Where talent meets opportunity
Christmas Newsletter
Continuation of Articles from Christmas 2007 Issue
Compensation In 2006 the average original salary was $106K per year with an average increase of 14% to $121K. The corresponding target bonuses were 11% of base to an average target bonus of 30% of base salary with an average sign on bonus of 7%. The average years of experience in placed candidates was 20 years. In 2007 the same items include $125K to $138K in base salary, pre/post placement with an average base increase of 10% with pre/post placement target bonuses of 13% to 36%, a 9% average signing bonus and 24 years experience average. Individuals placed in 2006 and 2007 ranged from field tech service engineers to Sr. Staff Geoscientists/Engineers to VP, COO, and CFO level with the majority of placements in the mid to Sr. Staff level engineering/geoscience disciplines. Our client niches of placed candidates was: Industry 2006 2007 Oil & Gas Upstream 63% 82% Oil & Gas Midstream 11% 4% Civil/Infrastructure 10% 7% Manufacturing 6% 7% Marine 5% 0 Chemicals/Refining/Other 5% 0 Oil & Gas Upstream accounted for the bulk of our successful placement activity. Average base salaries in O&G upstream of placed candidates were $121K/151K in 2006/2007 with an average increase in base salary of 14% and 10% respectively with sign on bonuses averaging 7%/11% of base in 06/07 with target bonuses in the same period of 30%/40%. In comparison to our placements in 2007, the Society of Petroleum Engineers November 2007 Salary survey shows an average salary in the U.S. of $134K with a base pay increase of 8.2% and average years of experience as 21 and total compensation of 188K or roughly 40% above base compensation. The remaining industry niches we serve showed increases in base salary ranged from 15 to 30% in 2006 to right at 11% in 2007. Looking into the crystal ball its difficult to project any flattening in base salary increases, signing and performance bonuses due to a continuing shortage of qualified entry and experienced level technical talent. This combined with the looming early and normal retirement ages of the baby boomer work pool continue to point to increasing professional labor shortage and likely increasing compensation given continued economic growth and high commodity prices of oil & gas. Keeping Your Employees/Retention Issues There is little debate on the fact that human capital is an organizations most valuable asset and management should be motivated to put measures in place to protect its pool of talent. No matter if you are an operating company or service provider the issue of employee retention is on everyone's mind and never has it been more critical in the energy industry. If your firm has not experienced a loss in talent two things are very evident - lady luck has been in your favor and you are doing the right things to keep your people satisfied. A word to the wise, buckle your chin strap because the competition for experienced talent is at a peak and you can be certain some of your key contributors are having conversations and kicking tires. In the event you have been too busy drilling wells and adding barrels and molecules to the pipeline to take notice, the oil and gas industry is about to experience a big blow out and one of the largest crew changes in history. Statistics indicate that the median age of Society of Petroleum Engineers membership is between 45 and 50, whereas AAPG reports a remaining geoscience workforce with a median age of 49 with only 16% under age 35. By 2010, the oil and gas industry will have experienced a talent attrition approaching 45% compared with 2001. Its alarming to think about aggregate years of experience leaving the industry at a time when the learning curve for new technical professionals entering the business is estimated to require 5-7 years. With the commodity price of oil nearing $100 per barrel and short of sticking our heads into a pup joint and denying that the industry is indeed facing a historical talent crunch what can we do? Should we not pursue every possible method to retain our experienced talent, re-engage those who left the industry during the bust, and attract entry level professionals into the business? So, what specific things are you doing to keep employees on your team, ensure that they feel of appreciation both professionally and in their personal lives? Recruiters are constantly in communication with a versatile mix of clients and candidates which allow a unique perspective on the various methods employed to attract and retain employees. This includes a client base of privately held and publicly traded firms scaling from small businesses with a few employees to large international firms with huge workforces. It is intriguing to observe and contrast how motivated and committed some clients are to retaining its talent pool compared with others. At the same time, it is equally interesting to learn what some employees are attracted by versus their co-workers or industry peers. Here is a partial list of things we are aware of some conventional and others less ordinary that experienced professionals (staff level) are attracted by today:
The world wide economy, especially in the industry segments our firm services in oil & gas, civil infrastructure, chemicals and marine niches has been humming along in the last 3-4 years. Companies in all industries have been scrambling to fill technical and technical support positions at a torrid pace in experienced and new hire categories. We've taken a brief pause to look at what 2006 and 2007 have shown us in terms of base salaries, signing and performance bonuses. There are many non-cash items that companies have offered that vary which will not be mentioned due to the difficulty of comparing on an objective basis (e.g. net profits and working interest pools, stock grants, stock options, carried interests etc. which all have different formulas and time horizons).
The following data represents placements of candidates with our clients in 2006 and 2007.
