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Transforming the HR function

The Future of HR 2019: Oil & Gas

Disruption or transformation? The impact of AI on HR structures in Oil & Gas

In the rapidly changing energy sector, human resources (HR) has proven to be open to the idea of technological advances. Digital transformation is underway with sixty-seven percent of Oil & Gas (O&G) companies. The recent Future of HR study, however, revealed some significant barriers to realizing the full benefits of this digital transformation.

Matching expectations with actions

Seventy-seven percent of HR executives within O&G recognize the need for the workforce to be transformed, yet less than half are very confident in HR’s actual ability to transform.

HR is in two camps. On one side, there are those who have woken up, and have seen and are already responding to the disruption that’s occurring in the workplace. On the other, there are those who are taking a dangerous approach, waiting to see what others are doing. The challenge HR faces is that for far too long, it has been focused with looking to see what other organizations are doing, looking for the benchmark, the best practice, the latest thing. But imagine that HR had access to an insightful, predictive evidence base of what’s going on with their own people in their own enterprise. Then they could work to their own strengths and weaknesses.

Digital transformation is being driven by artificial intelligence (AI) and machine learning (ML). Ninety-five percent of O&G HR executives agree that these technologies will drive significant value, but only 54 percent have started to implement them. In this area, however, O&G companies are significantly ahead of the global average: globally, only 74 percent of respondents agree that AI and ML can drive value and only 36 percent have begun to introduce them.

O&G HR executives also seem to be unsure about their role in leading AI initiatives: only 26 percent feel that they are leaders in implementing AI, while 36 percent believe that they have limited involvement, no involvement, or are unsure of their involvement.

If the transition to AI is to be successful, O&G HR executives will need to support change management and workforce transition.

“Although it may not be happening quite so quickly with O&G as in other industries, disruption is already underway, HR executives in O&G don’t have the luxury to sit back and wait to respond. They need to begin systematically planning what the workforce of the future needs to be, and shape their strategies to create that workforce."

- Robert Bolton, Global People and Change Centre of Excellence, KPMG in the UK. 

Skills transformation on the horizon

With AI in place, leaders will need to rethink how they organize workplace roles and tasks. While jobs may not be eliminated, tasks within jobs will be affected, and in different ways. Some tasks will become entirely automated. Others will see humans and machines working together. Productivity gains will depend on this reinvention of both work and roles. Whether you call it job atomization, or work pixelization, there’s little doubt that it will be disruptive. There will be a period of transition for employees. Investing in the enterprise’s ability to re-skill the workforce will be critical to achieve productivity gains.

Sixty-seven percent of HR executives in O&G agree that HR is experiencing a digital transformation, but only 41 percent have a digital workplan in place. The largest barriers to scaling this transformation are capability (54 percent) and capacity (38 percent). Other barriers include maturity of relevant technologies (35 percent), culture, CEO commitment and HR leadership commitment (all 31 percent), board commitment (23 percent), and IT organization (8 percent).

Is the O&G industry ready to manage this looming skills transformation? Rather than simply accommodating technology investments, reskilling must consider new tasks, processes and business models that are possible for the organization. It’s as much about innovating and building skills for the future as it is about current operational needs.

Scaling up the digital transformation

The real benefit to AI comes from taking an enterprise approach, from being much more cross-functional and connected. This is where HR can have the most impact, because it’s one of the few functions that can respond to all the people implications that arise from an enterprise-wide-deployment of AI. HR needs to have a plan in place to steer the enterprise through the future of work implications brought about by these technologies. Otherwise, there’s a real possibility that HR will be bypassed, or that the enterprise won’t consider the people agenda.

As the digital disruption continues, effective leadership will need to begin charting a course that reduces ambiguity and designs new environments in which workers can excel. There will be a premium placed on inventing, creating, and reinventing. With access to reliable, predictive evidence that AI can provide, O&G HR leaders will be better placed to confidently guide this workforce transformation.

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