This week I’m going to cover the need for oil & gas companies to make it a priority to find a solution to the ever increasing talent gap and labor shortage that the industry is experiencing. How do companies keep these new workers happy? What is the best way to fill the talent gap? Why is this happening? And what do we do about it? Here’s my take on this big time issue, I read all comments so let me know yours too!
The Great Crew Change: 50% of the Baby Boomers represent the oil & gas industry which are leaving the workforce in the next 5 years. This generation was all about starting as a hand out in the field at a young age and began working their way up the ladder on the rig. Once these Baby Boomers gained enough experience they then received a letter to pack their bags to move into the corporate office which began their managerial career. Or some decided to be a Company Man or Superintendent and supervise the rig’s workflow operations. The next generational group is Generation X. This generation grew up experiencing a massive decline in oil prices (especially in Texas) from the late 80’s and 90’s. This generation represents the smallest amount of talent in the oil & gas workforce. Then enters the Millennials. The laziest, technology dependent, and social media absorbed generation on the planet….wait that’s me!? That’s what our previous generations think anyways. However, the need to understand the psychology of how these Millennials work is crucial if we want to have this global industry move forward as the backbone of the world’s economy.
We can all agree that the most important thing to realize is that the lack of skills in the oil & gas industry has been on the rise for the last 10 years. There’s chilling evidence on why that’s the case, especially in North America. 11 years ago, in 2004, the U.S. oil & gas sector’s workers doubled in numbers. The U.S. had increased its employees from 250,000 workers in the oil & gas industry, to more than 520,000 workers into either upstream, oilfield service, or manufactured supply organizations.
Sharp rise in jobs had created a huge need for workers in the oil & gas industry, which at the time, was unforeseen. A note to point out about the history of job growth in the U.S. economy was when the oil & gas market bounced back with the 1990’s market recovery and 2000’s Dot Com recovery, rapidly infused jobs in the oil & gas industry. It was because of this growth in jobs from the oil and gas industry that was carrying the slack of the demand for jobs, which was the leading factor in pushing for job growth in this sector. Since the Great Recession of 2008, the industry’s job growth has increased at a faster rate than total overall jobs created in the U.S. by a massive amount. The crazy thing is, the oil & gas industry has been tapering off in the created jobs department only recently.
Where does that leave us? Is the generation parented by the Baby Boomers going to carry 50% of the expertise in oil & gas going to carry the industry forward with the same vigor and accomplishments? The Baby Boomers are coming very close to retirement age, and trust me, they are ready to clock out because they were brain washed into working for 40 years of their life at a young age. That was the way of thinking back then, and these Baby Boomers believed that if you kept your ‘eye on the prize’ at the end of the tunnel you shall get your prize. Once they are old enough to be senior citizens they can then retire and enjoy their freedom, which isn’t the motto today at all. Millennials know we will be working for as long as we are still alive. Anyways, I don’t know about you guys, but being financially free at an old age when I don’t have the energy to travel, learn new skills rapidly, or enjoy intensive physical activities sure doesn’t sound like “retirement” to me.
You also have a large group of oil & gas professionals who are in the industry that have a lot of valuable skills in their tool bag, but the oil & gas companies haven’t given this group incentives to stay in the industry. That’s a big mistake to these Gen Xers, which are the group of people between mid 30’s and late 40’s. They are hardworking and prefer transparency with structure, just like the Baby Boomers. They mirror the Baby Boomers in a lot of ways, except they obtain advanced degrees to move up in the ladder more quickly while at the same time accumulating a lot of DEBT because they spend money on luxurious items more so than any generation (Source: Shullman Research Center).
Gen Xers want to have a more of an organized work environment. There is a sense of relief when their is routine and structure maintained in an orderly fashion. These Gen Xers rather work by themselves in exclusion from others to complete a project. Much unlike the Gen Xers, Millennials favor a group project, where each person works on an individual piece then connects the project(s) together to form a desired outcome. Because of company structure and company politics, Gen Xers understand that their is an imaginary totem pole in the workplace where they must act in a formal manner to certain employees of power due to their key individual role in the company. This is because that is burned into their head that the more formal they are to their superiors, the likelihood that they will advance in their positions because of not causing any tension with the company. Millennials don’t care about this at all. Millennials want to have a direct line of communication with anyone, from entry-level to the CEO.
But Millennials understand that they need to have perception in front of these Baby Boomers that they are model employees. Millennials want Baby Boomers to see these Millennials capable of accomplishing tasks in such Baby Boomer style rigid environments the same way Baby Boomers were taught how to complete tasks in even more rigid settings. Baby Boomers thrive through structure, routines, and individual projects. Millennials WILL NOT conform to this way of thinking. In fact, like I listed above, Millennials believe engaging each other will give the best desired results to whatever problem that needs to be solved. Where things really get turned upside down is that the oil & gas industry is mostly run by Baby Boomers. Do you really think Baby Boomers know exactly how a company should be run just based on their “years of experience?” How accurate is their perception of what is a thriving, high productivity workplace? What is considered a high quality worker? Baby Boomers need to ask: how do we boost the performance of these Millennials? Again, Baby Boomers need to motivate these Millennials because Millennials approach the workplace VERY differently.
This is an excruciatingly difficult obstacle because Millennials approach the term “success,” in a different limelight than Baby Boomers. How do WE solve a problem? Why does this company need me to be successful in order to survive? What should my workplace be like to make it more fun? How am I making an impact at this company and in society? This train of thought is much different from previous generations.
As far as the Gen Xers go, when this generation were finally entering the workforce in the late 80’s and 90’s they experienced the oil & gas industry of being too volatile to risk losing their job due to the busts in the market. Also, potential Gen Xers that could jump into oil & gas industry won’t because they have already established themselves in other career paths that would be too risky for them uprooting with their enormous debt they have. Gen Xers are known to obtain advanced degrees for faster promotions, buying expensive items, starting a family, a mortgage, and most of all, accumulating DEBT. They can’t fail because they have others relying on them for financial support. So Gen Xers are more likely to stay in the positions they have embarked on because they are slaving away at paying all their debt back trying to afford “The American Dream.”
What about the Gen Xers who are established in the oil & gas industry? Since Gen Xers are asking for more money from employers because of their debt, it leaves oil & gas companies hesitant because it’s a large investment to shell out for high value workers. Recruiters have been talking to hiring managers over the past few years to pick their brains and have found that Gen Xers are asking for more money than what oil & gas companies are willing to put out. Recruiters are seeing a rise in the number of candidates turning down job offers than ever before, and positions are increasing in the amount of time it takes to fill.
In the oil & gas industry, the average length of time it takes to fill a job for an employer takes a little more than 60 days. The average length of time it takes to fill every other U.S. job in general is 40 days. Oil & gas companies will spend more than 50% of it’s time than most to get workers to fill jobs. That’s why Gen Xers in oil & gas are getting calls from recruiters so frequently. It’s because there are must need positions that need to be filled with very little skilled workers who can cross-link their skill-sets to perform the tasks that need to be completed for the employer’s scope of work needed. 70% of these Gen Xers have been contacted by a recruiter within a 6 month span. That’s why most of the future in the industry rests upon Millennials to take charge, because the Gen Xers are too established in a different line of work.
Why is it that us Millennials just refuse to respect hierarchy and the “old way of thinking” in the oil & gas industry compared to Baby Boomers and Gen Xers? There is a saying that goes, “Gen X lives to work and Gen Y works to live.” Millennials were taught that they’re special, that their opinion matters just as much as anyone else in the family by their Baby Boomer parents. Millennials talk to their parents about everything from personal matters, money, and taboo topics right in front of their parents. It’s openly accepted. When it comes to education, these Millennials worked in group projects where each person contributed their portion of the work that needs to be completed for that assignment. In even more privileged schools for Millennials it was encouraged to bend the rules and express individuality. In competitive events, previously the top 3 competitors within a sporting event receive a trophy. Well, when the Millennials were growing up and becoming involved in competition events, they were getting awards for just participating from 1st place to last place. Everyone receives a trophy! Aren’t competitive events revolved around the ‘best person wins’ mentality? Now, everyone wins just for trying. That’s why there are a lot of things that make the Millennials so much different from previous generations, how they fit into the oil & gas industry, and most importantly in society.
Unfortunately, there are a lot of Baby Boomers and Gen Xers who believe that how the Millennials were raised with such privilege, that this made them out of touch with the real world. Meaning, they didn’t have to overcome many obstacles of hard labor for years to get a desired promotion because they jump ship from their 1st company after an average of 16 months out of college. The previous generations believe that social media has skewed their reality to constantly needing validation, or being self-absorbed, and has made them lose focus from the tasks at hand in the workplace for these Millennials.
The Millennials do track their goals and strive eagerly to achieve these goals through a variety of metrics. They use analytics and utilize technology in such a way to always calibrate how they can keep delivering high quality work, while at the same time finishing the work fast. They do believe in working towards their goals, and Gen Y will do this by themselves or preferably in a group. They will complete this goal in a way that their manager will think is unorthodox, but Millennials will complete it their own way, regardless of what how their boss believes it should be completed.
Millennials are definitely open to input and are eager to have mentors to push them along their career paths to provide a gateway to success. However, they will speak their mind as if their thoughts are just as important as anyone else their communicating with at the time. So even though they may be entry-level workers, they will give their input on how work should be done to their managers and how their objectives should be completed as well.
On the other side of the fence, oil & gas companies will have to get comfortable for letting these Millennials walk up straight to the CEO’s office and explain to the CEO where processes are effecting the company in both a positive and negative manner. Millennials are bold and will voice their opinion with lightning fast grasp of harnessing technology to gather information to quickly deliver a report on any manner that they feel is relevant to reaching the company’s goal.
Unlike the Gen Xers, Millennials aren’t all about the money. This is a great relief to oil & gas companies looking to hire these Millennials because on the upstream sector of oil & gas, the costs have increased exponentially. They can’t afford the high price tag of the Gen Xers, and are all ears for other perks other than monetary incentives. The workers average hourly pay rate in this line of work has increased 27% from 2006 – 2014. The reason why is because of the talent gap & labor shortage. In essence, oil & gas companies should probably cater to the Millennials by dropping the pay rate down and increasing their benefits in the job offer.
Oil & gas companies now need to adapt to their environment in a sense that they need to learn how to pique these Millennials areas of interest, keep them happy by giving them empowerment, and retaining them by letting them have a multitude of opportunities to make their own decisions as if they were the owner of the company themselves.
Millennials need to have empowerment, and a sense that the career they are making a living off of has a greater sense of purpose. The idea should be that their job, their company, and their influence, can literally change the world. Millennials need to feel powerful, as if they have all the responsibilities to make any decision they want to make an impact, and the feedback to be even better.
Millennials will work hard and find answers to a problem fast. Millennials want full control of responsibilities quickly, even though the industry does not believe in giving such power to people in such a rapid manner. I mean, we are talking about life threatening situations that can happen out on a rig, or billions of dollars dumped into investing in an oil & gas startup. This makes C-level guys very worrisome about promoting Millennials too fast because they’re not equipped to handle such complex problems if something critical happens which needs to have a near instant decision made. The effects of that could destroy a company in a split second decision. That’s something that will take some time working out for these Millennials. However, as far as letting Millennials have a voice and the ability to make decisions with certain opportunities, absolutely they should have those opportunities. Oil & gas companies are going to have to make a change if they want to attract Millennials to this industry by giving this generation power.
Feedback. Like I stated earlier, feedback is crucial and constant for Millennials. The oil & gas industry feedback is a 6 – 12 month performance objectives checklist. How these companies approach the feedback is important. Oil & gas companies have to give instant feedback to Millennials, and make sure it’s not negative but constructive. I can’t express that enough! Millennials want the brutal truth about their work efforts, so companies have to be brutally honest right back. There’s no need to sugar coat the truth, Millennials want to know the root of the problem so they can instantly make a tweak to that area of concern. Oil & gas companies don’t work like that right now, and there will be constant feedback opportunities to always give these Millennials so they can become more valuable workers.
I have a friend of mine who graduated from The University of Texas at Austin the following year after I graduated. He received a Petroleum Engineering degree and received an offer from a major offshore E&P company before graduating from college of $100K+ at 23 years old. That same friend quit 9 months later because the work was rigorous due to 12 hour days in the Gulf Coast, and he missed his family. He later told me that he felt like a “link in a chain” that kept feeding the machine to keep producing more and more. There was no “how is my role impacting the world” work philosophy, and now he is working as a strength & condition coach making less than half the amount he was being paid at the offshore E&P company. The Gen Xers and Baby Boomers would have worked for years at jobs they hated to get the opportunity my friend had with that offshore E&P. He didn’t realize the value of his work and how it impacted the world. All of his reasons why he didn’t feel like he was changing the world left him empty inside. Unlike many of the previous generations, they would have loved to catch that opportunity to make that kind of money. It goes to show that oil & gas companies have to cater to the Millennials way of thinking which is to place less leverage into high pay rate and more into freedom to retain workers in the industry.
We are talking about a huge cultural shift in the oil & gas industry. This shift will happen in 5 years once the Baby Boomers leave, and foremost, companies have to get rid of the completely structured process that surrounds the existing workplace model. 1 BIG tip for hiring managers and supervisors dealing with Millennials is that you can’t bunch them up into 1 category to give them a linear path to do the work. In some areas, that could work because this industry has a huge engineering element to it that’s highly technical, but this industry is about finding solutions to extremely difficult problems. This “Great Crew Change,” is a problem. This problem does have a solution. The industry has to look outside the box, examine the areas of the problem, and formulate a call-to-action plan. This industry is smart enough to fully solve this problem. There is already consultants on staff that are helping major oil & gas companies chip away at this problem right as I write this blog post.
Let’s take a few steps back and look at why Millennials have the personality traits that they have from being raised from their Baby Boomer parents. Millennials become attached to the people, environment, and companies that they work with. They want to feel as if the company and brand is an extension of themselves. This can be a problem, especially if the company does not follow through on a particular incentive that motivates the Millennials in a way to strive for productivity. These Millennials will take that disloyalty to heart and will quit immediately. That’s happened more than once in this industry, and has definitely happened to YOU reading this as well as myself. That’s why it’s imperative for companies to follow through with their word, or they will lose valuable workers.
From a work time-slot perspective, Millennials don’t agree with the 9-5 approach whatsoever. Oil & gas companies have to get comfortable with letting this generation work in increments that account for that. If Millennials want to work for a straight 24 hours and take another 24 hours off, that has to be part of the plan. Companies are going to have to implement a 24 hour work-life balance schedule. If this generation wants to work from home, that’s another key factor that’s going to play in the part if they are going to consider that particular job or not.
Also, there has to be a more fun, and engaging social environment at the workplace. If you look at places like Google, where there are games, prizes, doggy day care, etc., these Millennials want to have fun while at work. The reason why there are so many games and temptations at the workplace is because it drives productivity through the ceiling. It needs to be engaging and social which are the things that this generation also looks for in opportunities at places to work.
Oil & gas companies will need to take a committed approach with how their company plays a key role in helping the world. You hear that from an external point of view through trade show gatherings, congressional hearings, and fundraisers. However, these companies need to channel that same energy internally to their Millennial personnel to keep this generation motivated and satisfied with their role in the workplace.
Also, Millennials want to “wear many different hats in the industry.” This means that they want to experience many different job functions to hone their area of expertise. They feel that they can handle multiple tasks and loads of responsibilities that come with the job description. They do not want to be bogged down with a linear position that doesn’t have fast growth into a various different levels of responsibility. I can’t express this enough, this generation wants flexibility. They can broaden their horizons of their skill set, and evolve into a more well rounded person. That’s the end game for Millennials in a nutshell. They want to go onto a project in Indonesia to help the company complete a project? Send them onto a project in Jakarta, they can learn quickly and you will retain these people if you give them opportunities.
That is a great selling point for oil & gas companies to retain these Millennials. More oil & gas companies are becoming more prevalent on a global scale due to technology, and there is no other industry where you can make an impact from all 5 continents to reach a company’s growth targets. This generation would be perfect for capitalizing on that aspect because of their love to explore and take on new opportunities. Plus, if you send them on 1 project around the globe they prone to take up on that offer again.
By 2025, 75% of the oil & gas work setting will be composed of Millennials. They have stipulations, they want to be empowered, and they want FULL responsibilities. It’s 100% going to happen. Even though oil & gas has been the slowest industry to change, I think if catered to the Millennials in just the right way, can be a positive experience for a life-long career.
Again, oil and gas companies must have internal communication with their employees about how their roles are making an impact at the company they are working with. The cultural fit of the company has to resonate with these Millennials to be a fun, comfortable, and collaborative team environment to get the highest work productivity out of their workers. The office is an option at the workplace for these Millennials, not mandatory. Millennials don’t look at how many bills they are getting paid. Finally, if you are willing to make a commitment to these Millennials to give them the responsibilities to be successful, then they will make a commitment on their end to fulfill your objectives for them too.