3 Key Challenges HR Faces Today in the Oil and Gas Downturn

HOUSTON - MAY 9, 2016





Published by Hula Partners, LLC


A couple of weeks ago, our Hula team attended the LEAP HR Oil and Gas Conference in Houston, TX. The room was full of HR professionals from several major oil and gas players. As we all know, this year has been a difficult one for all oil and gas organizations and we have seen some major changes throughout the industry. Everything from layoffs to acquisitions are continuously taking place as companies are trying to find ways to maximize their resources. Cue HR!

The HR function is key helping companies survive and even thrive in these downturns. More importantly, they must ensure that companies are positioned for the turnaround. They hold vital information and data and should have a big influence on business decisions.

Because of the downturn, companies are having to think differently about how they approach HR. This may seem like a bad thing but, in reality, it is a great thing! HR has an opportunity to prove their value. The LEAP HR Oil and Gas conference highlighted this opportunity but also challenged HR executives on how they will meet these new demands.

Hula’s takeaways from this conference focused on the 3 key challenges that emerged from the presentations:

  1. How do we continue to invest in people during this cycle? The very first item most presenters referenced was the Reductions in Force (RIF) initiative (cutting anywhere from 20-60% of their workforce) with their hand being forced by the fall in oil commodity prices. One of the worst periods the industry has seen from a RIF perspective. This reality has to be met with two responses:
    • Smart Cuts Partnering with the business to ensure the RIF decisions are made smartly and without devastating impacts to the skill/competence inventories of the company. Also ensuring that when things do turn around, the organization is prepared to run effectively.
    • Smarter Investments For the people who do remain, organizations must develop their employees, managers, and leaders more efficiently. The development opportunities are more limited, so in turn they must be more targeted.
  2. For those that remain, Culture and Engagement are critical. After you have lost a large number of your company, you don’t want to lose the rest physically or emotionally. Creating a sense of culture and engagement among your employees is a difficult task that involves a large amount of time and commitment. This is especially true for companies that are going through an acquisition or a merger. (i.e. Cameron and Schlumberger) It is critical to put initiatives in place to retain those employees and allow them to see the opportunities of a streamlined workforce.
  3. HR has work to do to close the communication gap. To make the right decisions for the company, you have to have all of the information. You have to understand what makes the machine function. Bottom line: HR has to talk to the rest of the business. In addition to providing the logistical and administrative support for cutting and moving employees around, HR must also focus on providing objective data to make sound strategic decisions for the entire organization. The first step in this process is better education on what data the business really desires (everything from competency levels to risk analysis).

This year’s LEAP Oil and Gas conference was a great event as it provided a collaborative environment to challenge one another on how to be better business partners. Identifying the challenges to this (specially in today’s Oil and Gas operating environment) is the first step in overcoming them. This is too important to ignore as we all know that Human Capital is our most precious resource.