Fernando Cruz
Kannbal Consulting
Expert Contributor

Talent Management Key for O&G Business in Mexico

By Fernando Cruz Galván | Tue, 06/29/2021 - 13:06

Mexico has a young population and talent is available for any business. In recent years, the oil and gas sector has diversified and many things have changed. This business has significant challenges ahead, including the energy transition, efficiency and the use of technology, but all these challenges necessarily require talented people to implement change and succeed.

When I started working for an energy-related group years ago, I was coming from the consultancy world and my first impression was that many of the companies were somehow close to PEMEX and, of course, throughout the years they have somehow assimilated the governmental style of culture in their own organizations. I have very vivid memories regarding one of my first goals, which was to reorganize and implement a better internal control system as well as policies to improve the overall business administration. By far, my biggest challenge with the latter was dealing with senior managers who had a great deal of experience in the business, and who were very solid in terms of operational and commercial skills, but who were certainly averse to change. In many cases, this was mainly related to their generational group. 

Well, things have changed since then and with the market open for private investment, a more dynamic environment is present in the Mexican O&G business.

The mix within the decision-making group was clearly led by baby boomers while the Gen X group was gradually growing in midlevel positions along with the group. After some years, I have seen how Gen X is now more dominant in decision-making while millennials are taking over in the present decade. In this changing environment, the O&G companies in Mexico have experienced an organizational evolution and especially in the last couple of years, a more intensive and dynamic business environment. On the one hand, the market is now extremely tight with a small margin to make mistakes, and on the other hand, digitalization and the energy transition are adding more challenges to design flexible organizations able to survive in this and the coming decades.

On this path to a sustainable future, talent retention and development have become key to secure organizations' capabilities to face efficiency challenges ahead.

To start from the top, I would like to point out the changes that not only O&G groups, but different sectors are experiencing in terms of leadership. The new profile of CEOs, for instance, has switched from what I call the traditional style, which is very focused on results, to a more human-based style, that requires new leaders to have some of the following skills.

  1. A very reasonable knowledge of the industry. They do not necessarily need to be the top experts in extremely technical skills but they should have a very developed sense about processes and especially, be able to identify opportunities to create value.
  2. A visible human side, able to inspire the team around the business vision and values.
  3. Exceptional communication skills, capable of putting wisdom in every message and making these messages flow to all levels with simple but effective content.
  4. Highly motivated and perceived as role a model with a positive attitude at all times and in any circumstance.

Now from the top to the bottom, organizations are evolving to embrace on the one hand, technology and digitalization and on the other hand, new talent that contributes with innovative ideas while seeking a long-term career. In this precisely resides one of the biggest challenges for O&G companies in Mexico. Millennials and especially Gen Z are very volatile and are driven by access to technology and constant and moving objectives. This is an area that demands lots of attention in designing HR initiatives to build a collaborative and dynamic business environment that maximizes efficiency and commitment from these generations.

Even though the O&G business is not naturally attractive for young talent, there is something that senior directors must have in mind, and that is that, "people leave managers not organizations." Therefore, investment in training is a must. Skills should be focused on developing leadership and communication skills (among other soft skills), so managers are able to learn how to become a role model to their respective teams, and to be aware of their own weaknesses and learn to improve and turn those into strengths. A continues learning cycle is the ultimate purpose so that by leading by example, managers are able to contribute to talent growth and retention over the long term.

Senior managers need to be constantly learning and there is no argument not to. I personally dedicate some space in my agenda to learn bits and pieces from different topics at least one or two times a week. The best leaders I know are those who are always learning new things, always reading, or exploring and above all, always making their own development a personal priority.

The energy transition is a reality and is moving forward, as we know. Fossil-based energy is coexisting with the flourishing of renewable energy, which implies a double approach to retain and train new talent. In this regard, I see two areas to cover: first, the efforts and initiatives related to talent need to be designed with a long-term approach, visualizing the type of jobs that will fit in the future shape of the O&G organization with a very narrow margin of profitability every time; secondly, the use of technology and the increase in data analytics and cybersecurity risks require a constant and robust detection of training gaps. We have to bear in mind that younger generations are naturally gifted to maximize the benefits from technology.

The workforce in O&G needs to be aligned with future demand. The use of data analytics offers a fact-based approach to help HR address workforce-related issues, while the use of more predictive models can provide a better assessment in terms of labor supply for technical areas to better synchronize with technology that is still in development at this time but also with technology that will be available in the next decade.

Sustainability targets in O&G organizations are also key to increasing talent retention. I personally have teenagers at home and, believe me, they are aware of topics such as global warming and renewable energies. Sometimes, I am surprised to see how they visualize themselves in a more sustainable world. O&G management should always include sustainability initiatives in their communication strategies, but more importantly, senior managers should lead with a deep involvement that needs to be very visible to the whole team. In other words, actions speak louder than words.

There is, of course, an economic downside when companies are not able to retain talented people. In the case of O&G, these talented people sometimes have an exceptionally long track record in secure operations and minimizing recordable incidents, and sometimes when they leave the company, the indicators move in the wrong direction. The investment in recruiting talented employees and providing training is generally higher than the investment in reinforcing current talent. And beyond this economic side, there is the real possibility of compromising the future capabilities of the organization in a very demanding and changing business environment.

The O&G companies that will succeed in the present and in the next decade are accelerating succession plans and using data analytics to manage talent, investing in but especially embracing a new vision with a more collaborative organizational design and use of technology, foreseeing how the future market will impact their business and adapting the capabilities that need to be built to take advantage of coming opportunities that are necessarily related to the transition from fossil to renewables. O&G has a future and can coexist with renewables as long as businesses are able to maximize efficiency, reduce environmental impacts and combine the best talent with the correct technological developments. No one has the correct formula to succeed in O&G these days, so failure is part of the process. The lessons learned from failures must be used to improve and to provide those with the right talent meaningful and actionable insights to take advantage of the next crest of the market that periodically comes and goes.

Photo by:   Fernando Cruz