A balancing act

For Frank Rudolph, SVP of Human Resources for Devon Energy, the biggest challenge facing the HR sector in the oil and gas industry is the huge amount of the workforce due to retire from 2016 onwards. “From an industry perspective there will be a whole host of people about to retire at once, and while the economic downturn may have pushed that out by a couple of years, the reality is that this remains a huge challenge,” explains Rudolph.

This translates in a dire need to pull as much talent into the industry as possible. At Devon Energy, Rudolph is looking to attract graduates directly off the college campus in order to meet the technical and talent requirements that will be in short supply come 2016. "We do a whole host of things when we recruit off the college campus," reveals Rudolph. "We are still heavily recruiting from an internship, so we'll start getting interns in around sophomore year and then we usually develop them and select which ones we want to have come back in the junior year, and then again from senior year. Just over 90 percent of our college hiring is right from our internship program."

Once they are hired, interns will be place into Devon's postgraduate development program, and depending on what discipline they choose this could take as long as four or five years. Rudolph explains that Devon has an extremely defined program for geoscientists, petrochemical engineers, accounts, IT and even HR. "The program will progress from improving their technical understanding in their discipline, to learning about the business and the industry and improving their application of skills, as well as specifically working in the particular area and assets they are dealing with," says Rudolph.

And after the postgraduate development program, employees are fed into the company's succession planning process. A robust process, says Rudolph, that drives individual development plans, internal candidates will always be considered before the company looks outside to potential new employees. "We're continuing to look at the company by division and bench strength to drive individual development plans, and from a development standpoint we will consider what additional development they need and what their career goals are. From there we are able to balance career goals off development needs and we're able to make internal selections, so there's a lot going on with respect to development.

Fresh blood

And while Rudolph considers the mass-retirement of current employees from 2016 onwards, unlike many of his peers he believes that attracting new blood to the industry is actually becoming easier. "If you look at the numbers of college graduates in the mid-1980s, especially in the petro-science area, there was hardly anybody that went into it. Today, you are seeing colleges in the technical areas, particularly in the petro-sciences, get more students enrolled than they've ever had in the past," explains Rudolph. "And that's partly because when you look at starting salaries for petro engineers versus an industrial engineer for example. There's no doubt been a gravitation of the schools both convincing people that this is a good industry to into as well as some dramatic growth. So off the college campus it's becoming a bit easier."

However, despite new talent being easier to come by and even with the growth on college campuses, the amount of people entering the industry is not going to offset the number of people leaving the industry from 2016 onwards. In fact, Rudolph believes this crisis could have the same impact as the recent economy on the industry. "If you look at the current price of oil and natural gas has on your capital investment - look at the huge amount of declining rigs around the world, especially projects that are more short-term and the amount of capital reduced there. It's easy to reduce long-term capital, but if you don't have the same capital you can't go after the resources that the world needs, and I think this situation will have the same impact. If you're not able to grow enough talent to meet your needs, you aren't able to drill enough to meet the needs of a nation because you don't have the technical expertise. And I'm not saying this is the absolute scenario, but that's what every company, from the majors to the small and large independents, are working really hard to make sure doesn't happen."

That said, continues Rudolph, when you are looking for people that are between the ages of 40 to 50 with high technical skills, there are some big issues. "Trying to find people with 20 years of experience takes us back to the 1980s when the oil and gas industry had some really big-time issues. And again they couldn't get anyone to go into those disciplines, which now means there is a big hole in the market."

So how is Rudolph attracting the scarce employees with 20 years experience? Well, he explains, firstly from a total compensation standpoint, Devon pay more at a competitive level. The firm also made a decision a couple of years back to look at the retirement program and went from a defined benefit to a defined contribution.

Indeed, Fortune also tabbed Devon at number six on its list of 'Eight Great Places to Retire From' in October 2009. After beefing up its retirement program in 2007, overhauling its program and contributing eight percent of a new employee's salary into a retirement account, boosted to 16 percent after the employee completes 15 years of service. And Devon will match employee contribution up to six percent, unlike most companies that typically match only half of employee contributions up to six percent, meaning the company's total offering can reach 22 percent.

"Our defined contribution amounts, which are when someone gets to around 10 years experience, receive 22 percent of their pay matched onto that defined benefit program - and as such it's been described as a 401(k) on steroids. With this we can convince people to make a midterm career decision based upon what they can see in from of them from a retirement point of view, and that has really helped a lot."

Rudolph also believes that the working culture at Devon, driven by the values and attributes, has made a big difference to how potential employees perceive the independent oil and gas giant. "I'm not just talking about the recent economic recession, but going back and everything that's happened with respect to 9/11, people look for a culture that they can relate to, for values that are practiced in the company, and that helps to attract the talent."

And in respect of the values of the company, Devon was voted the 13^th in Fortune's 100 Best Companies, moving up 35 places from the previous year, which, according to Rudolph, significantly added to Devon's employment brand. "It's a powerful brand and great recognition internally that we're doing the right things and that our employees recognize that too, so it's a great feedback loop that we use," says Rudolph. "And mostly I would say t hat once in a while it's just nice to get recognized for doing things, especially in the climate we're looking at today. And we've seen a huge number in the amount of unsolicited resumes that we get, particularly as over 90 percent them reference the 100 Best Places to Work For status."

Talent

Absolutely critical to Devon's success is the development of top talent at the firm. While the company continues to attract employees, people development is key if Devon want to keep them. "It's really about what I would call, a world class approach," says Rudolph. "With a creative approach, processes drive quantitative results around people development. Looking year over year and saying to ourselves, "Are we moving the needle with respect to developing our talent' is critical. And whatever you're doing on short-term basis, so if you have great succession planning processes accomplishing those things, it has to feed into a longer-term workforce planning model that deals with and understands your drivers of adding people. So those drivers could be capital investment, wells drilled etc, and then understanding how that spreads to the rest of the company.

"We've moved very quickly from a soft approach on developing to a very process, quantitative, disciplined approach to developing talent both in the short-term, as well as understanding your needs tomorrow and making sure that you're balancing need that you'll have tomorrow with what you are doing today with regards to developing talent."

It seems Rudolph has a balancing act on his hands to ensure that both new recruits continue to be attracted to independent oil and gas producer as well as prepare for the inevitable departure of the babyboomer generation from 2016 onwards. That said, Rudolph is no doubt prepared and is working hard to ensure that the disruption to his firm is kept to a minimum.

Recognition

This year was the second consecutive that Fortune magazine ranked Devon Energy among its 100 Best Companies to Work For, distinguishing the Oklahoma-based independent oil and gas producer as one of the nation's most desirable employers.

"While making the Fortune list is wonderful recognition for the company, it says even more about our employees," said Devon's chairman and Chief Executive Officer, Larry Nichols, when the announcement was made at the start of the year. "Our employees' values and their commitment are what make Devon a great place to work. We have an outstanding company with many wonderful assets, but we believe our people are at the foundation of our strength."

Even in the current recession, some companies are going out of their way to please employees. As Google slips to number four, 2009 sees a new number one. Will 2010 see another boost for Devon?   

1. NetApp (14*)
2. Edward Jones (4*)
3. Boston Consulting Group (11*)
4. Google (1*)
5. Wegmans Food Market (3*)

13. Devon Energy (48*)

* - 2008 ranking