With the dramatic decline in oil prices, one-third (32 per cent) of oil and gas industry organizations in Canada, the United States and Mexico are planning to decrease “buying” outside talent.
While 32 per cent said it was “too early to tell” when it came to the impact on their human capital strategy, 18 per cent plan to freeze or cut compensation, according to a Mercer survey of 154 employers.
Another 18 per cent said they will consider how to enhance the cost-effectiveness of HR delivery and 16 per cent may reduce staff.
These results are clear indicators of how quickly market conditions can disrupt employer strategies, said Mercer. For example, in a previous oil and gas survey released in early 2014, 66 per cent of respondents identified “buying” talent as a top talent management strategy.
Given these findings and current market realities, a forward-thinking HR leader will put forth a balanced strategy, taking necessary short-term actions while building capability and enhancing organizational performance for the long haul, said Mercer.
“This approach is essential because, as history has proven, the price of oil is fundamentally based on supply and demand — as production cuts take their toll, demand will eventually outpace supply and organizations will be in growth mode again.
In looking at the impact on business strategy, 25 per cent of respondents said it was “too early to tell,” while 44 per cent said they will cut back on capital expenditures. Thirty-eight per cent will reduce selling, general and administrative operating expenses, 23 per cent will reduce core operating expenses and seven per cent will explore potential divestitures of assets, business units, products or geographies.
The report can be found at www.mercer.com/services/solutions/energy/managing-human-capital-assets-during-market-disruption.html.
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