Canadian energy industry trends you need to know

May 22, 2018

Following a massive industry-wide downturn that started in 2015, the Canadian energy sector seems to finally be making its way to what's been called a "new normal" - that is, a seeming return to overall stabilization, albeit one marked by changes in worker demographics, skill sets, and which compensation and rewards packages are viewed as most valuable.

As a result, many HR professionals are approaching this idea of the "new normal" with a sense of cautious optimism, especially after being forced to let a large amount of talent go in the midst of the downturn. In fact, a staggering 1 in 10 employees faced involuntary turnover in a single year through early 2017, and the highest turnover rates were for early- to mid-career employees aged 25 to 44. This has played a subtle yet significant role in reshaping the face of today's Canadian energy industry.

In addition, many companies are still struggling to raise significant capital; meanwhile, recent Canadian energy industry research showed that 2017 was the biggest year ever for mergers and acquisitions. These two factors are almost certainly related to one another. Either way, this all has considerable ramifications for the Canadian energy sector outlook. With these exclusive highlights and findings from the most recent energy industry survey, you can start to optimize your own compensation and benefits packages with data-backed clarity, affording you a significant advantage over your competitors.

Energy Industry Research Findings: Compensation and Hiring Trends

In regard to energy industry trends for ongoing compensation practices, 2017 research found notable differences in organizational salary strategies across market segments. The average change across all employees in 2017 was 2.5%, but 45% of employees in the Canadian energy sector had a pay freeze or rollback in 2017, while 55% had a pay increase. With nearly half of employees receiving no increase, the industry moved towards thoughtfully targeting salary increase budgets. Employees that did see an increase often saw 4% to 5%.

Canada Energy Industry HR trends infographic

In the midst of these base salary changes, there were almost 11,000 new hires in 2016 and 2017. The majority of these new hires were for field positions, with the following positions having the highest percentages of new hires throughout the survey period:

  • Floorman
  • General laborer (unskilled)
  • Derrickman
  • Entry-level help desk representative
  • Field operator
  • Pipeline operator

It was also found that there were 10,000 fewer employees with two to four years of experience between 2016 and 2017. As the industry adapts to the 'new normal', will there be a missing cohort of employees as has happened in previous downtowns? How will you cope if there is?

Energy Industry Research: Performance Management Strategies

2017 survey participants provided a variety of helpful insights regarding their performance management strategies, and many prominent energy industry trends and patterns can be seen when analyzing the data.

For example, 83% of companies said they have a formal performance appraisal system, while 71% of companies said they directly link their performance appraisals to employee pay. Meanwhile, amongst all participants, an average 9 out of 10 incumbents eligible for a bonus received one - including employees who had a pay freeze. Indeed, in the face of all this industry-wide uncertainty, bonuses and incentives reward employees for their roles in managing costs and improving productivity as the industry struggles.

As you refine your own performance management strategy, make sure that you're fully prepared to engage the appropriate stakeholders, capture your employees' attention, and communicate with them clearly before and during the process. Also, always make sure to ask yourself the following questions to get the most out of your efforts:

  • What are the implications of these ongoing industry changes?
  • How do I want my employees to feel?
  • What do I want my employees to do?

All these steps are essential if you wish to determine and distribute appropriate rewards based on what your employees actually want and the results you need from them. Continuing with the idea of appropriate rewards, the Mercer Global Talent Trends Energy report found the following as the top things employees want in regard to performance management:

  • Clear performance ratings that let them know how well they're performing.
  • Better alignment of individual goals with prevailing business goals.
  • More consistent feedback on how they're performing.
  • Similar goals for themselves and others who are working at their level in similar roles.

Energy Sector Outlook: Future Considerations

As you look ahead to 2018 and beyond, take the time to reevaluate your current compensation processes. Consider where you have room for improvement, or think about better ways that you could allocate your pay and benefits budget. Also, take the time to consider offering a more holistic view of your rewards to attract an increasingly diverse workforce. Rewards such as increased job flexibility can go a long way in attracting younger generations of workers, for example.

As the progression toward the "new normal" continues, there will be no shortage of other changes you'll have to prepare for as well. Different jobs will start to require different skills, and dynamic new compensation methods are already being employed to account for that. For example, one of the more prominent energy industry trends in the oilfield services sector is to offer day rates rather than traditional salaries, especially for certain positions, such as operator, wherein very specific skill sets are required.

Of course, this only scratches the surface of things to consider. For even more in-depth insights on how to thrive in the "new normal," the Canada Mercer Total Compensation Survey for the Energy Sector features data collected from over 170 organizations representing 125,000 incumbents, covering everything from annual incentives to bonuses to base salaries to salary ranges - and much more.