Today’s oil and gas executives seem to be caught in the crossfire between the inevitability of digitalization on one side and skill gaps in the oil and gas workforce on the other.
Digital transformation is an integral part of the 2021 business landscape. However, too often, the oilfield workforce is not ready to embrace all the challenges brought by modern innovations. Therefore, the skill gap is growing, putting business growth under threat.
The reasons behind skill gaps in the oil and gas industry
The skill gap dynamic is driven by several factors that are not necessarily connected. It appears that natural factors such as workforce aging overlap with management problems that lead to inadequate training requirements. Meanwhile, access to qualified professionals is restricted due to the current pandemic and political environment.
In this section, we will categorize the factors contributing to the skills gap in the oil and gas industry into three main areas.
Rapid pace of digitalization
As companies rushed into innovative technologies to stay afloat amidst the COVID-19 crisis, it was just too much for employees to process, widening the oil and gas skills gap. Especially so, since this technological upgrade was not always complemented by consistent training. Consequently, people who have been in the industry for years suddenly realized that they no longer meet the current professional standards that have changed almost literally overnight.
Those who managed to quickly adapt and acquire new skills did it spontaneously, often on the spot, driven by their personal sense of responsibility. However, as management did not create any straightforward description of a new set of in-demand skills, such professionals never gained a true understanding of what people in their roles were expected to do in this changing working environment. Therefore, today they can neither leverage nor transfer their knowledge simply because they are not aware of its volumes.
Lack of consistent training also leads to an extremely high level of uncertainty within the oil and gas workforce. This means it becomes harder to retain specialists who have picked up new skills, as they tend to migrate to companies or industries where these skills are clearly in demand. Moreover, 74.6% of oil and gas employees prioritize job opportunities that include educational and development programs.
Aging workforce
Today, the oil and gas industry is going through a generational shift called “The Great Crew Change.” Baby Boomers who used to dominate the industry are now on the threshold of retirement, and they cannot pass their experience to the new generation because new hirings are not as large as the wave of retirements. Since the retiring employees have no one to share their years of experience with, it is resulting in a massive skill gap.
But what about those experienced employees who are not planning to retire yet? The problem is that they are not always tech-savvy enough to master new skills. This leaves executives with one viable option — hiring millennials or Gen Z representatives. But that is not as easy as it may sound.
Lack of new talent
It has already become commonplace that younger workers have different career priorities. They are concerned about their environmental conditions, seek work-life balance, and look for innovations in their everyday tasks. All of these make it hard for the oil and gas industry to attract and retain them.
The situation with travel and immigration restrictions makes it even worse, as it narrows down the selection pool. One may argue that in 2021 it should not be a problem, as remote monitoring is available through edge computing, and employees can perform their tasks from any corner of the world. However, sometimes this contradicts the compliance rules, so strict immigration laws remain a problem for hiring specialists in-house.
Strategies and tactics to address the skill gaps problem
Companies check various approaches trying to mitigate the skills gap. Oil and gas 2021 landscape is ever-changing, so it is not clear yet what strategies will dominate. Therefore, it is advisable to select the approach that best aligns with business needs or to combine several strategies for optimal results. However, identifying skill gaps is a crucial step that cannot be overlooked, so this guideline will begin with that process.
Identifying skill gaps
We suggest taking a short test to identify skill gaps. It consists of several steps:
Examine the business strategy and write down the key goals it entails
Note what professionals are required to reach these goals
Describe what skill set each of these professionals needs to perform their tasks
Make a list of the skills that the existing professionals have
Compare these two lists and gauge the existing skill gap
Only then proceed with choosing the most suitable tactics for closing this skill gap.
Train existing employees
This option seems the most obvious; however, it also has its pitfalls. As the research shows, 43% of workers can and will be reskilled, which sounds promising, but there are still 17% who can’t be upskilled. Therefore, training closes just half of the skill gap.
Organizations can either organize an in-house training schedule or hire training experts to design a unique program that suits them. In either case, the program should cover both theoretical and practical aspects (including instructor-led sessions and demonstrations as well as tasks and exercises).
Create new job opportunities
Engaging young specialists is about building a solid professional foundation for the industry’s future. As we have mentioned, millennials and Gen Z generations are interested in new technologies and have high expectations for working culture. This means that companies will have to rethink their policies regarding inclusivity, environmental responsibility, and career growth opportunities to create workplaces that will look attractive to younger specialists.
Overcoming gender imbalance is another way to engage a new workforce. Female employees can help close skills gaps as effectively as male ones, bringing new talent to the industry. This is a “kill two birds with one stone” solution, as it also contributes to creating an inclusive environment that meets the requirements of modern society.
Automate processes that require tech-savviness
Some companies prefer not to puzzle over employee training or new talent engagement. Instead, they choose to replace humans with machines and automate their tasks. Such an approach has some benefits, as automation has the potential to reduce accidents and injuries by 6% while bringing $220 billion additional value to the industry. Machines are better and faster than people at data analytics, so robotic process automation (RPA) unlocks new opportunities for data-driven decisions, predictive modeling, and business scaling. With automation, resources can be managed using next-gen enterprise resource planning (ERP) that relies on the data provided by smart devices.
On the other hand, machines lack creativity and flexibility, so they can’t replace humans when it comes to more complex data science tasks that require consideration of different levels.
Outsource projects and tasks
Partnering up with external companies to augment staff capabilities with new talent can help solve short-term tasks. The main pitfall is that more time and money will need to be invested in new team onboarding. On the bright side, external oil and gas professionals are pre-trained to quickly capture tasks, close the skill gap, and contribute to the overall business strategy. 30% of today’s businesses rely on this solution to close skills gaps, while 38% are planning to do so. They can count on the expertise of such teams in their selected field, e.g., IT infrastructure design, custom software engineering, or development of a cyber resilience ecosystem within a company.
Attract professionals from other industries
Hiring dedicated professionals from other industries is another effective option for addressing skill gaps. As the oil and gas sector evolves towards cloud computing solutions, artificial intelligence (AI), digital twins, and the internet of things (IoT), organizations can recruit professionals with hands-on experience in these technologies from other fields. While it may take some time for these professionals to familiarize themselves with the industry's specific nuances, they are already well-equipped to perform tasks within their areas of expertise.
Closing thoughts
As oil and gas companies start to identify skill gaps that hinder growth, it becomes crucial to determine the tactics that will work best for them. This involves experimenting with different approaches and finding the right balance between upskilling current employees and attracting new talent. Given the significant financial investment required, it is wise to seek guidance from experienced professionals to ensure your efforts are successful and the skill gap is addressed before it impacts your ROI.