© 2010 deloitte touche tohmatsu india private limited the big crew change in indian oil & gas...

© 2010 Deloitte Touche Tohmatsu India Private Limited

The big crew change in Indian oil & gas industry

A Strategic Imperative

November, 2010


Agenda

• Current issues and myths

• Global trends and starting point

• Succession planning

• Building periodic table of talent

• Enterprise Talent Maturity Model

• Leading talent practices

• Q & A

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© 2008 Deloitte Touche Tohmatsu

Current Issues


Mid level headcount is not sufficient

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Average age of people with specialised skills in Indian oil and gas public sector: 50+

India’s average age: 27

Around 80-90% of senior workforce (top executives) will retire in next three years in some of the public sector oil & gas companies.


Identifying decision makers of tomorrow from today’s younger workforce

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Building a continuous pipeline of quality talent

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Result oriented Industry-Academia Interaction

People with more than basic understanding of industry


Motivating people to preserve tacit knowledge

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• You just can’t replace a resource by hiring from an available pool

• Strategic alignment and governance is important than the tool

• Change management becomes the enabler


Some other issues from human capital perspective

According to a study conducted by SPE in 2006, the global E&P petro technical strength was expected to be around 375,000. Considering the rapid rise in global E&P activity the total deficit of the suitable skill is estimated to be around 30,000 professional by the year 2012.

Increased E&P Activity

Low Industry Awareness

Low Industry Attractiveness

Better Overseas Opportunities

Negative Public Perception

Industry Cyclicality

Lateral Hiring

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Myths


Indian oil & gas industry requires couple of thousands fresh science and engineeringgraduates with oil and gas specializations.

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It requires people with at least 3-5 years of experience before they can contribute qualitatively at the starting level.

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There is a huge shortage of people in oil and gas industry in India.

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It is actually a shortage of methodologies. e.g., one can hire laterally from other closely related industries.

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There is a huge deficit of people who understand highly technical approach.

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It’s actually lack of knowledge and technology outsourcing.Learn from best practices of other industries (e.g. telecom)


The Starting Point


Global Talent Market Trends – Supply/Demand and Changing DemographicsThe pressure for talent is precipitated by declining Western birthrates and accelerating retirements. Yet a truly global labor pool is emerging, enabling companies to harness talent from all around the world

Continued emphasis is being placed on creating and managing diversity in the workplace, including gender, ethnicity, and sexual orientation

North America

From 2000-2020, minorities and immigrants will account for 85% of the projected net growth in the workforce, especially at the younger end.4

In this decade, the total number of Asians in the U.S. workforce will grow by 44%, Hispanics by 36%, African Americans by 21%, and Caucasians by only 9%.4

61% of women work outside the home and nearly 80% in the 25-54 age range.4

Gays and lesbians are twice as likely to have graduated from college. 5

Africa

Has the longest “window of opportunity” and the highest ratio of potential workers to dependants, where older persons represent just 5% of the population and children compose 41%.5

Australia

More than 50% of the workforce in both Sydney and Melbourne have skilled, creative classes7

E. Asia and the Pacific

Geographic mobility can broaden opportunities for young people.3

In China, 118M rural youth have sought employment outside their home villages.3

In less than ten years, the number one English-speaking country in the world will be China.

Europe

By 2010, less than 20% of the full-time workforce will be made up of white, able-bodied men under 45.1

From 2010, the number of young people reaching working age is expected to fall by 60,000 each year, creating a net shortfall of 2.1M employees.2

Southeast Asia

Women account for 2/3 of the jobs in the export industry, the region’s most dynamic sector. 6

Latin America

With female participation in the workforce at an all-time high, 60% relate not entering or leaving the job market to inflexibility with their roles as mothers and caregivers.1

Sources:1 Work Foundation and Future Foundation, 20032 National UK Skills Task Force and City and Guilds 2006

3 World Bank World Development Report 20074 U.S. Census Bureau, 2000; EPF Annual Workforce Report

5 2007 United Nations Report6 Financial Times (10/3/06)

7 Harvard Business Review (10/04)

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Succession Planning – Leading Approaches

Identify external talent that may

be a potential fit

• Identify organizations within your industry, at direct competitors or in relevant private sector organizations that are a potential source of future hires

• Work with your recruiters to identify key individuals to build a relationship with

Build a long-term

relationship

• Begin getting to know potential future hires at professional events and associations• Stay in touch with strong former candidates who previously passed up your offer• Get to know their career goals, their existing career frustrations, and their dream jobs

Analyze potential

derailment factors

• Talk with past holders of the CEO position (and feeder positions) to determine what they struggled with on the job

• Use historical performance data (for internal successors) and feedback from the selection process (for external successors) to understand individual needs and risk areas

Bolster the surrounding

environment to support the successor

• Evaluate the position’s direct reports and ensure they are strong, supportive of, and invested in the successor

• Design or modify on-boarding programs to address derailment factors• Facilitate key stakeholder relationships; Assign internal mentors or coaches

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Succession PlanningBe Overt…• Today, most organizations are informing their employees about their succession plans

and keeping them engaged in the process. This includes making practices more transparent to a larger group of decision makers as well as the high-potential candidate group

Cons to Transparency

Those who are not in the program may feel unhappy

and unvalued

Pressure to be included in the program could take up significant management

and HR time Open communication

makes program candidates feel good about themselves & increases retention

Consistent, job-related selection criteria will give those not in the program something to work toward

Transparency creates an image of a progressive

organization

Leaders will accept employee transfers and special projects

as part of a larger plan

Prospective employees will see the organization as

one that cares about its people

Donors and funders will be assured that executive continuity

is a high priority

Managers will be encouraged to

nominate & develop the best

candidates

Pros to Transparency

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Defining the Critical Workforce Segments A real game changer

• Typically, a small percentage of the roles in an organization make a disproportionately large contribution to the achievement of the business strategy

• Talent solutions designed around CWS

• Requirements create competitive advantage by:

‒ Maximizing the attraction, development and retention of workers who create the most value

‒ Creating more focused and efficient hard and soft dollar investments

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Develop – Deploy - Connect

“Develop,” means providing the real-life learning employees need to master a job

“Deploy,” means working with key individuals to (a) identify their deep-rooted skills, interests, and knowledge, (b) find their best fit in the organization, and (c) craft the job design and conditions that help them to perform

“Connect,” means providing critical employees with the tools and guidance they need to (a) build networks that enhance individual and organizational performance and (b) improve the quality of their interactions with others

The Develop-Deploy-Connect model should be at the core of an organization’s talent strategy. By focusing on these three elements, organizations can generate capability, commitment, and alignment in key workforce segments, which in turn improve business performance

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The Periodic Table of TalentStrategy, Solutions, Catalysts, Infrastructure

Strategy:

• Clarity on Company’s top business priorities• Critical Workforce Segmentation• Using talent dialogue to link business & talent strategies

Solutions:

• Identify top needs for core & differentiated solutions • Assign responsibility for solutions delivery• Build talent dialogue & clear metrics

Catalysts:

• Redefine talent priorities• Drive dramatic improvements

Infrastructure:

•HR infrastructure, technology upgrades

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Knowledge Intensive Management Framework

• In oil and gas industry, knowledge is power and it is difficult to motivate employees to collaborate and share knowledge

• Employers need to create or recreate the framework for knowledge management

• Creating a governance structure with clearly defined roles and responsibilities is essential to defining, driving, controlling and overseeing the successful implementation of knowledge management

• Effective governance translates executive decisions into company-wide behaviors and ensures adherence to knowledge management practices

• KM framework should also be suitably linked to a financial incentive system

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Knowledge retention before it walks out of door

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KM framework: strategic alignment makes it happen

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Workplaces of tomorrow…

The Workplace of Tomorrow (WPoT) is a modern work environment that supports an organization’s current

and future business requirements and the realities of today’s evolving workforce in a cost-effective manner.

It should:

• Improve overall employee productivity and mission performance by leveraging modern technologies to help address business demands and differences in generational expectations for the work environment

• Make effective in-flight and planned investments in technology by adopting a holistic approach to outfitting the modern worker, taking into consideration workforce patterns, enterprise-wide impacts on the supporting infrastructure, technology advances, and opportunities for efficiency/economies of scale

• Reduce costs to maintain the physical workplace by “delinking” space consumption from headcount. This can be achieved by enabling increased mobility and moving away from the concept of dedicated workspace as an entitlement. Focus on creating a culture that encourages employees to work in shared workspace environments where physical workspace is always utilized and never empty

• Redirect resources from technology optimization and facilities cost reduction to improve core mission performance and fund innovation. Support enterprise sustainability and compliance with legislative mandates by reducing the organization’s carbon footprint and enhancing “green” attributes of the workplace.

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Enterprise Talent Management Maturity Model

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What are the potential triggers for staying back?

Source: Recent Deloitte survey in APAC

A “tale of two mindsets” exists between employee desires and employer priorities. Corporate leaders and employees who participated in these surveys share little agreement when it comes to understanding which key employees are leaving, why they want to leave, and what it would take to keep them

Data suggests that, on many of the factors that are crucial to retention, what employers see as important may not be what employees are most concerned about. And the priorities employees see as vital are lower retention priorities for employers

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Examples of market leading talent practicesNorwich Union: ‘Talking Talent Assessments’

A Talking Talent conversation is held every six months between line managers and their people. These conversations

help to assess an individual's performance over time and their learning agility. Both the employee and the line manager

pull together an assessment based on a set of criteria related to learning agility. Line managers go through training to

enable them to have quality conversations. The outputs of the initial assessment are then processed in a round table

levelling process and then fed back to the individual.

Google: ‘10 things Google has found to be true’

Google’s founders built their company around the idea that work should be challenging and the challenge should be fun. To

keep the fun element, Google offices are peppered with lava lamps and large rubber balls, sweet jars and games rooms. In

a list of “10 things Google has found to be true” the company states, “Give the proper tools to a group of people who like to

make a difference, and they will.” The company provides free food in the canteens, with an emphasis on fresh and

nutritious meals, gym membership, massages, yoga classes and now free bikes, all in a bid to keep staff healthy and

productive.

Deloitte: ‘Focus on Employer Brand’

Deloitte has a separate vision for talent - 'To make Deloitte a great place to work, one where you grow faster than you

think you are capable of growing.‘ A number of factors ensure that Deloitte is a recognised as respected brand to work for

- personal growth, a fair deal and leadership.

DEVELOPMENT

ATTITUDES & CULTURE

INNOVATION

EMPLOYERBRAND & EVP

Marriott: ‘Awards of Excellence’

One of the company founders, J. Willard Marriott, had the adage, "if you take care of your associates, they will take care of

the customer, & the customer will keep coming back...“. The company's Awards of Excellence program is one of the ways

Marriott celebrates the associates & business units that exemplify this spirit to serve the customer, community &

coworkers.

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American Express ‘Sabbatical Program’

A sabbatical program is offered to those employees who have worked for American Express for five years. The program

gives employees the chance to work for not-for-profit organisations whilst receiving full pay.

© 2010 Deloitte Touche Tohmatsu India Private Limited27

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This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s) and accordingly is not intended to constitute professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser.

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©2010 Deloitte Touche Tohmatsu India Private Limited.

Member of Deloitte Touche Tohmatsu Limited


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