The demographic of workers will change dramatically in the oil and gas industry over the next decade. (Image courtesy of the University of Houston, Continuing Education Petroleum Extension Service)

Not long ago, engineering companies that serve the oil and gas industry found themselves in one of the most severe “buyer’s markets” in history, where cost competition was a determinant and cost cutting, downsizing, and the need to accept onerous contract clauses from clients were necessary management focuses. After that, there was a time of rapidly expanding need for engineering services. The resulting “seller’s market,” where the focus was on getting things done, acted as a disincentive to providing the training necessary to respond to the demographic challenges faced by the industry.

Today, the industry is entering a period in which the demand for engineering services is once again slowing and may be drastically decreased for a period of time. The change in the economy provides an opportunity for the engineering companies to catch their collective breath and make the changes needed to create a culture where engineers are valued as professionals.

Understanding the change in demographics is the first necessary step toward achieving that goal.

The state of affairs

During the boom of the past few years, the industry was faced with the need to encourage older staff to defer retirement, find ways to use those who wish to slow down, and train a new group of engineers who are unlike anything we have ever seen in the work place.

But the press of business created a situation in which the industry may not have done as good a job in accommodating older staff and training newer staff as it would have liked. In many cases, the quality of work suffered.

At the same time there was a severe competition for engineering staff. Never has there been a time during which all sectors of the engineering and construction industry were short of engineers.

For example, in the past, when upstream oil and gas was busy, it was possible to attract engineers from the downstream sector or to retrain available personnel from the power and infrastructure segments. This was not the case during the seller’s market. Engineers had many options, and those options were not confined to the oil and gas industry — either upstream or downstream — but encompassed the booming power and infrastructure industries as well.

Today companies are in a state of instability. There are many questions and few answers.

Will we go back to the days of a buyer’s market? Will the seller’s market be reinvigorated? Will we land somewhere in between? Should we lay off engineers as soon as billable work declines, or should we keep them so we can do a better job taking advantage of the upswing when it eventually gets here? Should we encourage our experienced, expensive staff to retire, or should we lay off the new hires who are less “saleable” in a buyer’s market?

Compounding the problem

In the midst of organizational challenges, the industry is experiencing an epochal workforce change. Not only is it on the cusp of losing experienced staff to retirement, but the very nature of motivation is changing with the arrival of the new “Millennial” or “Generation Y” engineers, who are entering the workforce in large numbers.

The Baby Boomers running our companies soon will be replaced by the in-between “Generation X,” who as a group may look at work in a manner that is significantly different from that of either the Baby Boomers or Generation Y.

A look ahead

The recent economic problems have had tremendous impact. Upstream and downstream projects are being delayed and canceled, and the infrastructure and power industries are on life support. In addition, the recent downturn in the stock market may alleviate the retirement problem somewhat as individuals adjust their plans to the realities of shrinking retirement accounts.

Sooner or later, however, the economy will recover, demand for engineers will increase in all sectors as the government introduces its infrastructure stimulation programs, and the need for energy will once again become acute. At that point, retirement plans will recover their lost values, and those who chose to defer retirement will join those just reaching their planned retirement date. The shortage of experienced engineers will accelerate once again.

Engineering company management will once again be faced with the need to keep experienced engineers engaged, train young staff, and find ways to motivate a new generation that does not respond in a way that makes sense to current top management.

Will we learn from our mistakes and use the current breathing space to work on training, retention, and establishing positive corporate cultures? Or will we revert to what we have always done in the past and lay off staff quickly to protect margins, encourage staff to think that we are not responsible for providing them with meaningful careers, and assume we can rebuild when the time arrives without sacrificing quality?

Unfortunately, history has shown that we will learn nothing from the recent turmoil and will probably repeat the mistakes that we said three years ago we would never make again.

Generational change

Demographers have classified the work force into four groups, or “generations,” of workers, depending on birth date. The four groups are:
• The Matures – born before 1946;
• The Baby Boomers – born between 1946 and various times between 1960 and 1965;
• Generation X – born between 1960/1965 and 1977; and
Millennials (Generation Y) – born after 1977.

Each group is impacted by the way they were brought up, major events that took place as they were coming of age, and their interactions with the generations that came before them.

A forecast made by the Petroleum Extension Service of the University of Texas shows how the oil and gas workforce makeup will change over time. This forecast is probably a good estimation of what we can expect in engineering and construction companies as a subset of the oil and gas industry. It seems clear that within the next 10 years the Matures and Boomers will stop being the driving force of the workplace. They will be replaced by Millennials, who will rely on Generation X for leadership and mentoring.

Demogra-phers say that four such different groups have never before been part of the workplace at the same time. What motivates members of these generations is profoundly different.

Group dynamics

Matures and Boomers tend to define themselves by their jobs. They accept apprentice/master relationships at work, believing if they do what is expected, they will advance from rank to rank within the company. They generally trust authority and are open to the concept that the company will do the right thing for their careers over the long run. They take pride in working long hours, making personal sacrifices, and traveling to tough places. A common motto might be, “Work hard and prosper.”

Generation X came of age when the Boomers began to question things. They have lost respect for political leadership and distrust authority. Their heroes are people they know personally, not national or world icons. They tend to be cynical and pessimistic. They do not rely on the promises that a company makes because experience tells them that they can’t count on anyone but themselves. A motto might be, “Do what you can today; tomorrow, it’s anyone’s guess.”

Generation X is rapidly becoming the largest group in our workforce. They will be mentoring and teaching the Millennials. Motivating them will be difficult because it will require them to overcome their cynicism and mistrust of authority.

Meanwhile, Millennials, who tend to be extremely well educated, optimistic, and ambitious, want to assert their individualism. They are very group-oriented and social.

Everything is done in groups. They are used to having their lives scheduled for them. Work is important when they are there, but it does not define them. It is what they do between weekends. They define themselves by the “stuff” they do. Millennials have a short attention span, and although they have big goals for themselves, they have trouble charting and following a sustained path toward these goals.

Fifty percent of Millennials believe their older work associates do not respect them, and 70% of the older work associates believe Millennials do not listen to them. One in three Millennials is a member of a traditionally defined minority group. A Millennial motto might be, “I can’t work on that this weekend; I have stuff to do.”

Though these definitions are clearly generalizations, they are for the most part reasonable. It should be clear that, as the workforce changes, what was done in the past to recruit, motivate, and retain engineers may no longer lead to success.

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