distributions, income statements, and the balance sheet
• Model distributions and dividends, develop hedging and financing strategies, and manage
acquisitions and dispositions
4.2.3. Scorecarding
Drive corporate performance from your desktop. With IBM Cognos scorecarding software, you
can:
• Monitor key performance indicators, such as lease operating expenses and well
production, to quickly identify potential problems
• Keep an eye on cash flow
• Watch for retirement clusters to plan for succession
• Be notified of supply chain anomalies

41
4.2.4. IBM Cognos Performance Applications
IBM offers analytic applications that deliver hundreds of pre-built reports, metrics, and
connections to standard data sources. Using IBM Cognos Performance Applications, you can:
• Monitor key performance metrics of your extended supply chain to maximize

performance with Supply Chain Analytics
• Analyze your workforce and develop strategies to manage the big crew change with
Workforce Analytics
• Improving performance in the
• upstream oil and gas industry
5. 5.1. IMPROVING PERFORMANCE IN THE UPSTREAM OIL

AND GAS INDUSTRY
5.1.1. Manage assets, accelerate discovery
With mature fields, smaller finds, and more stringent environmental regulations, it’s no surprise
that upstream oil and gas companies are taking a closer look at managing their performance. A
common adage says “what you measure, you can manage.” By logical extension, what you
manage, you can improve. Measuring performance has always been an imperative, both within
your company and externally, to keep analysts and investors informed. This basic step, however,
can be challenging when financial and operational business rules and measures are not consistent
across your company. In this case, taking it to the next step—performance management—is
doubly challenging. But performance management is what lets a company contain costs, manage
assets, and streamline processes. It’s what lets companies excel.

42
5.1.2. The data challenge
The common core applications in oil and gas exploration and production—typically reserves,
production, and accounting systems—serve their purpose extremely well. However, these
systems are often geographically dispersed and do not talk to one another. For example, a well in
a reserve system might be classified differently in accounting than it is in production. Conducting
proper variance analysis on volumes and revenue for that particular well can therefore be
difficult because it requires a consolidated view of data from each system. To consolidate, you
need spreadsheets. But you’re in the business of managing performance, not spreadsheets.
Cognos business intelligence and planning software lets you avoid typically labor-intensive and
error-prone spreadsheets by drawing data from your many systems and bringing it together into a
single view of your entire operation. From there, you can measure and manage your performance
by more tightly aligning your company’s strategy with its execution so that everyone can work
towards common goals.
5.1.3. Budgeting and forecasting
The upstream oil and gas industry’s key budgeting and forecasting processes include gathering
volume forecasts, identifying key drivers, and applying financial assumptions to build and
consolidate a master budget and forecast. To feed these processes, you need an accurate view of
future income statements, balance sheets, and key performance indicators. You also need support
in such areas as modeling distributions and dividends, developing hedging and financing
strategies, and managing acquisitions and dispositions. Handling these processes successfully
helps to ensure the financial and operational health of the company. Most companies today
manage budgeting and forecasting by consolidating files from various applications into a
spreadsheet environment. Keeping up the latest version of the forecast means that operations,
finance, and accounting must all communicate and validate data on an ongoing basis. This
process can be unwieldy because managers must continuously audit the spreadsheets to validate
business assumptions and ward off errors. Management’s confidence in the numbers is
compromised, as is its ability to make the right business decisions in a timely manner.

43
Increasingly, companies are looking to migrate from this environment to a planning software
solution. IBM Cognos 8 Planning simplifies budgeting and forecasting by letting you:
• Automate workflow and aggregation by collecting volume and financial data from source
systems
• Collaborate among finance, operations, and other stakeholders, reducing budgeting/forecasting
workload and improving strategic analysis
• Model the effects of key business drivers, such as commodity prices, against various scenarios
• Quickly understand the implications of increased and decreased production volumes on cash
flow, distributions, income statements, and the balance sheet.
Fig 13.

44
5.1.4. Reporting and analysis
When reserve, production, and accounting data is spread out among purpose-built applications
and dispersed geographically, it is hard to get a meaningful view of a company’s true
performance. To get a complete picture of acquisitions and dispositions, or operational and
financial variances, you need to combine historical and projected volume with accounting data.
You will reach a final “approved” report only after onerous manual processes and many rounds
of informal communication. Companies need to migrate from this environment to a business
intelligence software solution. IBM Cognos 8 Business Intelligence streamlines reporting and
analysis by letting you
• Unify data from reserves, production, and accounting systems into a “single version of the
truth” based on common assumptions (for example, a UWI has a single definition across
operations and finance)
• Consolidate budget, forecast, and actual data to give finance, operations, and other stakeholders
a common platform for timely decision-making • Automate the gathering, reconciliation, and
delivery of data to make organizational resources more
valuable
• Adhere to Sarbanes Oxley and other regulatory compliance initiatives
• Ensure day-to-day activity is aligned with strategic goals.
Fig 14.

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5.1.5. Production management scenario
A production manager checks a high level dashboard weekly to keep an eye on production from
the district down to the well level. The dashboard shows some red lights in the central district.
Drilling down on key production indicators (KPIs) to discover why, the manager sees that the
district is down over 800 barrels a day, a drop of 7.6 percent from the previous week. Which
areas, fields, and wells are causing this drop in production? This view makes it clear that the
production level of one particular well in Field 4 is down almost 27 percent. This well is
contributing heavily to the overall production drop of Field 4. The manager can also analyze this
problem through the lens of financial accounts, budget information, another time period, and any
other dimension relevant to the business.
5.1.6. Cognos in the upstream oil and gas industry
Five of the top seven global oil and gas companies1 use Cognos to gain visibility into their
business, manage assets, and drive performance. A major global oil company saved an estimated
$140 million using Cognos software to focus on customer profitability and retention.
5.1.7. Tying it all together: performance management
Cognos performance management lets you answer your fundamental business questions:
• How are we doing?
• Why?
• What should we be doing?
The questions are interconnected. Knowing what happened without finding out the root cause of
why something happened is of little use to the business. Knowing why but being unable to make
the necessary changes is also of limited value. Business intelligence and planning and
consolidation technologies help you answer all of these questions. Many companies have
embraced the vision of performance management. They understand the value of enabling and
engaging everyone in an organization to manage the organization's performance. They are

46
deploying technologies and solutions to make that vision real. CPM companies know that if they
understand the business, they can manage the business, and by extension improve the business.
5.2. Case Study 1:
The talent crisis in upstream oil & gas
5.2.1. How the Canadian industry can attract and engage future workers
High oil prices and global demand are encouraging oil companies to invest in both conventional
oil exploration and unconventional oil projects. But an aging workforce and a diminishing pool
of new and experienced talent may be hindering growth. The Canadian upstream oil and gas
sector, centered primarily in Alberta, employs about 500,000 direct and indirect personnel, and
oil exploration growth is expected to produce more jobs. By 2010, new oilsands projects will
create about 20,000 new jobs and will require specialized skills — geologists, pipe fitters,
carpenters, welders and project managers. Is the oil patch prepared to meet this demand?
Deloitte has examined the labor shortage in the U.S. upstream oil and gas sector and suggests
that focusing on a new demographic may be the key to enabling growth. In a study entitled The
Talent Crisis in Upstream Oil & Gas, Deloitte Research discusses how younger workers can
contribute to the workforce and suggests specific ways to engage and sustain this demographic.
Though the Canadian oil and gas industry's workforce is about a quarter of the size of the U.S., it
shares similar human resource challenges, and will also have to look to its "Generation Y" pool
— workers born after 1982 who currently comprise 15 percent of the labor force.
"For the past 15 to 20 years there's been a labor shortage in this industry. Alberta's low
unemployment rate, declining number of technical and skilled trades graduates, and lack of
sufficient migration from other geographies impairs our ability to fill the gap with required
skills."
— Dick Cooper

47
5.2.2. The shortage in Canada's upstream oil and gas sector
"For the past 15 to 20 years there's been a labor shortage in this industry," says Dick Cooper,
the Energy & Resources practice leader based in Calgary. He sees emerging demographic,
industry and educational trends contributing to the problem. "Alberta's low unemployment rate,
declining number of technical and skilled trades graduates, and lack of sufficient migration from
other geographies impairs our ability to fill the gap with required skills."
The Canadian industry weathered the consolidations of the past two decades in part because of
its tight labor market — unlike the U.S. industry. "We avoided redundancies from M&A activity
because our smaller talent pool favored retaining these workers' skills," says Cooper. When
layoffs occurred, they resulted from technology improvements within the industry and energy
sector "crashes" in 1986, 1994 and 1998, when oil prices dropped significantly.
The study reports that people's negative perceptions surrounding the oil and gas industry and its
volatility have contributed to fewer new employees entering the oil-patch. "Price fluctuations
may imply a 'bust' in the near future, which makes it difficult to entice new workers into the job
market — even in prosperous times," notes Katie Hester, a Deloitte energy consultant. Moreover,
workers who were previously laid off may be averse to rejoining the now burgeoning sector.
"After downsizing in the 1980s and early 1990s, many young engineers entered the tech sector
instead of oil and gas." As a result, tech companies employ a large share of these skilled
engineers, while the oil and gas sector has many middle-aged workers, with an average age of
48.
5.2.3. The oil-patch is developing labor retention strategies
Canadian oil and gas companies are starting to recognize the urgency, and are beginning to
develop strategies to retain workers. In Fort McMurray, Alberta, Suncor Energy and Syncrude
Canada have partnered with Keyano College's Mine Operations program to "rebrand" the sector
through education and recruiting initiatives. Other oil and gas companies are experimenting with
different approaches — such as flex time and flying workers into the oilsands and back — that
go beyond just compensation.

48
"There is a trend to re-evaluate human resources management within the industry in order to
attract new engineers and skilled trades," says Hester. "There is no single answer to the talent
management issue, so companies must work together toward an innovative attraction and
retention solution," says Cooper.
"We need to create a culture of flexibility to engage and attract Generation Y talent — not just
focus on compensation and incentive strategies as we did with the baby boomer generation," says
Cooper. Cooper and his colleagues are part of a Calgary-based oilsands strategy team that strives
to tackle the industry's daunting challenges. "The companies that understand how critical talent
issues can make or break their business will be well positioned to compete strongly in the oil and
gas industry of the future."
5.3. Case Study 2:

Crisis in the Oil and Gas Industry
A skilled labor shortage threatens to stall the boom in investment and exploration.
In the midst of one of the greatest periods of expansion in its history, the global oil and gas
industry is facing a labor crisis, brought on by years of layoffs, that could jeopardize its future.
Even as companies unveil increasingly ambitious plans to uncover new sources of oil — projects
that have led oil companies to boost capital expenditure roughly 20 percent in the last two years
— the industry has continued to shrink its labor force. And because the shortage is most severe
among specialized workers such as senior scientists and engineers, it will take seven to 10 years
to train replacements to help close the gap. Over the last 12 to 18 months, a confluence of events,
including rising oil prices, planned capital investments, and changing industry demographics, has
stretched industry resources to the breaking point. From rig workers to petroleum engineers,
there’s more work to be done than there are workers to perform it.
The talent challenge is nothing new for an industry like oil and gas, which is subject to wild
market fluctuations. Throughout the 1980s and ’90s, in response to softening oil prices, the
industry laid off hundreds of thousands of skilled workers, many of whom abandoned the

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business altogether in search of more stable jobs. Accordingly, recruitment of new employees
plummeted, and fewer and fewer university students were entering petroleum engineering
programs. Now the industry is paying heavily for its shortsightedness. The average oil company
employee is nearly 50 years old; in the next decade, more than half of the industry’s employee
base will retire, leaving behind a massive void of skilled workers. “There has never been a time
when our industry so needs outstanding talent,” said Rex Tillerson, chief executive officer of
ExxonMobil. To meet its escalating needs, the industry will have to transform the way it
develops its labor force.
Even now, companies are scrambling to fill critical positions, with many paying exorbitant
salaries to lure highly skilled employees away from rival firms, and implementing short-term
solutions such as delaying retirement and rehiring retired employees. In hot spots such as
Canada’s Athabasca oil sands region, where billions of barrels of oil are thought to reside in the
ground, engineers and workers are relocating from as far away as Mexico and China to join the
labor pool. The Canadian government has even offered citizenship to foreigners working on the
project as an incentive to attract and retain skilled workers. Yet, few believe these tactics provide
a blueprint for future success.
To move beyond the vicious cycle of laying off workers each time the price of oil drops or
paying exorbitant sums to poach existing talent, companies are recognizing the need to refine
their human resources strategies to focus on the underlying problems. The process starts by
determining the company’s hiring needs for the next 10 years and aligning hiring practices with
those needs. A sound human resources strategy must also ensure that existing employees
maintain the critical skills necessary to keep the company competitive. Of course, overhauling
human resources practices is not always easy: When BP set out to improve its hiring and training
processes, the exercise led to a complete restructuring of the company’s HR team, including the
replacement of more than 60 percent of the company’s senior HR staff.
With a clear internal strategy in place, companies can then focus on replenishing the workforce.
Both Shell and Exxon have recently invested in global training centers to provide hands-on
experience to thousands of recruits. With the ability to train nearly 10,000 students annually, the
two companies hope their training facilities will attract bright young scientists and engineers to

50
the field. BP is following suit, partnering with the Massachusetts Institute of Technology (MIT)
to build a career development program for new employees.
Companies must also develop retention strategies. These include helping workers develop
specialized skill sets and focusing on the work–life balance. Such planning requires that leaders
ask themselves and their colleagues the right questions to get a sense of organizational
advantages and shortcomings. Are line managers and team leaders encouraged to actively
develop staff? Do human resources and technical and operations teams work together
effectively? Are we seen by potential workers as the employer of choice? Each of these questions
needs to be addressed within the organization. These talent-retention questions have the potential
to reshape the market and even drive consolidation if companies can’t find the skills to embark
on critical projects.
Although it may be difficult to get there, the goal is simple: find a better way to manage the
industry’s most valuable asset — its talent. If companies can continue to build partnerships with
universities, invest in new recruits via company-funded training programs, and overhaul current
human resources practices, it will be possible to avert another labor crisis before it begins.
Although it may take time, abandoning the reactionary labor practices of years past and focusing
instead on realistic hiring goals for the next decade could eventually correct the current labor
shortage and strengthen the industry for years to come.

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6. Conclusions
The impending talent shortage, and potential resulting loss of institutional knowledge, has
created an urgent need for companies in the upstream oil and gas industry to evaluate and update
their approach to recruiting, developing, deploying, and connecting their people. To replenish the
workforce pipeline, such organizations must work to understand the values of the incoming
generation, and then carefully rethink their strategies for attracting and engaging these young
entrants. Furthermore, they must communicate their organizational philosophies through
effective branding, role development, and rewards programs. Following is a short survey, which
serves as a guide to self assess employer readiness for Generation Y:
1. Are you familiar with the concept of corporate identity/ brand? What are the solutions you are
currently working on, or have already implemented, to evaluate, improve, and market corporate
identity/branding?
2. Do you think the performance review process that you are currently using is effective? Do you
offer formal mechanisms for employees to create and modify their career paths beyond yearly
performance reviews?
3. Do you offer formal mentoring programs? Are you familiar with the term “reversed
mentoring?” If yes, would your company be a good place to implement a reverse mentoring
program?
4. What are the opportunities your company offers to employees to network across divisions and
hierarchy?
5. Do you offer employees choice in their benefits, rewards programs, and work structures? If
not, why? If you are, how is it done?
6. Do you leverage technology in recruiting and organizational communication? Based on your

knowledge, what do you think is the most successful way to recruit new talent?
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1.

OVERVIEW OF OIL & GAS INDUSTRY

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1.1.1. Leverage the digital oil field

1.1.2. Streamline and regulate financial processes

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1.1.3. Manage the big crew change

1.1.4. Maximize supply chain efficiencies

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2.1. Rationale of Study

2.2. Objective of the Study

• To identify the challenges of talent management in oil & gas sector.

2.3. Scope of research

• To determine the importance of talent management in employee management and

2.4. Type of Research

2.4.1. Research Design- Descriptive research

• Internet, magazines, Infraline, newspapers, Journals

Low availability of secondary data

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• Sourcing, attracting and recruiting qualified candidates with competitive backgrounds

3.1. TALENT MANAGEMENT CHALLENGE IN THE OIL AND GAS INDUSTRY

…over the next decade, attracting and retaining

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As one independent oil company representative

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Although most companies do not aspire to be

University of petroleum and energy studies

2. Fewer experienced candidates. Competition is increasing for an insufficient supply of

4. Difficulty attracting entry-level talent. Although there is expected to be an adequate supply of

3.1.2. Wanted: top-down talent management

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3.1.3. Source and Recruit

3.1.4. Develop and Manage

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3.1.5. Reward and Retain

3.1.6. Oliver wyman’s approach to talent management

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University of petroleum and energy studies

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University of petroleum and energy studies

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University of petroleum and energy studies

3.2.2. The Talent Conundrum

3.2.2.1. Industry Consolidation

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3.2.2.3. Industry Cyclicality

3.2.2.4. Aging Workforce

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3.2.2.5. Diminishing Enrollment in Petroleum Engineering and

1) short term jobs versus careers;

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3.2.3. Targeting Generation Y

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3.2.4. Communicating to Generation Y: Branding and Identity

• Branding and Identity

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A) Branding and Identity

How do these strategies target Gen-Yers?

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