Qualified manpower eludes regional oil producers

DUBAI — Getting the right human resource for the Middle East's oil and gas industry is the next decade's challenge, say Middle East Strategy Advisors.

By Karim Raef

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Published: Sun 24 Jul 2005, 10:27 AM

Last updated: Thu 2 Apr 2015, 4:43 PM

MESA representatives said human resource departments of regional oil and gas producers face one of the biggest challenges in recent years. They said pool of engineers, vital for the whole industry, is getting older. They complained that the average age of production engineers in the region was already around 48.

Joern C. Kuntze, partner of UAE-based consulting firm Middle East Strategy Advisors (MESA), said: "The consequence is that there is a lot of pressure to replace this ageing workforce in the coming years. Training young professionals to fill the posts of senior employees, who often have more than 25 years of relevant experience, is not easy for the HR departments and when it is compounded by the intense competition for young engineers worldwide, it becomes a major strategic issue. The increase in oil demand and the resulting pressure to boost oil production already has a direct impact on the demand for additional production resources. Technology and innovation can be used to help improve production, but in the short- to medium-term, oil companies will depend on the supply of well-educated and experienced employees to ramp up production."

It is a well-known fact that there is a worldwide shortage of qualified engineers. Major oil and gas producers are competing fiercely for the scarce qualified manpower. The regional oil producers are often at a disadvantage in this competition, because they lack the reputation as a first class employer, while global firms like BP, Shell or Total have a strong human resource brand distinguishing them as world-class employers, attractive to young professionals. The worldwide shortage of engineers in this highly competitive market is also heating up competition for high potential employees and the situation in the Middle East is getting worse.

Marc Hormann, senior consultant at MESA, said: "All our clients in the oil and gas sector complain about the difficulties of filling vacant positions, and particularly about the quality of applicants, indicating that getting skilled people is becoming increasingly harder."

There is already competition in this sector for human resource between the GCC countries, a trend that could become a major hurdle for the region's overall economic development. In addition, most GCC countries have set aggressive nationalisation targets to replace retiring expatriates with nationals. The national supply base of experienced engineers is limited, so this requirement turns a difficult task into a major challenge for HR departments.

In short, the situation calls for a review of current human resource management practices and firmly putting the HR challenge on top management's agenda. Many companies do not manage the HR value chain as a whole and often lack a clear strategy to respond to today's challenges. A common pitfall is that HR managers react to the pressure by launching numerous initiatives to solve specific problems, without the strategic perspective to provide the coordination and a clear vision translated into measurable goals.

"It is actually a surprise that business strategies are reviewed and adapted on a regular basis whereas HR strategies dealing with the most valuable resource have hardly been changed within the last 15 or 20 years," added Hormann.

He said that managing the value chain starts with a comprehensive human resource strategy derived from the corporate strategy and a clear execution plan. Key focus areas, he said, for regional players are: HR marketing and recruiting, staff development and motivation, rewards and compensation and performance management. Companies must show exceptional performance in every one of those areas in order to be successful in the long-term.

Once the right people are hired the biggest challenges are their development and retention, he said. "Plenty of companies invest heavily into their management and staff development, but fail to profit from their investment because employees leave the companies too early," concluded Kuntze.

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