Financial results are booming in the oil and gas industry, but climate-change-driven opposition to energy companies has driven away young talent. Industry players need a board-level focus on human capital and inclusivity if companies are going to solve what’s turning into a leadership crisis.
Let’s say it out loud: Younger workers are avoiding energy careers because of companies’ perceived indifference toward pollution and climate change. Experienced talent largely stays away too, put off by what they view as limited opportunities in an insular, male-dominated world coming under ever-increasing regulatory pressure.
The irony is that a good – and growing – share of oil and gas companies have strong green agendas. And with sustainability as the watchword at those companies, innovation and engineering have never been more important.
But industry players just haven’t been very good at communicating that story to prospective employees.
The outline of the new story should go something like this: New talent – whether experienced or newly graduated from college – has the chance to work in a dynamic environment to meet challenges and solve problems of the utmost importance to the world. It’s an industry that’s transforming itself to meet future global demands in an increasingly environmentally friendly way, and the rewards for those who help tackle the challenges will be significant and long-lasting.
But before companies can drive that story through a communications or PR offensive, they’ll need to tackle some long-standing industry troubles first. The first is the rollercoaster ride of hiring and layoffs fueled by commodity price fluctuations. And the second is broadening the prospective future talent pool by changing what has been an unusually white, male-dominated management structure.
Those kinds of significant changes will have to start at the board level. Boards need to realign incentives, focusing more on stakeholders rather than shareholders alone, as has been the custom in this most traditionally freewheeling and financially driven industry.
The feast-or-famine mindset that seems to govern the industry’s history places a high value on executive bonuses during good times, only to see that money disappear when prices plunge – which they always do. Boards and their executive teams need to work together to build incentive systems for both management and engineering staff that are focused on longer, full-cycle goals that can be written into employment contracts. When prices slump temporarily, no future-focused energy company should lay off coveted talent to meet a quarterly earnings target.
Boards can also help shift a cultural dynamic that’s been evident well over a hundred years in the energy industry: Departments at all levels need to embrace diversity in the workforce in a bid to form a broad pipeline for future leadership. That pipeline is currently simply too narrow, with the industry suffering from a legacy practice of recruiting talent mainly from a very narrow set of universities.
To address the boom-bust mentality’s damage to the leadership pipeline, companies should consider changing their thinking on how they handle middle managers during cycles of growth and decline. That talent level has largely been considered expendable on the downside and replaceable on the upside, creating a narrowed set of interested applicants and lowering loyalty once on board.
My belief is that every significant industry player needs a seasoned human capital executive on their board. Such a director can influence recruitment and retention practices, particularly of women and people of color, who are massively underrepresented in energy. (Women, for instance, account for only 22% of employees in the industry.)
While energy companies undoubtedly do sell products seen as driving climate change, they can highlight the amazing strides they’ve made in renewable energy and carbon-capture technology. Most large companies have made significant inroads in solar, wind and electrification, but it’s still little-known outside the industry. For example, Shell, the second-largest oil company in the world, purchased one of the biggest public electric vehicle charging networks in the U.S. earlier this year.
Energy companies could stand to be more relevant among their recruiting base. That might mean upgrading from a pay phone image to a smartphone image. Why should a millennial or Gen Z-er leave their current job for a role in the oil patch? Giving them challenges they crave – above all, to be innovative and create sustainability – is an obvious, but often overlooked, tactic.
The younger generations prize authenticity. Companies can capitalize on that by acknowledging they haven’t figured everything out yet, but they’re interested in doing so.
In short, a rebrand for the industry is in order. That will take some new thinking and tactics that industry HR practitioners aren’t used to – whether that’s creating fewer stiff portrayals of the industry for TikTok videos or highlighting the successes of young workers in an Instagram series. That type of outreach may be uncommon for energy companies, but it’s what most other industries are doing to vie for talent that’s in short supply.
This is the shakeup the industry needs if it wants to not only attract talent, but also to drive innovation, sustainability and profits. Neither is possible without a new generation of talent or experienced executives who can reimagine the industry for the big changes on the horizon.