Behind the Oil & Gas Skills Shortage

Posted on April 14, 2014 by

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Nikki Lebedis, Head of Training, Development & Facilitation at The Urquhart Partnership discusses the root causes behind the Oil & Gas skills shortage.

The following article was published in the Aberdeen Press & Journal on Friday 11th April 2014.

Nikki Lebedis

Nikki Lebedis

Almost every week we read about the skills shortage in the Oil & Gas sector and the resulting challenge of bringing in new people. However the success of transferable skills recruitment events give hard evidence that a move into Oil & Gas is an attractive proposition, and there is no shortage of news on the 39,000 jobs we hear are coming.

We have plenty of people on one side of the equation and plenty of jobs at the other – so what’s the problem?

As with all complex issues, there’s no simple answer. We can continue creating more jobs and sourcing more candidates with transferable skills and behaviours, but until there is a focus on what happens in between, the problem will never go away.

A popular scapegoat is the mind-set of the Oil & Gas sector: that deep-set belief that value only comes with industry experience. Before we can move forward, we need to recognise that this mind-set has been borne out of very real set of circumstances.

The first is simple: it’s about keeping people safe. The reality is the industry can only absorb a finite amount of inexperienced people because there needs to be enough experience to support and supervise those who are learning.

It has taken a lot of work over many years to make the North Sea such a safe environment to work in.   It’s easy to picture what safety means on platforms, rigs, workshops and fabrication yards. Yet it’s also deeply implicit in many office jobs such as engineering, project management, procurement and so on.  If the people doing these jobs make a mistake, the outcome is potentially catastrophic.

The next problem comes from the economics of risk management. Any good manager will manage risk down as far as possible: that means seeking out an experienced team with a great track record.  Historically, the financial and reputational exposure of non-delivery would far outweigh the additional costs associated with getting the most experienced people on your team.

Couple this with human nature; if you’re the person awarding a multi-million pound project, getting it right could make or break for your career – so who feels like the safest bet? The experienced project manager who has successfully delivered half a dozen similar jobs, or someone stepping into the role for the first time?

It’s not hard to see how the so-called mind-set has come about. Circumstances push hiring managers to recruit experienced people, which has created the merry-go-round of high day rates and a constant churn in the resource pool. When there has been little incentive to change behaviour, why should we expect it to happen?

The compelling argument is now here. Current practice is potentially disastrous for the future of the industry in the UK. If it continues, our own reserves will become uneconomical and the UK will be priced out of the international market altogether.

Explicit acknowledgment of this is becoming more prevalent. Sir Ian Wood’s report mentions the damage of “leapfrog” rates, and the current PWC Northern Lights report goes into further depth.  Collaboration is essential but this will only happen in such a highly competitive environment if a strong regulator is in place.

The North Sea is a safe place to work because a robust safety culture is a mandatory pre-requisite for doing business. This was achieved through a heavy regulatory approach, with collaboration following behind.

Is it possible achieve the same with the skills shortage? An effective regulator could, for example, provide clear expectations on exactly how many industry joiners could – and should – be safely absorbed. This would address the competitive advantage of the low risk recruitment approach: pulling exclusively from the experienced skill pool.

If a robust development culture became a pre-requisite in the same way as a safety culture, it could change the landscape overnight. Those companies who are investing in transferable skills programmes would become more competitive and growing the resource pool would be the pathway to winning high quality, high value work.

Until there is a change in the operating environment, it’s unlikely there will be a change in thinking. The great news is we’re almost there; it is widely recognised that more powerful regulator is needed, and with that, will come change.