Energy industry's biggest shortage? Future executives.
With half the workforce expected to retire in the next decade and thinning ranks at the top, program targets young leaders.
HOUSTON — After only a year at CenterPoint Energy, Shelley Daniel has big plans for her career. In 20 years, she sees herself in the company's executive management ranks; by the time she retires, CEO.
This recent college grad, in other words, is exactly what the energy industry is looking for - not just because she's highly motivated, but because she wants to remain in the business.
For years, energy analysts have been warning that their industry will run out of employees faster than it runs out of oil or gas. By some estimates, half the workforce will retire in the next 10 years. But the biggest need, they say, is to replenish the ranks of senior management.
"The need for an infusion of new talent is a real dilemma right now - especially for energy executives," says Gene Morrissy, a senior consultant at RHR International, an executive development firm based in Wood Dale, Ill. "And it's incumbent on them to make sure, once they find that talent, that they are training them for those senior roles."
To be sure, industries of all types face the same demographic squeeze as 79 million baby boomers begin to retire, leaving too many positions open for 48 million Generation Xers to fill. RHR reports that America's 500 largest companies anticipate losing half their senior management in the next five to six years.
But nowhere is the need more acute than in energy, where two decades of boom and bust led to multiple rounds of downsizing and pushed some of the industry's best prospects to find work in more stable sectors. The effects are noticeable.
"I was the tail end of a hiring boom and what follows behind me is a huge gap," says Mat Castaneda, General Electric's vice president and general manager for North America. He says his company is prepared to promote him, but it can't because it can't find anyone qualified to take his current position.
"You cannot exaggerate the magnitude of the problem," says Matthew Simmons, chairman of Simmons & Co., a Houston-based energy investment bank. The industry is incredibly complicated and manpower intensive. This summer, for instance, British Petroleum hired 13 different headhunters to find individuals with one or more of 450 different skills by the end of the year, he adds.
Indeed, just as important as finding new talent is keeping it. The downsizing of the 1990s cleaned out middle management and created little loyalty.
"Every time prices collapsed, the industry downsized again," Mr. Simmons says. "And the new recruits were always the first casualties of the downsizing."
After one or two layoffs, those recruits found steadier industries - and have not returned to the energy sector. In addition, the number of petroleum engineers graduating from US schools is nowhere near what the industry demands - to say nothing of the schools that have cut their programs altogether. Only 1,500 students are enrolled in petroleum-engineering programs this year, down 85 percent from 20 years ago, says Lane Sloan, chairman of the Global Energy Management Institute at the University of Houston and former CEO of Shell Chemical.
Recognizing the shortfall of top-ranked talent, the university launched this year the nation's first energy-specific executive MBA. The program aims to take those with high potential and significant technical skill and teach them the management and finance skills to advance to senior levels.
"We're not focusing on middle management," says P. David Shields, associate dean for graduate and professional programs at the university's business school. "We're focusing on ... the top guys, the upper echelons."
The first Global Energy MBA class is small - 11 students total - and industry officials point out that it will produce only a fraction of the talent needed. Companies must also play a strong role in recruiting, training, and retaining, Simmons points out.
Still, interest in the university program is building as the word gets out. Ms. Daniel and Mr. Castaneda are enrolled. So is Johnny Ramirez, a marine charter scheduler for Shell Trading. He says his company is well aware of the problem and is putting a lot of emphasis on grooming future management within the company.
Seven years into his career, Mr. Ramirez says he plans on staying with Shell and would like to work his way up to chief financial officer.
The next generation of senior managers may also have to be more well rounded. "A lot of the leaders in the energy industry tend to be technical people who don't really have the acumen to talk to the public," says Lane Sloan, chairman of the university's Global Energy Management Institute and former Shell Chemical CEO. "And on top of that, the only time they're talking to the public is when there is some sort of crisis. They need to get out in front of these things."
The new energy MBA promises just that, which is what drew Kirsten Kennedy to the program. She has a background in geology, but needed a better understanding of the entire industry to move up in her career at Shell Pipeline Company.
"I lacked the finance side of things, the marketing side," she says, preparing for a quiz in oil and gas accounting. "There is such a push for hiring new people right now. I have to set myself apart from the others."