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For upstream oil and gas companies, today’s economy is a matter of good news and bad news. The industry is experiencing a significant growth cycle and many companies are seeing double-digit growth. But to fuel this success, oil and gas companies require a specialized workforce to bring their products to market.
Industry studies reveal that the existing workforce is rapidly approaching retirement age and the numbers of new college graduates with the necessary skills are at record lows. As a result, company executives often find themselves embroiled in a critical battle with other companies to attract and retain highly skilled people. Moreover, executives must also identify and develop the potential of their in-house talent. Increasingly, human capital management (HCM) is a top priority for executives who realize that their workforce is a source of competitive differentiation and the key to achieving their business goals. Forward-looking companies are focusing on strategies to retain the value of current employees while attracting the best of the available talent.
This SAP Executive Insight examines how your company can win the war for talent by answering the following questions:
- What challenges do today’s upstream oil and gas human resource (HR) organizations face?
- What is the specific impact of these challenges?
- How do best-run HR organizations achieve leading performance?
Key Challenges in the Oil and Gas Industry
The upstream oil and gas industry operates in a complex environment where companies are confronted by:
- The critical need to replace reserves
- Growing competition in the marketplace
- Declining margins
- Pressure to maximize return on capital employed
- Environmental and safety issues
- Segment consolidation
An increasing number of oil and gas executives recognize that these challenges can only be met by maintaining a skilled workforce and executing effective talent management.
Rethinking the Role of HR
A company’s HR organization is at the center of any business strategy to win the war for talent. To help deliver business results, the effective HR organization must transform itself from a service provider to a strategic business partner. As such, HR organizations are being asked to further integrate with engineering, production, project management teams, and contractors to drive optimal results on a global basis. The roles of the today’s leading-edge HR organization include:
- Establishing aggressive recruitment goals to address the fierce competition for the most talented resources
- Increasing retention rates of highperforming employees
- Accelerating employee development and time to productivity
- Establishing an infrastructure for safeguarding of structured documentation and transfer of knowledge from the aging workforce to the new talents
This transformation, however, often requires both a shift in mindset and the implementation of supportive technology. HR organizations must adopt the technology, business processes, and organizational best practices necessary for success.
Blueprint for Success
The Americas’ SAP Users’ Group (ASUG) and SAP established a benchmarking forum to examine the dynamics of HR organizations and the challenges faced by their managers. In a recent study, ASUG/SAP found that leading HR organizations: - Focus on results versus effort. Effective HR organizations link HR programs to specific business outcomes.
- Build a performance culture. These organizations also integrate the talent management process with their companies’ operational processes.
- Develop a global people strategy. This strategy promotes sharing of best practices and supports rapid learning and collaboration.
- Establish a career-planning process. Successful organizations enable employees to grow within the company and maximize their value at each career stage.
The results of this benchmark study are clear. Interdependent processes, automation, and the integration of HR and business solutions can reduce the cost of delivering basic HR services. Additionally, this approach can eliminate information and communication barriers while freeing up resources to support an integrated talent management process.
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