The need for experienced upstream personnel within the oil and gas industry has never been as acute as it is today. E&P companies have improved their financial position to where they are spending significant capital to explore, exploit and produce oil and gas. Unfortunately, however, they face a big problem: they need talented people to achieve this goal, but there isn't enough talent to go around.

Right now, virtually every E&P company in the business needs more experienced people, especially in geology, geophysics and petroleum engineering. Evidence of a war for talent is everywhere. First, prospective job candidates are getting two or three cold calls every few days from recruiters. Second, it has become common knowledge that some of the largest independents and majors are paying substantial finders' fees to their employees, upon referring a technical candidate who is subsequently hired.

Third, there is now a prevalent practice in the upstream industry of offering job candidates sizeable signing bonuses to lure them away from their current employers. And fourth, the overall demographics on upstream professionals show their average age is 50-plus. That average will only continue to rise yearly.

The task is monumental for anyone wanting to attract experienced upstream talent, especially on the technical side. The other side of this equation is the challenge of retaining existing talent-that is, to prevent those experienced and knowledgeable people from walking out the door.

In at least the past 30 years, the search for oil and gas talent has never been as active as it is today-desperately active is a better way to put it. This age of recruiting and retaining upstream professionals is an all-out war for talent with a take-no-prisoners attitude.



Retention

As the loss of professional employees can be serious, E&P companies of all sizes should perform a general review of compensation, benefits and retention practices. This is an overview of salary, bonus, merit pay, benefits (such as insurance, retirement, vacation and work schedule), and retention plan.

An experienced professional upstream search firm can analyze these programs versus what it knows is being done in the marketplace for the same caliber of talent. Such a firm knows in real-time terms what other E&P companies are doing and how the market is changing, while keeping all names confidential.

It can be surprising and disconcerting, yet in the end, very helpful, for an employer to find out that its compensation packages lag that of peers. This can leave the employer vulnerable to losing experienced and trusted talent, just as the company is busier than ever.

To be sure, there is no one size that fits all. The employer must take into account the company's size, its financial strength, its goals and its growth projections. For example, in 2006 a smaller client lost a very good employee because management was unaware of how much salaries had advanced in the marketplace for that particular position. After a review and based on our recommendations, salaries were immediately increased across the board, the vacation program was improved, and a new bonus program was implemented.

In addition, it is useful to conduct an Individual Personnel Compensation Range Identification. This is a review of each employee's compensation, as desired by the company, based on a large number of factors, including years of experience, type of experience, years in that specific job, education, industry training and value to the company. The employee is evaluated based on his or her compensation range and on what his or her demand or value on the open market would be.



New talent sources

To meet the sizeable demand for technical talent needed in the upstream industry, companies have been forced to seek people from myriad unconventional sources. One of the best sources of technical talent and expertise is women who had been hired and trained as engineers (especially reservoir engineers) by the majors and larger independents in the 1980s and 1990s. A number of them subsequently lost their jobs during corporate downsizing, and many had children or wanted to start a family at this time. With virtually no jobs available to them in the industry, they devoted their time to their families. In some cases, these energetic women did part-time engineering consulting on the side, but by and large the pay was mediocre and the work unsteady.

Today, career opportunities available for these women have changed dramatically in their favor. Female engineers with 10 to 15 years of technical experience, who had been out of the oil and gas industry for eight or more years, can be placed today. The strong demand for engineering talent has really worked out as a win-win situation for new employers and women re-entering the marketplace.

Another good source of technical talent is other professionals who were forced to take early retirement packages when they were displaced during corporate downsizings, mergers or acquisitions, particularly in the late 1990s. Few were ready to retire and they maintained their passion for their work both then and now. Many managed to stay in the business, or floated in and out, or stayed close in a number of ways.

Some became consultants and worked intermittently while others worked seasonally with consulting firms, mainly around year-end reserve-evaluation cycles. Some went into business generating prospects or deals on their own or with colleagues who had suffered a similar fate. Finally, some went into teaching, research and/or consulting to stay as current and active in the business as possible.

These early retirees have proven to be excellent candidates and employees for both permanent and consulting positions for the industry. Whether geoscientists, engineers or land professionals, this group has much to offer the upstream world, to help meet the personnel needs of this busy industry.

Attracting and retaining talented employees in this market is a tremendous challenge. It really is a war out there for good people right now, and no one foresees a change in this dynamic any time soon. In other words, it is likely to get even more competitive in the next few years than it is now!

Nevertheless, working hard to retain good talent with the benefit of informed professional advice is almost always more productive and cost-effective than having to recruit to replace that talented employee who has just given two weeks' notice.



Steven M. Emshoff is a senior associate and Gladney B. Darroh is a founder and senior partner for Houston-based Piper-Morgan Associates Personnel Consultants, specializing in upstream recruiting for 30 years.