The Independent Petroleum Association of America estimates that around 40% of the industry’s current skilled professionals will reach retirement by 2010. Fewer young people are studying engineering and associated degrees at the university level, and many who are head for industries where compensation is higher and long-term prospects are more attractive than in the energy industry.

To resolve this problem, simply spending money might appear to be a short-term solution but is in fact unsustainable in the long term. It is far better to address the resource challenge in the medium to long term by recognizing the potential additional resource that exists in the form of human capacity yet to be released within an organization.

Capacity release — the freeing up of extra resources from within an organization — is a technique that can help ensure companies are getting the most from their employee base to meet increasing labor demands.

While certain skill sets and roles will always be filled by external recruitment, experience shows there is significant potential to release capacity latent within many organizations. The challenge in doing so is to create work environments that offer skilled people a more fulfilling and productive role without giving them the impression that they simply need to work harder. This both increases loyalty and drives up individual productivity, thereby releasing capacity.

Avoiding the wrong paths

While recruiting highly talented staff at high salaries may work to solve the diminishing talent pool problem in the short term, it will not necessarily attract a new generation of employees to the industry. Instead, it can quickly lead to too much money being spent chasing too few people. This approach is expensive, potentially culturally damaging, and offers only a quick fix.

Using technology to help unlock capacity is also something of a false solution because it can only ever be as good as the processes it is integrated into. Even after lead time for installation and implementation, technology alone rarely removes the need for skilled human capacity. “Spending to save” on advanced technologies may seem an attractive proposition at first, but it can take a long time to deliver a return on investment. In many instances, the return may not be realized at all.

The real key to sustainable capacity release is to closely analyze and understand existing working patterns and processes across a business. People who can see a direct relationship between their personal input and a more positive and productive output tend to stay around even if there is more money on offer elsewhere. Staff can be empowered to achieve more in a working day, which in turn increases total capacity. Additional resources can be released from within without the need for expensive external intervention.

The question is how this new working environment can be created and sustained. There are at least two ground rules. First, the pre-conditions for capacity release cannot be achieved through initiative fatigue. In an environment where there are already many initiatives taking up the limited time of personnel, new, demanding, and cumbersome changes to the work pattern will be rejected. Intervention is the wrong approach; initiative is the wrong terminology. Change must come from within. Second, time is
of the essence. Action today needs to generate results by next quarter, at the very latest.

Setting the wheels in motion

An independent operator in the Middle East had a goal of driving up profits, increasing motivation and loyalty in the workforce, and increasing profitability using the staff in place. The initial analysis identified specific areas that could help to resolve the capacity issues.

A small team was installed within one asset. Working with the client on a daily basis revealed the size, strength, and range of roles within the client’s existing organizational structure. An observational “day in the life” study gives insight into how resources are used, allowing non-value add time to be distinguished from value-add time. This exercise helps to identify inefficiencies.

In this project, 20% of the key roles were sampled to yield a representative example of a typical day across a range of job functions. Resulting observation identified areas for improvement, including:
• Lack of clear forward planning;
• Inefficient and inaccurate task execution; and
• Staff assignment that did not always best suit individual skill sets.

Metrics and performance measurement offered further room for improvement. Too many unnecessary meetings were being scheduled, while necessary meetings were overlooked. And often, there were no appropriate key performance indicators (KPIs) to evaluate present operations and drive corrective action.
KPIs for individual employees were often driven by the price per barrel rather than meaningful targets tailored to day-to-day work.
Finally, there were no feedback mechanisms to ensure action items resulting from the meetings were completed.

Identifying shortcomings resulted in better-informed meetings, involving the right people, a clear agenda, an action plan, and meaningful data driving fact-based discussions and timely decisions.

Supervision was another area where positive changes made operations more efficient. Ideally, a supervisor’s day should be divided into four basic tasks, with active supervision taking up 25% to 35% of the supervisor’s time. Passive supervision should take 25% to 30% of the time, training 25%, and administrative work 15%.

On this project, supervisors spent as little as 10% of the time on active supervision, and administrative work took up to 50% of the day. Rearranging priorities improved effectiveness and increased productive time.

This operator also evaluated the company culture and employees’ expectations. This is perhaps the most difficult area of any project because it is predicated on understanding what level of change is required across the organization, how rapidly it should take place, and how likely it is to be implemented within a specific operating environment. It is equally important to gauge what level of change is realistically achievable.

For example, a British-born oil worker working in the Middle East on a lengthy contract naturally takes a certain period of time to adapt to the new surroundings. Our experience shows that there can be a clash of working practices and conflicting social cultures which, if not carefully and sensitively addressed, can hinder productivity and operational efficiency.

Instigating sustainable change is the greatest challenge in every capacity release project. A workable solution can be delivered only through more effective processes based on a deep analysis of current operations. In the end, this approach delivers better focused behaviors, fostering new approaches to working.

Capacity released

Getting the right people is a huge challenge, but it isn’t the only one. The second step is to ensure the right people are working efficiently in jobs that closely match their skill sets. The benefits of striking this balance are cultural/behavioral, operational, and financial. These three things are inextricably linked.

Relieving people of administrative non value-add tasks and giving them the chance to operate effectively and efficiently across their entire work schedule so that they can see the tangible results of their work helps engender company loyalty and reduces the incidence of turnover. The problem of continuous staff churn should be much less of a problem if energy firms are able to realize the internal potential they already hold.

The problem of capacity is widespread, but it doesn’t have to be crippling. There are ways to release capacity to improve oil and gas
operations worldwide.