Human Resources Management in the Oil and Gas Industry
As organisations in today’s oil and gas sector continue to globalise to survive in an increasingly competitive business environment, the pressure on human resources is escalating.
Finding, developing and managing individuals to ensure that the right resources are available for the right job, at the right time and in the right place, is a key requirement for operators and service sector companies alike. Competition for skilled staff is fierce – and the current skills shortage is turning up the heat.
As managing director of Scottish-based Absoft - one of the largest and longest-established independent SAP consultancies in the UK and a specialist supplier of the leading business software package designed to help companies enhance their corporate performance – Ian Mechie is well aware of the people-related challenges facing the industry.
“Oil and gas sector companies are responding to these challenges in a variety of ways – and increasingly are turning to technology to help them deliver more effective Human Capital Management (HCM) strategies,” he said.
“The range of HCM-related packages available in the marketplace today is immense. Highly-sophisticated tools facilitate the process of employee recruitment as well as development and performance management. Others help to streamline and speed up essential activities relating to administration, payroll, time management and legal reporting. However, many of these packages are quite generic in nature and struggle to deal effectively with the complexities of the oil and gas business.
“Quite often businesses end up selecting a variety of systems, including bespoke and off-the-shelf solutions. The resulting lack of integration between these systems means that operational and maintenance costs increase – which can cancel out any potential business benefits.”
HCM solutions, which form part of larger Enterprise Resource Planning (ERP) software packages, have traditionally been viewed as rigid, complicated and expensive to implement and support – particularly by smaller organisations. But they can deliver huge benefits and quickly provide a return on the initial investment in implementation. Further, the scalability of these solutions makes them accessible to small and mid-sized companies as well as larger ones.
These types of solutions tend to be rich in functionality and highly integrated with other functions such as finance. In oil and gas, this integrated approach to HCM is slowly gaining ground, but there is still plenty of progress to be made.
Many of the service companies that have traditionally focused on one province are now expanding their global operations and have historically managed these using a number of separate HCM software packages. These have often multiplied as a result of mergers and acquisitions. These multiple systems invariably have functionality and integration issues, resulting in silos of information, process inefficiencies and high system maintenance costs.
The existence of multiple, poorly-integrated HCM systems can lead to some key processes and functions not being addressed in a satisfactory manner, leading to inefficiencies and poor performance.
“Competency management in particular seems to be an area that has been neglected. Typically, organisations use different systems to record training and skills assessment information,” said Mr Mechie.
“Operational staff frequently have to resort to labour-intensive manual processes to consolidate data from multiple sources such as spreadsheets and standalone bespoke or packaged HCM systems in order to plan resources for tenders and new projects. Needless to say, this approach makes for significant inefficiencies and seriously impedes an organisation’s ability to maximise the use of its people.”
So what exactly do oil and gas sector businesses need to achieve excellence in competency management? The requirements fall into essentially four categories.
Information integration - a single, integrated source of qualitative competency information for all individuals, incorporating details of qualifications / certifications obtained, combined with independent skills assessments or performance ratings.
Powerful analysis, reporting and planning tools – enabling users to access past, present and future resource and competency profiles, based on any individual employee or grouping – right up to a cross-organisation, regional or global view.
Integrated career management and succession planning – effectively an extension of competency management, focusing on the longer term and marrying competency, training plans and employee aspirations to deliver a people development ‘roadmap’ for the future.
Automation and productivity enhancements – incorporating features and functions to enable operational staff to cut significantly the time they spend organising staff at the sharp end of the business.
“To compete effectively on a global scale and manage an increasingly dispersed global workforce, indigenous service providers could benefit substantially from an integrated, global HCM system, with competency development and management at its core, that allows them to manage and monitor all of their workforce processes, both at a local and central level.
“Some global operators have an integrated business system already, and are continuing to roll out their systems to their UK and other regional operations to achieve better integration and efficiencies.”
There are also companies that have already implemented a single HCM system, but find their particular software inadequate or difficult and costly to manage and support on a global scale. Others have more mature and effective global HCM systems and are now looking at the next stage of HCM development and more advanced functionality.
Outsourcing solutions are also growing in popularity as companies recognise that many basic business processes can be handled by suppliers, leaving them to concentrate on core operations.
Absoft’s Advantage HCM for Oil and Gas offers a simple and affordable solution to the dilemma faced by midmarket organisations. The software provides an integrated view of all workforce-related processes across the business. It enables oil and gas sector companies to recruit, deploy, develop and manage people efficiently, on a global basis, aligning workforce competencies to strategic objectives.
In essence, it provides a single global view of each employee as they move around the organisation.
Implementing Advantage HCM for Oil and Gas can bring numerous benefits to an organisation, not least maximising return on investment by providing a rapid, affordable and controlled route to optimised HCM strategy and development.
The package, which is based on SAP’s world-class business software, automates and streamlines HCM processes, reducing costs and allowing employees to concentrate on value-generating activities, rather than on routine tasks. Industry-specific reporting and analysis options offer real-time insight into the workforce, enabling early identification of trends and better-informed decision-making.
This means companies can manage their workforce more effectively, predict human capital investment demands and track workforce costs and the return on investment associated with HCM projects.
The solution is also scalable, supporting local best practice, legal compliance and other reporting requirements in over 45 countries worldwide.
“The technology is definitely there – in various forms - to support oil and gas companies of all shapes and sizes to establish successful HCM strategies, to help them compete on the global stage,” said Mr Mechie.
“As HR departments continue their transformation from traditional, administrative ‘cost centres’ into high-value business functions, the clear winners will be those that harness technology effectively to meet the needs of their organisations and enable HCM – and particularly competency management - to play an increasingly key role in influencing business strategy.
“It’s a cliché to talk about people being the most important asset of a business, but it’s nonetheless true. Companies that don’t invest in their people, never mind try to capture the extent and value of that investment, are failing themselves.”