When Jake Randall needs to recruit a mechanical engineer in the oil and gas industry, he must contact 75 to 100 potential candidates before he can fill the position. In 2004, contacting 25 to 30 potential candidates sufficed.
“It’s three times harder now to find a candidate who is qualified, interested and ready to take a new job,” he says.
Randall is a top recruiter for Futurestep and project leader for its oil and gas division, specializing in filling engineering and geoscience positions for client companies that range from the largest integrated oil companies to small independents. Salaries for these positions start at $90,000. Job growth in the U.S. oil and gas industry hit 11.3 percent in 2006.
“The market is absolutely incredible,” Randall notes. “There’s a severe shortage of candidates, and a huge push coming from the industry because of high oil and gas prices. And as more companies snap up more candidates, the talent pool shrinks.”
Futurestep is a Korn/Ferry company that focuses on recruiting for middle management positions. It organizes its 454 recruiters into practices that cover the consumer/retail, finance, government, health care, life sciences, technology and industrial sectors.
The industrial practice includes oil and gas. In Futurestep’s Houston office, a dedicated staff of six reports to Randall, and he scales the team based on client demand. The metrics he uses to evaluate the effectiveness of each recruiter working under him include placements secured, interviews per month, the number of people networked per day and the number of outbound calls per day.
Randall’s recruiters typically handle 10 positions at a time, and each recruiter has full responsibility for those positions.
“They receive extensive support from me and from our staff of research assistants, dialers and sourcers looking for active candidates,” he notes. “Futurestep has huge resources and capabilities.”
The oil and gas industry now represents a worst-case scenario for recruiters. High job growth, an acute lack of candidates and the inability to find similar skill sets in sister industries create near-impossible conditions for filling critical positions. Randall’s approach is instructive for any recruiter working in tight labor markets.
Sourcing far and wide
Randall begins every search with a kickoff call to the client. He talks directly to the hiring manager to gain a better understanding of the intangibles of the job. He may also speak with the HR executive to review the process he plans to use. “The goal is to get the best sense of what kind of candidate will deliver real value to the company as soon as possible and fit the company’s culture,” he says.
Randall’s most productive outreach method is classic sourcing. “We select 25 to 50 competitor companies depending on the specific sector we are looking in, and note their locations,” he says. “This allows us to geographically locate the talent.” Randall’s research staff generates the names of potential candidates at other companies, their location, title and contact information.
“Passive candidates are typically the best qualified for the positions we need to fill, and they are also less susceptible to multiple offers, which has become a huge problem in this market,” he notes. The geographic area may be very broad, so Randall must determine whether relocating the new hire is realistic.
The position requirements are often quite specific. “We want to create the largest candidate pool possible,” Randall says. “But it’s a balancing act. If we create a pool that is too broad, we won’t able to fill the position efficiently, and if we go too narrow, we won’t produce a sufficient number of candidates.”
In addition to classic methods designed to reach passive candidates, Randall makes use of industry associations such as the Society of Petroleum Engineers, the American Association of Petroleum Geologists and the American Society of Mechanical Engineers.
“Using the industry associations is imperative in our line of business,” he reports. “We hold memberships and access their directories.” The industry associations represent a large portion of the labor supply for oil and gas professionals.
Randall also makes heavy use of LinkedIn, which he says is an effective tool, and other online networks. He also taps the major job boards and niche boards such as Rigzone.com, Oilcareers.com and Worldwideworker.com.
“Oil and gas is a flat industry with few geographic barriers,” Randall notes. “In addition to sourcing in the United States, we also source abroad for U.S. citizens who are working in other countries. We may find a U.S. engineer in Russia just as easily as Indiana.”
Among U.S. citizens working abroad, Randall sees a growing interest in returning to the United States. “The sizable differential in compensation that originally took them away— higher pay and large hardship premiums— is smaller now because there is some global equalization of compensation,” he reports.
If the differentials are lower, candidates are more willing to think about retuning to the United States. Randall leverages Futurestep’s overseas offices for support if a candidate is in their location.
The ‘contact sport’
With potential passive and active candidates identified for a position, Randall begins to work through the pool. “From this point on, recruiting is a contact sport,” Randall says. “The more people you touch, the more effective you will be.”
If Randall introduces 100 potential candidates to a specific opportunity by phone or e-mail, he will typically receive a response from 50 to 60. “We are looking for three to five fully vetted candidates for each position,” he says.
“Once we have an interested candidate, we must sell the client. Because we have a retained arrangement with our clients, we have a deeper relationship with them and know them well. When we talk to the candidate, we sell the company, the compensation package, the location, and education and career opportunities, which are very important to engineers.”
Randal then presents the three to five candidates to the client. “In addition to all the information we have gathered from the candidate and the vetting process, we also present intangibles that may have come out in our interviews,” he says.
On average, client companies ask for interviews with 80 percent of the candidates he presents—a very high interview ratio. After the presentation, Randall follows up with phone calls to the candidates to pursue any questions the client raised.
Before the candidate goes for the face-to-face interview with the hiring manager, Randall ensures that potential deal-breakers have been discussed. “If relocation is involved, we make sure that the candidate has already initiated a conversation with his or her family about the potential move,” Randall notes. “We also make sure that the compensation expectations have been addressed.”
If the client is satisfied with the candidate, Randall steps back into the process to begin the negotiations about what it will take for the client to secure the candidate. “I’m constantly on the phone with the candidate and the client and push the process along when needed,” he says.
“Any solid blue-chip candidate will receive multiple offers. To combat this, we are in a continuous process of talking to the candidates. We are very focused on candidate care and take a consultative approach that centers on their fit and their career progression. It’s a selling atmosphere.”
Randall drops the hard sell and backs away from a candidate, however, if he is concerned that the candidate might not stick with the position. “We want to see a minimum of three years with every employer when we look at a candidate’s work history,” he notes.
“The only thing worse than not being able to close a deal is to close one with a candidate who leaves after 60 days on the job. But we have a great track record for finding candidates who stick.”
With the labor shortage bearing down, Randall is beginning to look at new graduates for some clients, but they are also in short supply. “During the oil and gas downturn that began in the late 1980s and continued through the 1990s, new industries emerged and attracted talented students,” he says.
According to Randall, the number of new graduates in petroleum engineering has dropped from 10,000 to 12,000 a year in the 1980s down to 2,000 a year now. “Today, new graduates are wooed by multiple companies while they are still in college,” he says.
The Futurestep oil and gas group also fills international positions. “Right now, we are filling positions in Dubai and Brazil,” Randall reports. “We also do some sourcing abroad for foreign nationals to fill jobs here, but there is some pushback from our clients.”
Clients are reluctant to look at foreign nationals because few H-1B visas are available and the process is expensive. “In addition, U.S. oil and gas companies are long established and generally prefer U.S. talent for continuity and communication reasons,” Randall says.
He notes, however, that if the labor markets continue to tighten and Congress raises the H-1B visa cap, U.S. oil and gas companies will be more receptive to hiring foreign engineers. “We’ve already seen lower resistance, and it will continue to drop,” he says.
