Selecting the right managers to deal with turbulent times

“As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; and the next the people hate…When the best leader’s work is done the people say “We did it ourselves!”” – Lao-tz

This article is aimed at the offshore vessel owner, possibly a bank or investment fund, who knows little about the marine or offshore business, but may have recently found that they are stuck with a money losing offshore contracting company in their portfolio.

Finding the right people is possibly the most important topic on this site. The problem of the wrong people running projects (and field operations) has noticeably worsened during my working life, especially in the past decade.

In the boom-bust oil business, a slew of mid sized offshore contractors spring up in boom times. Many or most of these new companies, especially those established since 2005, have people in their management teams who lack the experience and judgement to efficiently support operations.

When vessels earn big oil boom day rates, a bit of inefficiency here and there doesn’t seem to matter that much. But now, when times are toughening up, the lean and competent have the best chance of surviving.

Even in good times, the marine and offshore industries operate with barely enough good people to efficiently manage operations. In an upswing, when there is money around to start new companies, the most scarce resource is talent. First rate people tend to recruit other first rate people. Second rate people tend to recruit third rate people.

Many people who work for drilling contractors seem to have their own insecurities, which makes them incapable of saying “I don’t know”.

A good number of post 2005 marine contracting start-ups were launched by parent companies in unrelated businesses. So the first mistake in people selection is that the parent company, who chooses the founding team, has no clue how to tell a truly effective offshore or drilling operations administrators from the dullards and fakers.

Lesson one. In this age of computer cut and paste, CV’s are nearly worthless. In the construction business, successful projects are run by first rate people who have been managing projects for years; they don’t need to read CV’s, because they have worked with hundreds of people in their careers, from which they personally know who they want to bring to their next job. For them, a CV is an HR formality. Note the difference between projects, which have a finite life, and the operations of contracting companies, which are intended to last for decades.

Lesson two. Due diligence. A properly run project (or marine operation) uses a rigid format to periodically reviews people’s performance. But the most important review is at the start, to double check that the candidates on the short list have the track record they say they have. Technical positions cannot be evaluated by non technical people (including HR). If a piping supervisor is to be evaluated, his background and abilities has to be checked by somebody who knows what running a piping job entails.

Lesson three. Mistakes will be made. Usually, the wrong man for the job becomes apparent to those who can tell the difference, within days or weeks. Is HR ready with a mechanism to terminate or transfer such people? If you haven’t replaced 5% of a newly mobilized team within the first 3 months, your project’s human performance evaluation procedures may be lacking. There are plenty of projects which got into trouble due to having the wrong people and failing to identify the problem.

Other lessons. Candidates should have experience in a similar size and type of operation. Somebody used to a well funded highly regulated European way of working may not be able to adjust to a seat of the pants tight money business in Asia. Candidates should be familiar with local customs and ways of working. Project objectives are achieved in different ways in China or Indonesia than they are in Norway. It is not for us to say which of two cultural ways is the more valid.

People running offshore operations have a different mindset from those who run projects. Well drilling in particular depends on crewmen who reliably and repeatedly follow procedures and who instantly report problems using plain language. A mistake could cost the well, sometimes even the rig. To an outsider, a good drill crew must sometimes seem to an abrupt and bad mannered lot.

Rig crew behaviours do not transfer well to yard projects, where mistakes are easily made and where those running the project may have little say in who gets to work on the site and who doesn’t. Projects need soft people skills, such as using humor to motivate the team and an excellent memory to help coach yard workers (who have no mental image of the product they are building) in ways that they can more easily do their job.

In an oil boom, many of the best offshore operations people move into construction projects, where they learn to shift gears from an operations to a project mentality. Now that the boom is over, owners of offshore contracting businesses can draw from this pool of good project people.

BULLIED BY DOGMATIC DOCTRINES

Less experienced managers lack self confidence to fight the dogmatic dictates of today’s autocratic safety tyrants, a weakness which has cost second tier offshore contractors millions in costly and avoidable procedures.

If the business is losing contracts but is still costing loads of money to run, this is as good a time as any to call in a consulting firm to evaluate the management team. There are marine construction and commissioning consulting firms who can help evaluate the management teams of offshore contracting businesses and advise on how to upgrade talent. Maybe readers can recommend some good consultants in the Comments section below?

Will management self-overhaul become an oil industry trend? Probably not, because once humans have invested so much time and effort to form their perceptions, such as what their business is and how it should be managed, they mightily resist pressures to change that perception, even in the face of irrefutable information. So when some outsider comes along providing evidence that our perceptions are outmoded and need to change, we fiercely resist those new concepts. This is human nature.

Back in the 70s, in the fast moving world of IT, when makers of 14″ hard disk drives couldn’t see the impact of new 8″ drive technologies, entire companies disappeared before perceptions changed.

This is about to happen to the offshore contracting business.

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2 comments to Selecting the right managers to deal with turbulent times

  • Geoff

    Some good comments here. Some other comments though I don’t believe are correct and really need to be revised particularly in respect to the onshore projects

  • Evan

    Comments (17) from : http://oilpro.com/post/22915/selecting-right-people

    Tracey McTague · 4d ago · Reply · Unlike · 3
    “…dogmatic dictates of autocratic safety tyrants?” I know that you really meant to say trusted safety professionals who help to keep our crews aware of safe practices, so that we can send them home alive and in one piece to their families.

    Nigel Davis · 3d ago · Reply · Like · 1
    Well said Tracey, I have been in the industry for over 40 year and hopefully gone are the days when you expected to see serious injuries on a regular basis, and minor cuts, trips and falls every trip offshore. Hopefully post Macondo in the US the culture of cutting corners and moaning about ” the dogmatic dictates of autocratic safety tyrants” which needlessly cost 11 lives is a thing of the past. (although judging from Evan Jones’ article I think not). Europe learnt from the Piper Alpha disaster, and the subsequent Cullen Report introduced the QHSE systems that has made the industry one of the safest heavy industries around. Yes like every company personnel, service hand and contract I have winged about the apparent endless form filling, safety meetings and apparently petty regulations, but on the plus side I know that all the crew can climb on-board that helicopter or board that boat under their own steam at the end of a trip and not be carried on inside a bag. Maybe the second tier offshore contractors should have a good look at their wives and children next time they go offshore and perhaps with the practices they wish to return to, it may be them who do not return. Stop moaning and manage.

    Evan Jones · 3d ago · Reply · 2
    Good point Tracey, I am guilty of using strong language without properly qualifying the context within which the terms were intended. (Such as weak managers who meekly submit to over zealous and unnecessary safety dictates.) Herbert Spencer once famously said: “The ultimate result of shielding men from the effects of folly, is to fill the world with fools.” We need more intensive debate about the factors that cause accidents and injuries; including what is effective in modern safety philosophy and what needs further debate and review. There has to be some middle way between the nanny state which treats adults citizens like 3 year olds and unregulated situations where the unwitting risk walking into death traps. Modern aviation’s safety record, although good, also acknowledges not every accident can be prevented.

    John C. Milne · 4d ago · Reply · Like · 2
    Good commentary, Evan. The industry that I first encountered in 1969 was based on simple technology with reliable equipment run (safely) by capable people who had mostly gained their expertise from experiential education. The end product has not changed and the equipment has evolved only a little. What has changed is the social environment with the emphasis on electronic communication and aversion to risk. None of the people I met in the early years wanted to cause any harm to the body or the environment and I am still available to conversion to the idea that the increasing influence of HR & HSE has contributed to the overall efficiency or effectiveness of oilfield operations. This is a classical case of building ivory towers which proved to be the downfall of the Roman, Chinese and British Empires.

    Greg Baehr · 4d ago · Reply · Like · 2
    When the industry was at its peak a few years ago, trying to find and recruit experienced and high quality candidates was a monumental task. Those that were highly qualified and available were available for a reason. As a result many inexperienced and under qualified or poisonous people were put in positions they were not prepared to properly manage. Some rose to the top but more failed and took project teams, projects and company reputations down with them before they could be replaced. Now with this slowdown there are many over qualified candidates but companies need to vet candidates very aggressively since most companies shed their dead wood and problem children first before good employees. References are worthless as most former colleagues will not say anything negative for fear of backlash.

    Victor Schmidt · 4d ago · Reply · Unlike · 1
    Anyone seeking to evaluate and upgrade their management team should contact me at Endeavor Management. The company has a deep bench of industry veterans to help your team sharpen their pencils and develop the leadership qualities needed in this challenging time. You may not need to replace them, just provide them the right tools to meet the need.

    Evan Jones · 4d ago · Reply · 2
    Victor’s concept of “Upgrading a management team” is intriguing but I am yet to be convinced that incompetence can be upgraded in heavily technical projects.

    The most lacking management resource in oil and gas are top line section leads, who carry to the jobsite a comprehensive mental model of the proposed final product. A deep understanding of an oil or gas related enterprise comes from decades of self learning on the job; it cannot be learned in school.

    The best run projects have several interchangeable top people, each of whom have the qualities of: a] a prodigious memory for tens of thousands of details; b] a mental model of how the millions of components that comprise the final product fit together and the communication skills to share this knowledge to artisan tradesmen at the workface. c] an infectious self depreciating sense of humor that puts people at ease and encourages them to do their best without fear of criticism or ridicule.

    On the best run jobs, this group of top line people may not even bother with job titles; if half of them suddenly go on holidays, the remaining members of the top team pick up the slack without anybody hardly noticing.

    The Carly Fiorina Hewlett Packard model of some technically illiterate outsider taking over a specialized enterprise is a text book pipe dream taught in MBA school. The quick and easy way to deal with incompetent managers is to replace them. (Which is ultimately what happened to Carly.)

    In the context of managing an offshore contracting operation, there is indeed a business opportunity for a technically competent outside consulting team to review money losing businesses. Such a team doesn’t exist. There is a need for a consultant who understands the above issues and can put suchlike teams of advisers together.

    Daniel Stiff · 4d ago · Reply · Like · 1
    @EvanJones: Great Article Evan. You are correct about having someone come in on “Guest Appearances” and expect them to transform leadership teams. Study after study has proved that to effectively change leaders behavior takes at least a year of Coaching. You are totally correct, the Carly Fiorina experiment failed miserably. The only addition I would make would be under: Lesson Three Mistakes will be made. I would add a final statement. “Once problem leaders are identified, have the courage to do something about it. Either help them, or cut your losses quickly” Cheers Dan

    Evan Jones · 2h ago · Reply · 1
    @DanielStiff: Thanks Dan, I just found this quote from Lao-tzu; it would have served as a good intro to this article: “As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; and the next the people hate…When the best leader’s work is done the people say “We did it ourselves!”” – Lao-tzu

    Hendrawan Senjaya · 4d ago · Reply · Like · 1
    Wow. Dear Evan, no way on earth I expect you to write in my mother tounge. I really appreciate this. You have my respect. It is obvious that you understand how to use local habit and culture to advantage instead of batling it. I know from experience that when you combine it with knowledges and experiences that you gain from other parts of the word, you will be able to achieve what seems to be impossible. I also have a feeling that you emphasize people above protocol/ procedures. I am doing the same as well. While I heard that a chain is as strong as it’s weak link, I believe that I am as good as my man. That is the reason that we have to develop our people (and throw out bad apples?). My ultimate advice to my padawan is that they have to understand the procedure so that they do not have to follow it. Many times, the procedure that were given to me did not match with situation on hand and we have to modify it on the fly. I guess that is your way in climbing the ladder all the way to the top.

    Arron Angle · 2d ago · Reply · Like · 1
    I really like this article. While seemingly written to the vessel owners/managers and project management of their services, I find many parallels to all aspects of management in any industry. We have become, (perhaps always was) a society that embraces the young and ignores the seasoned (I purposely did not use the word old). Yet, when things get tough, who is sought out for advice, the Yoda’s of the world. As a recent graduate from the O&G workplace into retirement, not by choice, I find it interesting that executives have no clue how to come out of the downturn better than when they entered it. It’s not rocket science, or should I say oil science; rather a fair amount of common sense that has been garnered by the experienced and lost to many of the millennials who are entering key management positions as a result of RIFs and restructuring. These folks are often afraid of admitting what they don’t know as it might be seen as a sign of weakness. I would propose that the admission of not knowing what you don’t know is a sign of strength and character and those that possess it will use all resources young or seasoned to find solutions to today’s issues. Bring back the “Graybeards”, you will be pleasantly surprised at what they can accomplish.

    Timothy Axelsson · 4d ago · Reply · Like
    Good analysis of a project vs. an ongoing concern buried in process. Identifying the value in any process has to be an ongoing evaluation in order to succeed in today’s world. It takes people to get things done. Don’t get married to the process because it will end in divorce.

    Mark Van Velzor · 4d ago · Reply · Like
    Interesting aside, the original classification societies (ABS, DNV, LLoyds, BV) were established to provide a basis is knowing that the ships captain was qualified and later became concerned with the design/engineering and operations/maintenance (survey) of the ships.

    Like everything else is a given safety mandate yielding value or is it costing more than any value it brings in terms of reductions in deaths and serious injuries?

    Like anything else what value is it adding to the owners but also the hands?

    Davy Crockett · 4d ago · Reply · Like
    Trying to Dogma their ways into thinking they can run large logistics destroyed GSI, who used to own Texas Instruments. Until the IC was invented for oil exploration. And it has destroyed SLB’s seismic business as they put 2 men and a Truck Wireline people in charge of large complex project management divisions they had no clue how to run.

    “Finding the right people is possibly the most important topic on this site. The problem of the wrong people running projects (and field operations) has noticeably worsened during my working life, especially in the past decade. In the boom-bust oil business,”

    Khemkaran Deonarine · 4d ago · Reply · Like
    Very good article, I especially liked the bit about CV’s are worthless. Indeed the “right” Manager is dying breed, unfortunately, especially those who lack Operations experience but continue to run E&P companies.

    Hendrawan Senjaya · 4d ago · Reply · Like
    Thank you for sharing your view, I could not agree more. I can tell that you speak from your vast experience and deep observation. It is encouraging to know that you are seeing the same thing that I see from the bottom of food chain. But I am worried that the message will be burried under statistics and bottom numbers. Not to mention ratios and devidend will make it unimportant.

    Evan Jones · 4d ago · Reply · 1
    Hi Hendra, Saya juga kerja lama di tingkat kuli “at the bottom of the food chain” dengan posisi rig mekanik dll. Orang bahwa bisa lihat gambar situasi luas, lebih jelas daripada boss besar diatas.

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