Workforce Planning – The Right Stimulus Package For The Natural Gas Industry

September 2009 Vol. 236 No. 9

Brad Kamph

Just about everyone, it seems, is lining up for their cut of the stimulus package billions – except of course the oil and gas sector.

As a consequence, workforce planning must become more important than ever for oil and gas companies. To be effective, the planning should encompass a valid workforce strategy and a prudent tactical plan, both for the short term and the long term. It should also be fully aligned with ongoing business strategy.

Workforce planning has many facets. It addresses current needs and future capabilities and takes into account elements such as performance management, skill forecasting, workforce modeling, core work analysis and attrition forecasting. In addition, it must integrate with knowledge management and process optimization to achieve the real benefits available.

Performance management, for example, is vital if you want to avoid making decisions based on opinion or popularity. Take the case of the employee segment nearing retirement. As this bracket is generally paid significantly more than younger workers, it is vital to determine who is performing well and who isn’t as well as to determine whose knowledge is vital to be captured. Also, a key focus is to clearly evaluate the strengths and weaknesses of the workforce to identify areas where additional personal development can be of value to the organization, versus where it will not benefit the organization in the long run. The key is to focus retirement planning and prevention efforts on those areas that are demonstrably best as determined by real performance analyses.

How about hiring? While the “natural thing to do” in a recession is close all the recruitment doors, this has often been found to be the best way to hasten the decline of the business. A period of record layoffs, after all, is a period of tremendous opportunity. But you won’t ever benefit if you impose a global hiring freeze.

Talent that would have cost a fortune in signing bonuses only a few months ago might be available today at reasonable rates. Instead of haggling over hefty salaries, some very bright minds may be more than happy just to have another job.

But once again, don’t just hire anybody. Instead of filling vacancies in general, highlight those areas of organizational weakness where you are bleeding profits. Cutting expenses is only half of the equation, the other side that must be addressed, along with budget management, is true performance and process improvement. Management may look unkindly on what can appear to be demands for salary increases when they are calling for cutbacks. But they may well be interested to hear how they can raise revenues by tens of millions by adding competent personnel to specifically targeted areas.

Knowledge And Process

Any workforce strategy has to incorporate two key areas – knowledge management and process optimization. Why? Not all areas of an organization perform at the same level. The positive areas need to be addressed squarely with knowledge-management techniques to ensure these data are made available and leveraged within the organization. Additional personnel can also be added to such areas as apprentices and trained on those data – particularly where members of existing staff are nearing retirement.

Emphasis must be placed, of course, on capturing and disseminating knowledge that adds the greatest value to the business, as opposed to embarking upon a lengthy project to capture all organizational knowledge. This is done by evaluating those areas of the organization that demonstrate the fewest errors and highest performance scores overall. By focusing knowledge-capture efforts in these zones, only the most valuable information is captured. In addition, there may be isolated areas in an otherwise poorly performing area where performance is good. This may be a good candidate for knowledge capture as well.

Knowledge from areas of the organization that are poorly performing, on the other hand, does not need to be captured; this is exactly what some companies do. They blindly implement knowledge capture across the board at great expense and wonder why they see minimal benefit. In many areas, they are gathering faulty institutional knowledge from the people who are responsible for poor plant performance.

Where systems or processes are not working properly, knowledge capture is a waste of valuable resources. In such circumstances, the only prudent way forward is process optimization. Existing processes and procedures must be reviewed against overall business goals to identify any areas where business practices are inefficient or causing any level of rework. Lost opportunities must be isolated and incorporated into operations. And, of course, faulty processes must be rearranged to eliminate persistent errors and enhance performance.

While this should be done in a systematic fashion, it rarely should be done across the board. Most organizations, by their sheer existence in these difficult times, have proven that many of their processes are arguably performing somewhat effectively. Process-optimization efforts have received a bad name in some areas due to earlier fads which attempted to fix all processes in an organization in one fell swoop or perform what amounted to be, simply a mindless exercise of using improvement tools.

Certainly all processes can be improved, yet perhaps only 10% of those processes really need a critical fixing and a major overhaul. Too many resources to improve the rest amounts to “busy work” and in some cases, causes harm due to vital actions being lost or impeded.

In summary, there is a vastly overlooked opportunity that many organizations are failing to address. With a minimal investment, it is not unrealistic to expect to stabilize and improve business performance far in excess of what budget management can achieve. With an approach that combines effective workforce planning, along with critical elements of business performance management, a great opportunity exists to impact top line revenue, not just bottom-line budget cuts.

Author
Brad Kamph is president of Interliance Consulting, Inc., a 20-year veteran in the development of workforce, knowledge management, process optimization, and performance measurement strategies for energy companies He recently completed an extensive workforce study for the Interstate Natural Gas Association of America (INGAA). Contact information: 714-540-8889, info@interliance.com, www.interliance.com.

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