Best in class

O&G. Earlier this year Valero topped Fortune’s list of the best big companies to work for. What did this ranking mean to you and Valero and what would you say is the secret behind this achievement?

MC. It’s a great reinforcement of our employment brand if you will. It makes us a known entity in terms of potential applicants, and so it's great in terms of promoting the company to potential new employees. I think secondly, for current employees, it was a validation that the company is a great place to work, that we all know that it is, and it was just good recognition. It makes you feel good when you drive in to work and you see the banner up that says "best big company to work for.” You get satisfaction in that. So it's great internally from a morale and pride perspective; but it's also great externally so that people understand that when they apply at Valero, they're going to be working for a good company.

O&G. I'm sure a billion different things that went into having you reach this status, but is there anything that you could pinpoint that you think set you over the bar?

MC. I think it's about consistently treating people the way you want to be treated. I know that sounds really trite, but it's just what it is. We treat people fairly, but the work ethic at Valero is a tough one. I mean people as a rule come early, stay late; but they're well compensated, not so much so that that is the reason they stay, but we're powerful members in the community, we have huge volunteerism efforts and employees just believe in the core values of the company.

At the end of the day, when you make decisions and consider the employee first, that goes a long way with people. A lot of companies just say employees are their number one asset – and you read it in their mission statement. Then you see people who are walking out that have just been laid off. And so you wonder as they are walking out, what does this really mean? At Valero, we don't put our mission statement up anywhere. Our employees understand through our actions that we're serious about that rather than what we say, or what we read – that kind of thing.

O&G. Valero has around 21,000 employees – can you tell me about how you strive to keep staff happy and what incentives and bonus plans do you have in place?

MC. We have a bonus program that everyone is on the same metric; so if the CEO gets a bonus, then the janitor gets a bonus and vice versa. If the janitor doesn't get a bonus, neither does the CEO. So we're all in the same boat, and everyone understands that and we work together. It sort of defeats the sub-optimization that you can have if you pit the company against itself, so to speak. And we also have a culture of what we call "Caring and Sharing," where our employees put hundreds of thousands of volunteer hours into the community every year. We have volunteer councils at each place of business, so part of our culture is helping the community and employees really buy into that. We give them time off if necessary as we can to go to volunteer things. We ask each employee to give two hours a month, 24 hours a year, to volunteerism. Now, we don't go flog people that don't do that, but it's something that people voluntarily do and do in large quantities.

We did the Valero Texas Open, which is a PGA golf event that was just a couple of months ago. We're number one on the PGA tour in raising money for charity. We gave $8 million this year. We were the title sponsor for the MS150 for multiple sclerosis. It's a 150-mile bike ride from San Antonio to Corpus Christi, and hundreds of volunteers take part – plus our CEO actually rides the 150 miles and was the event’s top individual fundraiser for the second year in a row. So everyone's in on it, and so when you all kind of work together as a team, it's a good dynamic. So it’s all about our employees working, volunteering, and putting on these different events that raise money.

O&G. Valero has acquired a number of refineries since the 1990s. And back in 2001 you successfully led the integration of 18,000 employees when Valero acquired Ultramar Diamond Shamrock. How difficult are these large-scale acquisitions in terms of HR and what important lessons have you learned?

MC. The thing that you have to do for acquisitions to work is have a line in the sand of what your culture will be. So many mergers fail because they can't make the people side work. And sometimes it sounds a little tough to the acquired company, but we basically have said in the past, "Here is the culture, here is what we expect,” and we allow people to either buy into that or select themselves out. At Valero, we're very clear; we support United Way – we want you to be members of the community, we're going to work hard, we have lots of celebrations, and we're going to celebrate our achievements. I've got more trinkets on my credenza than you can imagine from those celebrations. So it's a work-hard, play-hard kind of a culture, and we just define that.

So from an HR perspective, you go into these acquisitions or mergers with a true blueprint of what the company will look like, and it allows very quickly those who don't like that the option to leave. We believe that if you don't like the way it is, you're probably going to be happier somewhere else. And those folks eventually self-select out, and everyone else gets on board and you move forward. It's been a very successful approach.

O&G. Do you have to work on making sure that Valero has a steady stream of new graduates and engineers or do your employee incentives and awards you have received mean that potential employees are beating your door down?

MC. Well, it's a combination of both, and it really depends on what disciplines you're talking about. Our campus is physically located right next to the University of Texas, San Antonio, and there are other numerous private schools in San Antonio that we can have the cream of the crop from. However, if you look at the type of engineers we need, then that’s a much more competitive environment. I mean we're going up against ExxonMobil, and Shell, and BP, and hiring those kids; so it is very competitive. But I will say that our status as a great place to work and our culture does help us considerably. No one in this market has a monopoly on technical graduates; it is very competitive. If you look at the demographics of the baby boomers leaving the workforce over the next five to 10 years, there aren't even enough graduates – or chemical engineers – to fill those jobs.

Also, the public image of energy companies, thanks to the media, is not good. So if you have a particular student that's very environmental in their thinking, they may dismiss our industry out of hand without even looking at it. So those things work against us. Now, if you look at the reality, probably the energy industry has some of the better paying jobs and opportunities. I mean we have 17 refinery opportunities, so if they study the options, they come here. If they go by public image, it's a different – it's a little tougher to get them interested. If you're talking about unsolicited resumes, I think that my employment manager told me the other day that we have something like 130 for every job opening we have. Now, that's not so on the engineering side, but when you start looking at accounting jobs and clerical jobs and our operator jobs in the plants, we have a lot of people sending us resumes because of our exposure.

O&G. We keep hearing that there is a serious skills shortage in the oil and gas sector at the moment, with companies struggling to find qualified and experienced employees. Is this a problem you also face as North America’s largest refiner?

MC. We get hints of it now because, and this is something that not every company enjoys, our 401(k) plans have all been matched in company stock up until recently, and so a lot of long-term Valero employees are reaching their financial objectives much quicker than they thought in terms of retirement. And so we have some folks who are able to retire a little earlier than normal, and so that has accelerated the rate by which we need to get some new folks in. It's not an unmanageable thing at this point, we're able to keep up, but we have seen our turnover start to increase a little bit.

O&G. In your opinion what at the main reasons behind this skills shortage in the O&G sector and what needs to be done to plug the gap?

MC. Well, I think these things are cyclical. I think a lot of students these days see the refining business as boring. It's old technology. When you boil it down, we're boiling oil. Now, it's a little more complicated than that, but it's not a very sexy occupation to work at a refinery. I could take my skills and go work for a high-tech company or some engineering company that's designing new leading-edge products. So we're kind of an old, mature business. I think that's part of it, but dollars talk and cycles goes where there's a shortage, the salaries go up, kids make decisions based on salaries what to major in, and so then it starts to perk up.

So this industry's working on getting more interest in what we do and more aggressive with recruiting. We've talked about even going down to the high school level and start getting kids to focus on our industry with scholarships and internships at an earlier stage in their education. We've not implemented any of that yet, but we have been brainstorming a lot of ideas.

O&G. You mentioned how the industry could be perceived not as really as a sexy industry, but it sometimes also is perceived as tough or dangerous even. Do you think this is a fair assessment, and how involved are you in the health and safety of your staff?

MC. OSHA [Occupational Safety and Health Association] has an award for voluntary compliance – well, actually it's more of a status than an award – and 11 of our refineries have been certified under that. We do not, and will not, put employees knowingly at risk; and so if we have a safety concern, we will shut a plant down before we push it, and we give our employees that ability. To back that up, we create a safety culture whereby we try to voluntarily comply with everything, and this OSHA recognition does support that. Now, you can't sit here and say that our industry doesn't have some risk, because everything we do is at high temperature and high pressure. So yes, there's some risk, but we think we have enough safety features built in, and practices in safety culture that mitigates those risks. I haven't come across that as a reason for folks not wanting to come into the business.

O&G. Finally, what would you say are your main HR challenges you face now and in the near future at Valero?

MC. Well, it's clearly the staffing issue that we've already talked about, and we just have to be more aggressive on the college recruiting side. It used to be that you could go out and recruit seasoned engineers because of our benefits and our retirement, but the fact is that demographics have changed so that most folks now are past the part in their career where they want to change jobs. They're either vested in their options or their pension plan enough that it's going to be costly for them to change jobs. So we've had to revert to more of an on-campus internship approach, and that's going be our primary focus gong forward.

And then there are the challenges of managing a big company. We want to make sure that we keep our culture intact, and that always requires maintenance to make sure our leadership and our supervisors and everyone that has employees reporting to them understand how we want them treated. That’s ongoing. By and large, the staffing and talent management is the bigger issue ¬¬– making sure that we manage the people that we have properly so that we can retain them. We don't want to lose good employees that we have years vested in because they get better opportunities somewhere else. We want to make sure that they believe they have opportunities here at Valero.