One of the most obvious impacts of the downturn in the oil and gas industry is the effect on the jobs market across the north and north-east. For professionals at the sharp end, in the recruitment industry, the smart money saw it coming – but it doesn’t mean it has been easy for anyone including the tens of thousands across the region who have lost their livelihoods.
A select group of employment industry specialists meets at the Dunavon in Dyce.
The hotel has recently enjoyed a £100,000 refurbishment to a boutique standard – decked out with a vibrant orange and cream colour scheme to create a funky, 1970s vibe.
The menu at the hotel’s newly launched gastro pub, Brysons, has been revamped too. Although the hotel owners noted that while the jazzed up restaurant has been a great success, occupancy at the hotel has been down – another aspect of the local economy.
Les Park is the founder of Talon Board Advisory, an executive recruitment specialist. Mr Brown set up the business after selling his first consultancy, Park Brown International to FWB in 2013.
“People have been in denial,” says Mr Park. “They thought it wasn’t happening to me, I’ll be fine. I lived through ’86 which was bad. It was about 18 months before we saw any recovery and it was slow, very slow.
This is completely different. This is a three, maybe four or five year cycle. The dynamics of the market are different.
“There will be a normality. If we didn’t have international businesses based here it would be tougher. However one looks at it, the North Sea has been a backbone for lots of companies in this area for a long time.
“When you lose that you lose it all. That is the big challenge. That is the big difference this time around. My area of expertise is board room. In the boardroom it has been carnage and will continue to be for the next 12 months.”
On this less than cheerful note, we order our lunch.
The restaurant’s award-winning head chef, Stephen Castle, has just been away on a holiday in Thailand, so he brought back with him some inspiration for some delights on offer.
Mr Park orders the five spice duck breast from the specials menu, while Sally-Anne Ogilvie, a partner with Aberdein Considine who specialises in employment law, opts for the Teriyaki grilled salmon. Our third guest, Mark Ingram, is the chief operating officer for Europe for Orion Group, a specialist industrial recruitment firm which operates a global business from its headquarters in Inverness. His choice for lunch for something perhaps a little more conventional – the chunky beef chilli. I go for the Panko breaded langoustines – a posh retelling of scampi, which is utterly delicious.
Mr Ingram notes that Orion saw the early effects of the downturn and moved swiftly to diversify its business. Where previously it was heavily reliant on oil and gas now this sector accounts for 50% of its trade.
“We diversified two or three years ago,” says Mr Ingram. “We saw the contracts going down. We knew where it was going. We diversified into rail, construction – anything that gets you from A to B. Thankfully we are privately owned and we are cash rich. We were able to shift as we needed to. There is spending on infrastructure, here but most of it is down south. Up here there’s the A9 upgrade. Forres Railway station.
“There is money getting spent. We have had to change tack in recruitment. We have a good brand. We had been reliant on oil and gas like many others. But we saw it early.”
As Orion’s business diversified, there has been speculation that the highly skilled workforce employed in the oil and gas industry should find it relatively easy to get a job in a different sector- however this is not the case.
“Everyone talks about transferable skills. Can we do it? Will the employers accept it? You can get the buy-in at the top level but when you get to middle management level, do they want to wait for transferable skills? They are more likely to want someone who can finish up in three months time. You can do it and the skill sets are there, but whether the companies will buy into that to get the volume they need, I don’t know,” says Mr Ingram.
Another issue is the big salaries paid in oil and gas aren’t usually found elsewhere.
“We can’t get them to work at the rates we pay in Scotland,” he admits.
“To get oil and gas guys moving to a different industry – that’s difficult. Never mind all problems you have got to get that transfer of skills to happen and get employers to accept it.
“Whether that starts to change now with the climate. People are starting to accept it. People will cut their cloth accordingly. One way or another folk are going to have to change their opinion.”
Meanwhile, Ms Ogilvie, who now leads the employment practice at Aberdein Considine, has been very busy as a result of the downturn.
“We knew it would be coming. A redundancy process doesn’t necessarily have to end in a settlement, but interestingly, for whatever reason, it has always been the way in the oil industry that there is a settlement. It gives them a great deal of comfort. With only a few narrow exceptions it means there can be no come back or claim for unfair dismissal claims, for example.
“Unfortunately, we knew employees would be in their droves looking for legal advice and oil companies would be looking for settlement agreements and that has proved to be the case,” she adds.
“Quite often as employment solicitors we will always look if there is any basis for challenge. There are two kinds of challenge – the substance and the procedure.
“We always ask is there a genuine redundancy situation. In times gone by very often the answer is probably not. Redundancy is a term that can be used for a multitude of scenarios, but actually quite often when you dug into it it was actually more about getting rid of certain people.
“There’s not much ground for suspicion now. Not many people in Aberdeen are going to challenge that right now.”
Employers too are also looking for options in the face of declining revenues, she explains. Bosses can either cut jobs, or look for employees to accept reductions. Perhaps even both. But it is not a straightforward process.
“I also work with a lot of employers. Renegotiating terms and conditions is always an option. I find myself explaining to employers a lot what the process would be for approaching that kind of negotiation,” says Ms Ogilvie.
“It is always interesting to see how a workforce reacts to a proposition like that. Quite often it is about the greater good. So you will have people who might keep their jobs being asked to make accommodations. That can go in any direction depending on the personalities involved. It often comes down to engagement and what the relationship has been prior to that.
“Sometimes I work with employers who are really committed to making options work. Sometimes I work with employers where I know it is a box ticking exercise.”
Mr Park said over the course of the downturn, packages that were initially on offer to employees willing to give up the job were now no longer on the table.
“I’m seeing where key employees were retained and didn’t get enhanced packages, are now getting the bullet on statutory terms. That is a big issue in Aberdeen right now. Mr or Mrs Loyal are now being released 12 months later. The folks who were released 12 months previously left with big packages and they are getting statutory.”
Yet, oddly, the skills gap that was the subject of most conversations about problems facing the industry when oil was $110 a barrel has remained.
Mr Park adds: “The one thing that hasn’t happened is the skills shortage has not gone away because there has been a recession. The talent pool is the same as it was two years ago. That is one of the challenges going forward.
“There is also the view the oil industry needs to think out of the box in terms of the type of people they employ, particularly in terms of senior management. because if you are going to continue to do things the was we have always done them, will there be any change?”
The North Sea needs – and is looking for -a new type of leadership that can manage the downturn. The Press and Journal will soon be launching a new executive recruitment section aimed at meeting this trend.
“The new entrants who came into the industry in the last ten years have never experienced a downturn. You have senior managers who are use to spending money rather than preserving it.
“It is a different type of leader you need now. You need leaders who can manage a business,” says Mr Park.
“That is we we are still busy. We aren’t bouyant, but we are still busy changing out senior management that can’t function in a downturn. We are looking for turnaround leaders versus growth leaders. They are different people. The skills are different. The mind set has got to be different.”
“Frankly, Aberdeen has been spoiled. People were over-promoted. A phrase I use is ‘good guy syndrome’. There’s been a lot of people promoted from technical positions that don’t have managerial training.
Don’t have managerial skills sets or communication skills – which is fundamentally the most important one.”
