Issues & Challenges of Talent Management in Oil Industry

1. Issues & Challenges of Talent Management In Oil &Gas Industry Issues & Challenges of Talent Management in Oil Industry

2. Talent Management O&G Industry Talent Management is simply a matter of anticipating the need for human capital for the business and then making a plan to meet it

3. Talent Management O&G Industry Issues & Challenges • Growing Demand • Access To resources • Cost of Resource & Services • Safety, Environment & Technology • Concern & cost of Climate Change • Shortage of Right Talent

4. Talent Management O&G Industry:Issues & Challenges ISSUES A major problem is looming over Global Oil & Gas Businesses: • Shortages of the talent whom they need to sustain Growth. • Increasingly Becoming Difficult to : • Attractand RetainTalent from a deficit market • Retain Younger Employee; • Retain Experienced Ones ; • Transfer critical knowledge.

5. Talent Management O&G Industry: Issues & Challenges ISSUES: • 96% of top executives believe finding talent is becoming a serious challenge • The war for talent is more pressing than the quest for project finance, project sites or government support • The number one shortage is in experienced senior management level

6. Talent Management O&G Industry:Issues & Challenges “What Are The key Challenges to delivering growth in Energy-Next ?” CEO’s Perception Source: Anita Hoffman, Heidrick & Struggles‘, London. 2008 Survey of 75 Key Decision Makers

7. Talent Management O&G Industry: Issues & Challenges Where Is All the Talent Going? 􀂄 An Aging Work Force 􀂄 Fewer Workers with the Right Skills. Increased integration across the value chain in the oil and gas industry, companies need workers with more specialized hence scarcer—skills, further aggravated by • Slashing of Training Budgets to ease operating-margin pressures • Decrease in University Programs for positions such as Petroleum Engg • Inadequate Facilities and Infrastructure for Skill Development 􀂄 Difficulty Attracting Entry-level talent. Finding Equally Difficult finding for Mid & Top Level 􀂄 Growing Attrition of Experienced Employees. For oil and gas companies, the toughest challenge is retaining employees with Five to 15 years of experience.

8. Talent Management O&G Industry: Issues & Challenges Why Is All the Talent Going? • Loss of key skills and experiencethrough downsizing and retirement • Misalignment of remaining skills withfuture business requirements • Employee dissatisfaction with existingcareer paths and reward systems • Increasingly more employees outside their home country • Contingent ( Temporary) workers making up a greater part of skills • Economic pressures • Need to grow earnings • Need to rationalize manpower after M&A • Demographic Shifts • Aging Skilled Experienced People • Increasing diversity: Globalisation • Changing attitudes towards work • Emerging talent shortages in select areas

9. Talent Management O&G Industry:Issues & Challenges ISSUES: Where All The Talent is Going? US: Perspective • Shrinking for all across industries. 60% of today’s workforce, is older than 45. The expected percentage loss of expert petroleum engineers • over the next 5years is greater than 80%; • Low Availability of Talent • Bachelor of science degrees granted in petroleum engineering declined 74%, from 1,529 in 1983 to 393 in 2006 … but there is hope … • For the 2008 academic year, there are 3,710 undergraduates in the United States pursuing petroleum engineering degrees, twice as many Source: www.deloitte.com/us

10. Average Age Distribution Talent Management In O&G Industry : Issues & Challenges For all Companies surveyed 40% 30% 20% 10% 0% % of total workforce Under 25 25-34 35-44 45-54 55 & over Age Range (years)

11. Talent Management In O&G Industry : Issues & Challenges Highest-Priority Challenge • Not enough skilled candidates in the market • Qualified employees increasingly difficult to attract and retain • Demand for experienced talent continues to increases Insufficient supply of external candidates Compensation competitiveness Aging workforce Breadth of career opportunities/challenges High attrition among tenured employees High attrition among newer employees Insifficient supply of internal cadidates Interest in the oil & gas industry Ability to attract young people Working Conditions/environment Relocation requirements 0 1 2 3 4

12. Talent Management In O&G Industry Expected Talent Gaps Petroleum Engineers Geoscientists Plant / Operations Engineers Plant / Operations Mangers Upstream Technicians Upstream Project managers Plant / Operations Technicians Finance Managers Shipping/Maritime Leaders Marketers and Traders 0 20% 40% 60% 80% 100% Percent of survey respondents expecting shortage in position, five-year time horizon

13. Talent Management Challenges of Indian O&G Industry: Industry Growth Vs Talent • War For Talent In India: • Opening up of Oil E&P and Downstream oil Business to Private sector & MNC, • Faster Growth in the E&P, Oil Refining, Petrochemicals, Gas Business, & Marketing • Aging Workforce, • Increased Technology Intensity • Inadequate Supply of Qualified People • PSUs, in addition to meeting & managing their own requirement of talent, became the easy source of talent to private sector and the MNCs

14. Talent Management In O&G Industry Issues & Challenges: GAP ANALYSIS- Internal Talent Gaps Analysis: ForAction Planning TM Information Required : Internal: skills the company will require to carry out its competitive strategy, using detailed analysis of business plan & work force to anticipate shortfalls in those skills. • Corporate Strategy, Growth Plans What new capabilities will our company need to address emerging challenges? When will we need them, and where in our organization should we locate them? • Performance Targets • Market Trends, Customer Data & Employee Feedback Evolving needs of the workers. Reward systems to meet newly emerging needs, and aspirations, so as to retain our most valued people. Changes required in their career path.Career trajectory—promotion path, training & development needs, timeline etc • Productivity, Quality, Technology, and other effectiveness measures. • Skills that are at maximum RISK of LOSING: Also, How to retain and manage the knowledge that will be walking out the door?

15. Talent Management In O&G Industry Issues & Challenges: GAP ANALYSIS.. Gap Analysis: plan design, and implementation • Work force required by business unit • Expected evolution of current work force • Assessment of critical gaps, and best means to fit all those gaps • Targeted work force practice and policy changes for attracting, recruiting and retaining, and execution timeline, with defined role & responsibility. • Organisation wide Human Capital Metrics for tracking progress & Milestones for filling gaps.

16. Key levers in Talent Management • Source and Recruit • Develop and Manage • Reward and Retain

17. Key levers of Talent Management Source & Recruit Sourcing Attraction • Talent Needs • Talent Assessment • Identification of Patent Source & Pools • Recruiting • Screening capabilities and cultural fit • Conversion and assimilation

18. Key levers in Talent Management Develop & Manage Training & Development Performance Management • Comprehensive training • Informal coaching and mentoring • knowledge management and transfer • Career path opprtunities • Supervision and Management • Leadership development • Performance assessment

19. Key levers in Talent Management Reward & Retain Compensation & Incentives Retention • Talent management tools and strategies • Flexibilities • Culture • Specialized program • Compensation • Benefits • Rewards and Recognition

20. Talent Management O&G Industry: Issues & Challenges: Vocational Training Vocational skills compare Unfavorably in India 96 88 85 86 25 8 India receives only 8% formal vocational training which is much less compared to other countries

21. Talent Management In O&G Industry: Issues & Challenges Attracting The Talent • The War for Talent: Better talent is worth fighting for • At senior levels of an organization, the ability to adapt, to make decisions quickly in situations of high uncertainty, and to steer through inevitable change is critical • But, Why someone, really GOOD, should join my company, and how long shall we be able to retain him?

22. Talent Management In O&G Industry: Issues & Challenges Attracting The Talent • Not a High Tech or Creative • Running out of Oil and Gas • No Growth & Career Advancement opportunities • Not enough jobs for graduates • Petroleum Engineering is a narrow discipline • Oil industry is environmentally unfriendly, Dirty, not safe to work and harsh working Environment MISCONCEPTIOS

23. Talent Management Challenges of Indian O&G Industry: Issues, Challenges & Way forward A. Attract and Retain Availability of Quality People

24. Talent Management Challenges Key issues Attract and Retain 2. Low Industry Attractiveness / Awareness

25. Talent Management In O&G Industry: Issues challenges Way Forward - Internal • Motivate and Develop • Keeping the employees motivated and their continuous development are the twin challenges • Employees don’t like to be treated as cost • Challenging Assignments, Scope for Learning & development & HRD is Great Motivator • Only motivated employees will work to ensure highest level of performance • “ He should favor those contented, with incentives like additional wealth and honor. He should also take care of discontented with gifts and conciliation, in order to make tem contented” • Kautilya, Arthshastra1.13.16-17

26. Talent Management Challenges Key issues • D.Connect and Enable • In today’s connected world, employee communication has assumed a major role in creating a community of employees in the organization who believe, think and say similar things. • Employees get information about the company not only from internal but from external sources as well. • This plays an important role in shaping their beliefs about the company, their motivation to stay, say and strive for the company. • COMMUNICATE , COMMUNICATE & COMMUNICATE Higher Employee Engagement – Keeping a continuous channel open with the employees is a must

27. Talent Management Challenges Key issues • D.Connect and Enable • Creation of enabling culture, thru demonstrated behavior by Seniors (Role models to junior and new entrants) • Create an engaged environment enabling people to perform and derive satisfaction of having perfromed An enabling culture will empower the employees down the line to take business decisions

28. Talent Management Challenges Key issues • Transform and Sustain • With abundant availability of Capital, Material and technology, it is the people alone, who lend the uniqueness differentiating organizations. • HR has no option but to play the strategic role. • HR professionals need to understand business and its need While business will continue to require strategy, strategy will continue to need people

29. World Class Training/e-learning • Work associations with global Operators • Stretch Assignments and Global exposure • Re-employment of • Former employees • Tenure Engagement • Hiring Specialists as • advisor and consultants • Best Social Security, Retirement and Medical Benefits • Generous welfare measures • Comprehensive Education

30. Talent Management in O&G Industry: Issues & Challenges The battle for Talent is a War on two fronts: One Inside, and Other Outside How can both wars be Won? & We have to Win

31. Talent Management in O&G Industry: Issues & Challenges The battle for Talent is a War on two fronts: One Inside, and Other Outside How can both wars be Won? & We have to Win

32. Talent Management in O&G Industry: Way Forward • To ATRRCT & RETAIN the RIGHT People, we need to create and perpetually refine an employee value proposition –inside & outside. • Always ask, and answer, why a smart, energetic, ambitious individual would want to come and work with my company, rather than with the competitor?

33. Talent Management in O&G Industry: Way Forward • RECRUIT RIGHT PEOPLE: • more complex business, demands more sophisticated talent with global acumen, multi-cultural fluency, technological literacy, entrepreneurial skills, and the ability to manage increasingly flat, and diverse business organizations. • That done, we must, then turn our attention to how we are going to Recruit Right Talent, and • Develop, Develop, Develop! • In to Great TALENT

34. Talent Management in O&G Industry: Way Forward • Retention is about more than Money • Praise from one’s manager, attention from leaders, frequent promotions, opportunities to lead projects, challenging assignments, and chances to join fast-track management programs are often more effective than cash. • Indeed, a 2009McKinsey Quarterly survey found that executives, managers, and employees rate these five nonfinancial incentives among the six most effective motivators when the main objective of the exercise is retaining people.

35. Talent Management in O&G Industry: Way Forward We Can win the war for talent, but first we RAISE talent management to TOP on the agenda OF corporate priority, STAREGIC INTENT & Strategic plan of The company

36. Talent Management in O&G Industry: CONCLUSION: • Strategic work force planning : anticipate future shortage to redeploy competencies • Performance Management: move from short to long term approach • Employee Engagement : focus on motivation, values, ethics and accountability • Leadership Capabilities: Deploy, Deploy & Deploy • Change Management – adopt a systematic cascading approach • Internal and External Communication: talk the walk • Invest in Future: T&D, R&D and CSR

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38. Talent Management O&G Industry: Issues & Challenges: Availability of Technical Manpower

39. Mapping Employee Career Progression Existing General Manager 12-14 yrs 12-13 yr Manager Entry level General Manager Proposed 10 yrs ED 10 yr Consultant 10 yrs Manager Entry level