Diversity in Energy Op-ed: Organization Culture in the Oil and Gas Industry

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For more than 100 years, the oil and gas industry has provided a fundamental and sustained contribution to the global economy. It serves billions of people with abundant, affordable and reliable sources of energy. In terms of dollar value, the oil and gas industry is considered the largest industry in the world, employing more than 4 million people across the globe.

Despite its contributions, the industry has long endured negative stigmas, particularly noted by its exclusive club of good ol’ boys. In 2014, through its global reputation center, market research firm Ipsos took an in-depth look at the oil and gas sector across 24 countries and found its reputation the least favorable in the world.

Culture of a company

Although there have been sincere attempts at increasing the representation of women and African Americans in the industry, there is still a great deal to do in its diversity and inclusion (D&I) efforts. According to a 2020 report from nonprofit analyst company Energy Futures Initiative, about 8% of the energy industry workforce is African American, while women make up between 23% and 32%. Additionally, a 2017 report from the University of Massachusetts, Amherst, found that African American oil and gas workers earned 23% less than white workers in comparable roles. Adding insult to injury, the pandemic and dips in demand in 2020 led to mass layoffs, further challenging the industry’s D&I efforts.

“There is clearly implicit bias throughout the industry, a condition that thrives in the darkness of ignorance—often held by the well-intentioned individuals who are unaware of their own shortcomings.” —Kendra Lee, Merichem Co.

Diversity, the first step for true inclusion and acceptance, is not only about striving for equality. Multiple studies across several industries have confirmed a strong and statistically significant correlation between the diversity of management teams and productivity, innovation and improved financial performance by the simple virtue of a diverse range of opinions and perspectives. Diversity also lends a hand to speedy responsiveness, which better positions companies for adaptation in the event of internal or industry changes. Despite this potential, there is clearly implicit bias throughout the industry, a condition that thrives in the darkness of ignorance—often held by the well-intentioned individuals who are unaware of their own shortcomings.

Results of a 2019 study conducted by EY determined that although lack of diversity in the industry is a real issue, culture and processes for inspiring and motivating personnel are paramount.

“Culture eats strategy for breakfast,” said Peter Drucker, the world-renowned management theorist.

It suggests that the culture of a company—the shared values, attitudes and practices that characterize an organization—determines success regardless of leadership strategy. It is the company’s personality and is the foundation for engaging internal and external stakeholders with integrity, instilling trust and developing a commitment to success. Although culture and leadership are inextricably linked, some believe one individual cannot dictate an entire culture; instead, it should be navigated and negotiated by various employees equally committed to walking the walk. Good leadership can quickly fail without a well-integrated, unified culture that all employees can support.

‘Ambidextrous culture’

In Erin Meyer’s book, “The Culture Map: Breaking Through the Invisible Boundaries of Global Business,” she coined the term “ambidextrous culture,” an outline of two types of corporate culture: execution and innovative.

In an execution culture, the work environment leans toward process and tasks as the fundamental fabric of the organization. This culture, historically favored by the oil and gas industry, typically consists of a single authoritarian or decision-maker that assigns labor. Pertinent matters requiring research and recommendations are often presented as a synopsis to a key executive or board that then mandates orders of business. The oil and gas industry fits the execution culture employing myriad engineers who naturally follow processes. Of course, this does not take into consideration safety processes that are government-mandated. Those disciplined frameworks for managing the integrity of procedures for handling hazardous substances are non-negotiable.

In stark contrast, an innovative culture is a work environment where unorthodox thinking is encouraged, and there are tools and processes in place to capture and progress ideas. Innovative cultures foster an environment of trust with leadership and with one another. Employees are motivated to get involved knowing that everyone else in the company is doing the same. Great ideas come when all are open to different backgrounds and perspectives. Within innovative companies, cultural and individual differences are embraced, rounding culture back to D&I.

“We’ve always done it that way” is one of the most dangerous phrases in business. Although it is most likely said with good intentions, they are not words employees can embrace. Creating a culture of change requires listening to employees and empowering them to question, “How can we do this better?”

Change led from the top down

The oil and gas industry at large has a long way to go in its D&I efforts.

All the major oil and gas company websites have information on their D&I programs and policies. Why, then, is the industry still so male-dominated? It is thought to be cultural (e.g., a belief that women cannot handle the workload) and is laced with short-term thinking (e.g., the focus is on the next spike or drop). Despite so many claims, the industry fails to make gender equality a value.

There are still fewer women in oil and gas than almost any other major industry, and gender diversity decreases with seniority. Women hold only 17% of executive-level roles, and only 1% of oil and gas CEOs are women.

It is not just about gender. From the 1860s to the present, the oil and gas industry is thought to be the most racially homogenous industry in America. In addition to the lack of African Americans, Asians, Hispanics, Native Americans and Millennials are also underrepresented. Although the American Petroleum Institute (API) has been actively developing strategies and programs to engage minority audiences, the impact has been benign.

Even with the collapse in demand for oil and gas during the coronavirus pandemic and the push for renewables, API predicts there will be nearly 1.9 million direct job opportunities in the industry through 2035. Minorities and women represent critically vital and available talent pools to help meet those future workforce demands. Current recruitment rates into the sector will struggle to meet that need. Recruiting and promoting will take diverse thinking and positive action, including identifying and addressing cognitive and cultural bias patterns. Bridging racial and gender disparity gaps must be approached with a broader framework, aiming to foster inclusive workspaces and diverse resources. Change is led from the top down, which means success will require leadership support and commitment and driving change from a compliance-focused perspective and a cultural shift.

Attracting fresh talent

There are various factors that induce changes in business environments. In the oil and gas industry, an estimated 71% of the workforce is 50 years old or older, and are aging out. Dubbed the “Great Crew Change,” oil and gas companies face disruption in the workforce and have the choice of creating environments that attract young, skilled, diverse talents or else lose them to tech giants like Amazon, Apple and Google. Savvy companies are focusing on developing a culture that attracts and inspires all cultural, ethnic, health and gender identities.

The industry will win for its efforts. While the oil and gas industry continues to have a negative reputation, there are companies dedicated to inclusive environments. They value individual and group differences within their workforces and embrace the employees’ diverse backgrounds and perspectives. When D&I become the norm rather than the exception, it will bode well for oil and gas.

About the author: Kendra Lee has served as chairman of the board for Merichem Co. since 2012 and CEO since 2014. She has worked for Merichem Co. for more than 25 years, beginning her career in the research laboratories. Lee continued her progression with the company in chemical sales management and the corporate functions of treasurer and corporate secretary before being appointed to serve on the board of directors in April 2010.