Did you know the median age of an oil and gas employee is 42.8 years old, up from 38.6 in 2011? While younger than other industries, it’s a clear trend that the workforce is aging. Combined with a large number of executives beginning to retire, this creates a distinct leadership gap that must be addressed to ensure a company’s long-term success. Let’s take a look at how this unique trend formed and why it affects your succession planning and employee management.
To understand the age gap affecting your company, it’s necessary to look at a timeline of the last 30 years:
1990: The price of oil drops significantly, shrinking profit margins and the number of available jobs. As a result, fewer individuals enter the industry.
2001: As oil prices rebound and the demand for talent rises, younger demographics are attracted to oil and gas. Companies begin to see the first signs of a distinct age gap, stating the majority of their workforce is made up of those in their early 50’s alongside entry level individuals, with not many in between.
2011: After a decade of young talent flocking to oil and gas, the industry demographics make the age gap clear. The majority of workers are 25-34 years old with a significant number also aged 55-64.
2014: Oil and gas firms report 27% of their employees are likely to retire in the near future.
Present Day: Following the timeline, it’s easy to see why there’s currently a significant age gap in the oil and gas industry. The crew change has happened. The first signs were seventeen years ago, and those who were in their early 50’s then are now well into retirement age and leaving their executive and leadership positions. Furthermore, employees who were in their early 30’s in 2011 are now the industry veterans stepping up to fill important roles and becoming Vice Presidents, Directors, COOs, and CEOs at the age of 40.
Not surprisingly, 75% of HR professionals in the oil and gas space are concentrating on their future workforce needs in light of retiring executives, which is a much higher percentage than their counterparts in other industries. Faced with a unique age gap, proactive companies are refining their succession planning to best leverage younger workforces and create seamless transitions between employees who may have a 20+ year age difference.
Outside of identifying candidates with strong leadership qualities, transitioning a 40-something into an executive position currently held by a retirement-eligible individual requires a great deal of knowledge transfer. Outgoing Baby Boomers have innate industry expertise that cannot be found anywhere else but through experience. While a younger executive may have a solid technical foundation and the drive to succeed, they must discover and understand the expertise of their seasoned counterpart. That will take more than one day, potentially requiring regular conversations or job shadowing over the course of months.
At the same time, while this may be the high potential talent’s first executive role, they likely won’t see it as their last. Younger generations make their career path and skills growth a priority, and the best organizations acknowledge this hunger during succession planning by engaging in conversations that help talent see their future and the company’s future as one. It’s a best practice to discuss goals and how one executive position will lead to the next internal one, creating an executive that’s in it for the long-haul.
Younger executives can certainly help provide a leadership style that better relates to a younger workforce. After all, given oil and gas demographics, successful employee retention and engagement rests on a company’s ability to understand what their employees want and providing it. Talking to your employees and candidates is of course the best way to uncover their specific desires and needs, but there are a number of things this group generally seeks out from of their employer.
Studies show that Millennials crave mentorship and constructive feedback. This goes hand in hand with succession planning, and can help shape effective training across the organization while providing that sought-after career guidance. Millennials place great value on a healthy work-life balance, desiring flexible hours and remote work when feasible. Likewise, younger talent feels a strong connection to the world. They desire to make a positive difference in their communities, and value employers who organize volunteering opportunities. Finally, this group wants to be a part of a fun and healthy workplace culture that helps them see their roles as rewarding careers rather than just jobs.
The oil and gas industry may fluctuate for a number of reasons, but companies that can adapt to change are the ones that persevere through market changes and keep operations running smoothly. Whether it’s a result of age or a major event such as an acquisition, the fact is that older executives are retiring and younger generations are taking their place. How will you react to this shift?
We’ve been in your shoes and are ready to aggressively pursue the leadership to fill your business needs. Contact us today to get started.