On-Demand/contract workers are not new to the energy industry. In a recent Mercer energy industry survey, 93% of global respondents reported using on-demand workers. And it’s easy to understand why; they offer great flexibility for organizations that need to scale up (or scale down) projects quickly. Not unexpectedly, our Mercer energy surveys, forums and networks showed that the on-demand workforce were amongst the first to be let go in 2014-15 as the industry delivered on the cost containment and lean operating imperatives brought on by the rapid decline in oil prices.
Mercer’s energy industry surveys demonstrate a significant increase in optimism and employee engagement. In Mercer’s 2018 Global Talent Trends, 2 in 5 energy organizations told us that they planned to ‘borrow’ more talent over the next 12 months. And as the industry slowly returns to their ‘new normal’ we expect to see more people movement (to be confirmed by an increase in voluntary turnover) across the industry as capital expenditure increases and more new projects are green-lighted.
Given current industry and labor market dynamics, it’s likely that a number of these new roles will be filled by on-demand workers. Fractured ownership (between supply chain, project teams and HR) and inconsistent management of this ‘shadow’ work segment within organizations has been and continues to create a unique set of challenges and issues.
Energy HR leaders in Mercer’s 2018 Global Talent Trends survey admitted a lack of confidence in:
- Easily packaging work efficiently for external workers
- Retaining institutional knowledge from on-demand workers
- Engaging and inspiring external workers
Given the ongoing mantra across the industry of cost containment and lean operating, Mercer believes that organizations need to improve their measuring, management and monitoring of on-demand workers. Tracking costs and performance for this shadow workforce is good fiduciary management. But just as importantly, managing this part of your workforce more closely can be critical towards reducing and mitigating the exposure to legal and regulatory risks for your organization.
To get a sense of whether or not you may be exposing yourself to risk – how easy is it to answer the following questions for your organization?
- How many on-demand workers do you have working across your enterprise today?
- Where are they working? (by geography and/or by role or project)
- Have you undertaken sufficient due diligence on whether these on-demand workers:
− have the appropriate skills and experience to undertake tasks on behalf of the organization?
− may be exposing your organization to any legal or regulatory risks? (i.e. IR 35 or Misclassification of staff)?
− have (where applicable) the appropriate Health & Safety training/certification?
- Do you know if you are over paying your on-demand workers? Have you undertaken any independent benchmarking?
- How efficient is payroll at paying your on-demand population?
- Do you have global standards on best engagement practices?
Impact of Digital, AI & Robotics
The energy industry is in a period of transformation driven by the efficiencies that digital, AI & robotics can deliver. Organizations are at different stages of their transformation. But it is clear that the industry will require a new range of skills and experience to drive this transformation. We recently asked the energy industry which models they were employing to acquire these new skill sets. Fifty-three percent reported heading down the employment model whilst 14% were going down an on-demand model, and a third of respondents told us that they were adopting a hybrid model (FTE and on-demand).
Effective management and measurement of your on-demand workforce
Mercer partners with organizations to typically develop a three-stage consulting project to effectively manage and monitor on-demand workers. Our solution in this space is underpinned by technology allowing organizations to find the reporting data that they need for this segment of the workforce.
Mercer also benchmarks energy on-demand worker day-rates for 150+ roles across a range of job families to allow organizations the ability to validate or adjust their current on-demand worker rates.