Schlumberger: HR Challenges in the Petroleum and Energy Sector
Faculty Contributor: Tripti Singh, ex-Faculty
Student Contributors: Manu Jain, Duggirala Madhumita, Rakesh Kumar Meena, Vinay S.
HR is a very important function in an organization, not only for its internal activities but also for its growth and expansion. To propel an organization forward, it is necessary to ensure that the motivation levels stay high at work. In the process, HR function faces challenges that are very different depending on the industry. A case in point is the oil extraction and refining industry. In this article, we present the different HR policies of a firm involved in oil exploration and extraction and their implementation.
HR is a critical function in an organization, not only for its internal activities but also for its growth and expansion. It plays a defining role in ensuring that motivation levels stay high at work, which is essential for an organization to grow. As these aspects are very closely tied to the nature of work, HR function faces challenges that are very different depending on the industry. A case in point is the oil extraction and refining industry.
In this article, we present the different HR policies of Schlumberger and examine their role in keeping up employee motivation in a difficult and often dangerous work environment. We find that some credit is due to the employee centric policies and organisational culture for the success of the firm.
Schlumberger Limited is the world's largest oilfield services corporation with operations in approximately 80 countries. The company features in the Fortune's Best 500 companies to work for, mainly due to its employee focus, and HR practices. Some of the best HR practices of the firm are in the areas of gender diversity, an equal opportunity employer, engagements with the best schools in the world, family and work life balance support and no 'Glass Ceiling'.1
Major Roles in the Organization2
This article looks at two roles at Schlumberger, from an HR and OB perspective, to appreciate the opportunities and challenges of each role.
Field engineers stay in the oil rig, which is in isolated, sometimes hostile locations for extended periods of time. They would also work in night shifts and would have to put up with the poor social life. Other difficulties include adverse terrain, seasickness especially in the case of offshore facilities, bad food, problems with equipments and the inherent risky nature of the job.
A field engineer in SLM-China says "It is a tough job, in the sense that sometimes we have to get down to our knees and dirty ourselves to get something working at the well site. At times I am called back from a holiday when the going is tough."
Field Engineers are adequately rewarded with fantastic pay packages. After every onsite stint, all FEs are offered one month of vacation with family, completely paid by the company. At work, the employees enjoy flexible working hours. Also, there is a rotation policy to give the Field engineers (FEs) hands on experience on different modules. International exposure and training in all modules across technical details, across geographies, across segments succeed in making each personnel a generalist and a specialist at the same time.
With respect to Field Engineers, HR policies focus on the following:
a. Flexible lateral movements are offered for employees to discover their niche areas in the field.
b. Interactive sessions with the employees through contextual databases and company sponsored offsite are facilitated to promote interpersonal effectiveness and bring down the barriers to communication amongst a diverse team of FEs.
c. Motivational work groups, discussion forums and close supervision ensure that signs of de-motivation are detected early. This helps in beating career blues and promotes a vibrant work place.
Interviews with the Field Engineers showed that an overwhelming majority of recruits join because of the financial incentives and exotic travel destinations; but money can motivate one only to an extent, and once the stretch is crossed, employee morale goes down and employees feel disillusioned.
HR finds it tough to promote job satisfaction. Employees tend to get disoriented, with no focus structure. Career blues set in the fastest in this segment of the industry, leading to reckless onsite behavior and unprovoked aggressiveness. Employees develop a negative attitude towards work, motivational levels fall and employees start dealing with work as if it is an incumbent obligation in order to continue enjoying their lifestyle.
HR and Employees - Difference in viewpoints
- HR believes that the team is well acquainted with each other through discussion groups. But to the employees, task cohesion and esprit de corps seem to come naturally with no need for special groups for interpersonal exploration. Therefore HR's role is not explicit.
- Employees feel that the appraisal system is too stringent with feedback seemingly used as a pressurizing tactic. However, HR, with employee's interest in mind; believes that timely feedback can prevent irrevocable mistakes which are unforgivable in their strategic roles.
- FEs assume responsibility for the work done by the local labourers under them. But the local labourers never take kindly to new FEs and do not cooperate to finish work. FEs believes this to be unfair. HR believes that it's imperative that the young recruit learns to deal with labor unions for without this exposure, the recruit would be isolated from ground realities to make informed decisions once he moves up the hierarchy.
- Employees believe that 3-4 months of onsite project assignment is not enough to gain experience and accuses the administration of sealing off their chances of shifting to other organizations by stunting and seriously handicapping their learning. HR however believes that constant work and isolation at a remote off shore point can push the employee towards disorientation, career blues and de-motivation.
Field Service Manager
Challenges in the Role
FSMs are responsible to make everything at the rig work as per the planned schedule and have to constantly remain in touch with the clients. The importance of deadlines and the pressure from clients make the job of FSM tiring.
In the words of a FSM in SLB-India -"Life at rig was peace... At least I got weekends off there. Here, although you get to work from office, but you have to work almost 24x7. Any complaint from the client, no matter which day of the week, what time of the day it comes in, has to be listened to and solved."
Motivators at Work
In addition to money, perks, incentives, vacations, etc which are predominant motivators in the oil industry, the motivation at this level is the increased responsibility and the leadership role associated with it.
The training for the job and the additional responsibility at FSM level are the primary drivers for many to choose the role of FSM, which is being increasingly sought after. An HR with SLB-India says "In the initial period, FSM is given limited responsibility (3-5 rigs). Also, each FSM is supported by a buddy. But within 3 months his span of responsibility increases."
The HR department offers the FSM aspirants relevant training that is focussed on the development of managerial attributes and soft skills like improving interpersonal effectiveness, global etiquettes, etc.
It was found that the motivation for work at this level is the passion and excitement of leading people with additional responsibilities. In addition the prospect of a stable life stimulates the employees to take up the job responsibilities of FSM.
The FSMs feel that they are overburdened with work and work life balance which they enjoyed during their field engineer days fade away at this point. The mental pressure, the 24x7 task gets a bit tiring at times, and the FSMs feel that the HR does little to help them cope through this. We could not, however get the HR to comment on this.
HR Practices at Schlumberger
All the HR practices followed by Schlumberger worldwide are tuned towards promoting and ensuring a few beliefs and principles such as promotion of diversity, meritocracy, employee safety and the right attitude within an employee. This is illustrated here by describing some of the HR practices of the company.
Campus Selection has been identified by Schlumberger as the most important part of the field recruitment process. Recruiting from campus and developing employees creates loyal employees according to the HR.
Maintaining the sex ratio is another challenge that oil and petroleum sector companies face.
A brief overview of the process shows the effectiveness with which this philosophy of choosing the most suited has been implemented. In the interview process, interviewees are grilled to test their psychological resilience through stress interviews, their physical stamina, reflexes, reaction time are tested using very unconventional methods. A group interview followed by a panel interview followed by a personal interview all of which are non directive is conducted. According to the HR, the company employs specialized training personnel to train the new recruits and they only look for mental and physical resilience in the candidates.
Appraisals & Reward Systems
Schlumberger practices a mix of Management by Objectives (MBO) and results based appraisal. The Field Engineer can discuss with his Field Service Manager to set goals for himself. It is the responsibility of the Field Service Manager to organise relevant trainings for the FE. At the appraisal time, the engineer has a meeting with the manager on the objectives (both personal and organizational) that were achieved and those that weren't. The deliverables are measured in the form of how the engineer performed at the rigs, deadlines met at the oil rig and working in a team. The manager gives the feedback and suggestions for improvement to the employee.
Diversity is one area where we found zero difference in the opinions of HR department and the organization in general. The HR Department's policy of maintaining diversity at rigs has helped strengthen bonds amongst employees. This diversity in a way acts like a soft skill training and prepares them to interact with any client in later part of their career.
Schlumberger has done a remarkable job at the diversity front. The kind of acceptance it gets in every nation it operates in is primarily because of its diverse workforce. The company is very flexible in acclimatizing itself to local customs.
According to a HR manager in SLB-India, "There is a learning curve for both graduates and experienced staff, with as much as seven to ten years training to get to the same proficiency level as the people in the industry now."
Schlumberger has training centers located all over the world, offering both theoretical and practical training, executive development programs, ongoing marketing and integrated enterprise learning ,external courses and classroom based programmes with hands on exercises.
A training centre, located in Abu Dhabi was designed to accommodate all segments of the oil and gas industry. There is a dummy, tailor-made rig to replicate the real-life working atmosphere.
A number of designated high-level executives from Schlumberger are sent as company "ambassadors" to 44 engineering programs around the world including universities such as MIT. This program promotes recruitment and talent identification.
HR also invests heavily in safety training. Recruits are given training modules in swimming, safety precautions in case of oil gas leaks, parachuting, high diving and speed driving.
Most of the employees surveyed or interviewed by us had immense appreciation of the HR's training initiatives. According to a FE, SLB-China, "The company does not put an employee on the line until he is completely ready... they do not expect us to know everything."
The employees also believe that this extensive training opens up career choices for them. Anyone who quits from Schlumberger is immediately flooded with offers. It is widely recognized that SLB employees have had the best training.
It's impossible for any HR practice to gain complete and undisputed acceptance amongst all employees. But the way Schlumberger has implemented its practices is exemplary in itself. After the oil industry crisis during the early 90s, Schlumberger has risen well. HR policies cannot be given the sole credit for its success, but people are the most important assets in this industry and Schlumberger has done well in keeping its people happy. Its policies of global workforce, equality, diversity, meritocracy, employee care has helped it in the long run.
Tripti Singh was a faculty in the Organizational Behavior & Human Resource Management Area at IIM Bangalore. She is a Fellow in Management in Organizational Behavior and Human Resources from XLRI School of Management, Jamshedpur and holds a Masters in Human Resources Management and Industrial Relations from Lucknow University.
Manu Jain (PGP 2007-09) holds a B.Tech in Computer Science Engineering from Indian Institute of Technology (IIT) Roorkee and can be reached at firstname.lastname@example.org
Duggirala Madhumita (PGP 2007-09) holds a B.Tech from Indian Institute of Technology (IIT) Madras and can be reached at email@example.com
Rakesh Kumar Meena (PGP 2007-09) holds a B.Tech in Electronics and Communications Engineering from National Institute of Technology (NIT) Warangal and can be reached at firstname.lastname@example.org
Vinay S. (PGP 2007-09) holds a B.E in Electronics and Communications Engineering from Rashtreeya Vidyalaya College of Engineering (RVCE) Bangalore and can be reached at email@example.com
Petroleum Industry, HR Practices, Schlumberger, Roles, Challenges, Motivators, Recruitment, Diversity, Training, Appraisal.
- Peter Parry, Varya Davidson, and Andrew Clark, 'Crisis in the Oil and Gas Industry', http://www.strategy-business.com/li/leadingideas/li00003. Last accessed on April 21, 2009.
- Career profiles in Schlumberger, http://www.slb.com/content/careers/develop/career_profiles.asp?. Last accessed on April 21, 2009.