Adopting Analytics to Effectively Manage Workforce Needs
Authors: Isherwood Ryan , Seale Michelle 
Published: February 2015

Talent & Technology

Oil and gas companies have increasingly relied on complex data to delve into the Earth’s geology and find energy resources thousands of feet below the surface. They have turned to numbers when analyzing prospective acquisitions, capital expenditures, and other investments. Yet, when it comes to managing their workforce, oil and gas companies have not adopted the quantitative rigor that they use so effectively across their business.

At a time when technological innovation and globalization are ushering in a new era of industry growth, large segments of the workforce are reaching retirement age, and with potential recruits from educational institutions remaining scarce, the competition for talent can now be as significant as the focus to find new resources.

Leading human resources (HR) organizations in the oil and gas industry are starting to effectively use data analytics to help identify, recruit, retain, and develop skilled talent. By blending internally available data with external statistics and information related to the labor supply, these HR leaders are positioning themselves to effectively manage changes brought forth by this volatile operating environment.

Managing a Moving Target

Oil and natural gas plays have been as fickle as fashion in recent years, due in large part to technological advances, such as horizontal drilling, combined with multistage hydraulic fracturing, which have given companies access to previously unattainable or uneconomic resources. The dramatic changes in the quantities, locations, and price volatility of the hydrocarbons unlocked by technology create a significant challenge in aligning human capital resources with the various market demands.

This challenge is tough for companies with balanced portfolios of natural gas and oil assets; they can theoretically shift manpower from one side of the business to the other as market conditions warrant, but it becomes much more difficult as volatility increases. The challenge is even harder for companies with a heavy tilt toward either oil or gas, as market swings may force them to reach outside the organization to staff up quickly in one area, while needing to right-size the workforce in other areas.

Adding to this complexity is a shrinking pool of available talent. A wave of older workers is reaching retirement age, and universities in North America and Europe are not producing enough skilled graduates to replace them. In addition, workers are increasingly mobile and technology advancements continue to change both the type of work and where it can be done. These factors are exacerbating the war for talent by extending competition beyond local, and even national, labor markets.

In the past, annual estimates of workforce needs proved sufficient. Now, the need for certain skills can change dramatically over the course of a year. The degree to which HR organizations anticipate these changes can spell the difference between being ready to support the company’s growth or inhibiting it due to a lack of skilled people.

Some in the industry have advanced their workforce planning in recent years by turning to resources such as enterprise resource planning systems to compile more data on their existing talent. But many HR leaders have been unable to distill such data into useful and actionable information. As a result, some have turned to blunt instruments, such as pay increases and competitive incentive awards, which have shown to be no silver bullet when trying to acquire or retain talent.