Sanjay Sathe | RiseSmart
Recruiting new talent is often more difficult in industries that face dramatic boom and bust cycles, a pain currently felt acutely in the oil and gas industry.
In recent years, the industry has already suffered from the difficulty of marketing oil and gas careers to a generation brought up with a negative perception of the industry’s impact on the environment or on business practices. Compounded by the uptick in layoffs by oil and gas extraction companies due to the drop in crude oil prices, that negative perception of careers in the industry will make it more difficult to hire when the market recovers. An aging workforce further adds to this problem of a potential talent shortage, as a majority of those currently employed move toward retirement.
The Great Crew Change
Most are familiar with the 1970s energy crisis, which resulted in the number of workers in the oil and gas extraction sector nearly doubling over the course of the following decade: oil and gas workers increased from 60,000 in 1972 to almost 120,000 in 1982. The overreaction to the crisis led to an overproduction of oil, which was followed by a precipitous decrease in the workforce during the next several decades.
Since 2000, the number of jobs in oil and gas extraction has been on the rise, but finding workers hasn’t been easy. After the bust in the ‘80s, many workers either left the industry entirely or, due to the lack of stability, were deterred from entering the industry in the first place.
The result of this constant fluctuation in demand is an aging workforce in which 71 percent of oil and gas talent is over the age of 50. The lack of new talent has not gone unnoticed, as 45 percent of leaders view the talent shortage as the most pressing issue in the industry.
The Cycle Continues
Given the current state of upstream, some may wonder why a talent shortage even matters. Falling oil prices — a 55 percent decrease between June and December 2014 — have led to industry unemployment figures that are approaching 10 percent and a significant decrease in the number of jobs available.
The most recent downturn is another unwelcome reminder of the instability of the market, something that could once again drive away the existing workforce and continue to deter new talent from considering a career in oil and gas.
However, we have seen the cyclical nature of oil and gas, and it would be shortsighted to dwell solely on the current numbers without putting a plan in place for the future.
The Inevitable Upswing
When the market improves, and it already looks like oil prices are starting to recover, the talent shortage may be even greater. That means companies will have to pull out all the stops if they’re going to attract the right talent, and the way companies handle layoffs now will have a significant impact on future hiring.
How a company approaches a layoff receives attention, not only from the employees who are directly impacted, but also from the their friends and family, the employees who remain at the company, and the media—all of whom can directly affect future hiring.
If they don’t feel like they’re being taken care of, employees will share their complaints with whoever will listen, including online via social media and employer review sites.
According to a recent survey conducted by RiseSmart, only 40 percent of employers monitor employer review sites, such as Glassdoor, during a layoff. However, 74 percent of human resources professionals say company reputation is critical for successful recruiting, as reported by the Society of Human Resource Management. This is especially true when trying to attract younger talent that pays more attention to online reviews. And after several decades of a “hire and fire” mentality, some companies may have earned a particularly bad reputation.
Therefore, it is imperative that organizations that are participating in layoffs now communicate and act on their desire to help impacted employees land on their feet, both now and in the inevitable future. One such way to do so is to provide a severance package that includes continuing health benefits and a reliable outplacement program that helps employees quickly transition into new jobs. Right now, 70 percent of employers are providing transition assistance in the form of severance benefits, such as outplacement.
Outplacement in particular can be useful for protecting current and future employee relations, because it provides more than a short-term safety net for the impacted employee as they begin the job search: it actually helps laid off workers become employees once again. And because there is no law that says a company must provide outplacement, choosing to make the investment in employee wellbeing—even former employee wellbeing—shows a continued commitment on the part of the organization to its alumni.
Future talent entering the industry will, by now, be savvy to the cyclical nature of the industry, and seeing that there is a plan in place to take care of them if the cycle takes a downturn can help maintain the attractiveness of an employer, even in times of uncertainty.
With about 70% of companies already offering outplacement, according to the RiseSmart survey, is your organization prepared to compete? The cyclical nature of this industry will continue to affect your talent acquisition: armed with the knowledge of how to create an impressive and attractive employer brand in spite of the downturn, outplacement and other severance benefits can help your company rise to the challenge.