Attracting and Retaining Talent in Booming Shale Markets

177757666The U.S. shale boom has been touted as the most significant energy development in decades. Although the economic benefits have been much lauded, such rapid job creation and economic expansion comes with growing pains – specifically in the form of attracting and retaining talent.

Rising employment in the oil and gas industry has increased competition for an already limited, highly skilled workforce and has caused talent shortages, challenges in succession planning and higher turnover rates as companies resort to poaching talent from one another. This has led to increasing levels of risk associated with staffing a growing number of positions, particularly in the remote shale plays.

Areas that face some of the greatest hiring challenges include Midland and Odessa in West Texas, and Williston and nearby Dickinson in North Dakota, which form part of the Permian and Bakken Basins, respectively. These basins are part of booming shale markets where firms are focused on ramping up hiring and growing their footprints. Challenges facing businesses in these areas already include limited local talent pools and a chronic lack of housing and other critical infrastructure.

Capacity crunch

The oil and gas industry’s reliance on contingent workers for surge capacity, in combination with low unemployment rates and double-digit population growth, has meant a lack of available housing and strained municipal services. Both West Texas and North Dakota are suffering a ‘housing crunch’, preventing the typical influx of needed workers to support industry projects. Although construction efforts have ramped up dramatically, the accommodation shortage now runs into thousands of units as job creation in the area continues to outpace construction.

Such is the scale of the problem, that some companies are contracting entire hotels to accommodate staff. In areas where companies want professionals to relocate, increasing numbers of workers are living in their RVs or “fifth wheels” on a long-term basis. Often, this is not an option in North Dakota, where the extreme cold can prove deadly – further narrowing housing options in Williston and Dickenson and making both locations a challenging sell. Overall, this is a challenge in recruiting new candidates to the area and can be a barrier for those professionals with families.

In both areas, particularly in North Dakota, companies that are open to candidates splitting time between their work location and their current home have greater options in terms of identifying viable candidates.

Window of risk

This combination of factors has made it extremely difficult for companies operating in West Texas and Western North Dakota to staff their plays appropriately. These dynamics present a double-edged sword where attracting talent is one side, and retention of these hard won assets the other.

The single greatest expense for any company is its talent, where retention of skilled workers becomes key to the bottom line. Employee churn also causes higher safety risks as up to three times the number of work-related accidents occur within the first month of hire. Retention is vital not only to maximize profitability, but to also to reduce the risk of work-related injuries.

Ways to improve retention rates vary by location. For West Texas, big city amenities with a small town commute is attractive for those looking to escape the grind of the big city. For North Dakota, companies have managed to address this challenge by placing more focus on recruiting individuals with experience of working in areas such as Calgary, Canada, since they are used to withstanding the extreme elements found there.

Selling opportunities in the Permian and Bakken Basins

For HR teams, it is crucial to sweeten the reality of working in environments like West Texas and North Dakota. The most important factor in selling opportunities in the Permian and Bakken Basins is to really listen to individual candidate needs to enable an outcome that is sensible for the employer and attractive enough for the candidate to sign on the dotted line.

For example, the best option may be to offer individuals a rotation where they are able to return home for a week or so every four to six weeks. Alternatively, if the candidate is willing to travel and keen to build on their experience, it is good practice to ensure they are considered for an intercompany transfer when possible.

Certainly, offering professionals the opportunity for career progression is one of the most effective ways to ‘sell’ them a role in a less attractive location. Shale plays in the Bakken and Permian Basins tend to be operated by firms that also have projects and offices in other locations that can be leveraged to attract and retain employees.

While oil and gas professionals with five to 10 years’ experience are in highest demand, professionals with less experience that are willing to relocate to North Dakota or West Texas can open doors that would otherwise remain closed. For companies looking to build a pipeline of talent for key disciplines within their business, recruiting to more challenging locations but offering candidates the opportunity to relocate at a later date, can entice those looking to build their experience to locations they would not normally consider.

Even some of the majors are adopting a more focused model for tapping into new markets, opening up opportunities for oil and gas professionals with just one to two years’ experience. This also applies to those with experience in a different industry such as automation, aerospace and construction, where they have engineering skills that are transferrable.

With rig counts at an all-time high, attracting and retaining employees often takes a back seat to operational issues. One of the ways companies are increasing hiring activity while maintaining their day to day operations is to place greater emphasis on global mobility services.

Global mobility services are increasingly pertinent for projects that require workers to relocate or travel with their families.Companies tend not to put down roots unless there is a longer-term opportunity. Rather, they follow a project in and out of a country or state, as it is not cost effective for them to install infrastructure locally. However, by working with a resourcing partner and staffing projects on a contingency basis, companies can avoid many of the complications that would otherwise arise if they employed and relocated their own people full-time in a local market.

PREMIUM CONTENT: Trends in U.S. Staffing Market Concentration and Staffing Firm Rankings

Counting the cost

The challenge of recruitment and retention in the shale industry is compounded by the ongoing boom, which shows no signs of abating. The opportunities keep coming, but if firms are unable to fill their vacancies, then the risk to their business is significant.

Estimates suggest that the average cost of an ‘empty seat’ (unfilled vacancy) in the oil and gas sector is as high as $30,000 per month. If it takes three months to fill a seat, then the cost to the business reaches $90,000 – just for one individual. Consider that cost across multiple plays in multiple regions and the scale of the issue becomes apparent.

As a result, it is imperative that firms across the industry adopt a new mindset when it comes to attracting and retaining talent. Theintense competition for talent is not only on the exploration and production side, but the supporting services side too.

For example, demand for engineers skilled in water excavation or transfer (vital for the development of shale resources), has risen substantially in line with the growth in fracking activity. It is not easy to find professionals with more than five years’ experience – even in Oklahoma City – which is considered the birthplace of the water transfer business. An additional challenge is, therefore, creating a path of development and identifying skill sets that are transferrable.

Mitigating rising risk

Ultimately, as firms get busier and employee churn increases, it is often training that is sacrificed. The result is overspend on senior staff to perform tasks below their skill level and the use of less experienced staff, which raises the risk profile of a play.

All of these concerns equate to people-related risk. Due to its significant and wide-ranging impact, Air Energi has partnered with Queensland University of Technology (QUT) in Australia to develop a comprehensive tool called ‘People Risk Evaluation for Projects’ (PREP), for identifying and reducing workforce risks. These risks have been broadly categorised into six core areas: project appeal, recruitment, onboarding and induction, retention, reassignment and demobilisation, and compliance.

Importance of ‘project appeal’

Perhaps one of the most interesting findings of the research is just how much emphasis oil and gas professionals place on the attractiveness of a project itself. The appeal of the project location for example, depends on whether a location is considered safe, if taxation arrangements are favourable, and whether there is a high number of competing projects in the same area.

However, with locations such as the Bakken and Permian Basins, it is clear more innovative approaches are necessary to enhance project appeal given the prevailing socio-economic and climatic conditions. Moreover, it is vital that E&P firms and those providing supporting services in these locations look to harness a tool such as PREP to mitigate people-related risk from the outset.

Doug Thorner contributed to this post.


MORE: Closing staffing industry perception gaps

Melissa Hooper

Melissa Hooper
Melissa Hooper is a lead consultant, Permian Basin, at Air Energi.

Melissa Hooper

Share This Post


Related Articles

Powered by ·