Oil Industry Due for Workforce Transformation: Shell Cuts Jobs and Reorganizes


Royal Dutch Shell has announced that it will cut 9,000 jobs, as reported by Bloomberg. But the company asserts that this is not a cost-cutting measure. It is a measure to realign to the needs of the future.

The pandemic has affected every industry – small and large, established and emerging. The extent of the adverse impact may be different, but firms are dealing with it similarly – through layoffs. The airline sector led the pack. Now, oil giants are also feeling the heat.

Royal Dutch ShellOpens a new window has announced that it will cut 9,000 jobs, as reported by Bloomberg. But the company asserts that this is not a cost-saving measure. It is a measure to realign to the needs of the future. The pandemic has escalated this need and allowed the company to start the reorganization process sooner.

This removal of jobs is in sync with the company’s shift to low-carbon and clean energy. In an earlier statement, the company announced plans to eliminate all net emissions from its operations and the majority of greenhouse gases from its fuel by 2050. Bloomberg reports that by the end of 2022, around 7,000 to 9,000 employees, who form 11% of the workforce, including the 1,500 people taking voluntary redundancy this year, will be removed. This project is called Project ReshapeOpens a new window .

Oil majors are using this crisis to rechart their course of action and business vision to create a more sustainable operating model. The industry’s image as a major pollutant and contributor to climate change needs an overhaul through a shift that reduces its carbon footprint. Younger individuals who form a majority of the workforce are likely to be less attracted to such organizations.

Restructuring of the Oil Industry: Implications for Workers

Other oil and gas companies have also initiated job cuts. BP Plc will remove 10,000 jobs, and Chevron Corp. will reduce 10–15%Opens a new window  of its global workforce. A Deloitte reportOpens a new window published today finds that the oil, natural gas, and chemical industry in the U.S. has eliminated 107,000 jobs between March and August 2020.

While some employees will choose voluntary retirement, others may become redundant with the layoff approach. As oil giants brace themselves for a greener future, they need to prepare their talent accordingly. The extent of talent upskilling and inclusion of diverse employee pools must be estimated as companies redesign their workforce.

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Creating the Future Workforce in the Oil Industry

The most common two ways to create the future workforce are making changes in talent acquisition and development.

Acquiring new talent

As per a study by Morning ConsultOpens a new window , it is the millennials and Gen Z who are driving the change in roles in the energy sector. The survey respondents shared that they are most interested in working in the solar and wind industries and then in hydropower and nuclear, respectively.

Given how talent needs are shifting, companies have already started taking steps in this direction. For example, EngieOpens a new window has hired an oil services executive responsible for refocusing on the utility of renewable energy, since this is part of the company’s overall clean energy business vision.

Retraining existing talent

Royal Dutch Shell started this process in April 2020 by reskilling workers in artificial intelligence as part of its energy transition process, as per CNBCOpens a new window . The purpose is to have a talent pool that can drive the digitalization and data science needs emerging from the shift to newer business areas.

This learning process related to digital skills will become increasingly important as more and more field roles or rig-based roles become redundant with plant closures. This upskilling process will also need to include contractors and temporary workers since they are an integral part of the oil and gas sector.

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With large companies such as Shell moving toward clean energy, even as some jobs become redundant, more new roles are expected to come up. This could become the latest phase of growth for oil and gas companies, where they follow a non-traditional approach.