The Offshore Northern Seas conference in Stavanger last month was the first major event to my knowledge to feature a session on human resources.
This struck me as evidence that layoffs have joined supply and demand, new technologies, and taxes among the front line concerns of operators.
Axing staff is unpleasant and so generally discussed in euphemisms. One conference paper used the term "rightsizing."
Previous buzzwords have been streamlining, restructuring reengineering, and downsizing. One delegate told me rightsizing is already out of date in Houston. U.S. companies apparently now say they are undergoing formation.
"Some companies are going through their third, fourth, and even fifth cutback m an effort to boost profits," said Harald Norvik, chief executive and president of Norway's Den norske stats oljeselskap AS. "No oil company can count on increased oil prices to maintain profitability. Low costs are equally important."
AMOCO'S DILEMMA
Miriam E. Kragness, principal at ROI Consultants Inc., Minneapolis, asked why Amoco Corp. is undergoing a second wave of layoffs, having cut 8,500 jobs in 1992.
Kragness said the most obvious due was an Amoco statement issued last June. This said despite the 1992 restructuring, earnings at Amoco lagged the results the company posted from 1988 to 1990.
"When a significant reduction in payroll fails to affect the profitability of a company," Kragness said, "chances are losses of another kind have wiped out the effect losses due to cost of layoffs, lowered productivity, and malaise."
Second layoffs only deepen the malaise, Kragness said. Productivity is less likely to recover after a second layoff than after a first.
"Further, the CEO has announced the restructuring without announcing details, allowing present employees to grow more fearful and rumors to fly while they wait for more explicit information."
LAYOFF TEAMS
John Hollis, general manager at BP Norge AS, said experience has shown it essential to appoint a transition management team (TMT) for major layoffs. The team should be made up of senior staff who work full time on the change.
"When the job is done the TMT disbands," Hollis said. "The leader of this group must have talent and the respect of staff, must have a clear understanding of the long term vision of the company, a thorough knowledge of the business, and have the confidence of the CEO."
In view of Kragness' warning, it presumably helps if the leader and other members of the TMT have jobs to move on to when the TMT is broken up.
"The loss of jobs in the oil companies over the last decade is more than 500,000, most of them in the U.S.," Norvik said. "Luckily, not everyone made redundant from the oil companies has left the industry. We often meet them in a new capacity."
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