Four Essential Executive Talent Strategies to Succeed in a Low Commodity Price Environment
Oil and Gas Monitor published a bylined article written by Russell Reynolds Associates' Stephen Morse titled "Four Essential Executive Talent Strategies to Succeed in a Low Commodity Price Environment." The piece looks at how the oil and gas companies have been forced to re-evaluate their priorities and shift their strategies due to the low commodity price environment. The article is excerpted below.
In the past months, oil and gas companies have been forced to re-evaluate their priorities and shift their strategies due to the low commodity price environment. As a consequence, we have seen a renewed focus on operational efficiency, an activity movement to downstream, board effectiveness evaluations and search for new channels of growth through capital reallocation.
From a leadership talent perspective, we have observed an increase in hiring for operational executives and supply chain talent, and, given the activity shift to downstream, we have seen incremental hiring, especially in functional roles. We have also witnessed an increased demand for board evaluations for effectiveness and composition. The need for redefined strategies and asset reallocation has put more emphasis on the business development function and related talent.
As companies work to address talent-related issues, the combination of demographic challenges and changing operating structures is limiting the pool of exceptional leaders. In addition, our research points to a change in required leadership competencies and skill sets for future leaders. We recommend the following four talent strategies during this period to help future-proof the business.
1. Redesign leadership competency model
We believe that a redesign of required competency models for hiring purposes is essential. Leaders hired in 2015 showed significantly higher levels of strong independent thinking skills, capacity to manage ambiguity, hands-on orientation, calculated risk taking, financial acumen and disciplined capital allocation skills compared with those hired during growth years (2010-2014). Companies should first ensure that their leaders’ profiles include key competencies required of future leaders and use the organization’s competency model as the basis for leadership development and also hiring decisions. The downturn presents senior talent with the opportunity to hone skills that were not highly utilized during periods of rapid expansion, while the next generation of leaders can gain valuable experience for future downturns. Make this developmental focus explicit and take the opportunity to identify and develop emerging high-potential leaders by engaging them on the most critical projects; e.g., restructuring. We recommend that companies learn from hiring freezes in prior downturns, continue looking for exceptional talent and use this moment for leadership development.
2. Focus on organizational culture
Corporate culture impacts the performance of a company. As we have witnessed in the market, some companies are forced to make difficult decisions regarding reorganization and downsizing. We believe that companies will need to place an emphasis on downsizing smartly. In addition, companies should conduct the same level of due diligence on the management team and organization culture assessment as on the asset base and balance sheet. Concentrate on building a leadership team that can align their organization with the company’s long-term strategy. Rather than think in the short term, companies will need to recognize the value that maintaining talent brings to a company in the long term.
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