Canadian HR Reporter

April 3, 2017

Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.

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CANADIAN HR REPORTER April 3, 2017 NEWS 9 last year… and we are starting to see some rehiring, particularly fi eld workers and work related to the actual drilling activity itself," said Carol Howes, vice-president of communications and PetroLMI division with Enform in Calgary. There's cautious optimism, according to Jim Fearon, vice- president of Western Canada at recruitment fi rm Hays in Calgary. "We've obviously seen a minor rebound in the oil prices in the last three, four, fi ve months, and that's eased the purses somewhat, so we're seeing some much-needed maintenance going on, a bit of drilling returning, and there's a marginal amount of more activ- ity going into new project work," he said. "We're a long way from being at the stage where the industry's in a boom, oil and gas compa- nies are making massive profi ts and they've got money to throw around — everyone's very, very cautious, the oil price is still very low." Most companies scaled back operations fairly signifi cantly, in- cluding corporate head offi ce sup- port, "so a small increase in activ- ity means that they're stretched not to the limit, but enough that they have to start hiring in some form or other," said Fearon. Employers are "fairly reticent" to commit to a permanent head- count, he said. "Everyone wants to see 'How long is the recovery going to be for? Is it a permanent recovery, is it a short-term thing with an- other dip?' So most companies… largely want to bring on contracts for extended periods of time, six to 12 months, and see what the economy's doing thereafter." In Alberta, the industry has been decimated somewhat, es- pecially for people aged 50 and older, said Iqbal Ali, managing di- rector of Petro Staff International in Calgary. Now, some people are getting contracts but they're short term, in terms of weeks, not years, he said. "And the folks who are in the 50-plus range are having it the toughest because they're the highest paid and demand high salaries," said Ali. "It's a wake-up call. Who knows, if the price of oil goes back up to 100 bucks, 90 bucks, we may see something diff erent. e price of oil now is man-made, not market- made and, therefore, anything man-made is always problematic — they can bring it down as they took it up." A lot more discontinuous ca- reer paths are sprouting up, and contracting is picking up as em- ployers are hesitant to hire some- body with all the benefits and commitments that go along with hiring a full-time person, said Rafter. " ey want to factor in that fl exibility within their own busi- ness and financial model," she said. " is (downturn) has been so hard and for so long, some peo- ple have put up their hand and said 'uncle' and those that have adapted to change are coming out with some of the most remarkable change for innovation, and inno- vative ways of reducing costs with fewer or no headcount. So this whole economic downturn has resulted in some really cool inno- vations that are in alignment with whole future of work as we see it." e job cuts will continue to grow, said Rafter, because busi- nesses are getting a lot smarter, and technology and innovation are taking over a lot of opera- tional divisions. In looking at a business organically and holisti- cally, employers are going to fi nd cost reductions in ways they never otherwise would have thought of, she said, such as using automated vehicles in the oilsands. "When you look at the fallout of that, you're not only increas- ing operational effi ciencies but you're also decreasing costs and you're decreasing headcount," she said. " e economy has really forced people to become innovative, cre- ative and look outside the box just to survive, never mind thrive." In the past, the pendulum has swung back quicker than it has this time, said Howes, and tradi- tionally the expectation was there would be a recovery. "In this case, that's not the case so much, so certainly companies are looking to fi nd some longer- term solutions, and that includes improving productivity and creat- ing effi ciencies." ere has been a restructuring of the industry, she said, "and we are going to see a smaller indus- try going forward, and by default, that means that you're going to have companies with fewer em- ployees than you would have had previously… It is a bit of a shift in mindset." There's a broad spectrum of changes contributing to the new labour force, said Fearon. "It's changes in technology, changes in process, it's restruc- turing to remove ineffi ciencies of organizations," he said. "I know a lot of the larger oil and gas companies have found ways to restructure fi nance de- partments and IT departments and that kind of thing, so there's way less double-handling. A lot of organizations had grown very, very fast and, as a result, probably ended up hiring heads that they could easily have found another way to distribute that work to if they had more time available to them. And I think the downturn's aff orded them the opportunity to generate more effi ciency within the organization structure." As for attracting job candi- dates, it can be diffi cult when it comes to the higher-skilled posi- tions, while plenty of applications fl ow in for lesser-skilled jobs, said Fearon. "Where you're talking about skills that are still highly in de- mand... if (employers are) trying to attract people that are gainfully employed with other oil and gas fi rms or services fi rms, and they're still having to turn their heads and attract them into their organiza- tion, then they've still got to be positioning their value proposi- tion in the right way. Where the market is less competitive, then candidates have got to be do- ing the same thing, positioning themselves to be attractive to employers." Employees who are adverse to the change are the ones who are going to suff er the most, said Rafter. "Old jobs are not coming back, not in the traditional way. We're finding people are being now rewarded not for loyalty they've shown in a job but for the value they bring to an organization. So career security is replacing job security." Employers seek effi ciencies OIL AND GAS < pg. 1 Credit: Chris Helgren (Reuters) Dump trucks parked near crude oil tanks at Kinder Morgan's North 40 terminal expansion construction project in Sherwood Park, near Edmonton on Nov. 13, 2016. Balancing headcount When the crisis fi rst hit more than two years ago, oil and gas companies soon realized they had to cut costs, and quickly. That largely meant layoffs, according to Lance Mortlock, partner and Canadian advisory strategy leader at Ernst & Young (EY) in Calgary. "When rigs are not being used because wells are not being drilled, you've got all those crews, which is the bulk of some of these oil fi eld companies' organizational headcount, with nothing to do so, unfortunately, as a result, signifi cant cuts have been made." Very few employers engaged in salary freezes or pay cuts, found an EY study completed in association with the University of Calgary's Haskayne School of Business. "It's potentially easier to cut headcount without longer term business infrastructure issues, whereas if you start to play with wages, salary freezes, when things recover, it can be more complicated in terms of your process and your policies and all of those things, to then fi x that." The 81 per cent of oil and gas companies that reduced headcount by 25 per cent to 30 per cent reported the highest level of reorganization success, according to the report. "The caveat, however, is that this relationship becomes weaker once companies surpass a 50 per cent headcount reduction," said Mortlock. "So we're really seeing an optimal point." The sweet spot would really be dependent on where a company was at prior to the downturn, and what level of effi ciency was created within the organization, said Carol Howes, vice-president of communications and PetroLMI division with Enform. "It really depended on what they needed to do to be able to become more effi cient and survive through a $50 to $55 barrel of oil… and how much they had beefed up in the previous years," she said. "2014 was really a peak in terms of the hiring."

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