Jose Ruiz
Alder Koten

Mexican Oil Firms Need Management Crash Course

Wed, 01/21/2015 - 13:08

Many that eagerly desired the Mexican energy industry to be opened up also feared that it would struggle to attract international talent, as salaries and compensations were not based on global standards but dominated by the monopoly of PEMEX. The challenge for Mexican companies, according to Jose Ruiz, CEO of Houston-based recruitment consultancy Alder Koten, will be to adapt to these new conditions, and for Mexican professionals to match the technical expertise of their international counterparts. “The major factor in this struggle will be to change from compensation structures based on hierarchy to those driven by experience and technical expertise. Our clients have been able to adapt to this because they worked abroad, helping them to be better prepared to return and take advantage of the Energy Reform,” he says. Alder Koten’s acquisition of the Mexican recruiting firm Top-Hire in July 2014 aims to bolster its advisory capabilities for middle management within the country’s energy sector. “We want to serve clients across all levels, and now we are able to cover the technical and engineering areas of the industry.”

According to Ruiz, Mexico has historically seen a training culture based on generalization instead of specialization, unlike in the US where technical staff are separated by area of expertise. “To achieve the level of technical expertise expected by foreign companies will be a major challenge for Mexican professionals more concentrated on managerial issues,” he says. “This goes back to the emphasis on hierarchy. For example, a Mexican professional with a degree in electrical engineering might well be asked during a job interview why he did not pursue another technical specialization or seek to rise in the field of operations. The ultimate answer is that, to keep his revenue growing, that engineer will have to become a manager. In the short term, we will focus on importing talent, but some companies in Mexico are now providing competitive financial packages to their technical staff, which will help to develop local capacity. It is now a matter of companies being able to provide full technical career tracks without side-tracking people into executive roles.” The influx of new participants in the Mexican oil and gas industry will result in a healthier, more competitive, and diverse labor pool. Evidence of this process can be seen in mature markets such as Houston, where oil companies have staff from all around the world, including China, India, Venezuela, Colombia, Brazil, and Mexico. “Achieving this diverse talent pool also comes down to the willingness to provide the development paths that will attract the best profiles. Globalization will happen by necessity, so we need to be able to tap into international talent in order to develop the industry at the required speed and quality level,” adds Ruiz. “To start bridging the talent gap within the Mexican oil and gas landscape, the mindset of local organizations will have to change. As Mexican and international companies alike begin to demand different types of profiles, local educational institutions will also have to adapt their academic courses. This evolution will also take place at the academic level, as universities and colleges will have to work alongside industry players in order to change their curricula and arm their students with the skillsets they will need in their chosen career paths within the oil and gas industry.”

On the executive side, good managers for the industry will be defined by their ability to deal with diverse working cultures, as well as their capability to serve as effective bridges between Mexican and global organizations, according to Ruiz. “Alder Koten’s greatest achievement will be to source this global talent. We want to help companies in Mexico identify people globally and help them fill this short-term gap in order to fulfill the requirements of the Mexican oil and gas and energy sectors,” he states. As this search ramps up, the flight of human capital will be particularly acute for PEMEX. The company is already experiencing a significant migration of skilled personnel to other companies. The problem is not only confined to a brain drain. Between 1,000-3,000 PEMEX employees retire every year, outpacing the number of petroleum engineers who graduate annually in Mexico. Over the next decade, 50% of PEMEX’s current workforce is set to retire. At the current rate of decline and hiring, the company’s workforce would plummet from 155,000 in 2014 to under 78,000 by 2024. “At some point, PEMEX will have to react to the market,” opines Ruiz. “Even if PEMEX offers valuable intangibles that are not only salary-based, it needs to protect itselve from other companies stealing its people. A deep analysis about the NOC’s real competitiveness is urgently required.”