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Interview

with Matt Underhill, Global Director, Oil & Gas, Hays

02.07.2010 / Energyboardroom

What underpins the confidence and trust that prospective employees place in the Hays brand when choosing to work with Hays during their job search?

MU: Hays is a global specialist recruitment company and one of the largest of its kind in the world with approximately 7,000 people worldwide. Our expertise covers 17 specialisms including accountancy & finance, information technology, banking, and the technical businesses such as construction, property, resources and mining, and more recently oil and gas. We are very much aligned with those technical functions and industry streams.

We have been in Western Australia (WA) for 30 years and in this time we’ve grown to be the largest recruitment agency in WA. We are probably two to three times larger than our next biggest competitor in the specialist market, so our presence here is significant. We also have more than 30 offices across Australia and some 340 worldwide. In 2009, we placed approximately 50,000 people into permanent jobs and found temporary assignments for approximately 270,000 people. So we are certainly a dominant player and we work very hard to maintain our leading position.

Hays Oil & Gas was launched four years ago and, like many of our specialist businesses, it was created to extend our industry coverage. We had been working to recruit engineers in associated interests such as construction and property and more recently in mining. Therefore, the next jump into oil and gas was a short one.

Our philosophy is that if a client company can come to us for their technical engineers, then they should also come to us for their accountants and IT professionals. We provide a full suite of services to our clients. As such, we have a name for knowing the Australian market. In some ways the Australian recruitment market is quite parochial; that is certainly the case in WA. Perth is the most remote city in the world and there is a natural tendency to rely on your own. Our tenure in the market and the fact that Hays is perceived as a good Australian company is something that stands us in good stead. To illustrate this, nearly 300 people attended the launch of our 2010 Hays Salary Guide last week. We had a standing room only crowd. There are employers constantly ringing us up asking when the next Guide comes out. Our standing and expertise is significant in Australia.

The oil and gas specialism of our business, which has been my role for the past two to three years, coordinates our presence here in Australia with all our other offices around the world.

Hays’ differentiators are our tenure in the market, our national network, our depth and breadth of service, and our expertise as specialists, not generalists. Our consultants and managers, including Simon and I, are living examples of how Hays focuses on becoming technical experts in recruitment. If someone came to me tomorrow to ask for an accountant I would not have a clue what to do. But our Hays Accountancy & Finance recruiters do know what to do, which is the point. So we make sure we become true experts in one market sector – for me, that’s oil and gas.

Where does Hays find itself positioned in preparation for the imminent, if not already current, resources boom in Australia and the human resources constraints it poses to the oil and gas industry?

SW: There are all sorts of estimates around the labor needs for major oil, gas, and mining infrastructure projects. We are under no illusion that there will be significant demand over the next ten years. From a brand perspective we are very well positioned in terms of being able to attract applicants looking for new opportunities. From a global point of view in terms of being able to get people from the US, Canada, Asia, or elsewhere, we are also well positioned with our 340 offices in 28 countries. There seems to be a new office opening up every week. In terms of pulling candidates into Australia we are in a good spot. Our continued ability to leverage our global scale and reach of the business is significant. In Australia, we spend more on paper media advertising than any other organization in the country. We also have the largest web advertising presence of any one organization in Australia.

Hays certainly cannot be accused of being complacent with its position as number one.

MU: The pressures and demands from the industry are so significant at the moment that you can never get complacent; you can risk losing it all.

SW: We are actually short staffed ourselves in some respects. We are always very inquisitive about new opportunities and what else we could be doing. We are limited in some respects, not just by the number and quality of applicants we get, but by our own staff numbers. We sometimes get to the point where we have too much work and have to be very selective of what projects to accept. These are things we are very conscious of going forward, particularly in the oil and gas sector with so many liquefied natural gas (LNG) projects coming up.

MU: I do not want to confuse our size with market dominance. Recruitment is a very fragmented industry since there are very little barriers to entry. Consequently, there are a multitude of recruitment consultants in Perth and no shortage of choice. Whilst we have a leading position and get a lot of work through our brand presence, you can never get complacent because the competition is fierce.

Australia is a resource driven economy that is subject to the boom and bust fluctuations of commodities. How has Hays been able to capitalize from its experience in Australia to prepare for this upcoming resource boom? How is Hays interacting with industry to respond to its projected hiring needs?

MU: We lived through the last mining boom which was a taste of things to come. It was immense, the demand was huge, and we learned many lessons through it. I got a sense that the last mining boom crept up on Australia without it knowing, certainly from a staff resourcing perspective.. With this one, everyone sees it coming. Therefore, we find that companies are being a bit more proactive with the oil and gas boom that is about to arrive in terms of workforce planning.

This said, a lot of people are still being ignorant about what it means. We are interacting much more with our clients at the front end of the projects before they even happen and getting involved in what the demands will be in each discipline and at various project stages. Simon and I have found ourselves writing workforce planning documents for clients over the past few months which we never used to do. To be honest it has been a very enjoyable experience for us and a great insight into what is going to hit the economy and how it is going to happen.

I think employers are being much more guarded and a bit more astute about what the implications are going to be for their staffing needs and skills shortages. While many may know the projections of what is to come, what they are actually going to do about it is a completely different ball game.

SW: I think that it also varies a lot depending on who you talk to. There are some companies who are very proactive and aware of what is coming and keen to be at the front of the queue when it comes to attracting good quality staff. At the same time there are other companies who are unaware of the level of demand coming. There are a few employers in Perth who are doing a good job promoting themselves in the global market purely to attract staff through the LNG space.

Which regions are attracting the most of Hays’ attention for staffing needs?

SW: The Northwest Shelf and Queensland are the two hot spots at the moment and will continue to be in the future.

MU: WA has more “conventional needs,” although the deep sea and LNG specific experience is very young. Queensland is still at the very front end. A lot of projects still have not happened yet. We are seeing demand for positional hiring. We are trying to find people in the right networks and position to get Queensland companies where they need to be when the projects do begin. There is very strategic type of hiring going on, but not in big volumes.

What we are seeing from a technology point of view is a lot of demand for directional drilling and well mapping because of coal seam gas reservoirs. Queensland is also interesting because they have not historically had a lot of oil and gas so this is all very new to them. There is a lot of noise, jostling, and both political and financial strategizing in the background. But from what we see, the wave of recruitment is still six months off.

As stated, coal seam and other unconventional gas plays are nascent industries in Australia. Exploration and production companies themselves are learning as they go about them. What is Hays learning through its exposure and experience in these new industries?

MU: We have to educate a lot of people. Companies are still coming to us asking for an Australian with 10 years experience in coal seam gas but they do not exist. We get a lot of requests that are somewhat ignorant of the history and development of the market from a human resources perspective. There is quite a lot of education going on about what you can find and how you can recruit from overseas. That is not something that a lot of Australian employers have had to learn before.

SW: Further to Matt’s point we have been working with our clients on how we can support them going forward and where they need to go to find skills.

From an internal Hays point of view we are being very strategic in benchmarking certain skills and candidates. We are proactive in developing databases for those types of individuals.

MU: The majority of the work we do at Hays is on a contingent basis; we do not get paid until someone gets placed. It is a very reactive industry but we are in a lucky position where we can do a lot of proactive work. Half of the process of our surveys is to understand where the market is. We released a survey at the start of 2010 on salaries and industry trends which generated 7,000 responses.

A critical point we found was the number of oil and gas industry workers who are Australasian residents and how many are overseas foreign employees. From that survey we know that approximately 60% are homegrown and 40% have come from outside of Australia. Another chart in our survey shows where Australian oil and gas professionals are working in the world. About 50% are working overseas. There is therefore a huge Australian population working overseas that we can pull back in. We look at that data and know where the talent pool is and where they are working. Because we have offices around the world we have the ability to go into international talent pools to access them. Increasingly we are doing more of that type of campaign work.

While you can attract workers from abroad to come to Australia, the issue of immigration and visa standards immediately arises. Does Hays liaise with the government concerning immigration?

SW: We are certainly not in the same lobbying space as associations such as APPEA so our sway is very limited. However, we have been part of industry groups and forums with the Department of Migration regarding what may change and what could change with immigration. It is a difficult question, to be honest, but I can say that there is industry frustration over the pace at which change might occur and frustration over a lack of foresight by the Federal Government in what it potentially needs to do. The government is perhaps not completely aware of what is coming. There is no immediate change in the horizon as far as immigration is concerned.

MU: Having done the studies and worked with our clients to know what is coming, immigration is a real issue. It is probably harder for a foreigner to get a skilled visa now than it has been over the past ten years.

We are speaking of the inhibiting trends of visa regulation and parochial mindsets. Should the oil and gas industry be equally concerned by competition for labor amongst different sectors such as mining and energy networks?

SW: Yes, particularly with the mining sector. There is massive concern about the oil and gas industry poaching labor from the mining sector. That is at the forefront of many major mining companies’ minds since there are clearly transferrable skills between the two industries.

In many of the conversations we have had with clients they are looking very closely at the mining industry and assessing those transferrable skills. Salaries have never been a particular issue between mining and oil and gas.

MU: I wouldn’t underestimate the effect of labor shortages on the mining industry. Oil and gas will have to go toe-to-toe with an industry that is closely aligned with it and whose workers share many transferrable skills. And let’s face it, the miners have money to burn. The price of iron ore has doubled over the past year. There is going to be a huge battle ground for skills. If mining is going to get where it was pre-2007 and oil and gas continues on its trajectory, it is going to get interesting.

I believe that industry and open markets always have a way of solving their problems. I believe the human resources issue will eventually be solved and it will be interesting to watch how it works. The noise will grow, feedback will build, and those in authority will eventually have to listen. There will have to be some relaxation of immigration rules or another initiative that assists the industry. At the end of the day there is a lot of investment going into this industry that the government stands to financially gain from. To not be able to proceed with half of these projects because they cannot find the right people is hard to grasp.

Another point is that whilst the projects are based in WA, a lot of the engineering can be done offshore. None of the operators will hesitate to take their engineering operations offshore to Asia.

What would you tell the operators to lure production to Australia?

MU: Two things are needed. First, the hurdles and bottlenecks need to be removed to make it as easy as possible for people to do business. Having lived in Singapore for two years I know firsthand that if you work in a place with no barriers, things get done. Second, a fully functioning open economy is necessary. If you have that then prices will remain low and the employment market will work efficiently.

SW: Additionally, it is not just a matter where you find these people but how you train them. There is a distinct lack of training facilities in Australia.

MU: That is a good point. We have not discussed training much, mainly because that is not necessarily our realm. But parts of our studies have touched upon training. If I compare what I consider to be the most efficient recruitment market in the world in terms of oil and gas – the Middle East – with Australia, the differences are fairly marked and training is one of them. The Middle East has been built up for many years and they simply do not have the local population that can do the work. So they have been importing talent from overseas for years and it works like clockwork for them. They get low-cost talent from the Indian subcontinent, the Philippines, and China. They get skills from the US, UK, and Australia. Their immigration policy is fairly quick and simple and all things work efficiently. I do not think a week goes by when we don’t get a job registered for a training manager. There are enormous sums put into training facilities all run by the operators. Australia is behind the Middle East in this regard.

Does this resources boom structurally change the way Hays does business in terms of opening up new and more permanent clients?

MU: Yes, I think so. We were already growing as an oil and gas business before this boom came, but the boom will now accelerate our growth. We also did things during the downturn such as build a global database specifically for oil and gas which we can access for jobs and candidates. We are gearing up to facilitate global moves. Globally as a business we have invested £35 million pounds in new technology so that our database is absolute state of the art. A lot of recruiters will pay lip service to a database but we fill the majority of our jobs based on its strength. All of our searches are powered by Google so that matches can be that much better. We have more technology along the way. We have projects that are designed to maximize our website so that when people register they get offered jobs that are most relevant to them. We are quite excited about the technology that will help us meet the demand.

What are some of Hays’ targets and timetables over the next several years?

MU: My goal is to coordinate our team globally. If you look at our other markets – such as mining, accounting and IT – we are probably number one, if not, top three in those markets wherever we are around the world. That is our ambition for the oil and gas business. It is a relatively new space for us being about five years old and we are on a strong ten year plan to become a dominant player in its market. We do not ever do things unless we know we are going to be in the top three.

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