The Demographic Shift in the Oil and Gas Industry

The Demographic Shift in the Oil and Gas Industry

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The oil and gas industry in the United States is approaching a dramatic shift in the next 3-5 years. According to forecasts by the U.S. Bureau of Labor Statistics, about one-quarter of the U.S. labor force will be over 55 years old by 2022[1]. For the oil and gas industry, this shift is amplified by broad industry layoffs, starting with the 1986 oil price collapse which shed an estimated 600,000 jobs, followed by nearly two decades of subsequent layoffs and low hiring. Characterized as the “Big Crew Change,” the workforce remnants are bifurcated into two employee groups: employees under 40 and over 60 years old. Research reveals that the oil and gas industry has a greater reliance on technical university degrees as compared to other sectors, and employees with deep industry knowledge are an immensely valued asset. As older employees approach retirement, the industry may find itself struggling to replace the skilled, highly knowledgeable employees that are a product of longevity and dedication to working in the industry.

A three-year research initiative conducted by The Society of Human Resource Management[2] reveals 83% of the Human Resource (HR) professionals surveyed are aware of the demographic shift. Yet at an organizational level, only 12% of these HR professionals responded that their organization has a planned or an implemented strategy to address the workforce shift. 17% have decided that no change is necessary, and the remaining 71% of organizations are still considering their response.

As industry veterans enter retirement eligibility, company leaders must rethink the succession of skilled workers in actionable terms. For HR professionals, recruiting, cross-training, and retention efforts are obvious opportunities. Organizations must also act to document processes, preserve institutional knowledge, and adopt technology systems to support a dramatic workforce transition. Without a systematic approach, the wealth of institutional knowledge may be lost and the next generation of oil and gas workers may struggle to be as effective in their jobs without a knowledge base from which to consult.

[1] Dubina, Kevin et al. “Projections Overview and Highlights, 2018 – 2028.” BLS Monthly Labor Review, 2019, https://www.bls.gov/emp/data/labor-force.htm

[2] Schramm, Jen and Karen Wessels. “Preparing for an Aging Workforce: Oil, Gas, and Mining Industry Report.” The Society of Human Resource Management. December 2015.

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