Due to the dramatic drop in oil prices, companies are re-evaluating their business and HR strategies.
Mercer recently surveyed 154 oil and gas industry organizations in the US, Canada, and Mexico about their reactions and HR strategies to the dramatic decline in oil prices. The survey, entitled “Mercer Changing Energy Industry Dynamics Survey” was conducted between December 11, 2014 and January 16, 2015 and revealed the short-term business and human capital tactics under consideration by respondents.
Human capital strategy impact >– while 32% said it was “too early to tell”:
- 32% plan to decrease “buying” talent from outside their organization
- 18% plan to freeze or cut compensation
- 18% will consider how to enhance cost effectiveness of HR delivery
- 16% may reduce staff (restructuring)
Business strategy impactwhile 25% said that it was “too early to tell”:
- 44% will cut back on capital expenditures as a result of the decline in oil prices
- 38% will reduce selling, general and administrative (SG&A) operating expenses
- 23% will reduce core (non-SG&A) operating expenses
- 7% will explore potential divestitures of assets, business units, products or geographies
Mercer recommends that HR leaders should put forth a balanced strategy – taking necessary short-term actions while building capability and enhancing organizational performance for the long haul.
