Oil & gas, mining industries anxious about top brass succession planning

VANCOUVER (miningweekly.com) – There is real anxiety in the oil and gas and mining industries regarding the lack of aptitude to replace an ageing top-level management talent pool, Stephen Diotte, partner and head of leadership services for Odgers Berndtson tells Mining Weekly Online.

He recently joined the executive search firm, bringing veteran consulting experience in working with leaders and globally around talent and organisational strategy, specifically focused on the energy sector.

“From a leadership perspective, ageing management teams are the top of mind concern,” he says. “The low prices of the past few years has delayed the exit of the old guard of senior executives, with it not being uncommon for senior executives well beyond the 60-years-plus and higher range.”

He says that Odgers Berndtson’s research has revealed that there is a ten-year gap in the required experience between the younger and older generations. There is also lots of commonality between oil and gas and mining industries.

Companies should be looking at finding and accelerating high-potential leadership candidates, grooming them with broad exposure to diverse areas of company operations, Diotte advises.

Minerals prices are still recovering and are nowhere near 2012 levels. Previously, there was a broader talent shortage, whereas the immediate concern is leadership succession planning, or the lack thereof.

“The flavour of the skills shortage is different this time, compared with the previous times when skills shortages came to the fore as one of the most critical challenges facing the sustainability of the extractive industries.

“The lens is narrow for now, to focus on executives and leadership development.”

HIGH-IMPACT TRAINING
Diotte notes that he undertook a global study that found that only 30% of major oil and gas industry respondents had succession plans in place, while less than half have vetted their succession plans with boards. The trend was more pronounced in the resource sector, he pointed out.

So acute is the problem that at one of his clients, the top structure comprised about 50 people, of which 47 were eligible to retire.

The question is: how do we accelerate these high-potential candidates’ development.

Diotte recommends that companies focus on giving high-potential candidates exposure to the top three or four levels below the CEO, to channel people into the high-impact roles in preparing them for top management. The same approach would work for grooming people to serve on boards.

He expects to start seeing boards increasingly introduce mandatory retirement age limits to ensure that the current situation does not repeat itself.

Diotte notes that the resources sector has historically been slow in gender transformation and equal employment opportunities, and both the mining and oil and gas industries have lagged behind in technological innovations and the advantages they provide.

Younger people tend to be more interested if technology is deployed to enhance their work performance, he notes, but it remains “exceptionally difficult these days” to get people to fly out to remote camps for weeks-long rotations.

Diotte also points out that the workforce is heavily skewed to the younger aged, with a recent Mercer report finding that over 70% of the work force has less than ten years’ experience at the same firm. Of these, about 40% had less than two-years’ experience at the same company, and what’s more, nothing has changed about this situation over the last four years.

“There’s very little incentive out there to create loyalty among employees. In fact, loyalty has been found to have dropped.

"It is a conscious choice not to invest in succession planning. The industry did this to itself,” Diotte says.

He believes that a link could be drawn between the Trans Mountain oil pipeline expansion project and the impending skills shortage, noting that a project of that scale will draw heavily on increasingly scarce experience pools.