Nadia Saleem writes about why diversity in the workforce is of paramount importance in the current market condition as companies look to cope with crisis management, capital spending cuts and diminished demand
As the energy industry looks to cut costs, jobs and delay projects to cope with the current low oil price exacerbated by the diminished demand due to the COVID-19 outbreak toll on economies around the world, the signiﬁcance of a more diverse and inclusive workforce becomes increasingly important.
According to diversity studies done by Boston Consulting Group (BCG), diverse companies are 35 per cent more likely to beat industry, 10 per cent most inclusive large companies show 2.3 times greater cash ﬂ ow per employee, most diverse companies derive more than 36 per cent more revenue from innovation than the least and companies in top quartile for women board members outperform those in bottom by 66 per cent on return on invested capital.
Jarand Rystad, CEO of Rystad Energy said in an interview with Pipeline Magazine: “Any management team more equally represented would be a better management team in terms of operations and business development.”
He said that oil and gas is still a very male dominated industry that has struggled to attract and retain women.
However, he said there are examples of exceptions. “In Norway, which is a big oil nation, we have 2-3 upcoming energy companies that have female leaders – this are a big inspiration for younger women. But still there is a long way to go from the recruitment and development perspective,” Rystad said.
In the Middle East, which is an important petroleum region, there is even less of a gender balance, with the exception of a few countries, he added, which could partly be the reﬂection of the local culture.
Although there have been moves from energy companies towards building a more diverse culture, it has not met targets and more needs to be done, analysts say.
Shelly Trench, managing director and partner at BCG says diversity is not only a social obligation but a business imperative.
“We have seen progress –the percentage of women within the workforce has increased signiﬁcantly, with leading companies such as BP, Petronas and Shell having around 30 per cent women in the workforce. Within the region (Middle East), a few ﬁrms are recognised as having best practices of strengthening the female workforce in oil and gas globally with around 30 – 50 percent. However, there is more that can be done as the general range of female workforce within the region is around 5 – 10 per cent.”
Although the region overall is not achieving the set targets, within the last 12 months there have been signiﬁcant steps taken by players to make a more diverse workforce, she said.
David Clark, group energy director at Lloyd’s Register said that as an industry, everyone needs to try harder to improve the workforce diversity.
“We are getting better and I think part of the opportunity is not only in terms of diversity in gender, but also greater diversity in culture and thinking. We have already seen how this can be improved by moving people around different regions and bringing in fresh perspectives to geographic areas. By connecting teams across multiple regions, we can see the diversity of thinking and broader creativity that can be brought to bear on the daily challenges we face in any one region,” Clark said.
In order for companies to achieve set targets or to even begin to hold diversity a matter of signiﬁcance, high-level consciousness needs to prevail.
“We need a very conscious effort from the board to search for and recruit women at middle and top management level to achieve a gender balance, said Rystad. “We can make the management conscious on processes, because we have unknown biases that very often impact hiring and promoting decisions.”
Meanwhile, BCG’s Trench laid out a few key action points;
“Companies need to mainstream diversity and become transparent about targets to align themselves with international benchmarks. Within the region, because most companies are not listed, there is little transparency on details of workforce diversity. Without performance based reports, we don’t move ahead, she said, while highlighting the below points;
- Critical mass needs to be sought in all businesses – not only the support functions such as HR and ﬁnance. Focus on diversity and inclusion as a corporate strategic priority with the board and executive committee. This cannot be owned by HR only.
- Use technology or AI to eliminate bias from decision-making when it comes to recruitment
- Use allies and sponsors to support women’s network, such as where men are encouraged to take up parental leave and have ﬂexible working policies. Best practice companies are offering global parental leave policies for secondary caregivers: 4 weeks in companies like Bloomberg and DuPont to 26weeks in others like Volvo and Facebook.
- Provide career support for women, which can come in the form of sponsors for high potential staff, which includes advocating for employee advancement.
Lloyd’s Register’s Clark said we need to do more in terms of communicating the range of opportunities and activities that we have in the sector; the types of jobs that we have to do and the environments that people work in.
“A large part of our workforce has been able to develop a fulﬁlling and rewarding career without ever having to go to work in coveralls or ﬂ y out to a rig in a remote location.
We need to leverage the broader proﬁle of our global business, and take time to engage with different areas and different sectors to promote what we do, how we work and, in our case, why Lloyd’s Register is unique as a business. We need to explain why our culture, values, purpose and intent make us different to our competitors, and how as a business we need the new talent and new skills to help us develop the solutions needed for tomorrow,” he said.
Additionally, when going out to market looking for new talent, we need to turn to different sectors, he added. “For example, we recently brought in a new ﬁnance director who has come from the infrastructure industry, so she has no direct experience in oil and gas, or the wider energy sector. We took time to ﬁnd someone with the right proﬁle for us now, which included a different mix of experience to bring into the team, because we believed it would help us to grow successfully in the future,” Clark said.
Investments to improve diverse culture
BCG’s Trench said if companies were to focus investments on the subject, these should go into leadership time and visible commitment.
“This should be a strategic agenda of the leadership team just like any other priority.
In order to ensure they understand the importance of diversity, CEO involvement is necessary. Where companies are not involving CEOs, diversity shift does not happen,” she said.
Additionally, she said companies can make monetary investments on critical infrastructure and program. Different investment can be made depending on the maturity of company - this should be a company-speciﬁc strategy, not industry wide as different companies have different diversity requirements, she added.