Cutting personnel is a big risk for oil companies, says SBC

Oil companies seeking to cut costs by reducing numbers of engineers and other technical personnel risk becoming uncompetitive within a decade. Indeed, now is the time to invest in human resources, write Jean-Marie Rousset and Pierre Bismuth from SBC

The oil-price slump has made oil companies reassess the financial outlook and their spending plans. Predictably enough, the shock has led to brutal cost reductions, some imposed in panic mode. Yet the evidence indicates that, when applied indiscriminately to human resources (HR), cost-cutting destroys long-term growth potential and value. Human capital is not an optional cost that can be reduced without consequences; it is a strategic enabler of growth, equal in importance to access to technology, capital and even hydrocarbon resources. Its significance is reflected in the intensity of competition for talent when oil prices, and upstream activity, are booming, or in the upheaval to operation