“Here we go again,” seems to be the common sentiment among employers in the oil and gas industry as prices continue to plummet and thousands more workers receive their pink slips. No other industry has experienced the type of staffing rollercoaster that oil and gas has seen in recent years. Are these employers becoming wiser with experience?
Most top oil and gas officials believe the energy sector is repeating the mistakes of past downturns through widespread layoffs and severe budget-axing, according to a recent report by Norway-based DNV GL. The report found that global oil and gas executives believe too many companies are short-sighted about making quick cutbacks.
“Many companies are handling this downturn in exactly the same way as they did the previous one: They are laying off lots of people, stopping projects, and significantly cutting back on research and development,” said DNV GL Vice President Graham Bennett in the report.
“Businesses who simply hoped to ride out the storm, operating as they did in 2014, will not last long,” adds Steve Pugh, Group Business Development Manager at UK-based Nortech Group. “They are in a new environment competing against the best in the world, competing against companies driving efficiencies and savings, in some cases saving up to 35 percent from identifying ways to do things better.”
In Texas, some major players are taking note and changing the way they handle staffing through volatile times. The lessons they’ve learned, listed below, can help employers in other industries weather their own storms.
- Never stop recruiting. Burned by the talent crunch created by hiring freezes in prior downturns, energy companies continue to beat the block for new recruits, reports the Fuelfix blog. Houston-based natural gas producer Southwestern Energy Co. is among the hardest hit, shedding more than 40 percent of its workforce in this first quarter of 2016. So does it surprise you the company has continued to hire new people? As it positions itself to meet the demands of an evolving market, says Jenny McCauley, the company’s Senior Vice President of Human Resources, “We don’t want to cut our nose off to spite our face by not recruiting and not maintaining the level of talent we need over time to grow and develop,” she said.
- Be open and honest with staff. More than 75 percent of workers value honesty above all other employer traits. Yet honesty can be both the hardest to deliver as an employer and even more important to hear as an employee when layoffs are on the horizon. Telisa Toliver, senior vice president at Chevron Pipeline Co., admits it isn’t easy but, in the end, honesty really is the best medicine. She adds establishing clear and open lines of communication with employees is critical in a downturn. For Chevron, in particular, it can help employees understand their roles in helping the company make progress on its strategies and goals. “People may not like what they hear, but at least they know,” she said.
- Find a smart staffing partner. Having contingent workers in place holds an obvious benefit: It can allow you to scale up and scale down your staffing as needed. But using a staffing partner to help also holds additional benefits. As the Texas Workforce Commission states, “Temporary employees hired directly by a company are the company’s employees for all intents and purposes and can file unemployment claims…[but when a staffing partner] is the employer, it will deal with any unemployment claims. Hourly labor cost is higher, but at least there will be no unemployment claims to worry about.” Staffing partners can help prepare, train and take responsibility for shared staff when it comes to OSHA safety requirements. Staffing partners, as joint employers, are also jointly responsible for temporary staff when it comes to National Labor Relations Board (NLRB) issues.
What other lessons have you learned by watching the staffing rollercoaster faced by the Texas oil and gas workforce? Would you be adequately braced for a downturn (or sudden upturn)? Let’s talk! Tell us what areas you feel most secure and where you feel exposed.
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