With the price of oil going down, many businesses are thriving. However, oil and gas companies are likely scrutinizing their 2015 and 2016 budgets, and this can mean major cuts for these organizations.
Recessions are naturally scary for businesses. There are so many unknowns. How will we need to change? Will we need to downsize? Can we still see our projects through? These are just a few questions business owners and managers (and everyone else) may be asking. While there may be lots of future unknowns, there are still considerations that you can think about now about what not to do.
Since I’m based in Texas and I’ve worked through several of these cycles, I’ve noticed that there are three mistakes oil companies make during a downturn that I would like to provide some insight on. Here they are:
1. Cutting employee development expenses. This is the time to identify and grow your top talent. Where is the gap in their experience? Where are they lacking in skills to be more widely valuable to the organization? If you cut 30% of your staff, for example, someone has to step in to do that work. So, this is the time to provide training for those people to do it. Plus, if things don’t look good at the company, your best employees might start looking elsewhere. Make sure to tell them they are valuable and demonstrate that by providing educational and growth opportunities to retain them.
2. Laying off the “wrong people.” Don’t make cuts based solely on job function or title. Look at the individual and their overall value to the organization: How to Build and Maintain a Premier Organization. It is 10 times as difficult and three times as expensive to get that talent back when business turns back around, and it will.
3. Viewing HR as a cost center and not a valued business partner. Patience thins during a downturn, but THIS is the time to lean on your topnotch human resources specialists to help you make employee business decisions. Rather than viewing your HR team as an income producer, know that their return on investment is based a lot on cost savings and streamlined productivity. HR can save you money in the cost of turnover—they can help you decide whether to replace a person and hire someone new or retrain them. If you’re deciding what locations want to shut down, HR might have some perspective on cost of labor in this market versus another, or that if you close one, you will lose half of your employees because they don’t want to make the hour commute, and so on and so forth.
Hopefully armed with these mistakes oil companies make during a downturn, your company will make the right choices and recover faster in the long run.