Oil & Gas Sector:

Academia-Industry Interface & HR Policies

Academia-Industry Brainstorm Session 17th October, 2008

Dr.A.K.Balyan, Director(HR), ONGC

Industry- Academia Interface: Concerns and Suggestions

Oil Sector:-Talent Issues

UNESCO- Ranking for India in Education Development Index Completion of school education

105 (out of 137 countries) 10% ( against 85% in dev. Countries)

Access to higher education

Labour participation Rate Labour Productivity Skill Base Academicians viewpoint

6-7% ( against 50-80% in dev. Countries)

62% ( China - 82%) $6,587.( China-$9,846) 50% of Indian population is below 25 years Universities focus should be good education Employability is the secondary objective

 Skill Shortages

Skill Mismatch
Quality and Focus in Education Absence of a structured interface

Sector

Trades shorts in supply

ITI diploma holders Mechanical ITI diploma holders Electrical ITI diploma holders Civil

Professionals short in supply

Chemical engineers Electrical engineers Mechanical engineers Civil engineers Instrumentation engineers Finance professionals (CAs/MBAs)

Oil

Source:-FICCI, in its 2007 Survey, has identified Oil Sector as one of the sectors, which deserve immediate attention in terms of promoting skill

Engineering

Petroleum Engineering Chemical Engineering Civil Engineering Mechanical Engineering Electrical Engineering Electronics Engineering Instrumentation Engg.

Production Engineer Drilling Engineer Cementing Engineer Well Engineer Maintenance Engg.

Geosciences

MSc(Geology) MSc(Geophysics) MSc(Physics+Elex.) MSc(Botany+Geology) MSc(Chemistry) MSc(Mathematics) Petroleum Engineering Chemical Engineering

Geoscientist Petrophysicist Reservoir Engineer Geo Chemist Field Chemist

Degree Diploma

ITIs

- We need to ensure a correct mix of ITI/Diploma/ Degree Education institutes based on feedback from the Industry - Presently a lot of emphasis seems to be given towards creating facilities for higher education - Focus on ITI/Diploma courses has to be given to tide over the shortage of technicians in key Industry sectors- Oil Sector requiring it the most

In developing countries, onus of development lies mainly with the Government Govt. faces predicament of multiple demands and limited resources Govt. alone thus cant meet objectives like interface On other hand, industry has both resources and purpose to foster interface However, to ensure a strategic focus, government/ nodal agency needs to set the agenda and monitor the interface

Way forwards from earlier meets..

RGIPT & GERMI set-up Petrofed Study on Workforce Sustainability and Talent Management in Indian Oil and Gas Industry2006 Curriculum developed by DGH in association with IIT, Mumbai , IIT Kharagpur, ISM, Dhanbad,etc

AcademiciansRelevant Curriculum Design/ Financial Support etc. Industry Professionals Exchange for mutual development

Facilitated by Coordinating Agency

Meaningful Student-Industry Interface

Collaborative R&D Projects

Need for setting up a vibrant coordinating agency to promote interface for the oil sector on lines of NASSCOM for the IT Sector

Promote capacity building within academic institutions Help identify and develop learning opportunities for problem-solving across industries Eliminate existing voids such as lack of clarity on mutual expectations, lack of trust etc. Promote applied research

Industry-Academia Interface: Concerns and Suggestions

Oil Sector :Talent Issues

Global Trends Indian Oil and Gas Sector Trends Challenges for NoCs

Trend Growth in Worldwide Investment in E&P Companies Growth of Service Sector Preference to Service Sector Jobs- softer and more remunerative

HR Imperative Heightened demand for E&P professionals Creating a strong Employer Brand for the Oil Sector Companies

Response :ONGC Innovative Sourcing Program Sustained Employer Branding Initiatives

Misperception of Oil Industrys attractiveness.

Fewer New Engineers joining the Oil Sector ( Ernst and Young Report 2008)

Trend Heightened Exploration Activity through NELP

HR Imperative Demand for more fresh and experienced professionals

Response :ONGC Supporting Academia to develop talent for the Oil Sector - Structured Development Initiatives for the existing employees Designing Comprehensive HR Policies for the JV Companies Innovative Retention Strategies

Entry of MNCs and New Collaboration and Domestic Companies Competition

Net Outflow of Talent to Oil Sector Companies Worldwide

Launching Major Retention Initiatives

Trend Compensation Controls on Indian PSUs

HR Imperative Net Outflow to Private Sector/MNCs operating in India offering attractive remunerations( compensation identified as a major attrition factor)

Response :ONGC Creating an Integrated Retention Strategy which has shown some Success

THANK YOU

ITI (4200 Nos.) Engineering Degree Level (1460 Nos) Polytechnics(1245 Nos) MBA(1052 Nos.) MCA(975 Nos.) Pharmacy(630 Nos)
1052 70 630 975

1245

Applied Arts & Crafts(535 Nos.) Architecture(120 Ns.) Hotel mgmt & Catering Techonology IIT (7 Nos.) IIM (6 Nos)

The Quality Issue: State of our ITIs

About 35% of ITIs reported under utilization of seats Basic industrial trades offered by these ITIs had no market demand Trades offered by participating ITIs varied between 2- 38 as against 110 government approved trades 82% of ITIs had placement services Inadequate supplies of raw material- only 6% of expenses allocated Shortage of staff- 89% ITIs had staff strength less than the sanctioned strength 70% of ITIs did not have allocated budget for staff training & development 28% of the ITIs reported no industry interface 32% ITIs reported lack of appropriate supervision

TIME for EXCLUSIVE ITI s for Oil Sector Trades

Technical Education in India : A Comparison

Challenges For India
100 90 80 70 60

96 85 86 88
Vocational Skills in India Compares Unfavorably to other countries. India Receives only 8% formal Vocational Training which is very less.

%
50 40 30 20

25

8
10 0

India

Korea

Japan

Germany

Canada

Mexico

Source: Efficiency training Study Report by ILO

Nodal Agency to: Maintain & Analyze Data from Academia( Courses Details being conducted in Academia) and Industry ( Requirement of Fresh Talent Discipline wise and Competencies required) Coordinate with national/ global faculty and industry domain experts regarding inputs for upgradation in curricula Collect and Analyze Data from World Energy Outlook Report/Indian Plan Data/ Hydrocarbon Vision about the long term/ short term projections for the sector Based on Interpretation from above, prepare annual report on requirement of additional capacities from acacdemia

Coordinate with Industry and obtain requirements for collaborative research projects .Identify academic institutions best suited for taking up such research projects. Collect , analyse and synchronise requirements from academia and industry for exchange programmes Conduct coursewise rating assessment of courses being conducted at various academic institutions Assess/Moderate requirements from Academia for financial support / opening up new centres for petroleum engineering/ geosciences. Forward such requirement to relevant players in the sector( upstream/ midstream/ downstream) Facilitate student- industry interface by facilitating in identifying

The coordinating agency wou can facilitate a more planned ,structured and meaningful academic interface for the entire petroleum industry of India rather than the piecemeal initiatives taken up individual Corporates

 Historically, 70% of industry investment has been targeted at the upstream However, both upstream and downstream projects draw personnel from the same talent pool
Source: 2006 IEA 2006 World Energy Outlook

Projected Requirement every year

Courses

From 2012

2017

Reservoir Engineering
Drilling Geophysics*

250
50 150

350
150 200

Geologist**
Total (For India Demand) Additional to Tap Global Opportunity Total

150
600 100 700

150
850 100 950

*Geophysics 150 per annum required from 2009 **Geologist 100 per annum required from 2009 -2011
Source:- PwC Study for Petrofed -2006

 Aggressive Recruitment up 50% over the previous year Job Fairs for specific disciplines- Two held at the sidelines of the SPG Conference in 2006 and 2008

Re-employment for executives and Engagement of experienced superannuated professionals as Advisors/Consultants Tenure Base Recruitment for Executives and StaffGetting the buy-in of the stakeholders that even for a PSU, tenure employment is the need of the hour for E&P Companies

Creating a Strong Employer Brand

Sustained Internal and External Communications highlighted through success stories, have helped in creating a perception of ONGC as : A major player in countrys economy in an important sector An Integrated Major with a global presence with interests in sectors like Refining, Power, Alternate Energy. Preferred Employer amongst Corporates

 Not high tech or creative Running out of oil & gas No industry growth or advancement opportunity Not enough jobs for graduates PE is a narrow discipline E&P industry has a hire & fire mentality E&P industry is environmentally unfriendly & unpopular

Stable jobs for the future Jobs are high tech & exciting Fossil fuels will continue to play a central role in our energy future PE is a core engineering discipline that can handle a broad array of subsurface problems Fiscally & environmentally responsible use of fossil fuels is our best energy option

We need to get the message out

Dick Chaney (past Halliburton CEO): As a former member of Congress, Im probably the only person whose image was improved by coming to the oil industry. OTC Panel Discussion R.D. Blue (ExxonMobil): Our industry has an image problem that comes from lack of getting the message out. NY TIMES, July 1, 2001

Area awarded (in Sq. Km) Year of award Pre NELP 1998 2000 2001 2002 2004 2006 NELP 1 NELP 2 NELP 3 NELP 4 NELP 5 NELP 6 Onland Deepwater Shallow Off Total Cumulative (till year) % of sedimentary basinal areas opened for exploration 2% 8% 14% 20% 26% 31% 42%

56624 27562 18074 22922 31155 32868 56866

14904 54770 118258 146405 161555 103948 273291

3831 86008 53171 35343 0 8364 22034

75359 168340 189503 204670 192710 145180 352191

75359 243699 433202 637872 830582 975762 1327953

Senior Leadership Development Programmes

Advanced Management Programmes

Super Unnati Prayas

Unnati Prayas
Multi-skilling ITI Certification Courses

Thoughtful
Development

World Class Training / e-learning Work associations with Global Operators Stretch Assignments and Global exposure Dual Career Ladders

Innovative Sourcing

Re-employment of Former employees TenureEngagement Hiring Specialists as Advisors and Consultants

Generous Care

Best Social Security, Retiral and Medical Benefits Generous welfare measures Comprehensive Education Support to wards Work-Life Balance Avenues

Country China France Italy Malaysia

Pay Making Decisions PSEs have some freedom within overall guidelines Pay determination is decentralised Centralised Pay determination PSEs have the flexibility to determine PSEs can determine

Middle East Singapore

United Kingdom United States of America

PSEs can determine pay

Pay determination is decentralised PSEs can determine pay
Source: Mercer Consulting

Country China Malaysia Middle East Singapore

Ratio of Entry Level to CEO Salary 1: 4 1: 7 1: 10 1: 10

United Kingdom
United States of America India Public Sector India Private Sector

1: 10
1: 7 1: 4 1: 20
Source: Mercer Consulting

8,000
Thousands

Guaranteed Salary

Total Remuneration

PSE Guaranteed Salary

PSE Total Remuneration

7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

Bar graph Private Sector salaries

Line graph PSE salaries

E0
Source: Mercer TRS Surveys

E1

E2

E3

E4

E5

E6

E7

E8

E9

Setting up RGIPT in association with other oil PSUs Assisting in Govt Initiative of upgradation of ITIs by adopting few ITIs Full Assistance in Setting up Centres of Excellence in Petroleum Studies in Andhra University ,Dibrugarh University, ETC.

Summer Trainings
ONGCians on Academic Councils ONGC Chairs at Institutes R&D Projects

>1000/year
In institutes offering courses on E&P, on request Institutionalization and Support With leading academic institutions in the country/ abroad on core E&P Themes At worksites/ Plants / Institutes/Museum Domain Experts as visiting faculty Share information on foreign faculty 75 Scholarships each year to students pursuing courses in Geosciences/Pet. Engg

Industrial Tours Faculty Visits & Training Material

Scholarships

Compensation-5TH Biggest factor affecting attrition in 2000

Insufficient career advancement opportunities Better wealth-creation opportunity elsewhere Dont feel valued by my company Insufficient reward or recognition 69 67 65 65 64 57 57 55 55 47 44 44 38 38 36 34 34

Higher salary and benefits elsewhere

Insufficient development and learning Interesting, exciting people elsewhere Work not interesting or challenging enough Unable to meet personal/family needs Dont like the company culture Insufficient feedback and coaching Companys future uncertain or threatened Change in my career goals Little support for my initiatives My supervisor is a low performer Company has too many low performers Job causes too much stress

(Source-Mckinsey Study-2000 of 35 Top Companies Worldwide)

Rank 1 2 3 4 5 6 7 8 9 10

Reasons for attrition External inequity of compensation Limited growth opportunities Role stagnation Under utilization of skills Lack of recognition Work life balance Performance assessment People Managers Internal inequity of compensation Business instability

Weightage 22% 21% 15% 9% 8% 6% 6% 5% 5% 3%

Source: Hewitt Study-2007

400 350 300 250 200 150 100 50 0 FY04 FY05 FY06 59 66 184

370 303

FY07

FY08