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World Energy Capital Assembly Takeaways
Talent in Energy: A critical element of the Energy Transition
By Stephanie Del Carpio, Partner and Associate Director in People in Energy at BCG
Published 12 January 2024
It's no secret that the energy industry is going through a period of unprecedented and rapid change. The transition to a lower carbon future, combined with challenges to supply security and energy access, mean companies must strike a winning balance between maximizing valuations, investing for long term value and decarbonizing at pace. And they must do this against a backdrop of increased commodity volatility, a rising cost base and a declining talent pipeline. For many, this means transforming how we do business today, and how we build resilience for the long term, and people, skills and productivity are critical to our success.
As part of this year’s World Energy Capital Assembly I had the pleasure of moderating a panel on the topic of Talent in Energy. Together, the panelists and I discussed the need to tailor skills and capabilities to the energy transition. At BCG we have identified fifteen core capability sets, nine of which will be critical for the future energy workforce, from project management to electrical engineering, energy and carbon credit trading to complex financial structuring. It is expected that these nine capabilities will represent ~75% of energy capability needs by 2050. While we are not yet seeing a significant change in the skill sets required, the volume of skills needed to deliver the energy transition is growing. In addition to bringing in experienced hires with the necessary capabilities from different sectors, energy companies should also invest in upskilling and reskilling traditional hydrocarbon staff where possible. This will not only minimize the impact of the transition on the workforce but also maintain valuable institutional knowledge and avoid the time and cost associated with securing new talent.
Attracting and retaining talent in the oil and gas sector has become more challenging in recent years. Data from the US bureau of labor statistics indicates that degrees and unemployment levels in extractive industries are at their lowest since 2006 and this is supported by recent articles by The Wall Street Journal and Forbes that reveal a 75% decline in petroleum engineering undergraduates since 2014. To tackle this trend one company is taking a two-prong approach by targeting recruitment of graduates and women in the short-term while supporting the next generation of talent through school and university outreach programs designed to inform STEM students about how their skills could be deployed in a career in energy. Retaining talent is equally important and to do this effectively energy companies will need to update and target their employee value proposition to move beyond compensation and provide the next generation of talent with the purpose and connection they are seeking.
Despite demonstrating a clear business case for diversity, including enhancements in innovation, creativity, talent attraction and retention and higher returns, BCG's latest Untapped Reserves Diversity, Equity and Inclusion (DE&I) report, developed in conjunction with WPC Energy, makes for sobering reading. Since the last report was released in 2021 the average percentage of women working in oil and gas has increased only slightly from 22% to 23% with 19% female representation at executive levels. Of course, gender is only one aspect of diversity considered by the report. Together, the panel agreed that for any minority group the primary challenge is to be heard and seen. To support this goal, every company should take steps to measure progress, ensure diverse candidate slates and have leaders display commitment to DE&I. However, visibility is also important and getting a seat at the table at the highest levels of an organization is critical for minority groups to inform decision making but also to give those at lower levels an example to emulate.
There are clearly a number of challenges for energy companies to overcome to attract and retain a diverse, skilled and motivated workforce in the years to come. One tool that can support this ambition is strategic workforce planning (SWP). SWP enables the organization to understand the supply and demand balances for specific skills and capabilities, identify gaps and develop solutions to secure the resources required to thrive in future. But SWP is not only applicable for employees, strategic partners and contracts can also provide valuable skills and capabilities and should be factored into companies’ resourcing plans to ensure they have the right talent to successfully deliver the energy transition.
Boston Consulting Group is a Knowledge Partner for the World Energy Capital Assembly and the North America Energy Capital Assembly.
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World Energy Capital Assembly
November 2024 | London
The meeting place for senior energy executives, investors and financiers to connect and do deals.