Expert Opinions

Question

Mergers and takeovers in our industry and the service sector have become increasingly common in the last decade. A significant emerging trend is that a typical oil industry career is no longer joining a large company for life, but that individuals should manage their own careers and be willing to move on when they feel the time is right for them. So, companies will end up having self- centered employees, who will serve the company so long as their professional goals are being met.

Another scenario is where companies have professionals, who are their loyal people. The companies look after these employees (financially or otherwise) and out of loyalty these employees contribute their best for the company.

In your expert opinion, which scenario is common and appears to be more practical these days in the industry?

Answer 1

People have always been responsible for their own careers, whether or not they expected lifetime employment with a single company. The difference is that in the past, some people may not have realized that they had to look after their own career.

While employed, whether for what we envision as a short time or for decades, we should act within the bounds of the law and generally accepted ethical practices in what we see as the best interests of our employer. Whenever our personal path significantly differs from that of our employer, be it for legal, ethical or career reasons, it is time to look for a new job.

Working for a large company, it is important to have a sponsor, who vouches for your abilities and recommends you over other fungible candidates. However, even if you are lucky enough to have a powerful sponsor, you should not abdicate management of your career to your sponsor. You must determine for yourself your hierarchy of values. What are you willing to sacrifice for a promotion? More time on the job? More days away from home? A transfer to another country? A hardship posting? You should never delegate those decisions.

Eve Sprunt
ChevronTexaco
President-elect, SPE

Answer 2

It was over a decade ago that I argued against the idea of the “disposal employee” in a TLE Roundtable Discussion. However, it appears that the trend has continued toward the “temping of the oil industry”. Loyalty (or lack thereof) between companies and employees is a reciprocal relationship and it seems to be on the decrease. Geophysicists will generally work for several companies or institutions in a career, amid the ongoing trends of mergers and takeovers.

Is this trend a desirable or undesirable situation? This would seem to vary with individual situations. One would hope that companies who treat their employees well and foster an excellent work environment would reap the benefits of productive employees. In either company situation, there are certain basic words of advice suggested to many of us by Sven Treitel that I believe are valid. Treitel’s rules were: 1. Geophysicists should continuously strive to upgrade their skills. 2. Geophysicists should actively participate in professional organizations such as SEG, EAGE, CSEG ... 3. Geophysicists should strive to present talks at technical meetings and submit papers to technical journals.

Although these rules will not provide immunity against the “slings and arrows of outrageous fortune”, it will allow the professional to deal with either the mercenary or paternalistic company scenarios.

Larry Lines
University of Calgary

Answer 3

I believe every company, particularly the larger E and P companies, will have to have a blend of the two. Every company needs to have a group of senior level officers, who could also be shareholders of those companies, who will be loyal and take policy and most of the techno managerial/ commercial/general managerial decisions. A core group amongst them will also be responsible for strategic decisions the company has to make for short, medium and the long term. The other group will be at the technical working level and will live from project to project. A good number of these people would be self employed and will be available on call basis.

These two groups will have a varied ratio depending on local areas of operation. It is extremely likely that the self employed geoscientists living from project to project would be around 75 percent and the companies loyalists not more than 25 percent. The situation would however be different in service companies where the bulk of the employees would be in the permanent pay rolls. The geoscientists and engineers can hobnob from one service company to another but yet remain in a company for a relatively larger period. The development of these professionals would be handled by the service company for the service company profits are directly linked to the knowledge base of the employees.

Gautam Sen
ONGC, India

Answer 4

In my “expert opinion”; The first scenario is the more common, and furthermore, the trend is not unique to our industry or our country, but is worldwide in scope.

I conclude that leaders of companies increasingly think that this is “practical” (defined here to mean “good strategy”) for them. This may or may not be wise, since:

• encouraging employee loyalty (eg though generous employment policies) bears costs
• but these costs may be less than the cost to recruit and train replacement employees.

In fact, I am rarely asked to make strategy for companies. However, I am commonly asked to make strategy (and tactics as well) for myself and my family. Hence, it would be unwise for me to think that my company was following the policy of the second scenario, if it were actually following the first. Equally, it would be unwise for me to assume that the company policy would be unchanged, as the future unfolds and those mergers happen. So, for me and my family, the practical strategy is to manage my own career, in a way which is robust to those uncertainties.

In considering tactics to implement that strategy, young technical professionals should consider the advantages and disadvantages of two career tracks, the technical and the managerial. If you remain on the technical track, then so long as you remain technically expert, you will always be needed, either by your present company or another, either by this industry or another. But, you will probably never get rich.

By contrast, those on the management track will be better paid, and a few will reach the top and become rich along the way. But, most will not (since a pyramid narrows towards the top).

Most will eventually be moved to staff positions, and then retire early, or be discarded when the merger happens. Their skills are not easily transferable to another company; it is “the plight of unemployed middle manager”.

So, make your career choices with your eyes wide open.

Leon Thomsen
BP

Answer 5

I feel that both scenarios miss some essential points. Companies love to have dedicated employees that are loyal and doing their best. I strongly believe that employees are happiest when they are working hard toward bringing success to the company. Everybody wins when companies and employees find this common ground to stand upon. I went to work for a large oil company and was content for fifteen years. However, the company appeared to lose focus and I left for a better opportunity. In fact, two years after I left, my former company was acquired in a merger. I think that it is counterproductive for employees to continuously look for something different but each employee needs to realize that the individual, not the company, is in charge of his/her professional growth. Change is sometimes the best thing for an employee when there is no longer a good match between what the company has to offer and what the employee needs.

In order for companies to keep hardworking, dedicated employees, they must first be financially able to do so. Everyone likes to be on a winning team. A successful company is also in a position to reward employees. We have had substantial success at Apache and to compensate our dedicated employees, we recently paid out a major bonus of about $59MM spread fairly evenly among 1900 staff down to secretaries. This was a result of hitting an aggressive stock price target that could only be hit through teamwork by a hardworking, loyal staff . Companies that inject team goals and incentives where many employees reap the rewards of a job well done will be better companies because they understand the importance of a win-win approach for stockholders and employees.

Mike Bahorich
Apache Corporation

Answer 6

I don’t know which scenario is the more common today, although probably the “self-centered” one has gained currency, as companies have exhibited reduced loyalty to employees than in the past. The more important question for an individual’s career is which scenario is the more practical heading into the future.

The answer likely depends on expectations for future hiring and employment stability in the industry. But professionals would then have to base their career strategy on chancy guesses about that stability. I believe that the industry will experience an extended period of relative stability in hiring and employment. Although the bumpy boom-and-bust ride likely isn’t over, g rowing worldwide appetite for the limited supply of conventional hydrocarbons, combined with political instability in oil-rich areas of the world, portend an extended period of prosperity for the industry. Superimposed on this, the long-observed drift of demographic curves toward massive loss, through retirement, of experienced explorationists and their expertise may soon initiate a rush within industry to backfill its professional needs through hiring of (necessarily less experienced) geoscience graduates.

The longevity of improved employment stability probably depends less on traditional variations in the exploration cycle than on upheavals imposed by the stock market and corporate takeovers and mergers. Against these factors, one can hope that corporate leadership will demonstrate the wisdom to recognize, and strength to promote, enhancement of essential exploration capabilities.

Which of the two opposing scenarios — self-centeredness of employees and loyal commitment toward the best for the company — appears the more practical into the future? I believe both. Under either scenario, a young employee must commit to the well-being of his or her inner self (loyalty to self is not synonymous with self-centeredness) by becoming as complete and proficient an explorationist as possible — for all the self satisfaction, thrill of challenge, and professional growth that results. That commitment should be focused dually on making the company’s exploration program eminently successful and on making the individual demonstrably valuable to the company. Critically important, also, is that the individual become a valuable and appreciated contributor to the profession, beyond the walls of the workplace. By publishing, internally and externally, and by thoughtfully helping others in the company (and in the profession at large) succeed, he or she provides a level of protection both from being laid off and from being out at sea in case of layoff.

There can be no substitute for being outstanding in your profession and for gaining recognition for your contributions. Then you can devote full loyalty to the success of your company and, operating under no illusions, be prepared to grow professionally elsewhere if your company fails to reciprocate your loyalty.

Ken Larner
Colorado School of Mines

Answer 7

Company loyalty is declining in the North American workplace in every industry and in all sizes of companies. Governmental and academic institutions are slowly following this trend. “Loyalty” morphed from the “blind” version to an “earned, mutual” variety over the last 50 years as employee retention practices tried to adjust to societal and competitive business changes. Loyalty continues to have many virtues but tends to obscure the values of creativity, initiative and performance which are intellectually and economically critical to both the company and individuals.

Company loyalty puts tremendous pressure on corporate finances during economic downtimes. Similarly, such loyalty is questioned by employees during strong economic expansion when changing employment means higher pay and improved work opportunities. Clearly, it is more practical today to have a blend of loyalty and recognition of individual enterprise. Perhaps that’s the most practical business approach.

At AAPG (and CSEG & CSPG, I expect) we consider one of our most important goals is to provide our members with a constancy of being their career “home” in spite of changes in employers. Accordingly, we provide many services to support all members through their single- or multi-employer careers.

Patrick Gratton
President, American Association of Petroleum Geologists

Answer 8

I think there are more factors at play here than just the mergers and takeovers, though they are a driver for rationalization of staff numbers. The oil and gas business is becoming increasingly competitive, and companies must ensure that they have the best quality staff in order to survive and thrive. When staff reductions are needed, the selections are generally based on the suitability of individuals for the work that is remaining, not on other factors such as seniority.

So does this result in self-centered employees? To some degree, yes. Employees must be more aware of their strengths and weaknesses, and must be prepared to move on if their professional goals are not being met. It also results in a situation where companies must work hard to retain their best people, so they must ensure that the total compensation package is competitive, and that other non-financial factors are taken care of appropriately. Many companies, for example, have adopted flexible work arrangements in order to retain key staff.

This scenario results in a work environment where employees stay with an employer because their financial, career and work environment needs are being met. It does not require employees to stay out of loyalty or altruism. The flip side, from an employer’s perspective, is that they retain the employees they need because they treat them well. They do not have to rely on loyalty or altruism.

I believe that this is far better for all concerned.

Linda Van Gastel
President, APEGGA