It feels that in the last two years we have been bombarded with doom and gloom stories here in Aberdeen, where much of the economy is built on the Oil & Gas Industry. With the aim of tempering some of the despondency with more positive stories, this post is the first in a series looking at leadership, innovation and collaboration in the region as we continue to deal with the consequences of a low oil price.
Ray Riddoch is the UK Managing Director & SVP Europe for Nexen Petroleum U.K. Limited, one of the largest oil producers in the UK North Sea.
In my recent interview with him, Ray talked of his views on the current downturn, how Nexen has focussed on building engagement, and what they are doing to be “fit for the future”.
Tell me about your experience of downturns in the past. How do you see this one differing?
I’ve got enough grey hairs to show I’ve been through a few of these. What I’ve seen in past downturns, was a knee jerk reaction to the situation, which would have benefited from deeper thought to the long term impacts of the cost cutting measures. Certainly in the past, I felt the consequences of some of those decisions. In my view, there’s a fundamental difference to this downturn. I do see the oil price coming back – but to a realistic value. We have very little control over it – so what you have to do is keep safety as the top priority and plan effectively. I think this downturn will set out the future of the industry. More importantly, the actions of the operators and the supply chain will determine the way in which the industry operates as it goes forward. I think it’s extremely important that whatever changes we bring about, the rigour and the strong cost management behaviours we are witnessing – where excellent work is being done – is sustained as the price recovers.
What we can’t do is go back to thinking we’re going return to the good old days of $100 oil. We’re not! As an industry we will have to continue to work hard and co-operate to become more competitive – that’s the real difference.
So you see the industry moving more in that direction?
Absolutely. What we’re trying to do at Nexen is concentrate on effectiveness and efficiency. We’ll gain more from efficiency and effective cost management than simply cost cutting. That’s not to say we’re not reducing our costs – like all operators we are. We’re decreasing costs, but it’s two-fold. It’s about making good business planning decisions and it’s about enhancing our efficiency. It’s vital that our whole industry pulls together to make a collective commitment to work more effectively, efficiently and co-operatively in order to make this difference.
Okay, so for your people, how are you focusing on engaging them through this time of change?
We actually embarked on this journey this over two years ago now, before the oil price collapsed. Back in 2011 we were not performing to our potential. We developed an Operations Excellence project with six work streams. Five of the work streams were more technical; production optimisation, maintenance execution, HSE etc. We successfully delivered the technical aspects but the final work stream “human performance” required a fresh approach. This was about moving our people – their hearts and minds – to a stronger place culturally.
Around two years ago Nexen developed eight cultural beliefs. It’s all about recognising the behaviours we want in our organisation, so we introduced recognition cards focussed on promoting our people who demonstrated our cultural beliefs in their day to day roles. The uptake has been fantastic and I’m delighted to see the cards everywhere when I visit Nexen’s offshore assets. The rollout of the initiative was key, as it was vital our whole workforce completely understood business expectations, the importance of delivering our business targets and where we actually are in terms of being an operator in the UK. The programme has had such a huge impact. It’s all about listening to people’s ideas, evaluating and implementing them. If there’s a problem, it’s not somebody else’s problem but our problem, so let’s get the right people round the table to solve it.
And what are you and your team doing as leaders to drive that?
One of the most important things is that every employee should be able to understand how their role links to our objectives for the year, so they can fully comprehend how they as individuals contribute to the success of the business.
As an example, our travel team saved £1.5 million in a working year, which contributed to reducing our lifting costs. Our people greatly value and are motivated by seeing the positive impact that they are having on the business – it’s truly powerful.
At the same time, we’ve also become more open and transparent. As a leader it’s key to talk about what’s important and address the critical issues. Everyone needs to know how we are performing against our business targets and fully understand the part they play in being accountable for the business today and in the future.
Having done all that, you’ve also had to reduce people too though.
Yes, as a result of the low oil price environment, we took the difficult decision to reduce our workforce. Fortunately, we had fewer numbers as we had already started on our journey of efficiency. It’s important an organisation doesn’t become too lean when in a situation like this, because you need to be ready when the recovery comes to grow and get going again. There’s no doubt these are difficult times but workforce engagement and keeping communications strong and open is really important.
One of the areas that’s very easy to cut during a downturn is the training budget. I notice that you’ve been doing work around competency development. Tell me more about your focus on that?
We’ve reviewed our training budget and concentrated on providing ‘core training’. That’s not just your survival training but can involve project management skills or training in softer skills. We asked ourselves – “What benefit and value does it add to the business?” If we saw benefit, value and return on investment, the training was retained. At the core of good quality training is competency, particularly in safety critical positions. Competency is all about being fit for the future. Earlier this year, Nexen’s employee development and competency system was recognised as amongst the best in the world after it won approval from industry skills organisation OPITO. The system ensures high quality performance and safe working practice, and guarantees that Nexen personnel working on Buzzard, Scott and Golden Eagle are performing their roles to global best practice. This was a fantastic achievement for us.
And what about support for your leadership population and their skills then?
We have an active leadership development programme which we regularly review and refresh. Again we look at the benefit and value it adds to the company. We’ve developed several individual leadership programmes as well. So if we’ve got individuals that need stronger skills in certain areas, then we tailor programmes for them. Succession planning is very important. We say to our future leaders: “If you keep developing and if we help you get this particular skill then you’ll put yourself in a credible position to be considered for opportunities.” Our people are engaged and encouraged by this.
I noticed you’ve moved around in a number of different functions in your career.
I’m an advocate of moving people out of their disciplines for career development. It’s stood me in good stead and I’ve been very fortunate with the opportunities I’ve been given. In my case, I did spells in HR, overseas and finance which was hugely important in order to gain the breadth of knowledge and understanding these experiences provided – and I encourage people to do the same.
I have one final question, which is around your advice for building positive cultures during difficult times. If you could distil it down into a few sentences, what would it be?
I think on reflection, if you’re going to have success you’ve got to have passion. My father told me, “You don’t have to be the best, but you’ve got to try and be the best, even if you’re selling newspapers on a street corner try and be the best newspaper seller.” That’s something I always try to instill into my teams – being passionate to be the best.
Gillian Thomson is a director of GT Limited, an HR consultancy specialising in HR strategy, leadership development, team effectiveness, conflict resolution and HR project management.