Whether your credit is being crunched, squeezed or wiped out, there is no escaping the way the world is changing shape again.
No, I don’t think I am saying anything new here, but it certainly is appropriate for this column, about people, to have something to say about it.
So what is there to say that has not already been said? Not a lot is the likely answer, but what I would like to say is this. We have been through a number of cycles in the past and we have seen more than a million people exited from western upstream petroleum along the way.
This has happened in the interests of efficiency, down-sizing, right-sizing or whatever politically correct use of language has been applied to the activity formerly known as reducing overheads to be more profitable.
Of course, bumper profits have just been posted and, while the price of a barrel of oil has dropped significantly, we do still expect the oil companies to go on making a profit.
The problem we have been discussing endlessly in the recently concluded boom has been how much of a shame it was that so many skilled, essential people were let go in the previous downturn. If only they had been retained as part of a long-term strategy rather than a shortsighted instant profit activity, we would have all been better off.
After all, the cost of retention is infinitely smaller that the cost of replacement. Replacement, did I say? Well, we all know that the replacement didn’t happen, either.
So has anyone out there learned from the last cycle that it may be a good idea to hang on to all the talent you have? If the latest IEA report leaked to the FT is anything to go by, you better had.
It warns of massive depletion and failure to invest. Demand and price may have dropped for now, but the long-term need is still there, not only for the product, but for the people who will produce, discover and manage it.
Another worrying factor has to be how easy it is for companies to let some of the more expensive people go – slim down. Of course, it is wise and good business practice to run efficiently and to minimise waste. The difficulty comes when people who have critical experience are allowed to leave. This is surely a false economy.
Barely a day goes by when there isn’t a conversation or news item that highlights how important experience is. The FT recently had a major article on how many boardrooms lacked true experience. In times like these, we need folks around who know how to ride a storm based on solid experience rather than theory and academic training alone.
So how does all of this impact retirement? Well, certainly there will be fewer people in a hurry to put their hands up for early retirement than in the recent past. Many have just watched their retirement package shrink dramatically.
The only thing on their minds now is the probability that, in the current climate, retirement is not something they can afford as easily as they had hoped and planned. Naturally, and with my optimistic hat on, we are hoping that value will be restored when things get better. When will that be? Well, my crystal ball is broken.
The main thing is that experience is invaluable to steer companies through this economic crisis with skill and dexterity and to ensure that the technical capability is maintained. Otherwise, whatever mess we thought we were in on the talent front will seem like child’s play when things move up again.
Jon Glesinger is CEO of Expert Alumni
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