Maintaining an entrepreneurial spirit through rapid growth

A Frazer Jones Chronicle article: The Talent & Culture Series: Published October 2015

Petrofac_logo

With many markets enjoying growth, whether organic or acquisitive, developing an effective organisation whilst maintaining the positive elements of an entrepreneurial culture will always be a challenge that leaders need to rise to... …

Michael Schulz

Michael Schulz, SVP HR at Petrofac talks about maintaining the power of an entrepreneurial spirit when becoming a global corporation, the impact of the downturn in the Oil & Gas industry and trends in talent management.

Petrofac is a UK FTSE listed company providing services to the international oil and gas industry. With revenues in excess of US$6 billion, today the business employs approximately 20,000 permanent employees. The company consists of two divisions, the core business - Engineering, Construction, Operation and Maintenance - delivering design, building and maintenance of oil and gas facilities and the Integrated Energy Services division providing mainly subsurface and field development capabilities as well as training services. Petrofac is a project based business, with core projects often delivered over a number of years and worth billions of dollars. Over the years, many project opportunities have become increasingly large in size and complex in nature as our customers seek to optimise their capital investment.

Established in 1981, with its roots initially in Texas, the business has always been underpinned by a very strong entrepreneurial culture and clear view on ownership and responsibility; an almost owner-manager philosophy and mind-set. Fast-forward 34 years. The organisation has continued to grow, and maintaining the culture and “way of doing things” along with the ability to retain and attract talent with an entrepreneurial spirit has become a key component of the business and HR strategy.

Culture is a big component of employee retention
To help in the shift to developing talent internally, Petrofac has established a virtual academy which is founded on the principle of continuous learning, from entry to executive level. It is developing a much stronger capability demand planning framework that helps predict manpower requirements. For instance, its development of graduate hires from the UK to the Middle East, India and Asia is now better aligned with the longer term project nature of the business. This allows the organisation to, although not yet with 100% accuracy, identify the need for management and technical talent with several years warning. One of the key lessons learned in utilising a predictive talent development framework is the need to standardise the organisation’s delivery model as much as possible, so that talent can be deployed more easily and the creation of new roles for every project doesn’t create too much of a slowdown. Collaboration was a specific focus in Petrofac last year. Workshops were held under this banner, pulse meetings were /company/frazer-jones THE TALENT & CULTURE SERIES 23 conducted, as well as evaluations of the upsides and downsides of the organisation’s culture and levels of engagement. A review of how information flowed in the organisation was undertaken to identify and remove roadblocks and encourage communication. Board diversity and diversity in the wider business is a key development area for the organisation.

Michael Schulz-Maintaining growth_650

Entrepreneurial spirit is a mind-set. It’s an attitude and approach to thinking that actively seeks out change as a business opportunity, rather than waiting to adapt to it. It embraces critical questioning, innovation and continuous improvement but most importantly it’s about seeing things at a macro level and thinking and acting like a business owner yet at the same time being ‘obsessed’ about flawless execution. This is where the value of an entrepreneurial spirit can really provide great value within an organisation. As an organisation grows in complexity the desire and need to manage and mitigate risk more closely arises such that the need to introduce more policy and process comes into existence. In such scenarios the entrepreneurial culture that has helped the organisation to get to its current size can feel threatened and the organisation must actively seek ways to maintain it or choose to do away with this culture. Several years ago Petrofac was growing by more than 2,000 employees per annum and the challenge to maintain the culture became all too obvious.

To tackle this challenge, the organisation embraced the issues as opposed to fighting them as many growing businesses might be inclined to do. Whilst growth meant an increase in caution and process, it also bought with it energy, more business, more resources and excitement in the business that they looked to amplify and galvanise. Those who had played key entrepreneurial roles in the business’ growth were and are positioned in key roles to support the preservation of this very special culture. To capitalise on its growth and encourage an entrepreneurial spirit, the organisation diversified through its geographies and product offering, which provided rewarding returns.

To maintain core values and the ‘DNA’ of a business during significant growth, an organisation needs to keep a watchful eye and focus on internal talent development as opposed to a heavy reliance on external hires. This keeps, embeds and spreads those values, allowing the business to maintain the very fabric of where it has come from. When progressing through this phase there may be some friction between historic employees and new hires. External hires bring a new perspective and fresh ideas but can face resistance when trying to bring this to bear. Creating an environment that allows for communication and collaboration is key in easing any such friction.

Culture is a big component of employee retention

To help in the shift to developing talent internally, Petrofac has established a virtual academy which is founded on the principle of continuous learning, from entry to executive level. It is developing a much stronger capability demand planning framework that helps predict manpower requirements. For instance, its development of graduate hires from the UK to the Middle East, India and Asia is now better aligned with the longer term project nature of the business. This allows the organisation to, although not yet with 100% accuracy, identify the need for management and technical talent with several years warning. One of the key lessons learned in utilising a predictive talent development framework is the need to standardise the organisation’s delivery model as much as possible, so that talent can be deployed more easily and the creation of new roles for every project doesn’t create too much of a slowdown. Collaboration was a specific focus in Petrofac last year. Workshops were held under this banner, pulse meetings were /company/frazer-jones THE TALENT & CULTURE SERIES 23 conducted, as well as evaluations of the upsides and downsides of the organisation’s culture and levels of engagement. A review of how information flowed in the organisation was undertaken to identify and remove roadblocks and encourage communication. Board diversity and diversity in the wider business is a key development area for the organisation.

Michael Schulz-Maintaining growth-2_650

The downturn in the O&G market
Due to the volatility and particularly the lower oil price environment, this has had an inevitable impact on investment. Across the sector and particularly so in areas where a higher price is needed to support the viability of projects, there have been redundancies and restructuring. This has proved beneficial to Petrofac from a talent perspective. In this atmosphere, Michael has noted how the market is shifting from an employee driven market to an employer driven one, which has helped with retaining key talent. Petrofac’s overall staff turnover remains somewhat below industry average and the organisation has a strong employer brand in its space. With the broader industry struggling, additional available talent in the market has helped both in terms of available hires but has also eased the pressure on talent acquisition in some of the company’s key geographies. Many organisations struggle to shift (relocate or reposition) talent internally, rather than losing it, which is an area in which Petrofac aims to be ahead of its competitors. Historically, the sector has not been renowned for a differentiated Human Capital Strategy in this space.

Talent management trends Michael has noticed in industry
During his career, Michael has noticed an increased focus on the identification of high potentials in organisations and the tools and methods to do so. Organisations are changing faster in today’s market and knowing who your HiPo’s are when you might have to let people go or focus on retention is business critical. Organisations are realising this and doing more to have processes and tools in place to do so. More broadly speaking, Michael sees
a lot of businesses reviewing their organisational effectiveness (specifically management layers and spans of control) and moving some operations to low cost locations.

We operate increasingly in an age where global corporations do not dominate the market for decades and new players appear overnight, taking market share with them. One of the most perilous things an organisation can do is not take any calculated risks. Building and maintaining an entrepreneurial spirit can have amazing effects not just on profitability. From a human capital perspective it can increase engagement, retention and productivity. Allowing
a culture of complacency and not supporting innovators restricts risk taking and can limit growth. Whilst we are forced to change as we grow, organisations that remember to maintain and amplify an entrepreneurial spirit potentially have a competitive advantage in an increasingly resource challenged landscape. People love to have the freedom to act, albeit within clearly defined frameworks and parameters, and they appreciate seeing their contributions deliver results for their clients and helping their organisation to stay ahead of the competition.

Ways to develop and maintain an entrepreneurial culture
Think like an owner
Empower employees to make decisions and simplify the decision-making processes. Coach and mentor employees to take hold of the reins and train line managers to develop their people.
Position the spirit you have and hire the spirit you want
Ensure key cultural ambassadors are positioned in key and critical roles to promote the desired culture and values. Most importantly ensure new hires possess the qualities and characteristics that support if not amplify the culture and values in the business.
Collaborate and communicate
As companies grow communication becomes more complex and silos can develop that can inhibit collaboration. Organisations needs to be proactive in their internal communication and have leaders encourage collaboration across divisions, departments and geographies, sometimes even corridors!
Manage the rules to a minimum
Whilst growth brings with it the need for more structure, a bloated bureaucracy stifles entrepreneurship and innovation. Simplify rules and encourage employees to think about those rules and what they mean, not just blindly following them.
Set an entrepreneurial example
As with most elements of a company culture, the entrepreneurial spirit has to come from the top. We can’t expect employees to have a healthy appetite for risk, openness to ideas and desire to innovate if their managers don’t. So, in equal measures, focus your development efforts and investment on executive and senior management.