the capability crunch the battle for resources 23 november 2010 – robin pinchbeck
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The Capability Crunch the battle for resources
23 November 2010 – Robin Pinchbeck
Agenda
• Petrofac
• Context for our industry
• Generation X & Y
• Our approach to recruitment & retention
• Petrofac’s employment proposition
Petrofac
• A leading provider of facilities solutions to international oil & gas industry
– 30 years’ experience supporting oil & gas production and processing
– Successful track record of several hundred projects
• We design and build oil & gas infrastructure; operate, maintain, and manage facilities and train personnel
• Where we can leverage our service capability, we develop and co-invest in upstream and infrastructure projects
• Our key markets are the Middle East and Africa, CIS and Asia Pacific and UK Continental Shelf
– these markets account for 70% of the world’s proven oil reserves and 85% of proven gas reserves
Finding Petroleum: The Capability Crunch
Focused on growth…
Revenue – US$ millions
391‘02
• 13,000+ employees • listed LSE• market cap. approx. $8bn
Finding Petroleum: The Capability Crunch
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Oct
-05
Apr
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Oct
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Apr
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Oct
-07
Apr
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Oct
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Apr
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Inde
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Pric
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609%
7%27%38%
672%
Source: FactSet as at 4 November 2010
Petrofac FTSE 100OSX FTSE 250Petrofac + EnQuest
Indexed share price performance since IPO
Finding Petroleum: The Capability Crunch
Operating locationsMilan
Abu Dhabi
BeijingLondon
Woking
Aberdeen
Moscow
Doha
Houston
Sharjah
Mumbai
Chennai
Jakarta
Kuala LumpurLagosAhmadi
Algiers
Tunis
Damascus
Bishkek
Khartoum
Atyrau
Sakhalin
Khobar
Main operational centres
Other operating locations
Corporate services
Finding Petroleum: The Capability Crunch
Petrofac “DNA”
• entrepreneurial culture with leadership close to the detail
• a focussed business in terms of offering and geography
• high employee ownership, yielding high project ownership
• a willingness to take (and manage) commercial risk, beyond the appetite of peers … AND to do things differently
• high confidence to deliver ‘on the ground’ where we work using:
- local resources and supply chain to deliver to international standards
- our contacts and cultural affinity
• risk identification and management followed by a relentless attention to detail in execution
Industry and Social Context
Finding Petroleum: The Capability Crunch
• Over half the world's energy is currently sourced from oil and gas and this is forecast to rise towards 60% in 2030
• Even if the UK achieves its objective of sourcing 15% of its energy from renewable sources by 2020, it will still rely on oil and gas for 70% of its energy, roughly the same proportion as today
• The maturity of Western economies is linked to lower birth rates and fewer graduates just as companies are striving to expand into new markets in developing countries
• The whole industry faces some stark demographics:– Around 50% of professional E&P staff are aged between 40 and 50 – Only 15% are junior recruits aged between early twenties and mid-
thirties– Up to half the current workforce is likely to retire within the next ten
years• Pressure to replace skills is most likely to be felt in the technical side of the
business, where shortages are more acute and the demands from the business more intense
Oil Industry
Finding Petroleum: The Capability Crunch
Social Context
• Whilst oil and gas industry people needs will continue to grow over next decade, too few people have entered during past 25 years resulting in shortfalls of talent
• In particular there is now a critical shortage of middle managers in positions to succeed those in senior leadership teams, who will be retiring in next 5-10 years
• Universities across Western world are not graduating enough engineers to take care of their domestic needs, never mind producing a large expat population
• Need to look across world for future intakes as some countries are producing a surplus e.g. China
• Industry faces critical challenges both in terms of:– quantity of people in those locations where they are needed – and quality of new entrants overall
Finding Petroleum: The Capability Crunch
• The energy industry is unique in:– diversity and scarcity of abilities and expertise needed to make things
happen, and – far-flung locations where cream of those highly specialised skills are
required• Energy projects commonly involve project management and design in one
location (often in the West), with construction in Asia, and final stages taking place in Africa, China or Australia
• Consequently, project management and technical personnel must be able to move freely between continents to execute each project phase
• Therefore companies servicing the oil industry require immigration and employment policies that allow overseas professionals ease of passage
Social Context
Finding Petroleum: The Capability Crunch
Demographic Challenges
• Generational differences have real implications on how employers and employees interact
• Each generation brings a different set of attitudes to the workplace• Organisations need to respond to these different attitudes if they are to
attract and/or retain talent from each generational group• Generation X (those experienced professionals currently in middle
management positions looking to progress) are most notably in short supply
Finding Petroleum: The Capability Crunch
Demographic Challenges
Traditionalists
(Born 1922-1945)
Baby Boomers
(Born 1946-1964)
Generation X
(Born 1965-1980)
Generation Y
(Born 1981-2000)
Work Ethic/Values Hard work
Respect authority
Adherence to rules
Work efficiently
Desire quality
Question authority
Want structure and organisation
Sceptical
Multi-tasking
Entrepreneurial
Goal-orientated
Leadership Style Directive
Command and control
Consensual
Collegial
Everyone is the same
Challenge others
The young leaders’ century
Interactive Style Individual Team player
Loves meetings
Entrepreneur Participative
Communications Formal
Written
In person Direct
Immediate
Voicemail
Feedback and Rewards
Satisfaction in job well done
Don’t appreciate feedback
How am I doing?
Freedom = best reward
Whenever I want it at the push of a button
Meaningful work
Messages that Motivate
Your experience is respected
You are valued and needed
Do it your way
Forget the rules
Working with other bright, creative people
Finding Petroleum: The Capability Crunch
Generational attitude differences
• Baby Boomers (born worldwide 1946-1964)
– Place more emphasis on work as an anchor in their lives
– Tend to be loyal and stay for long periods with one employer
• Generation X (smaller population born 1965-1980)
– Typically more organisationally cynical than the previous generation
– More likely to change jobs if they see more rewarding roles (compensation and career progression)
• Generation Y (born 1981-2000)
– Nearly as large a group as the Baby Boomers but driven by different values, life experiences and high expectations
– Technologically savvy, highly networked with friends and colleagues, and used to instant communications
– Place more importance on job content, sense of purpose, career path and training, communications and work/life balance
An example of our developing approach to knowledge retention
Finding Petroleum: The Capability Crunch
Petrofac Graduate Development Programme websitePetrofac Graduate Development Programme website
• Designed to be an online base for the graduates
• They can hook up, share information, discuss topics, etc
• They can access it whenever and wherever they want to
• Track their progress and learning
Finding Petroleum: The Capability Crunch
Learning from ExperienceLearning from Experience
The knowledge of the retiring generation is at worst lost or at best captured in an inappropriate or irrelevant way
Around 50% of E&P staff are between 40 and 50 years old and will retire within the next 10 years.
The pressure is on to up-skill younger technical staff
Finding Petroleum: The Capability Crunch
Learning from ExperienceLearning from Experience
The Petrofac wiki on the Graduate Development Programme website is used as a knowledge repository and is built, used and updated by the graduates
Finding Petroleum: The Capability Crunch
Learning from ExperienceLearning from Experience
The group meet with ‘experts’/senior staff and learn from their experience and knowledge
Finding Petroleum: The Capability Crunch
Learning from ExperienceLearning from Experience
Each graduate captures what they have learnt and adds to the wiki to expand upon what others have added
Finding Petroleum: The Capability Crunch
Learning from ExperienceLearning from Experience
Other groups can access the wiki, learn from others’ experiences, update/add to the information and help the knowledge repository grow
Finding Petroleum: The Capability Crunch
and share this knowledge on the Wikiand share this knowledge on the Wiki
Finding Petroleum: The Capability Crunch
Petrofac’s business is competence provision
• We’re asset-light: our main assets really do leave the buildings every night
• Our growth is built entirely on people:
– recruitment and retention are absolutely critical and strategic
• All levels of management (including executive management) spend significant amounts of time interviewing, selecting and enrolling talent
• We think our culture differentiates us
– and the only way this can be “sold” is movers and shakers looking candidates in the eye
Finding Petroleum: The Capability Crunch
Petrofac’s employment proposition
• Petrofac is a pure meritocracy; no one nationality predominates and our leadership is very diverse; there is no identifiable corporate nationality
• A large proportion of our employees (nearly one third) are shareholders
– we think this is fundamental, and we strive to increase
• We promote from within, but also require a lot of external mature recruitment
– and therefore, have to achieve rapid cultural assimilation
• We reward the creation of wealth & pay for performance
• We articulate clear values and these guide our recruitment and selection processes, as well as the everyday conduct of business
• We believe individuals really make a difference
Petrofac is still led by founders, which differentiates us from many competitors in the battle for talent;
Our challenge is to keep the core DNA intact and developing healthily
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