Canada | USA

Number Crunching the Labour Crunch

Is your company able to predict from incoming résumés which employees are most likely to have a tenure of ten years or more? Are you able to foresee who, by name, will resign after ten weeks of fly-in/fly-out of the oil sands? And do you know whether the current labour pool has adequate skills and workers to enable your production targets?

If you answered “no” to any of these questions, you are not alone. The Canadian oil and gas industry is facing a labour shortage that represents one of the biggest risks to its continued robust expansion.

This is no secret – the recent report, Current and Short-Term Workforce Trends published by Petroleum Human Resources Council of Canada (PHRCC) and Deloitte, cites “attraction and retention of workers to hard-to-recruit locations” as the number one workforce challenge facing the petroleum industry1. PHRCC also estimates that, in addition to 90,000 new oil patch workers, nearly 40,000 workers will be needed by 2020 just to replace those who retire.

Oil sands companies, both small and large, are ill-prepared to fill their widening labour gaps and unable to predict key elements of the workforce that are imperative for sustaining growth. And the same old approaches to solving this problem – developing hiring plans once a year based on annual business forecasts – are no longer commensurate with a competitive and turbulent boom-bust market.

Collaborating to solve the labour supply-and-demand imbalance

In the recent paper, Balancing the people equation: How enhanced collaboration can help solve labour challenges in the oil sands, Deloitte argued that oil sands producers should find new collaborative ways to manage their workforce needs in the face of a skilled labour supply-and-demand imbalance. The most common collaborative approaches – joint ventures and other limited cost- or technology sharing arrangements – will no longer suffice. Instead, the current environment calls for expanded collaboration across inter-company, intra-company, institutional and community domains. Energy players are urged to work jointly with unconventional partners spanning the industry, including traditional competitors and suppliers as well as government and community groups, to find innovative ways to manage their common talent needs.

It’s already happening to a certain extent. Just recently, twelve leading oil sands companies united to form the Canadian Oil Sands Innovation Alliance as an “overarching collaboration hub” to share information and help advance research and technology to improve environmental practices.2 Deloitte believes that such alliances could be expanded in scope to include partnering on talent issues. One area in particular, joint workforce analytics, offers a compelling opportunity for the industry to collaboratively address its ‘labour crunch’.

Strategic decision-making enabled by workforce analytics

Workforce analytics uses a fact-based approach to solve complex labour challenges. It applies “technology and advanced analytical techniques to collect, analyze and deploy workforce-related information across the enterprise.”3 Companies today have a wealth of data residing in their information systems, including ERP, HR point solutions and other repositories. But business executives continue to miss the opportunity to ‘unlock’ their key people data. Having little clarity on what to measure, they are unable to link workforce elements to their broader corporate needs. The challenge involves converting petabytes of available data into actionable business intelligence to help solve the most urgent talent issues.

A number of trends are driving the increased application of workforce analytics to strategic decision-making in the energy sector. Continued investment in technology infrastructure is allowing companies to aggregate massive amounts of data. In line with this development, ‘dashboard overload’ is now challenging companies to translate their raw, transactional data into more usable, business relevant information. New types of HR leaders are increasingly fluent in using data analytics for more effective decision-making.

Meanwhile, the economic recovery since 2008 has obliged executives to tighten their financials with more emphasis on managing the ‘people spend’ (one of the top three profit and loss line items). Considered together – and compounded by the shortage of skilled labour – these trends are impelling energy leaders to seek more innovative ways to recruit and retain top talent.

From HR paralysis to workforce analysis

Workforce analytics spans myriad solutions that can help energy companies address their most pressing HR challenges. Thinking back to the questions at the beginning of this article, three solutions warrant particular attention. Recruitment analytics triages received résumés using an advanced scoring model to predict probability of success within a particular job family. Similarly, performance management systems are a valuable source of data for analyzing the characteristics of potential high performers.

These enable organizations to focus on candidates who demonstrate the attributes of a successful employee. Retention risk analytics mines multiple internal and external data sources to predict which employees are retention risks months before they resign. Imagine being able to foresee whether a recent leadership hire will quit after working only two rotations ‘on camp’.

This changes the retention paradigm from reactive responses to proactive strategies by predicting attrition problems among the critical workforce. And workforce planning and optimization leverages internal and external data feeds for predictive modeling that defines workforce gaps to optimize supply and demand. Human resources analysts can study the labour supply for specific skill sets and target alternative jobs categories (e.g. construction) for potential recruits. This enables multiple scenario planning and matches strategic business requirements with long-term talent trends, external market influences and proactive planning.

The value of these analytical solutions is that they break down the barriers that lock valuable talent information away at the single function level. Bringing this data together can provide the insights for companies to more effectively use their people to execute business strategies.

Crunching the numbers together for a solution to the ‘labour crunch’

The labour shortage affects all players in the energy sector and is a  problem that is not going away anytime soon – nor should it be tackled alone. As activity in the oil sands continues heating up and cost pressures rise, producers must recognize that “some problems cannot be solved in isolation and that traditional competitors who face basically identical challenges can both win if they work together”.4

In this burgeoning era of technology-enabled decision-making and inter-company collaboration, oil sands players have an unprecedented opportunity to pool their data to understand where the upcoming talent gaps are – and together devise proactive strategies, including resource-leveling, joint recruiting and cost sharing on people logistics. Undertaken jointly, workforce analytics would be a major step towards solving the labour supply-and-demand imbalance afflicting Canada’s petroleum companies. It would also be a testament to the greater use of collaboration to solve common challenges in an increasingly uncertain energy sector.

For more information, visit: www.deloitte.com/ca/people-equation

Article by Cyril Elbers, Deloitte


  1. Petroleum Human Resources Council of Canada. 2011. HR Trends and Insights: A Look at Current and Short-Term Workforce Trends within the Canadian Petroleum Industry: Q3/Q4 2011 Report.
  2. Calgary Herald. March 3, 2012. Oilsands giants create unprecedented alliance to tackle environmental issues: Leaders of 12 majors sign commitment on tailings ponds, greenhouse gas emissions, water and land issues.
  3. Deloitte Development LLC. 2011 Workforce reporting and analytics: The three minute guide.
  4. Deloitte & Touche LLP. 2012. Balancing the people equation: How enhanced collaboration can help solve labour challenges in the oil sands.