Human Capital Investment: Strategies For The Gulf
By Amin H Nasser
Mr Nasser is Senior Vice-President, Upstream at Saudi Aramco. He presented the following paper at the Arabian Society of Human Resource Management (ASHRM) annual conference in Abu Dhabi on 26 March.
As founding sponsors of ASHRM, we at Saudi Aramco look on our involvement in the association as an important component of our large investment in human resources strategy. What brings me here, therefore, is to discuss: how can we in the Gulf region improve the return on our human capital investment; what is the real significance of the challenges we face; what are our current plans and what practices are already in action; how should our human resource development strategy unfold; how should we change our mindsets to adapt to the rapidly changing social and technological environment; and what major actions must we take to bring our human capital to its full potential?
If we respond to these challenges correctly, we will find down the road a Gulf region with high productivity in local content of goods and services. We will be part of a region with a higher quantity and a better quality of jobs for our citizens.
Human Capital Challenges
First, let us consider our human capital challenges. The Arabian Gulf nations are undergoing a huge generational shift. During the next five years, 60% of the Saudi Aramco workforce will be under the age of 30. This sort of demographic change is typical throughout our region, where many young people are moving into the workforce, and many others are still seeking to find productive roles.
This profound transition places extreme stress on continuity of operations, in terms of the transfer of skills from the experienced to the less experienced. Multiplying the challenge is the accelerating change in the communication and operating environment in which we live and work. The emerging workforce belongs to ‘Generation C’ – the Connected Generation. Their communications reach is global and immediate. They are coming of age with attitudes and expectations that take this for granted. Authors of the Generation C thesis say the impact of this social and technological change will be as transformative as the Industrial Revolution of two centuries ago.
Maybe that is too modest an estimate. One could argue that our situation compares with that of five centuries ago. Confronted for the first time with movable type and mass production of books and pamphlets, people accustomed to the old ways of hand-copying had to ask themselves: do I become an ‘early adopter’ of this new Gutenberg technology, or do I brush it off as a passing fad?
Whatever the case, what is undeniable is that human resources professionals in the Gulf are in a ‘perfect storm’ of workforce changes. However, should we address these changes as ‘human capital challenges,’ or ‘human capital opportunities?’ If we address them strategically, and harness them, this could foster real economic growth and social wellbeing.
Today’s Plans In Action
For our second topic, let me share our plans to take advantage of our human capital opportunities. During the past year, Saudi Aramco has launched our Accelerated Transformation Program (ATP). Initially, our leadership had to override any habits of thinking such that ‘if it isn’t broken, don’t fix it.’ Within and without, the company is perceived as successful. The effort will also change us, within less than a decade, from an oil and gas company to a fully integrated energy and chemicals company.
The process of formulating and launching our ATP involved a huge amount of research and consultation from the bottom up, involving many employees at all levels. This already represented the beginning of real change in our corporate culture. In the upstream business line, my colleagues and I have a mandate to add billions of barrels to our reserves. What is more, we are targeting to significantly increase our recovery rate.
We are committed to double or even triple our manpower in science and technology. To complement our capable and expanding R&D Center at headquarters in Dhahran, beginning this year we will open for the first time major research centers in strategic locations around the globe. This will give us even better access to talent, technology trends and exposure to international best practices.
We call our generational turnover the ‘Great Crew Change.’ To succeed, we are using more sophisticated assessments of our talent at early stages, and cultivating accordingly. We are making a massive investment in training and development, including sponsoring more than 2,000 young men and women in university studies in Saudi Arabia and around the world. All told, our company training and development budget is about $1bn per year. It is a massive undertaking to transfer knowledge to this rapidly increasing youth component of our workforce, and especially to compensate for the ‘experience gap,’ because as we know, knowledge and experience have some overlap but they are not identical.
The oil industry is distributed worldwide. We quickly communicate and information passes easily. Just as ASHRM is a vital resource for our human resources professionals, many of our upstream employees participate actively in professional and scientific societies that expose them to new ideas, new leadership styles and best practices.
A little over 12 months ago, we inaugurated the Upstream Professional Development Center(UPDC). It has the latest, state of the art simulators that will create an immersive learning environment for petroleum engineering and geosciences. Virtual-reality technologies will allow our trainees to see and feel the oil and gas field experience. The UPDC has two main objectives. It will compress the ‘onboarding’ cycle to three years from the current five years. Crucially and most relevant to the productivity of Generation C, the UPDC will train and require engineers and geoscientists not only to have functional expertise but also, more multidisciplinary capabilities. They will be better able to understand and communicate one another’s challenges. This will foster more creative and more productive solutions.
While I have relied on examples from Saudi Aramco, I know that across the many companies and industries in the Gulf, there is comparable awareness and there are efforts to deal with the Great Crew Change.
Strategizing For The Future
As a third point, let me say that while our current efforts are important, successful and admirable, they are still not enough. We will place ourselves at risk if we do not continue to push the ‘refresh’ button on our strategic planning process. The dizzying pace of social and technological change will not allow us the luxury to do otherwise. As we craft business strategies to promote long term human capital investment in our region, let us understand the benefits of new and emerging technologies. These technologies will allow us to increase productivity. They will also empower people to multitask more, and work on more value-added tasks.
We also live in a world more connected than ever. The good news is that this does not mean we will need fewer people and have to eliminate jobs. Instead, it means that we will be able to diversify and enable those people to become more productive, in ways perhaps never even imagined before. From the board rooms to the universities, technical schools and corporate training and development programs, let’s understand the emerging dynamics between technology and talent. And let’s apply that understanding to strategies to diversify our regional economies.
Now, one of the great values of institutions such as ASHRM and conferences such as this, is the environment it provides us to step away from our everyday concerns and to think creatively about emerging trends – thinking about what we might call ‘tomorrow’s everyday concerns.’ Let me launch a few probes about these concerns:
How shall we prepare for a generational change in which a typical employee in our industries and in our region no longer expects to spend his entire working life with only one employer? How do recruitment and our value proposition change when our talent pool is made up of young people intending to divide their careers among different employers or pursuits, including perhaps ventures in entrepreneurship or self-employed consultancy?
How ready are we for significant expansion of the number of female professionals in our ranks? Are we prepared to meet the challenges as well as to capitalize on the implied benefits of deeper integration into the global economy?
How many of us are imagining a future where it makes good sense to keep in touch with company alumni? Let me emphasize: not retirees, but alumni. Each of our businesses will be more competitive in years to come if we envision a dynamic talent marketplace requiring us actively to seek to remain attractive to alumni as a place for them to return to in more mature stages of their careers.
These are probes – questions for which I do not believe we have all the answers. That is a reason to participate in ASHRM – so that we can share thoughts across industry and national boundaries to develop the best answers.
Tomorrow’s Imperatives For Local Capacity
Returning to our local and regional situation, we need to ensure that our efforts to invest in human capital are worthy of our people. The challenge is not only to increase the number of jobs available in the region but also to ensure those jobs match our people’s aspirations for the future. Within Saudi Aramco, we are employing multiple strategies to maximize the impact the company’s operations have on creating new and attractive employment opportunities in the Kingdom.
First, we are working with our suppliers to localize their supply chains. Our ‘Made in KSA’ approach focuses not only on serving our needs and the needs of others in the Kingdom, but also on building capabilities to serve the region and beyond. We are focusing on companies that are not only bringing new jobs to the Kingdom but specifically are bringing jobs employing cutting edge technologies requiring highly skilled workers. In addition, we are working with these companies to further localize the supply chains they require for their new facilities.
Second, we are investing to extend our reach further down the petroleum value chain into chemicals. For example, Sadara, our new joint venture with Dow, will bring new jobs to the Kingdom which will utilize new and emerging technologies. But more importantly, it will also be the foundation for other companies to come to Saudi Arabia to make use of Sadara’s new products in conversion and manufacturing. Moreover, we are supporting the development of local entrepreneurs through our recently opened center called Wa'ed.This center not only assists entrepreneurs in developing their business plans but also provides funding.
Let me conclude then with a call to action. The economic strength of our region today is in many respects a relative matter. The major industrialized countries are in a fragile economic condition at the moment, but they will recover. One of our challenges is to work in harmony with them to help their recovery. And at home, our great challenge is to assure that we maintain sustainable economic growth – led by growth in the number and quality of jobs. Anyone with the financial resources can acquire infrastructure. That is relatively easy. The hard task that we need to embrace is a strategic approach to leverage this investment into long term talent development and jobs for our citizens. That’s the right way to sustain not only the infrastructure but our very future.
With this sort of vision, human resources strategists in the Gulf region can harness the opportunities the current oil and gas markets provide us. Doing so, we will win higher returns on our investments in human capital. And we will empower the rising generation as stakeholders in a better future.
This is no time for complacency. Business leaders throughout the Gulf must capitalize on the current economic climate to cultivate learning, skills, and higher standards of performance. We must work together to promote innovative thinking – to create new technologies here instead of buying them from elsewhere. We must earn the honor of having the world recognize ‘best practices’ developed here, not somewhere else.
If we fail to seize the opportunity of this moment, we will have no one but ourselves to blame. Let us collaborate – as strategists – to assure the Gulf region becomes an ever more attractive, productive, satisfying environment in which to work and improve the quality of life.
© Copyright MEES 2012.