Oil And Gas Talent: Leading A Diverse Workforce

[Editor's note: A version of this story appears in the February 2020 edition of Oil and Gas Investor. Subscribe to the magazine here.]

When thinking about corporate cul­ture today, diversity is a word that is sure to come to mind. From cre­ating high-level positions to weaving the term into a mission statement or list of core values, organizations large and small are developing strategies and tactics to ensure they recruit and nurture a diverse workforce. According to Google, approximately 20% of Fortune 500 companies now employ diversity officers.

Simply put, a diverse workforce includes people with different characteristics. These differences may be generational, cultural, gender-based or racial. They are sometimes based on spiritual or religious beliefs, or they may be based on previous work and world ex­periences. The concept of diversity itself is, well, diverse.

Oil and gas and diversity

According to a recent study from The Wall Street Journal, when it comes to diversity, the energy sector is underperforming. In its Octo­ber 2019 report, “The Business Case for More Diversity,” WSJ research analysts ranked in­dividual companies in the S&P 500 index to see which sectors fared the best in terms of di­versity and inclusion. The ranking was based on 10 metrics including the representation of women, age and ethnic diversity, and whether the company has diversity programs in place. The study found that the financial industry performed best while the energy and materi­als sectors brought up the rear.

While that report card is underwhelming, when it comes to gender diversity, the in­dustry is making progress. The percentage of women on boards of oil and gas compa­nies has doubled since 2009, reaching 14% in 2019, according to a recent S&P Global report. Progress is slow but trending in a pos­itive direction.

The benefits of workforce diversity

While inclusion in the energy sector is im­proving, savvy business leaders and hiring managers who recognize the advantages of diversity and proactively seek better balance stand to profit. The benefits are well document­ed. An article in the Harvard Business Review from November of 2016, “Why Diverse Teams are Smarter,” identified three specific areas in which diverse teams are stronger:

• They focus more on facts. Diverse teams are more likely to constantly reexamine facts and remain objective. They often encourage greater scrutiny of each mem­ber’s actions, keeping their joint cognitive resources sharp and vigilant.
• They process those facts more carefully. Scientists believe that diverse teams may outperform homogenous teams in deci­sion-making because they process infor­mation more carefully and consider the perspectives of outsiders.
• They are more innovative. Hiring indi­viduals who do not think, look or talk like you can allow you to dodge the costly pitfalls of conformity, which discourages innovative thinking.

Interestingly, these benefits map particular­ly well to the needs of energy companies. Oil and gas is a data-dependent industry, and em­ployees who can empirically analyze facts and figures through a variety of lenses or filters are increasingly valuable. Further, as the industry grapples with commodity pricing challenges and a constrained capital market, innovative thinking and original ideas will be critical.

Building a more diverse workforce

Energy executives recognize they can gain competitive advantages by building more di­verse organizations, and many are actively seeking to do so.

“The industry sees the value in a diverse workforce, from entry level to the boardroom. The data is there, and it is appreciated more than ever,” said Laura Preng of Preng & As­sociates, a leading global energy search firm.

In particular, Preng has noticed a change when it comes to board searches. “As they en­deavor to fill board seats, our clients want to see a diverse slate of candidates as they work to balance skill sets, perspectives and world­views. They know this balance boosts perfor­mance and mitigates risk.”

Jen Fontenot and Emily Baker have felt the positive returns of a diverse executive team first hand. As two of the three founding part­ners of Lotus Midstream LLC, an independent energy company backed by EnCap Flatrock Midstream, they have seen their organization grow through acquisition from start-up to more than 300 employees in less than a year.

“Our company grew extremely fast, so as a leadership team, we needed to develop policies and procedures that weren’t necessary when we were a small firm. Emily and I brought a different perspective to many of the conversations. From our maternity policy to our accommodations for new parents, we naturally knew what works for working mothers,” said Fontenot, COO.

Fontenot and Baker recognize the rarity of a majority female-led company in the indus­try, and they take the responsibility seriously. “While neither Emily nor I give much thought to ‘being a woman in the industry’ on a day-to-day level, we know it is atypical for females to have role models in executive positions in our field. We feel strongly this enables Lotus to build more diverse teams at all levels, and we know that makes our organization stronger,” Fontenot said.

Managing a more diverse workforce

The business case for diversity is unquestion­able, and energy firms are striving for more in­clusivity across all functions and at every level. As these shifts take root, those in the C-suite also need to be thoughtful and deliberate as they calibrate their approach to their teams.

As Solaris Water Midstream COO and chief commercial officer Amanda Brock put it, “The corporate dynamic is fundamentally changing, so management styles must change too.”

Brock believes leaders need to be aware that diverse groups of people often value different things. This can manifest itself in many ways in working relationships. Communication styles, incentive structures and feedback mechanisms should all be examined to ensure they are not counterproductive for different groups.

Working to refine the organization’s ap­proach to these areas is critical. A one-size-fits-all mindset may result in the kind of ho­mogeneity that can lead to inertia.

“The issue is there will be stagnation, lack of continued innovation and a workforce that is not fully engaged or participating,” Amanda says. “If we lose that input, the corporation it­self will suffer and ultimately be less competi­tive in its sector.”

Luis Rodriguez, CEO of Raisa Energy, has very purposefully built a firm where diver­sity of thought is considered a fundamental driver of success. Rodriguez believes varied perspectives are positive for the growth of the business, but he recognizes they can also cre­ate what he calls “constructive heat.”

“Vetting out differences of opinion is essen­tial to developing new ideas and continuously improving, but it can also create anxiety for those involved. At Raisa we do a lot of things to build trust and a common basis of under­standing amongst different constituencies,” Rodriguez said.

In addition to providing leaders with tools like executive coaching and mandating com­munication vehicles like regular one-on-one meetings with all teams, Rodriguez believes strongly in the importance of language when it comes to harnessing constructive heat.

“Diversity of opinion and challenging each other is a way of generating more powerful solutions,” Rodriguez said. “But we can cre­ate a language to improve those interactions. For example, reacting to a colleague by say­ing ‘you don’t want to discuss this’ assumes you know your colleague’s motives. Alterna­tively, if you say ‘I feel like you don’t want to discuss this’ you are clarifying your own emotions allowing both parties to move for­ward from a more neutral place.

“It may be as simple as knowing that very few things are black and white, knowing we all see things through our own lens and ex­press our views differently. If we can share a common language of understanding that al­lows us to both express and contextualize our emotions, it lowers the barriers to debate and enables more productive conversations,” Ro­driguez continued.

Moving the industry forward

The need to diversify isn’t merely about competitive advantage, but it may also be about survival.

A February 2019 article from Forbes.com suggests that failing to manage toward a more diverse workforce will result in a talent short­age because more than half of the energy workforce will be retiring in the next seven years. But as noted, strong leaders in the en­ergy space are already meeting the challeng­es and reaping the rewards of more diverse workplaces.

Over time, these shifts and changes will ac­crue to benefit the industry as a whole.

Casey Nikoloric founded the TEN|10 Group in 2008. She leads the firm as its managing principal, spearheading strategic efforts for TEN|10’s clients. Traci Ayer, a seasoned con­sultant with the TEN|10 Group, has expertise in brand management, marketing strategy and communications. She serves as the editor of the TEN|10 blog.