A challenge in Western Canada.
When it comes to top talent in the resources sector in British Columbia, both CEOs and chief human resources officers (CHROs) find themselves confronting the same challenge: They are keenly interested in learning about successful and workable best practices to attract, develop, and retain professional and executive talent, which has a profound positive or negative organizational effect on organizations. Korn Ferry interviewed 20 CEOs, CHROs, and other sector leaders and experts. Combining the results with its existing search, placement, and talent development expertise, Korn Ferry sought to identify key gaps and concepts that need to be considered for BC organizations to recruit, retain, and develop executive and management talent. Based on our research, we highlight four macro talent considerations affecting the BC resources sector:
- Economic issues: Leaders across the province trace the resource sector’s talent challenges to Canada’s rapidly changing economy. A slowdown in Western Canada of the primary mining and oil and gas sectors has received significant attention and has prompted appropriate concern. The natural resources sector plays a critical part in Western Canada’s economy — a 2010 estimated output of $21.4 billion or 11.2% of BC’s provincial GDP (Cross 2014) — and industry and government officials have acted swiftly to support it. Provincial leaders at the same time have sought to encourage other bright prospects for BC growth, including revitalization of the forestry sector and the promise of a new LNG industry tapping into the region’s rich endowment of exploitable natural gas reserves. It seems, however, that the industry may also, with some of its recent retrenchment, be setting itself up to repeat the challenges it confronts, once the commodity cycle re-enters a growth period. Resource businesses have been reducing junior positions and slowing the hiring of students from post-secondary institutions.
- Legal developments: Leaders see laws and court rulings affecting top resource sector talent in the province now and into the future. These include the Canadian Supreme Court’s decision in the Tsilhqot’in First Nation’s Roger Williams case and the newly enacted Express Entry federal immigration legislation; both seek to provide greater access rights and certainty to indigenous Canadians and skilled foreign workers.
- Skills initiatives: Leaders noted that initiatives have been launched to tackle talent gaps related to the trades, including the recent encouraging collaboration involving the provincial government, industry, labor, civic, educational, training, and community organizations to identify, assess, and forecast the skills needed to meet industry growth. BC has made real strides in addressing the pending skills shortage, primarily within the trades, as demonstrated by initiatives by the Industry Training Authority (ITA), the Mining Industry Human Resources Council (MiHR), and the Premier’s Working Group. Organizations still encounter formidable challenges with professional and executive talent, however, in areas where no similar initiatives have been launched. This is especially true for many smaller companies, including those in resources exploration, that lack resources to develop and retain top talent.
- Demographics: Leaders are concerned that BC’s existing gaps in executive and professional talent may worsen because of demographic shifts, as the size and makeup of the traditional workforce that the resources sector traditionally has drawn from, changes dramatically. The talent pool will be affected when significant numbers of baby boomers retire and as migration to Canada, particularly to Alberta and Saskatchewan, increases at the same time that many Canadians continue to move abroad.
With these larger issues as context, Korn Ferry found that the challenges inherent in attracting, nurturing, and retaining talent within resource-based businesses differ materially in degree from challenges in other sectors but are commonly felt by all within the sector. To address the challenges, it is important to consider the full talent life cycle—recruitment, development, and retention—as well as to recognize the unique hurdles that organizations in the natural resources sector must overcome to deal with top talent in a province as remote and diverse as BC.
Recruiting in the resources sector.
Natural resource employers share similarities in attracting, developing, and retaining unique talent. To start with, they must grapple with the cyclical nature of the mining, energy, agriculture, and forest products industries and their related service providers. This challenge is further complicated by the reality that top talent often must work in small, remote, under-resourced, and logistically isolated communities. Geography can be a decisive factor for talent and organizations, and they must distinguish the issues they face in identifying, qualifying, and attracting elites to the Lower Mainland, versus to their operations in smaller communities across the province. Neither recruitment is easy, and at the heart of each must be an implicit recognition that traditional passive approaches like job postings are woefully inadequate to sustain an effective long-term talent management strategy.
Instead, companies may wish to consider stepping up their management of talent, end to end, with well thought out, formal frameworks. The Korn Ferry Institute recently analyzed more than 2.5 million assessments of professionals and top executives. This research has determined that human performance in the workplace is governed by four factors or dimensions: competencies, experiences, traits, and drivers. Research shows these four areas to be highly predictive of performance differences and to be correlated with all key talent variables, including engagement, retention, productivity, leadership effectiveness, and leadership potential. When hiring top talent, these dimensions provide practical guidance on how
to evaluate the critical fit between an organizational culture and a leadership candidate. That fit, as BC leaders emphasized in interviews, plays a critical role in finding people who best benefit from development, who then grow and become more engaged with companies, and who stay and potentially move up in organizations in the province.
A four-dimensional insurance policy.
Korn Ferry Institute’s four-dimensional framework can help hiring teams clarify their understanding of how well a candidate fits with their organization (Crandell, Hazucha, and Orr 2014). The purpose of this research-driven framework is to foster practical conversations about candidates’ fit through an easily shared language that makes leadership selection and talent management effective and sustainable. The four dimensions:
- Competencies. These are the essential ingredients of success at work, distilled to their observable skills and behaviors. Competencies might describe management skills that contribute to better leadership, such as resourcefulness, courage, or quality of decisions.
- Experiences. This dimension typically attracts the most scrutiny in aligning talent needs and contains the qualifications for each management level in diverse functions and industries. It transcends job titles to capture the core effect of an experience.
- Traits. These are personality characteristics that exert a strong influence on behavior and that factor heavily into leadership potential. Traits are inclinations, aptitudes, and natural tendencies, including personality and intellectual capacity. Traits particularly relevant to resource organizations include optimism or confidence, social astuteness, and general cognitive capacity.
- Drivers. These articulate the deep internal values, motivations, and aspirations that influence people’s choices and ultimately the purposes that guide their behavior, decisions, and paths in life. They lie at the heart of critical questions: What is important to me? What do I find rewarding? What drives me at my core? Drivers may fluctuate because of circumstances or life stage. Drivers are crucial to cultural fit, employee engagement, talent retention, and to uncovering an employee’s purpose and therefore how she or he might best align with an organization’s purpose.
As Korn Ferry’s research in BC makes clear, companies know that the province places unique demands on top talent and that families and organizations could benefit from assessing potential leaders as early as possible for such characteristics as courage, resourcefulness, personality, social consciousness and deep internal values, motivations, and aspirations. Such information not only can help determine eventual fit but also can assist organizations as they deal with perceptions—and misperceptions—about opportunities in BC.
Vancouver and the Lower Mainland.
With the arguable exception of expatriate employees (whose living costs while on assignment in BC are met by their employers), material obstacles exist to attracting and retaining top executives in the Lower Mainland. Organizations must deal with resource executives’ perceptions, of the area’s high cost of living, particularly for real estate. Vancouver also may be viewed as anti-industry, lacking entrepreneurship, and as a difficult spot in which to do business. Oil and gas executives, most from outside BC, sometimes see Vancouver as a backwater in the resources sector, with few corporate headquarters, fewer competing employment opportunities, and elevated general and administrative costs. Further, the province has a reputation among some in this field for misplaced NIMBY-ism. Although British Columbians’ deep concern for the environment is seen as positive, general ignorance about responsible, sustainable resource development is sometimes seen as negative.
Globally based professionals on occasion cite a “provincial” mindset and the lack of a competitive world view. They must deal with concerns about employment, residence, and tax liability. Local employers perceive a protectionist labor code, low productivity, and high absenteeism, while multinational executives struggle with the challenges of dealing with a provincial government they see as under-resourced and challenged in understanding, enabling, or supporting the resources sector more effectively. Further, qualified foreign talent and prospective local employers have been frustrated by uncertainty caused by recent changes to the Express Entry Immigration Program and the BC Provincial Nomination Program (PNP).
Remote communities bring additional challenges that disrupt continuity and longevity in talent management. Employers play a large role in the social and civic fabric of such smaller communities as Prince Rupert, Terrace, Smithers, Fort Nelson, and Williams Lake. Town populations ebb and flow markedly in the up-and down cycles of the resource-based economy and in seasonal infrastructure project work and exploration. The challenges can be substantial for organizations seeking to manage top talent in these locations, and the most common include trailing spouses and children, lack of world-class international schools, and a dearth of advanced sports facilities and opportunities for high-level athletic competition nearby. The erosion over time of longstanding professional communities and informal networks among leaders in mining, forestry, and oil has only increased prospective employees’ concerns about the possible infrastructure challenges in remote communities.
Successful, workable best practices.
Korn Ferry in its research found no single silver bullet or portfolio of practices that would quickly solve BC employers’ top talent challenges.
But organizations in BC are making headway on their talent issues, those interviewed said, by taking steps like these, many of which show more success when undertaken early on in the process:
- Identify, qualify, and target lifestyle executives. Many top professionals in the resources sector are drawn to Vancouver by its quality of life, outdoor activities, education facilities, and natural beauty. Organizations may diminish the risk and cost of unsuccessful hiring campaigns by initially and quickly identifying and pursuing talent focused on an upgrade in lifestyle.
- Be aware of executives’ life stages for remote postings. Candidates’ life stages may be critical in determining their willingness to accept remote employment, which also affects their spouses’ and children’s lives, educations, and careers. Organizations may improve recruitment and retention by offering spousal employment and education assistance, particularly for families with middle-schoolers. Executives in later stages of their careers also may prove to be more open to working in remote locations, as their children have grown and their spouses may prefer a different pace and lifestyle.
- Manage and educate candidates. Organizations may find better outcomes when they are open, transparent, and forthcoming about their recruiting, compensation, and benefits policies and practices with both prospective employees and current staff and management. This ensures internal equity, avoids escalation in internal costs, and builds trust.
- Win over families. Organizations are learning that they need to go beyond the traditional family sight-seeing visit to establish an inclusive relationship with the candidate’s family. This needs to occur as early in recruiting as possible, integrating these key players in the hiring process, assisting with their potential concerns, and securing a familial commitment to employment.
- Consider a housing lump sum. Organizations may need to advance such sums, akin to relocation allowances but unlike signing bonuses, because they can favorably sway candidates. This allocation can keep them from needing to make a big capital outlay or to take on sizable debt, especially for housing. Companies may see improvements in retention by making it clear that the sum can be forgiven over time as long as the individual remains with the employer.
- Look at employment initiatives. Numerous opportunities exist for employers to join civic and provincial partnerships, particularly in the North-West of BC, to attract potential employees, including foreigners and Canadians living abroad. The provincial government has driven more recent initiatives with proponents seeking to build an LNG industry and with unions, educational institutions, and related stakeholders.
- Reexamine company programs. To recruit and retain top talent in remote communities, organizations may need to offer summer internships for employees’ children as well as incentives for travel, medical and dental care, education, and holidays.
Development in the resource sector.
Without exception, leaders in the resource sector underscored the importance of managing top employees throughout their careers. It is critical, those interviewed said, not just to recruit top talent but also to develop and retain those employees (and existing staff) to sustain organizations’ needs as they grow. Every organization has its own initiatives to develop talent from within, but the leaders interviewed said their companies need to stay laser-focused on this concern. That’s because of the limited talent pool within BC at senior levels and the difficulties of recruiting more. External pressures, they said, also have heightened the need to deal with staff development. Should the LNG industry take off, for example, affected companies will need to recruit outside BC for talent and, although this approach may work as projects launch, it will be unsustainable and undesirable to maintain expatriate executives over the extended lives of these operations. Companies are planning how they can mentor local executives to take over leadership of these operations as quickly as is appropriate.
Many organizations in the BC resource sector also recognize their need to compete and to expand globally. For example, the mining sector is already widely dispersed worldwide and the forest products sector is increasingly North American if not global in scope. They may need to plan strategically to improve customer proximity, mitigate geopolitical risk and lower cost structures. These big plans are heavily dependent, however, on organizations finding or developing leaders with the competencies needed to operate effectively on the global stage.
Many resource sector companies, the interviewed leaders said, are focusing on developing their workforces to deal with real gaps in executive talent in their industries, shortfalls that can be traced to history and tradition. Students pursue studies in resource-based programs in a way that matches the boom-and-bust nature of commodities markets; when a recession hits specific commodities (such as base metals or forest products), universities and colleges produce fewer graduates knowledgeable in these areas. But fast-forward 20 years to a time when these novices have gained the experience and are expected to lead companies and organizations then find the talent pool noticeably thin. The wave of baby boom retirements threatens to deplete the talent pool further, especially at senior levels.
As discussed earlier, resource sector companies are showing signs of talent retrenchments, with layoffs affecting staff members early in their careers and reductions in hiring of post-secondary educated students. These could well be contributors to a future cycle of major talent challenges that could be avoided.
The development initiatives vary by company, with some leading organizations creating integrated strategies and taking comprehensive approaches, placing development centrally as a critical component to achieving business success. In these companies, leaders constantly learn and grow in their roles. They are assisted with focused individual and group development plans that are part of programs that also can include job rotations, stretch assignments, and coaching on personal practices. Here, development is seen to be part of the job and continues over a career. Many other organizations, in recognition of sometimes acute talent gaps, focus their development efforts on immediate needs or specific groups, including high potentials, executives needing development and recent graduates. Company programs vary in their emphasis, but development efforts often target self-development, leading others and teams, and leading the business. Those interviewed noted a rise in development programs emphasizing leading at scale and increasing one’s global perspective. Companies with more advanced development initiatives have integrated expatriate assignments and cross-cultural task forces to elevate their current and emerging leaders’ global perspectives. A few organizations have sent some promising executives elsewhere to lead units with significantly larger scale to gain experiences they could not get in BC.
Business leaders also are collaborating to develop talent in the BC resource sector, a practice fostered by industry and government partnerships. The programs for technical development have helped to target and develop individuals. Associations like MiHR, ITA, and others have helped to create technical development programs targeting specific groups. This collaboration, however, does not extend in a meaningful way to executive development. Businesses are simply sharing best practices on mid- to senior-level executive development.
First Nations development.
A critical issue in the development of BC resources hinges on the First Nations’ relationships with industry and government. Companies long have realized that a key way to strengthen this relationship is to ensure that they have significant native representation in the workforce and not just on the front line; a number of organizations are seeking to engage better with the First Nations by developing native leaders in their workforces. This will require a longer term commitment, as there is now only a small pool of indigenous employees with the industry experience required to be senior leaders. The First Nations, government, educational institutions, and industry will need to continue to work together closely to develop an appropriately credentialed talent pool so that, as one interviewed leader noted, there is a “substantive number” of native people “with MBAs, PEngs, PGeos et cetera,” a process this expert sees taking a decade or more. Many respondents echoed this view and noted the importance of broad efforts to strengthen trust with the First Nations and to build critical social infrastructure, including facilities to improve health, education, and more. Companies said they are committed to developing available, viable, and interested native talent earlier in their lives to increase the talent pool. These initiatives, though long term, are critical to the development of First Nations’ executives in the resource industry.
A force multiplier and strategy activator.
Besides creating a robust internal pool of leaders, strong development programs help companies attract and retain top talent, those interviewed said. Organizations increasingly recognize that top talents, particularly at earlier career stages, want to work for companies that help them grow and develop, and organizations with formal development programs move to the top of their lists of preferred employers. Strong development initiatives can provide the growth and challenge to both engage and keep talent. These successful development initiatives not only boost organizations’ executive talent pools, they also expand them by attracting and retaining talent.
Respondents from companies with the most advanced initiatives emphasized the importance of development as a way to activate business strategy. Development isn’t something separate or in addition to leaders’ work, nor is it a perk just for top performers, they said. Development is an integral, sustained, and cohesive part of the planning and execution of strategy. These observations align with Korn Ferry research on talent development and strategy activation, including planning to support these key elements, the need for leaders to learn in place, for them to get a grip on their own strengths and weaknesses, and for them to discover how a greater good can be a powerful motivator (Hill et al. 2015). One organization that is planning a multibillion-dollar investment in BC may be providing an exemplar for integrating development to activate strategy: Its executives have identified how they will attract, develop, and retain top- level leadership throughout the process. Their plans—embraced by current leadership as a critical strategy component—detail how the organization will develop leaders throughout, with programs that include mentoring, job rotations, and temporary assignments.
Retention as a critical BC concern.
The topic of retention dominated the interviews with BC resources companies. Although clients in forestry, paper and packaging, and some other areas have been most directly affected up to now, executives across the resources sector expressed concern with their aging professional workforce, attrition, and loss of key technical talent to competing industries, jurisdictions, and careers.
The cyclical nature of most resources industries exacerbates the issue, and the current downturn in the oil sands—viewed by most respondents as the primary challenger for scarce executive and technical talent nationally—increases the need, leaders said, for the industry to develop robust retention strategies to safeguard the tenure of professionals when energy markets inevitably rebound.
Two key considerations surfaced in the Korn Ferry interviews:
- Beautiful BC: Unique factors greatly influence retention in the BC resources industry, including the remoteness of many of its workplaces; the commonplace practice of “fly in-fly out” (FIFO) rotational assignments; the scarcity of headquarters locations and their resulting high general and administrative costs and potential productivity challenges; and the disintegrating interdisciplinary network in BC of resource professionals. These networks still exist in BC’s provincial neighbors, Alberta and Saskatchewan in particular. This suggests that an interprovincial-regional approach to retention may provide more promise in a global economy to keep scarce locally developed talent, particularly people with graduate degrees.
- The talent management continuum: Retention cannot be effectively tackled separately from talent attraction and development. Successful retention is based on engagement, which can be elusive, difficult, and time-consuming to build— and all too easy to undermine. Those interviewed emphasized that it is critical to consider retention throughout the talent process, starting with recruitment. Organizations that rigorously assess candidates at the outset probably will identify the hires that fit best and stay longer. Talent frameworks, including the KF4D, can be invaluable to companies to help ensure that they consider multiple dimensions of their leaders, such as what they do or have done (their competencies and experiences) and who they are (their motivations or drivers and leadership traits). The presence and quality of development initiatives boost retention rates.
BC leaders also offered other notable insights in the Korn Ferry interviews, including:
- Rotational employment is here to stay: Although it may create tension between local communities and affected employees, the FIFO assignments are here to stay, especially given the unique challenges and remoteness of many work sites across the province. This practice will continue to be driven by high relocation costs; challenges with credentialing, mobility, work eligibility; and relative lack of infrastructure in remote areas.
- Telecommuting: BC will continue to benefit from emerging industries like LNG. Advances in technology, communication, and telecommuting will allow specialized professionals to contribute effectively while based in Calgary, Houston, Toronto, or London.
- Local hiring: Employers will prefer to hire employees from local communities, local First Nations and families of existing staff, including spouses and children, to retain talent in remote communities.
- Career lattice: To safeguard against “enterprise amnesia” and to promote retention and tenure, organizations will foster dual-track career streams (technical-management), rotational assignments (in projects, operations, engineering, and global projects and assignments), and multidisciplinary training.
- Inclusion and longevity: Organizations that have embraced diversity and inclusion initiatives have found that these efforts can increase overall retention rates. Executives and emerging leaders who feel fully included more easily see themselves growing, engaging, and staying with a company.
- Network nostalgia: Companies recognize that employees don’t leave just their employers, they leave communities where they rely on a host of intangibles, including common experiences, informal networks, and a sense that they are valued for their contributions.
- The millennial myth: It’s untrue that top millennial talent shows less loyalty or potential longevity. But many in this generation do want varied experiences, recognition, and values-based leadership. Meeting these desires creates greater trust, increased contribution, and longer tenure.
As this list and the Korn Ferry research indicates, CEOs, CHROs, and other resource sector leaders in BC are thinking deeply and broadly about talent management. They are meeting their unique and significant challenges head-on. That can-do spirit and approach long have been hallmarks, of course, of those who readily describe their good fortune to live, work, and prosper in a demanding business in a splendid land. Sharing best practices, applying expertise like Korn Ferry’s, and putting innovative practices in place can only advance the aspiration that so many described in interviews—to find, hire, develop, and retain top talent, global and local, in a comprehensive way to ensure organizations in the province can grow and prosper.