the capability crunch the battle for resources 23 november 2010 – robin pinchbeck

The Capability Crunch the battle for resources

23 November 2010 – Robin Pinchbeck

Agenda

• Petrofac

• Context for our industry

• Generation X & Y

• Our approach to recruitment & retention

• Petrofac’s employment proposition

Petrofac

• A leading provider of facilities solutions to international oil & gas industry

– 30 years’ experience supporting oil & gas production and processing

– Successful track record of several hundred projects

• We design and build oil & gas infrastructure; operate, maintain, and manage facilities and train personnel

• Where we can leverage our service capability, we develop and co-invest in upstream and infrastructure projects

• Our key markets are the Middle East and Africa, CIS and Asia Pacific and UK Continental Shelf

– these markets account for 70% of the world’s proven oil reserves and 85% of proven gas reserves

Finding Petroleum: The Capability Crunch

Focused on growth…

Revenue – US$ millions

391‘02

• 13,000+ employees • listed LSE• market cap. approx. $8bn


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Inde

xed

Pric

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609%

7%27%38%

672%

Source: FactSet as at 4 November 2010

Petrofac FTSE 100OSX FTSE 250Petrofac + EnQuest

Indexed share price performance since IPO


Operating locationsMilan

Abu Dhabi

BeijingLondon

Woking

Aberdeen

Moscow

Doha

Houston

Sharjah

Mumbai

Chennai

Jakarta

Kuala LumpurLagosAhmadi

Algiers

Tunis

Damascus

Bishkek

Khartoum

Atyrau

Sakhalin

Khobar

Main operational centres

Other operating locations

Corporate services


Petrofac “DNA”

• entrepreneurial culture with leadership close to the detail

• a focussed business in terms of offering and geography

• high employee ownership, yielding high project ownership

• a willingness to take (and manage) commercial risk, beyond the appetite of peers … AND to do things differently

• high confidence to deliver ‘on the ground’ where we work using:

- local resources and supply chain to deliver to international standards

- our contacts and cultural affinity

• risk identification and management followed by a relentless attention to detail in execution

Industry and Social Context


• Over half the world's energy is currently sourced from oil and gas and this is forecast to rise towards 60% in 2030

• Even if the UK achieves its objective of sourcing 15% of its energy from renewable sources by 2020, it will still rely on oil and gas for 70% of its energy, roughly the same proportion as today

• The maturity of Western economies is linked to lower birth rates and fewer graduates just as companies are striving to expand into new markets in developing countries

• The whole industry faces some stark demographics:– Around 50% of professional E&P staff are aged between 40 and 50 – Only 15% are junior recruits aged between early twenties and mid-

thirties– Up to half the current workforce is likely to retire within the next ten

years• Pressure to replace skills is most likely to be felt in the technical side of the

business, where shortages are more acute and the demands from the business more intense

Oil Industry


Social Context

• Whilst oil and gas industry people needs will continue to grow over next decade, too few people have entered during past 25 years resulting in shortfalls of talent

• In particular there is now a critical shortage of middle managers in positions to succeed those in senior leadership teams, who will be retiring in next 5-10 years

• Universities across Western world are not graduating enough engineers to take care of their domestic needs, never mind producing a large expat population

• Need to look across world for future intakes as some countries are producing a surplus e.g. China

• Industry faces critical challenges both in terms of:– quantity of people in those locations where they are needed – and quality of new entrants overall


• The energy industry is unique in:– diversity and scarcity of abilities and expertise needed to make things

happen, and – far-flung locations where cream of those highly specialised skills are

required• Energy projects commonly involve project management and design in one

location (often in the West), with construction in Asia, and final stages taking place in Africa, China or Australia

• Consequently, project management and technical personnel must be able to move freely between continents to execute each project phase

• Therefore companies servicing the oil industry require immigration and employment policies that allow overseas professionals ease of passage

Social Context


Demographic Challenges

• Generational differences have real implications on how employers and employees interact

• Each generation brings a different set of attitudes to the workplace• Organisations need to respond to these different attitudes if they are to

attract and/or retain talent from each generational group• Generation X (those experienced professionals currently in middle

management positions looking to progress) are most notably in short supply


Demographic Challenges

Traditionalists

(Born 1922-1945)

Baby Boomers

(Born 1946-1964)

Generation X

(Born 1965-1980)

Generation Y

(Born 1981-2000)

Work Ethic/Values Hard work

Respect authority

Adherence to rules

Work efficiently

Desire quality

Question authority

Want structure and organisation

Sceptical

Multi-tasking

Entrepreneurial

Goal-orientated

Leadership Style Directive

Command and control

Consensual

Collegial

Everyone is the same

Challenge others

The young leaders’ century

Interactive Style Individual Team player

Loves meetings

Entrepreneur Participative

Communications Formal

Written

In person Direct

Immediate

Email

Voicemail

Feedback and Rewards

Satisfaction in job well done

Don’t appreciate feedback

How am I doing?

Freedom = best reward

Whenever I want it at the push of a button

Meaningful work

Messages that Motivate

Your experience is respected

You are valued and needed

Do it your way

Forget the rules

Working with other bright, creative people


Generational attitude differences

• Baby Boomers (born worldwide 1946-1964)

– Place more emphasis on work as an anchor in their lives

– Tend to be loyal and stay for long periods with one employer

• Generation X (smaller population born 1965-1980)

– Typically more organisationally cynical than the previous generation

– More likely to change jobs if they see more rewarding roles (compensation and career progression)

• Generation Y (born 1981-2000)

– Nearly as large a group as the Baby Boomers but driven by different values, life experiences and high expectations

– Technologically savvy, highly networked with friends and colleagues, and used to instant communications

– Place more importance on job content, sense of purpose, career path and training, communications and work/life balance

An example of our developing approach to knowledge retention


Petrofac Graduate Development Programme websitePetrofac Graduate Development Programme website

• Designed to be an online base for the graduates

• They can hook up, share information, discuss topics, etc

• They can access it whenever and wherever they want to

• Track their progress and learning


Learning from ExperienceLearning from Experience

The knowledge of the retiring generation is at worst lost or at best captured in an inappropriate or irrelevant way

Around 50% of E&P staff are between 40 and 50 years old and will retire within the next 10 years.

The pressure is on to up-skill younger technical staff



The Petrofac wiki on the Graduate Development Programme website is used as a knowledge repository and is built, used and updated by the graduates



The group meet with ‘experts’/senior staff and learn from their experience and knowledge



Each graduate captures what they have learnt and adds to the wiki to expand upon what others have added



Other groups can access the wiki, learn from others’ experiences, update/add to the information and help the knowledge repository grow


and share this knowledge on the Wikiand share this knowledge on the Wiki


Petrofac’s business is competence provision

• We’re asset-light: our main assets really do leave the buildings every night

• Our growth is built entirely on people:

– recruitment and retention are absolutely critical and strategic

• All levels of management (including executive management) spend significant amounts of time interviewing, selecting and enrolling talent

• We think our culture differentiates us

– and the only way this can be “sold” is movers and shakers looking candidates in the eye


Petrofac’s employment proposition

• Petrofac is a pure meritocracy; no one nationality predominates and our leadership is very diverse; there is no identifiable corporate nationality

• A large proportion of our employees (nearly one third) are shareholders

– we think this is fundamental, and we strive to increase

• We promote from within, but also require a lot of external mature recruitment

– and therefore, have to achieve rapid cultural assimilation

• We reward the creation of wealth & pay for performance

• We articulate clear values and these guide our recruitment and selection processes, as well as the everyday conduct of business

• We believe individuals really make a difference

Petrofac is still led by founders, which differentiates us from many competitors in the battle for talent;

Our challenge is to keep the core DNA intact and developing healthily

the capability crunch the battle for resources 23 november 2010 – robin pinchbeck

Documents

finding petroleum

intense oil industry

ipo slide

execution slide

bn slide

international oil gas

social context slide

oil gas infrastructure