The oil and gas industry faces significant challenges in employee retention, particularly as the shift towards decarbonization changes skill requirements. A key strategy for improving retention is developing a strong Employee Value Proposition (EVP), which includes benefits like competitive compensation, career opportunities, work-life balance, and positive company culture. Research involving over 70 organizations showed a direct link between high EVP scores and longer employee tenure, although effectiveness varies across sub-sectors. Leadership style plays a crucial role in enhancing EVP and retaining talent.
Employee Value Proposition Effectiveness & Retention Rates
The oil and gas industry experiences varied Employee Value Proposition (EVP) effectiveness and retention rates across its sub-sectors, necessitating tailored strategies. Major companies, with mid-range EVP scores, face moderate attrition and could enhance their EVP for better talent attraction. National oil companies (NOCs) show strong EVP and low attrition, benefiting from limited competition. Upstream segments face high attrition, attributed to technical skill demand and industry shifts, while midstream and downstream companies, with better or average EVP scores, have lower attrition rates but room for differentiation. Services and equipment segments, challenged by high attrition and lower EVP scores, need urgent EVP improvement strategies.
Full Analysis in the Oil and Gas Sector
The analysis of Employee Value Proposition (EVP) drivers within the oil and gas sector highlighted five key areas: work-life balance, culture, career opportunities, compensation and benefits, and leadership style. It was found that, on average, companies scored highest in compensation and benefits but lowest in leadership style, suggesting that enhancing leadership qualities could significantly impact EVP positively across the industry’s various subsectors.
Evolving Leadership Styles Makes a Difference
The study suggests oil and gas companies can enhance their EVP by evolving leadership styles. CEOs and leaders should become identifiable, charismatic figures not just within their organizations but also to external stakeholders. This involves a shift from traditional leadership approaches to more visionary, inclusive, and adaptive styles. Leaders are encouraged to focus on creating value, fostering collaboration, and being more coach-like, promoting innovation and rapid decision-making. This new leadership paradigm emphasizes transparency, inclusiveness, and a more authentic connection with both employees and the broader community.
These important shifts were made within the industry with positive results:
- From Executive to Visionary: Modern leadership in the industry transcends traditional profit delivery to shareholders, advocating for a visionary approach. Leaders are now expected to inspire their workforce with a purpose that transcends organizational boundaries, aiming to create significant societal impact. This shift emphasizes engaging employees in a shared mission, thereby aligning individual goals with broader external stakeholder values and societal benefits.
- From Planner to Architect: The shift from planner to architect in leadership reflects a move away from merely capturing market share to innovatively creating new value. Leaders are encouraged to collaborate with customers and stakeholders to challenge and redefine industry norms, thus paving the way for groundbreaking advancements and value creation that benefits all parties involved.
- From Director to Catalyst: Transitioning from a directorial to a catalyst role involves promoting transparency, collaboration, and inclusivity both within and outside the organization. This approach fosters empowered teams and encourages cross-unit networks to innovate and drive change, leveraging collective strengths.
- From Controller to Coach: Merging the roles of a controller and a coach, leaders are now expected to balance detailed planning with a coaching mindset that encourages rapid decision-making and learning. This dual approach helps address challenges and seize opportunities through innovation and adaptability, fostering a culture of continuous improvement.
- From Expectation-Setter to Authentic Leader: The evolution from setting strict expectations to embodying authentic leadership marks a significant cultural shift. Leaders are now seen as more open, fostering personal well-being, creativity, and autonomy among their teams. This transformation promotes a more human-centric leadership style, enhancing employee satisfaction and organizational integrity.
To address talent shortages, a European oil and gas subsidiary shifted focus towards decarbonization and digitalization. Partnering with HR, the CEO led a comprehensive strategy to attract and retain essential new engineering and digital talent, with a particular emphasis on diversity. This approach included understanding employee desires for inclusion, flexible work, and purpose-driven work, utilizing surveys and external diagnostics to pinpoint EVP improvement areas. This case exemplifies how targeted leadership and EVP enhancement can effectively draw and keep critical talent aligned with strategic company directions.
To enhance talent retention, oil and gas companies must extend their focus beyond compensation, fostering a positive workplace that competes effectively with new energy sectors. Enhancing leadership styles and company dynamics can improve EVP scores, encouraging employees to remain longer, fostering the growth of institutional knowledge, and reducing recruitment costs.
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