The COVID-19 Workforce Challenge Strategies to manage your workforce to come out stronger in recovery April 24, 2020
Introductions Faiz Khanbabi (A&M) Teal Reamer (BTS) Kevin McMahon (A&M) Riz Shah (A&M) Ryan Isherwood (A&M) Houston Houston Houston Washington D.C. Houston Riz has 20+ years Faiz has 13+ years of Teal has 10+ years Kevin has 25 years of In his 30+ years in the supporting project owners / experience leading change experience in designing and management and consulting energy industry, Ryan experience. He has practical operators, improving management programs for leading behavior change specializes in helping hands-on experience, leading performance by effectively Oil & Gas clients to and people development leaders and organizations leveraging technology and large scale organizational maximize the employee engagements for transform through analytics to enhance ROI experience and minimize executives, managers, and change, organizational design, organization redesign, and reducing the the risks associated with an individual contributors at talent management, merger behavioral change, integration, and carve-out work. associated risks that can uncertain workforce. Fortune 500 energy leadership alignment, and occur during execution. companies. culture change. 2
Current Challenges for the Capital Projects Industry COVID-19 presents a widespread range of challenges ultimately resulting in several projects being shut down or delayed. The severity of the impact deepens when the recovery path looks uncertain. • Travel Mandated shelter in place and travel bans Ban • Virtual work is causing companies to accelerate adopting digital technologies • Brent Crude oil prices dropping below $25; 26M US unemployment claims since virus hit. Global • OPEC+ Deal cutting global supply to 20 million bpd; storage capacity concerns remain Recession • Large players cutting 2020 Capex by at least 20% with most cuts occurring in 3Q and 4Q • Provide adequate PPE & enforcing new social distancing guidelines Employee • Large number of OSHA complaints and essential workers protesting Safety • Planning for increased absenteeism Supply • Product delays from production facilities in Asia Chain • Material delays and project impacts Risks • Contracts not protected by force majeure clauses Legal Issues • Labor law risk exposure • Historically very slow to adopt new ways of working Tech • Alignment across all industry participants will be a challenge 3 Source: McKinsey & Co – Facts and Insights Covid-19
Large Capex Reductions Several large players have responded to the current crisis by reducing capital expenditure and operating expenses. The $30B of Capex reductions may be further reduced over time. Recent 2020 Capex Original 2020 CAPEX Amount Reduced New Plan for 2020 Company Reductions budget ($) ($) ($) Exxon 30% 33B (10B) 23B Shell 20% 25B (5B) 20B Chevron 20% 20B (4B) 16B Total 20% 18B (3B) 15B BP 25% 15B (3B) 12B ConocoPhillips 10% 7B (700M) 6.3B Marathon Oil 46% 2.4B (1.1B) 1.3B Schlumberger 30% 1.7B (500M) 1.2B 60-65% 1.2B (720M) 480M Halliburton As of April 15, 2020 4 Source: US Energy Information Administration
Top Ten Human Capital Challenges An organization’s ability to embrace and tackle the talent and workforce challenges resulting from COVID-19 will be critical to recovery. Providing a Safe Workplace Assessing Critical Workforce Leading with Empathy Retaining Key Talent Communicating across Stakeholders Containing Labor Costs Engaging a Remote Workforce Managing RIFs Enabling Frontline Supervisors Retaining Institutional Knowledge 5 Source: A&M Project Experience
Providing a Safe Workplace It is critical for organizations to provide a safe workplace and equipment for essential workers. In addition, consider flexing existing HR policies to help employees adapt to the new normal. Flex HR Policies • Increase leave flexibility • Facilitate effective remote work / infrastructure • Implement travel and quarantine parameters • Flexibility for labor support Safe Work • Practice social distancing Practices • Isolate potentially ill individuals • Work station / common area sanitation • Entry temperature check requirements Serving Customers • Adhering to Owner’s safety guidelines Safely • Incorporating social distancing in the construction build (sq. foot by person) • Modified HVAC standards and limiting enclosed space • Restructuring layouts in cafeterias and mess halls 6 Source: OSHA Guidance on Preparing Workplaces for COVID-19
Leading with Empathy in a Crisis Employees are experiencing collective stress, and leadership must be purposeful and visible by creating a stable support system. Build a Network • Implement teams/task forces to carry out responses • Foster collaboration and two way dialogue across network of Teams Elevate • Empower others to lead crisis response • Create new “normal” process for decision making Leadership Agile Decision • Do not react to uncertainty by waiting, but pausing, assessing, and then acting • Scenario based planning: Act based on best readily available data Making Treat Employees • Pay attention to how people are struggling and provide support • Show compassion and sensitivity to challenges with Empathy Communicate • Getting ahead of the rumor mill or misinformation • Provide frequent updates Transparently 7 Source: McKinsey & Co. Leadership in a crisis – March 2020
Communicating across Stakeholders Focusing on one group too much or too little may impact bottom line. A well executed communications strategy is inclusive of all stakeholders, transparent, timely, and purposeful. Crisis Management Communicate Communicate Reassure Be Proactive with with Employees with Customers Shareholders Communities Teams 8 Source: Harvard Business Review - Communicating Through the Coronavirus Crisis – March 2020
Engaging a Remote Workforce Creating a culture that fosters collaboration and engaging employees becomes more challenging when the workforce is working from home whilst navigating personal situations. Informal Enhance Provide forums where team members Provide employees childcare, Channels to can still ask questions and connect with dependent care, benefits, and other Shared Support peers to maintain collaboration Connect concierge type services Services Virtual Plan for informal check-ins like Clarify Tasks Ensure there is clarity about “Water Virtual Happy Hours and and Priorities deadlines and priorities Cooler” introduce new team members Establish Monitor Monitor your team’s well- Leading Establish norms, including Communication Well- being through surveys/check which medium to use when Practices Boundaries ins to identify risk of burnout Being Leverage Accelerate adoption of digital Use downtime to cross train Cross Train Collaboration tools (Zoom, MS Teams, employees to manage Employees Sharepoint Webex, Asana, Slack) Tools furloughs effectively Don’t Provide reimbursement or allow staff to Setting up a Allow for time to check – in and take office resources: monitors, Forget the Home Office provide feedback videoconferencing equipment 1:1s 9 Source: A&M Project Experience
Enabling Frontline Supervisors Frontline supervisors are expected to deal with challenges they have never experienced before and serve as crisis managers without sufficient soft skills training. Disrupt Shift Live Reinforce Reimagine how we work Help leaders evolve in Remove barriers Provide the social and together & rally around a their roles & work to optimize for structural supports & shared challenge processes resiliency & tools to enable them efficiency every day 10 Source: BTS Project Experience
Assessing Critical Workforce The new landscape may cause a shift in assessing who is truly critical to your business. Specialists Critical Workforce Segments Rare Skills Field Ops Manager Low Supply Drilling Engineer Development Geologist Construction Manager Difficult to Replace Development Engineer Skills Facilities Engineer Flexible Labor Core Workforce Common Skills High Supply Business Impact Low High Source: A&M Project Experience
Retaining Key Talent Retention strategies include a broad mix of intentional programs that should be implemented dependent upon the demographics of your workforce. Financial Retention Non-Financial Programs Retention Programs Customized Critical Talent Retention Strategies ▪ Combination of cash, equity, and ▪ Leadership recognition, mentorship other financial vehicles program, provide flexibility ▪ Short-term retention incentives tied ▪ Enhanced career paths, leadership • Monitor engagement to business goals access, or special projects • Deliver a higher ROI ▪ Long-term incentives to motivate ▪ Opportunities that allow employees • Enhance employee experience and retain to advance, develop, and fulfill goals ▪ Acknowledging service milestone Primary retention driver for Gen X, Primary retention driver for Baby Boomers Millennials, and Gen Z 12 Source: A&M Project Experience
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