Personnel Decisions: Cost Benefits And Opportunities For the Energy Industry
Authors: Janz Tom 
Published: March 2010

This article reviews current practice in personnel decision making in the energy industry, outlining the conditions under which it developed. Changes in today's environment are noted and the utility equation is introduced as an aid to understanding the dollar impacts of these changes. Recent developments that make it possible to tally up the dollar benefits of alternative recruitment and selection programs are explained. Results of utility analyses for the job of roughneck, c1erk.typist and assistant buyer are presented. The discussion points to human resource investment likely to have high net benefits and favorable return on investment for the energy industry.

Introduction

A recent article in this Journal(l) outlined human resource challenges facing energy industry managers. This article concerns the first one, the challenge of attracting, retaining and effectively utilizing human resources. Managers may long for the days when their biggest human resource problem was one of talking the few qualified applicants available for specialized or technical openings into accepting an offer from their organization. When the number of applicants approaches the number of openings, the personnel decision maker has few choices anyway. Those days are over for now at least, and today's challenges ask much more of the personnel decision maker. Now, sometimes many qualified applicants are available for new positions, vastly increasing both the opportunity for selecting top-notch performers and the bottom- line payoff that comes with hiring the cream of the crop. Unfortunately, personnel decision makers are also faced with the necessity of managing human resource reductions. The principles are the same, as is the opportunity to waste vast amounts of human capital. This paper is focused mainly on the process of bringing, new talent into the organization or Human Resource Acquisition (HRA), but the relevance to human resource reduction is also discussed.

Structurally, section one reviews current human resource acquisition practice in the energy industry. Section two briefly outlines analytical techniques. Section three opens with a first look at applying the utility equation to the job of roughneck on an oil rig. Results of applying the utility equation to two other industry related jobs follow. Section, four offers recommendations for bringing HRA programs into line with their impact on the bottom line.

Current Practice

It is useful to break spending on HRA into two main types:recruiting andselection.

Although they are often used interchangeably, recruiting is the process of generating an applicant pool. Selection is the process of gathering information from the applicants leading to decisions about who to hire. From recent discussions with energy industry personnel managers, there is a clear trend to spend the bulk of the HRA budget on the recruiting side.

It is also useful to break spending down further into R&D and production. By this, I mean to distinguish money spent to develop new recruiting strategies (R&D) from money utilized in carrying out tried and true strategies (production).