In the not-so-distant past, oil prices were escalating and resources were difficult to find. Now that oil prices are dropping, energy companies are downsizing their workforces. Will you be able to hold on to the right talent to grow again in the future?
Energy companies need robust HR processes to manage growth and contraction while building organizational strength and capability for the future. Those that are best able to respond without simply taking a slash-and-burn approach will be the first to recover and in the best position to take advantage of future growth.
One thing is certain: The impact of the drop in oil prices affects each company differently, with regional, political, value chain exposure, scale, cash flow, and balance sheet strength all playing important roles in determining the appropriate future strategy.
With previous oil price drops, the main impact of workforce contractions occurred upstream, particularly in oilfield services. This trend is repeating, with many majors and independents already cutting exploration and production investment this year and downsizing corporate centers. Consolidation is occurring in certain sectors like oilfield services. However, with national oil companies trying to buy reserves on the cheap and downstream companies benefiting from the market fluctuations, major players will find opportunities and risks to evaluate.
There is a clear window in the sector to selectively hire workers with skills that normally take 12-plus years to develop. Organizations in a strong financial position can acquire not only reserves and physical assets, but also lure top talent. Examples include recruiting experienced project managers to upstream companies to deliver critical projects and targeting talent involved in high‑cost programs such as enhanced oil recovery.
However, not all regions will experience the talent shifts equally.