Where will tomorrow's oil and gas industry leaders come from? Talent available to lead the industry in the future is insufficient to backfill the baby boom generation. While interest in the oil and gas industry is growing among university students, oil and gas companies face difficulty in attracting top job candidates. Why? Many students believe the industry is broken.
Based on perspectives gleaned from journalists, politicians, educators and even other business leaders, they see the industry as focused solely on profits for shareholders and willing to jeopardize public health and safety.
Forward looking industry firms should embrace and incorporate the new fourth dimension leadership concept to attract and keep the best talent. What is this?
Managerial psychology traditionally defines the basic dimensions of leadership competence as:
- Leading yourself (awareness of personal values, skills and personality preferences, and how those are perceived by others in the organization)
- Leading your team (interpersonal and group skills to motivate others and build effective teams)
- Leading your organization (corporate and enterprise skills to work across boundaries, communicate direction, and lead change).
The new fourth dimension takes leaders outside themselves and their organizations to establish leadership presence in their communities. It requires them to expand their competencies accordingly.
This fourth dimension of leadership is founded on the pillars of purpose, ethics, and value for multiple stakeholders. It recognizes that profits follow purpose, and so leaders are able to articulate their organization's larger purpose.
These new leaders' ethical skills are based in truth, trust, and courage. They communicate not only truthfully, but with transparency about their business practices and results. While this relates to financial reporting, much needed transparency in the oil and gas industry can also be achieved through third-party certification of environmental, health and safety systems.
Leaders' ethical skills are also demonstrated through relationships based on reliability and reciprocity: trust. Fourth dimension leaders act with courage and commitment to uphold personal and organizational values and provide channels to constructively address potential conflicts. What if the personnel on theDeepwater Horizon had operated in a culture in which it was acceptable to question a decision that seemed to run counter to operational safety policies?
The industry must build and encourage fourth dimension leaders who recognize the interests of multiple stakeholders, not just shareholders, customers, suppliers, employees, and communities.
By seeking candidates with fourth dimension leadership skills, oil and gas companies will attract more of the best business school students.
Retrofitting fourth dimension leadership skills to current leaders' portfolios will pay off in improved managerial and organizational performance. Research shows that:
- Trust and integrity of leadership are key factors in moving employees to higher levels of engagement, and firms with higher engagement perform better in terms of customer loyalty, employee retention, productivity, quality and safety
- People and customers take positive action based on trust in a company, including recommending it to others and paying more for their products and services
- Firms managed to optimize stakeholder value rather than shareholder value alone outperformed the S&P 500 at 3-, 5-, and 10-year intervals, by up to 700%.
The energy industry's or individual firms' emphasis on purpose, ethics, and multiple stakeholders invites in expertise from outside business needed to solve today's most challenging problems. Current leaders who are skilled in fourth dimension leadership will be equipped to retain top employees, attract better customers, reward investors, and drive innovation and growth.
Firms can reap the benefits of investing to develop leadership skills – across all four dimensions – within their current management group with the help of new development trends, including:
- Training providers and clients are working more closely together to co-create programs tailored to fit the needs of the business
- New programs which incorporate multiple sources of learning that blur the boundaries between classroom, workplace, and community. These include executive instructors, projects focused on mission critical business challenges or community needs, and support for on-the-job implementation of new knowledge and skills through peer accountability, internal learning contracts, and executive mentors.
New trends in management education promise to revitalize oil and gas firms' efforts to develop their existing high-potential talent because they lead to application of new skills and sustained behavior change.
Oil and gas firms should operationalize fourth dimension leadership skills that embrace purpose, ethics, and multiple stakeholders in order to attract and retain the best new talent and achieve sustainable results—for shareholders, customers, suppliers, employees, and communities.
Frank R. Lloyd, Ph.D.
Associate Dean, Executive Education
SMU Cox School of Business
W. Bruce Bullock
Director, Maguire Energy Institute
SMU Cox School of Business
This page reflects viewpoints on the political, economic, cultural, technological, and environmental issues that shape the future of the petroleum industry.Offshore Magazine invites you to share your thoughts. Email your Beyond the Horizon manuscript to David Paganie at email@example.com.
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