2016 Global Mobility Trends in the Energy Industry

2016 Global Mobility Trends for the Energy Industry

How global mobility leaders respond to talent mobility challenges in today’s business environment is, in significant part, related to the economic and market realities of their specific industry segment. This article focuses on companies in the energy industry, and is part of a series highlighting key global mobility trends within certain industry segments.

Energy companies represent the fourth largest percentage of respondents (12%) to BGRS’s 2016 Global Mobility Trends Survey, and they average just over 30,500 employees worldwide.

The energy industry is comprised of a diverse cross-section of companies and is at the heart of two major trends. The trend toward continued development of renewable energy resources is still strong and companies in this sector are thriving as a result. At the same time, it is clear that the continued low price of oil has had a strong adverse impact on other companies in the industry. These market level trends are to be considered against the overall slowdown of the global economy. Another consideration is the fact that lower oil prices are also exerting differing pressures on countries worldwide, depending on their relative production and utilization of this resource. We expect that these business realities, combined with the challenges inherent in moving employees across borders, will ultimately play into the mobility trends we are seeing in this industry segment.

Specifically for the energy industry, the survey reveals:

Assignment volumes drop as cost reduction efforts rise and cost pressures intensify

  • A significant 80% state they were required to reduce international assignment costs last year, which is higher than the overall survey participants (69%) and the second highest percentage reported by an industry segment in the survey
  • 65% report a decrease in the number of international assignments compared to last year, compared to 37% of the overall survey respondents
  • 60% expect the number of international assignments to decrease next year; this compares to 25% of the overall survey participants
  • 70% report that the pressure to reduce costs has increased compared to the prior year; this compares to 39% of the overall survey participants

Global mobility teams are undergoing change

  • 50% report a decrease in the number of Full-Time Employees (FTEs) dedicated to managing global mobility, this is the highest percentage reported by any industry segment and compares to only 19% of overall survey participants
  • The ability to achieve cost efficiencies tied with experience in service delivery model development and process optimization, and are identified as the number one skills that have become most essential to the successful management of the company’s global mobility program
  • 80% indicate that the amount of mobility data, analytics and benchmarks requested by senior management has increased; this is the highest percentage reported by any industry segment and compares to 59% of overall respondents

The impact of cost reductions

  • Despite strong cost reduction efforts, energy companies are more likely to agree that the pressure to reduce mobility costs has had no adverse impact on their ability to execute global business strategy, retain high potentials or grow global talent
  • The top three initiatives to control costs that have been most successful in controlling mobility program costs are:
    • Closer scrutiny of supplier fees
    • Reviewing mobility program processes for cost efficiencies
    • Ensuring fewer policy exceptions
    • Cutting employee benefits is being largely left alone as a cost saving initiative of choice

Family tops cost as primary challenge to managing international assignments

  • The top three challenges to managing international assignments are:
    • assignee and family adjustment to new environment
    • containing the cost of international assignments
    • compliance and risk management
  • Family concerns is the top reason for assignment refusal, and family related issues is the most common reason cited for assignment failure
  • 45% of respondents believe that spouse/partner employment concerns have a significant impact on their ability to attract first choice candidates for international assignments, which is 13 percentage points higher than the overall respondents (32%)
  • More than half (55%) believe that spouse/partner employment related resistance to accepting an international assignment will increase, which is significantly higher than the overall respondents (39%)

Energy companies’ diverse markets and a greater adoption of selection tools

  • Brazil, Angola and Mexico are the top three most challenging countries for global mobility teams
  • The U.S., Brazil and the United Arab Emirates are the top three assignment locations; for overall survey respondents top assignment locations are the U.S., China and the United Kingdom
  • Mexico, Malaysia, and South Korea (tied with Australia) are the top three countries emerging as assignment locations; this compares to China, the U.S., and Singapore for overall respondents
  • 40% formally assess the adaptability of potential candidates for international assignments, this compares to only 22% of overall survey respondents

Many energy companies are in a period of adaptation. Not surprisingly, given the market realities that are affecting a number of companies, cost pressures are intense.  Assignment volumes have dropped, and the outlook for future volumes is guarded. As a result, global mobility teams are changing as well, with staff numbers being reduced in some cases and reporting demands on the rise.

At the same time, despite the rising cost pressures, energy companies do not see this as having an adverse effect on talent and business strategies. And companies are not turning to assignee benefits as a sole source of cost savings, but instead are exploring other avenues.

Energy companies also recognize that as difficult as managing assignment costs can be, family challenges are, in some cases, much more important. As this industry moves people into diverse and, in some cases more challenging markets, keeping critical selection practices in play will help ensure that the right candidate is sent and supported while on assignment, which is, in its own way, a critically strategic cost management practice.

Global mobility leaders in this industry segment will need to continue working to meet their company’s business and talent agendas.  Balancing the need to continue to manage costs in an uncertain market against supporting employees and families on assignment in challenging locations will continue to require a thoughtful, long-term approach to an energy company’s mobility strategy.