InterSearch Oman Chairman, Mohammed Al Kharusi moderated the 2017 OPAL Oil & Gas Conference panel discussion held in Muscat, Oman from October 30th – 31st
Among the panelists were:
His Excellency Salim bin Said Al Aufi, Undersecretary, Ministry of Oil & Gas
Raoul Restucci, Managing Director, Petroleum Development Oman (PDO)
Steve Kelly, President and General Manager, Occidental of Oman Inc. (OXY Oman)
John Malcolm, Executive Managing Director, Oman Oil Company Exploration & Production (OOCEP)
Yousuf Ali Ojaili, BP Oman
Dr.Amer Al Rawas, Chairman, Oman Society for Petroleum Services (OPAL)
Mohammed Al Jahwari, Chief Executive Officer, HydroCarbon Finder Oman (HCF)
-by Asel Shilikbayeva, Principal Consultant – InterSearch Middle East ( Abu Dhabi Office)
The recent downturn in the oil and gas sector followed by the US shale boom and technological advances in the area of exploration & production (E&P) has led to unprecedented skills and challenges faced by companies today. Since 2014, companies understandably focused on cost reduction, including downsizing their workforces shedding over 440,000 jobs globally (1).
The industry, however, is on the edge of a demographic fall with an ageing workforce approaching or surpassing its retirement age, shortage of mid-career professionals and not enough fresh talent finding the sector attractive to join due to its poor image. These challenges are particularly significant in the context of rapidly growing demand for energy as well as global calls for greater adherence to responsible social and environmental practices. According to the International Energy Agency’s 2016 forecast, the demand for energy will increase 1.2 percent per year until 2035, with hydrocarbons continuing to supply at least half of the world’s energy needs (2). This is being compounded by the rapid growth in workforce demand fueled by deep water activity in West Africa, Eastern Mediterranean and Brazil, frontier developments in Mozambique and Tanzania and the shale boom in North America.
With oil and gas experts exiting the sector this may lead to an increase in recordable safety incidents or even unplanned equipment downtime if it cannot be promptly replaced. There is also a risk in valuable institutional knowledge being lost unless it is transferred to others. The shortage in skilled talent has major implications for the industry’s pipeline of top leadership, which tends to move up from the ranks of experienced managers in skilled technical positions. With this skills change dubbed as the Great Crew Change, companies face an even more significant challenge: crew change at the top.
Many leading energy companies have begun making their own plans to address increased retirements and help prevent critical skills gaps that could derail their growth ambitions. These plans have incorporated a number of forward-looking initiatives designed for a smooth transition including succession planning, accelerated development and mentoring programs, enhanced recruiting strategies and a variety of knowledge transfer programs.
There are three major emerging forces that are changing the future talent landscape in ways that have not been experienced by the sector before:
First, it is the debate over the long term future of the petroleum sector triggered by the rapid growth in the renewables and electric vehicle technologies. Leading forums and consultancies such as the World Energy Council and McKinsey & Company predict that oil demand would peak at around 100 million barrels a day by 2030 – a striking shift from bullish projections of 118 million barrels a day and higher in the years preceding the downturn (3). Hydrocarbons will retain its majority share of the energy supply for the foreseeable future, but the balance is changing and the greener future does seem assured. Experts believe that tightening climate regulations and competitive economics of renewable energy will further accelerate this trend, casting doubts over the revival of large scale capital spending in the E&P sector.
The second force is the digital revolution that has brought an explosion of technologies such as big data, artificial intelligence, robots, 3D printing, Cloud, and more recently block chain. These technologies are predicted to shape the future jobs creating requirements of the new set of skills, not all of which are possibly known today. While E&P firms are still warming up to them, the adoption is inevitable and will gradually pick up as mentioned by various research firms.
Third is emergence of the millennials generation in the corporate world. It is expected that the millennials will form a majority of the workforce by as early as 2020 (4). Much has been written about the millennials: their digital proficiencies, career preferences and search for the purposeful jobs. Their appearance at the management level will adjust hierarchical and conservative organizational culture, siloed work environment and highly specialized career paths typical to the petroleum sector. In addition, the millennials are increasingly mobile and their proneness to technology advancements will change the type of work they perform. These factors are exacerbating the war for talent by extending competition beyond local, and even national, labor markets.
The forth force is the focus vastly on agile and improved efficiency at around US$50 “lower for longer” oil price environment. This is essential for the industry at the moment and translates in avoidance of any form of complexity, which may slow down exploration programme or commercialization of new discoveries. In order to discontinue fueling a shortage of skilled workers into the future, companies need to pursue talent processes that better manage the attraction and retention of engineering and technical talent. At the same time, development and training programs should also focus on fostering a higher level of cost consciousness among existing workforces, who will likely be asked to operate in more fiscally constrained manners going forward.
In both the short and long-term, oil and gas companies face a number of workforce issues ranging from low commodity prices to perceptions of the industry and generational preferences, regulatory changes and technology developments. Continued success will require attracting, managing and retaining a workforce which not only sustains the business, but also innovates and executes in a powerful new way.
- David Wethe, “Oil Drillers Are Expanding Again After Losing Half-Million Jobs,” Bloomberg, January 9, 2017.
- International Energy Agency (IEA), “World Energy Outlook 2016”.
- Bram Smeets, Angelos Platanias, “The Outlook For Crude: A Thought Experiment”, Energy Insights by McKinsey, June 2016.
- David Andrews, Aleek Datta, Charles Newnam, Jean-Marie Rousset, “The Talent Well Has Run Dry”, Accenture, 2017.
With further pressure on oil prices in the short to medium future, many of the regional leaders have been exploring other entrepreneurial and innovative industries to supplement GDP. This has long been the case in the UAE, Dubai especially, with the transformation toward tourism and services; however other nations are following suit more actively.
A number of regional governments have already committed to investing heavily in digital innovations as seen in Saudi Arabia’s 2030 Vision, PIF’s $3billion investment into Uber and Softbank’s recent $93billion private equity technology fund (backed by Mubadala, Saudi Arabia Government, Apple and Qualcomm). The UAE is hoping to create a FinTech Hub to rival that in London and we see a large rise in incubator programmes and Venture Capital Firms, who have historically avoided the region and invested in more predictable global locations. This highlights the region’s awareness and commitment to embracing digital disruption in order to compete on a global scale if and when the oil runs out.
An interesting article was released last week by Stanford University’s Tony Seba. In which he outlines his view on the redefinition of the automotive industry and the possibility that this shift could be the catalyst for the next oil crisis. Tony predicts that in the next eight years only electric cars, trucks, buses will be sold. Furthermore his premise outlines that most vehicle travel will be in autonomous vehicles and vehicle ownership will become a thing of the past, with the rise of on-demand vehicles. Earlier this year, the RTA announced that Taxi Drones will be in service in 2017 and they have already tested autonomous buses in parts of downtown Dubai which could give some credit to Tony’s claims.
OPEC have different views and see that the adoption of electric vehicles (EV’s) will take much longer as the current number of EV’s is less than a tenth, of 1% of global vehicles. There are further hurdles for EV’s with the cost of production, the cost of batteries and the current limit of travel range. Furthermore, the increased usage of electricity for transportation may be compensated by the increased usage of fossil fuels used in the production of electricity until renewable production catches up with demand.
Obviously, we are seeing great progress with renewable energy production in the region. Earlier this year Elon Musk discussed partnership and sharing of knowledge and resource, with HE Saeed Mohammed Al Tayer, CEO DEWA. The partnership would support Dubai’s plans to become a global hub of clean energy and green economy. The largest-single site solar project is already in progress which aims to provide 75% of Dubai’s total energy output by 2050.
Although it is unlikely that we will be swapping the Land Cruiser or the Patrol for a flying or even Electric car in the near future, I do think that the investment in digital, innovation and transformation that we are seeing across all industries will continue to grow. It gives a great opportunity to those in disruptive technology and creates a vibrant talent marketplace for those professionals who operate in digital, technology, security, IOT and transformation.
Attracting the best talent to facilitate this innovation is the key to remaining competitive and those who don’t are potentially running the risk of being left behind. As many sectors are challenging for the same type of expertise, we are noticing a skills shortage which often requires us to approach global talent from more developed markets; who cannot only lead innovation but who can also skills transfer to high-potential nationals.
New research has suggested that public sector staffing levels in the UAE are unsustainable as oil prices shrink government revenue and automation replaces the need for certain jobs to be carried out by humans.
According to the World Economic Forum (WEF), government jobs account for 80 per cent of nationals employed in the GCC, which represents the highest central government wage bill (as a percentage of GDP) in the world at 9.8 per cent – nearly twice the world average and four times that of Japan.
Ahmed (who asked his real name and employer not be identified) works for the government, like so many thousands of others. He is sanguine about the impact of automation on jobs despite widespread evidence of workplace disruption from robotics and artificial intelligence. “Anyway, labour costs are low here in the Gulf so I don’t think it’s a problem for us,” he said.
However, weaning nationals away from government jobs and making them ‘future ready’ is crucial if the economies of the six-member GCC are to propser from the march of digitisation. A new report, ‘The Future of Jobs and Skills in the Middle East and North Africa’, by the WEF pulls no punches and says the GCC is not exempt from the workplace upheaval experienced by other major economies.
Change starts with education and reconfiguring the skillset of graduates. Put simply, the region has a skills gap and needs more employees with STEMs (Science, Technology, Engineering, and Mathematics) degrees to satiate the demands of technology based economies.
Kai Chan, distinguished fellow at INSEAD’s Innovation and Policy initiative, argues the emphasis should be on raising participation in data-intensive and science-based subjects in school. “Right now, the uptake of STEM degrees is very low – even when they are chosen, most of the students in the region are not globally competitive.”
Yet amid the uncertainty, there are opportunities. A white paper by IDC (a market intelligence firm for the IT sector) predicts 800,000 new jobs globally by 2021 as a result of automation but says new workforce development programmes are critical to ensure employees are prepared for the next wave of innovation.
There will be strong demand for professionals who blend digital and STEM skills with traditional subject expertise such as digital-mechanical engineers and business operations data analysts, as well as user interface experts who can facilitate human-machine interaction, says the WEF. The radical reshaping of work may also open a wider range of careers to women in areas like remote and virtual working. Still, it is not just technology that is forcing change in the GCC – socioeconomic and demographic factors will result in new occupations, a decline in others and new ways of organising and coordinating work.
If harnessed correctly, these changes will help resource-rich Gulf states diversify their economies by reducing dependence on oil and gas exports. Even so, contending the dualities of automation and socioeconomic disruption will require leadership said Nairouz Bader, chief executive officer of IIC MENA, an executive search partnership. “In the past, leadership was about clarity and clear vision: Now leadership is the ability lead in a VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world”.
The original article appeared here: http://bit.ly/2u5uBCH
As the landscape of recruiting changes, different methods are needed to reach talent, and social media is a key channel. However, many HR and recruiting professionals are not equipped with the expertise to create a social media recruiting strategy.
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-by Andrew Bailey, General Manager – InterSearch Abu Dhabi
There’s honestly no other place on this planet where the world’s population comes to work, other than the UAE. Almost every nationality is represented in some shape or form, along with the standard diplomatic officials and trade councils. As we know, the region has experienced tremendous growth in such a short period. The world’s dependence on natural resources still remains high, however with the oil price flickering around the US$50-$60 mark, this has given the government’s more incentive to not only diversify their interests, but has also allowed them to take a step back, consider the current landscape, make the necessary changes so we are all prepared for the markets to turn again. Abu Dhabi is no exception…
‘Consolidation’ is the buzz word in the UAE’s capital at present. Its literal definition is:
‘The action or process of combining a number of things into a single more effective or coherent whole.’
NBAD and FGB have now officially merged, becoming the largest financial institution in the UAE, with a combined US$186bn in assets, and a market cap of US$30bn. These numbers haven’t been seen in this sector, in this market…ever.
The recent mega-merger of Mubadala and IPIC is another notable effort of consolidation. The new entity, now known as Mubadala Investment Company, who officially employs in excess of 68,000 people has become one of the largest strategic investment organisations in the world.
Masdar Institute, Khalifa University and Petroleum Institute have also made the strategic decision to consolidate, to become one of the strongest educational facilities worldwide.
Mubadala Real Estate & Infrastructure and Eshraq Properties have just announced their own merger, ensuring they both experience what appears to be a trend in the region.
On a global scale, with local impact, SNC Lavalin and Atkins have announced a merger, Aberdeen based Wood Group and Amec Foster Wheeler have also joined forces, as well as Johnson Controls and Tyco, and Emerson Electric and Pentair Valves and Controls.
The rumour mill has been working in overdrive the past 6 months; more financial institutions to merge, government and semi-government owned entities to form strategic partnerships, the healthcare sector to go through a complete overhaul, plus more.
Regardless of what actually happens next, the vision of Sheikh Mohammed Bin Zayed, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the Armed Forces and Chairman of the Council is clearly aimed for the betterment of all citizens and residents of Abu Dhabi, across all sectors and industries. The impacts of change will be felt initially, however when normalcy returns, the markets will turn, and we will be back on track for more growth, and exciting times.
As Executive Search consultants, the changing landscapes offer unique opportunities for those with ‘out of the box’ skillsets. The few examples above are only a tiny glimpse into the shift that is taking place at present. These organisations now have teams of people to support the integration process, assist to develop new cultures, and support the new structures that have been put in place. We have lived through a number of economic cycles, and during these days of uncertainty, we often find the candidates who do not ‘check’ all the boxes on a job descriptions checklist, but offer something new, something different, something unique, they are the ones most highly considered.
During this transitional period, employers can afford to be more selective with their hiring. Their interview process is more thorough, and their selection criteria has become stricter…and understandably, too.
We are encouraging our candidates to stand out from the pack, differentiate themselves and demonstrate where they can add value to potential employers moving forward. The competition for senior management positions has risen, whereas the vacancies in the market have somewhat waned. Traditional skillsets seem to be a thing of the past. Employers want more from their leaders these days, whether it be a unique certification, ability to oversee more departments, comfortably adapt to new structures, or simply capability to drive strategic transformation.
We are receiving literally hundreds / thousands of new resumes every day from those feeling the effects of this bumpy market…and we have seen every shape / form / layout possible. Conventional skills are still great to have, however potential employers need to know where you’ve added value in the past, and how you plan to add value to their organisation moving forward. Keep in mind your resume / bio is going to assist you get a foot in the door. Make sure it’s worth reading. Only then, you’ll be given a chance to listen to the opportunity directly from the employer, and sell yourself accordingly during an interview. Spend time ensuring you haven’t just copy / pasted your job description on your resume. Demonstrate your strengths and where you go above and beyond. You’re paid to complete your responsibilities on your job description. This is not necessarily something compelling enough to read. Illustrate your true value add, and provide examples. The competition is tough, so ensure you’re ahead of the pack.
Now is the time to upskill, obtain that qualification / certification that you’ve always thought about, and stay agile in the current market. Make sure you are well positioned during the shifting tides, so you’re placed to make the most of turning markets…the good times aren’t far off, so ensure you know where you want to be, when the dust settles.
Growth in other sectors expected to hit 3.3 per cent after widespread investment
Non-oil growth in the UAE will hit 3.3 per cent this year, according to forecasts by the International Monetary Fund (IMF), as the country continues to successfully diversify its economy.
Overall growth is expected to be only 1.3 per cent because of lower oil production, but widespread investment in non-oil sectors is clearly paying off.
“The UAE is adjusting well to the new oil market realities. Its large financial buffers, diversified economy and the authorities’ robust policy responses are facilitating the adjustments while safeguarding the economy and the financial system,” said Natalia Tamirisa, head of the IMF mission to the UAE.
Consumer goods saw the highest employment growth of any UAE industry in the first quarter of 2017, suggesting that other sectors are capable of picking up the slack during the slowdown in oil production.
Earlier this year, recruiters were predicting a boom in hiring in banking and finance – partly a result of the Government Accelerator programme to boost the hiring of nationals.
However, the purchasing managers’ index (PMI) – an indicator of the economic health of the manufacturing sector – levelled off after hitting a 19-month high in March.
“The PMI shows that while overall activity was firm going into the second quarter, organisations are still facing significant challenges as job creation remains subdued and pricing power is limited,” Tim Fox, head of research and chief economist at Emirates NBD told The Khaleej Times.
Spending on infrastructure is set to grow steadily in 2017, after the government reduced spending during the previous two years in response to the low price of oil. This could mean increased hiring in the construction and energy industries, in particular. The introduction of VAT next year will also create extra tax revenue.
The original article appeared here: http://bit.ly/2qweN7D
-by Harris Karaolides, General Manager – InterSearch Dubai
A while back I had a meeting with the VP International of a small but dynamic European multinational company, very nice guy, one of his current projects was developing the Middle East market. This gentleman was desperately seeking a General Manager for their newly established Middle East branch in Dubai and was unsuccessfully trying to find the right person by posting classified advertisements about the role on job boards. I approached him to suggest we could perhaps help.
It doesn’t really matter if we won the assignment (which we did) or if he did hire the right General Manager (which he did) – what I want to point out is the following: When we met for the first time I had asked him why he was trying to make this hire, the most crucial for the company’s future in the region, by posting an ad and hoping the right person would a) see the ad, and b) bother to reply to it, instead of working with a search consultant who would make sure to approach and assess the top people on the market. His reply was: “The services of executive search firms like yours are very expensive and without a guaranteed outcome. My boss has been refusing to work with headhunters for years, since he got burned by a couple of them in France and in Eastern Europe.”
I have to say that the particular client came much easier than I expected after such a comment: I told him that our services are actually really cheap compared to the opportunity cost of a six-month lag in his business plan as a result of not finding the right person through ads. As for the “guaranteed outcome” I suggested he talks to some compatriots of his who are our clients for references, and gave him the names and contact details. He thanked me, left and a few days later he called me from the head office giving me the green light to start the search. “Do a good job”, he said, “or I’m screwed, my boss will have my head!”
A few days back this nice gentleman called me again. He wanted to ask me if InterSearch has an office in Hungary and if I can put him in contact with my colleagues in Budapest since he is establishing a subsidiary there and his boss “doesn’t want to waste time and money.”