Retirement wave technical skills gap hit companies

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July/August 2014

Retirement Wave, Technical Skills Gap Hit Oil and Gas Companies

Looking at labor

The world’s oil and gas industry is in the midst of a talent crisis and needs to find alternatives to poaching from competitors, according to new research from Mercer’s Energy Consulting business. Mercer’s analysis of the industry’s workforce indicates that, in the US alone, many large employers risk losing 50% to 80% of their retirement-eligible population in the next five years.

To address this global energy talent crisis, the Mercer Global Oil & Gas Talent Outlook and Workforce Practices Survey shows that approximately two-thirds of oil and gas companies intend to fill the void by “buying” talent from outside their organizations (see Figure 1), and nearly half of these same employers use “poaching” from competitors as their predominant source for new talent (see Figure 2). Mercer’s survey collected input from more than 120 companies representing more than one million employees across 50 countries.

Figure 1: Buying Talent Overshadows Building Talent in the Oil and Gas Industry

Figure 2: Current Talent Sourcing Strategies Among Oil and Gas Companies Globally

This dynamic within the oil and gas industry arises at a time of unprecedented opportunities that can only be capitalized on with a sufficiently productive, engaged, and increasingly global workforce. Unaddressed, this talent shortage will threaten individual company growth and profitability, the report notes.

Although the looming retirement wave is of primary concern to oil and gas industry employers, Mercer’s research also revealed other critical talent issues faced by oil and gas employers throughout the world, such as:

  • Three-quarters (74%) of organizations surveyed cited ”technical skills gap” as a critical problem, but leadership, management, and supervisor skills were also noted as being in short supply.
  • The oil and gas industry will add more than 530,000 positions in core professional and technical jobs over the next five years and more than 1.1 million positions over the next 10 years, yet more than half of the world’s largest oil- and gas-producing countries will not have an adequate supply of talent to meet this demand.
  • Among the 56% of companies that say they have a workforce-planning process that identifies gaps, only 27% say that process also provides solutions to close gaps.

Mercer’s energy industry experts observe that the widely embraced strategy of “poaching from the competition” is not viable or sustainable. They advise a more strategic approach to both talent acquisition and workforce management that aims to build an adequate supply of required talent, enhance the skills and capabilities of the company’s existing workforce, engage staff, and foster commitment and loyalty. These programs must also address the need to manage cost and risk exposure.

Further, oil and gas HR leaders need to conduct a deep examination of their own workforces, understand labor trends in key markets, forecast talent and skill needs, and, most important, build a customized plan of action that will address their specific talent gaps and opportunities.

The good news for oil and gas employers is that addressing these issues brings with it the expectation of favorable return on investment. In fact, large numbers of the employers Mercer surveyed saw strong ROI potential in increased employee productivity, decreased attrition, increased production, and decreased operating expenses.

Learn more and download the report .


Philip Tenenbaum (Houston)
Senior Partner, Global Energy
Consulting Leader
+1 713 276 2253
Jay Doherty (Richmond, VA)
Partner, Co-leader of Mercer’s
Workforce Sciences Institute
+61 3 9623 5524
David Pang (Singapore)
Principal, Talent
+65 6398 2800
Julia Howes (London)
Principal, Talent
+44 20 7178 6998

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