Engineers and the Managers they Make

One of my pet topics which I bang on about here is the inability of oil companies to recruit people, usually in response to the latest whine from an oil industry executive about how difficult it all is.

But there’s an important point to note here.  Oil companies have no difficulty in recruiting people, as demonstrated by the ever-increasing headcount and new departments which appear and bloom like flowers in spring.  The problem is these thousands of people they get through the door, and the new departments which they form, are often tangential to the business of getting oil out off the ground.  Ask anyone who works for a major oil company to describe what all departments in his organisation actually do, and you’ll see by the blank look on their face that I’m right.

But that’s really a problem of having too much money, which means efficiency is unimportant (see here).  But for all that, oil companies do have a serious problem when it comes to recruiting people who they desperately need to run their operations, and once again it is not due to a lack of talent in the marketplace but rather a lack of understanding about what sort of people they actually need.

A mate of mine spent a summer on an internship for an investment bank in London, where he worked his arse off until the early hours every morning on mergers and acquisitions.  He told me that the hours were long, and the work intense, but not really difficult.  Anybody reasonably bright could have done it, but the investment banks insisted on taking only the cream of the crop from the top universities into their graduate programmes.  Why?  Because they were paying so much they felt they should only be looking to get the very best people.  The result was a lot of very bright, highly educated people attracted by the money found themselves doing jobs they hated and for which they were entirely unsuitable.  It’s somewhat of an ego thing on the part of the investment banks (and they’re not alone: I know one London law firm who simultaneously struggles to recruit and insists only Oxbridge graduates are considered).

Oil companies have a similar problem, partly driven by egos and partly by a failure to understand how the role of a major oil company has changed in the past few decades.  The major oil companies probably have the best overall employment packages in the world, and their graduate packages are particularly good.  As a result, the number of applicants far exceeds the number of places, so the oil companies are in a position to make exacting demands.  This means that they generally recruit only the very brightest and best engineers from the top universities (at least this is true for the European majors; the American oil companies tend to recruit from universities with strong oil and gas programmes).  Which is great, until you realise that you don’t actually need only the best and brightest engineers as the majority of your operational workforce.  More importantly, you don’t want that either.

The best and brightest engineers I knew in university, and later in the workplace, were brilliant problem solvers and liked to deal with numbers and hard facts.  In the early years of the oil industry, these were the sort of people who would go to a new location and design, set up, and run an entire operation from the drillbit to the offloading line.  The engineering and technical problem-solving was done in-house, and it made sense to employ lots of engineers who were also the managers of the projects and operations.  And given the isolation in which some of these guys worked in the Dutch East Indies, Persia, and Venezuela having them super-bright and with fierce egos undoubtedly served the companies well.  Faced with a problem, they could resolve it by applying technical principles, skills, and knowledge; or old-fashioned self-assured bloody-mindedness.  Therefore, it made sense to recruit chiefly those who had these abilities.

The problem now is that the oil industry is nothing like this any more.  Other than in the geosciences (i.e. exploration, reservoir management, geology, etc.) and drilling, the oil companies don’t actually do much engineering any more.  They retain a core competence in HQ, and a lesser competence in the operating subsidiaries, for the purposes of providing general oversight, the resolution of a small number of highly specific issues, and some research and development, but otherwise most of the engineering is subcontracted out to specialist companies.  Even at the early stages of a project, the engineering is not done in-house.  The role of an oil company these days is not to carry out complex engineering, but to manage contractors, partners, investors, governmental authorities, and other stakeholders.  The added value which a major oil company brings to the table nowadays is the ability to find and analyse oil and gas reserves; the ability to finance a major project; and the ability to project manage.  The engineering and technical expertise they used to supply can now be found elsewhere in the specialist service providers or engineering companies.

So given that one of the main roles of an oil company is to manage the relations between contractors, partners, and stakeholders from a bewildering array of cultures and nationalities, ask yourself this question: what were the social and personal skills of the best and brightest engineers you knew at university like?  Exactly.

In effect, you’ve got the college geeks who were playing online Command & Conquer until 3am and attending Star Trek conventions now in charge of managing the complex personal relations of thousands of people in a multi-billion dollar industry.  Give them a technical problem to solve, and they’ll get stuck in and give you a cock-on solution the next day.  They understand numbers, physics, and hard facts like the relationships between pressure and temperature.

Unfortunately, this is not the skillset which helps in managing people, who tend to be a lot messier and unpredictable than numbers and mathematics.  And the majority of oil and gas management in the modern era is managing people, something the oil companies don’t seem to have figured out yet.  I recently went on a superb Interpersonal Relations course in Paris (trust me, I needed it) and one of the things we were taught was the difference between a “big picture” person and “details” person; and between high and low context cultures.

Engineers are almost by definition “details” people, and most of them from a low context culture.  A manager needs to be a “big picture” person and in the modern oil business have a good understanding of high context environments (I must confess this latter concept was new to me, and I wish I’d been aware of it earlier in my career).  The typical career path in an oil company is to be recruited as a super-bright, number-crunching engineer and after a set period of time you’re catapulted into a management position.  Here you’re supposed to deal with people and personal relations, whilst maintaining a “big picture” outlook.  Unsurprisingly, most of them are fucking awful at it, masked only by the fact that the company is making gazillions no matter who is managing what.  Faced with people who aren’t behaving as expected (for whatever reason), the typical ex-engineer manager will think he hasn’t explained himself properly (being completely unaware of the high-context culture he’s in) and start treating people like retarded children.  This is coupled with a fear of losing control, and so he attempts to regain control by asking for more and more (and more!) information of an ever-increasing level of detail until the whole operation has been reduced to a bunch of numbers which he can personally “manage”.  In other words, he has quickly retreated to his comfort zone and back to crunching numbers.  It’s micro-management, which is not management at all.

So where do I fit in?  Well, I’m a mechanical engineer by degree, but a bloody awful technical engineer who realised pretty quickly that my organisation, administration, and communication skills far outstrip my technical abilities and that a rapid move into project engineering was the way to go.  When I once found myself a manager of a dozen or so engineers with very little proper personnel management experience, I just kind of went at it in the way I thought best.  Asked about it a couple of years later, I guess I manage people the way I want to be managed myself, i.e. generally left alone to do my job but supported where required.  I gave my lot general guidance on what I expected, told them what role they performed in the context of the overall operation (something very few managers do, by the way), told them the door was always open should they need anything, but otherwise left them to get on with their job as they saw fit.  Provided the technical drawings came out accurate – and they did – I really wasn’t bothered with exactly what they were doing and how.  This is not due to any great managerial insight on my part, it was simply the fact that I had very little knowledge of the discipline engineering they were carrying out.  And I had the sense to belt up and listen when one of my lead engineers was telling me something.

My point is that you don’t need to possess great technical ability to be able to manage a technical team.  In fact, this is often a hindrance.  You usually know what engineering discipline your manager considers his specialty because that’s the area of the plant he wants to design himself, perhaps forgetting that it’s not his job any more.  What I did for my lot was to provide the organisation, administration, and direction which engineers much prefer to be provided for them: if this is missing, the engineers cannot perform.  And I also kept a lot of the shit off my department, ensuring that they weren’t being handed shit-burgers because some other department was serving them up and needed somebody to help polish them off.  I’d say my efforts were more directed towards other departments than downwards through mine, my guys pretty much managed themselves (hence when I went on leave, nobody noticed).  The result of this is that I was never really busy.  In fact, given my level of authority put me just above office driver in the organisation, I had very little to do.  A couple of hours a week at the most.  By contrast, most of the other managers were working 12-14 hours per day and weekends, pulling their hair out over a mountain of issues, and telling me I was very lucky that I wasn’t busy.

Lucky? Or just able to delegate?  When I looked at what these mega-busy managers were actually doing, I often found they were engaged in fine-detail number crunching which one of their team was paid to do, or they were dealing with an almighty mess which had been passed to them because they hadn’t the balls to say “Don’t think so matey, not in that state.  Now off you go and do your job before you pass this shite onto me.”  A lot of the time these guys would tell me they had to do the job of their subordinates or it wouldn’t get done at all.  Then when you look a bit deeper you find the subordinate has never had his job properly explained to him, his job description is a garbled mess, he is receiving confusing and contradictory instructions, and he has been written off as being useless on Day 1.  No wonder the managers are all busy.

This would not be so acute a problem were the only people that need to be managed internal.  But unfortunately for us palefaces, gone are the days when we could just rock up unannounced in a country where we’ve bought a tract of land, run the natives out of their ancestral village before setting it ablaze, and go on our merry way with the business of drilling and pumping oil.  These days we need the permission of local governments, approval from local authorities and regulatory bodies, we are forced to work in partnership with local engineering contractors, and we need to interface with the local communities and a thousand other interested parties.  This doesn’t require technical ability, but it does require one to have a personality, communication skills, and the ability to adapt to whomever is sat in front of you that morning.  I’m not saying I could do this job – I really don’t think I could – but when trying to find somebody suitable it probably helps not to have to draw from a pool of people all of whom are brilliant engineers just off the autistic scale who never had a mate they didn’t meet online and have been told on a weekly basis for the past decade that they are smarter than anyone else by virtue of their working for a major oil company.  And that the company is never, ever wrong.

Oil companies need to understand that good managers have a different skillset from good engineers, and that good managers will complement good engineers (the former allowing the latter to be used most effectively).  The funny thing is, it is extremely difficult to find anyone in the oil companies who is even aware of the problem.  Even when they see the mess in front of them, they just assume “that’s just how it is” (and normally shift 100% of the blame onto either the contractor or the local employees).  If you were to suggest to any senior manager or HR person that maybe we should be recruiting guys who have run a branch of a service company for 4-5 years and making them managers, instead of promoting the engineer with milk-bottle glasses who gets nervous in groups of more than 3, they’d think you’d gone mad.  “Oh no” they say, “we need people who understand the full technical details of the job, otherwise they won’t be able to manage it.”  The possibility of the manager shutting the fuck up and listening when those engineers who are paid to understand the full technical details of the job speak, thus negating the need for him to possess the same knowledge independently, doesn’t seem to have occurred to them.  Not that I’m saying oil companies should recruit random philosophers, historians, and teachers as their management, far from it.  All of them need to be engineers or similar by backgrounds.  Just they don’t need to be those that were top of the class, better to get the guy who scraped a 2:1 because he spent a little too much time on the piss and still spends his free time arranging rugby tours.

It’s one thing for oil companies to complain they cannot recruit the right people.  It’s quite another for them not to even understand who the right people actually are.

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18 Responses to Engineers and the Managers they Make

  1. Bardon says:

    This is an interesting topic as I have some experience in the oil and gas industry and have worked with developers and contractors and I am also a qualified Civil Engineer. Yes we were the guys that drunk the most at yooni, we were well ahead of mech and elec students in that regard. I tend to agree with your writing here and would add that the other vital ingredient that is needed in an organisation is the entrepreneur, big oil and gas companies tend to have a dearth of them as well.

    I learned early that engineers should be on tap and not on top and I haven’t seen any examples where this has been proven to be untrue. Not saying that you don’t need engineers but those that actually practice an engineering discipline are very useful in their role, but generally are not management material and don’t progress to executive of director level.

    I have also worked in the underground, offshore, civil infrastructure, mining, mineral processing, wharf and desalination arenas and can say that oil and gas is second only to nuclear in the rigor stakes, so I am told, having never been in nuclear. The money tends to be the highest in oil and gas as well, although in my experience the big money is to be got in the Tier 1 Oil and Gas Contractor organisations as opposed to the actual owner/developers.

    I have worked for some of the big boy oil and gas developers and quite enjoyed the role, but I didn’t enjoy the company of my colleagues nearly as much as I do working in a contracting organization. I find them fairly pigeon holed and specialised, if it aint in the manual they don’t know what to do and they are always worried what Houston will think about something especially when I made some calls on the run.

    I have just been appointed at director level of a new oil and gas subsidiary company of a holding company and fully expect to attain directorship at the holding group level within the next few years as well. I aint done any management training, except an MBA from the school of hard knocks, reading the situation using my god given senses, looking for the common ground, listening to both sides of the story, treating everyone with respect and valuing their opinion, do the body language studies, keep if face to face as much as possible, study and practice proven negotiation techniques and the only bad decision is the one that doesn’t get made.

    But yes Engineers should definitely be on tap, not on top.

  2. Ian says:

    Could not agree with you more.

  3. NickQ says:

    Interesting article here about the dubious benefits of focusing your graduate recruitment only on those with the best degrees which chimes with some of what you say.

    http://www.spectator.co.uk/life/the-wiki-man/8953111/why-im-hiring-graduates-with-thirds-this-year/

  4. NickQ says:

    There’s also the interesting phenomena of large companies being full of people who find themselves in positions they are least suited to at which point their career stalls. Having excelled at the start of their career they rapidly move up the organisation until they reach a role at which they are not suited. At this point they get stuck in a job they’re no good at. Personal pride and potential loss of face stops them from assessing their own position but their mediocre performance hinders their chances of escaping from the job they either don’t like or simply can’t do.

    It’s a bit like making your star player the team captain at which point his form goes off a cliff. England went through a long period of doing this with their cricket team and it never worked. One of England’s greatest captains was Mike Brearley (a supreme man manager) but it was generally agreed his batting ability would never justify his place in the team.

  5. dearieme says:

    When I was graduating Shell wanted to recruit at the top of the class whereas BP wanted to recruit across the spectrum of the class. It was ICI, however, who made the biggest fuss about recruiting the absolute elite. Do you remember ICI?

    Mind you they did need elite people but, as you say, fairly swiftly moved many of them into jobs that didn’t suit them. They also, at least in some divisions, had a ‘culture’ that made me want to spit. “We’re not chemists, we’re gentlemen who make chemicals”. For fuck’s sake.

  6. Tim Newman says:

    @Bardon,

    Thanks for the comment, insightful stuff.

    I learned early that engineers should be on tap and not on top and I haven’t seen any examples where this has been proven to be untrue.

    I’ve not heard that expression before, but yeah, it’s true. Although the oil and gas companies generally put their geoscientists into the executive positions, which I don’t have a problem with given their area of expertise is so closely related to the strategy of the company, and they learn to take broad outlooks during their careers. I prefer this to having an accountant on top, anyway.

    The money tends to be the highest in oil and gas as well, although in my experience the big money is to be got in the Tier 1 Oil and Gas Contractor organisations as opposed to the actual owner/developers.

    That’s probably true, although the overall packages are probably better in the operators. Given they always pay overseas schooling, if you have 4 or 5 kids (not unheard of by any means in this game) then that part of your package alone over 15 years is worth serious money. Plus the family healthcare, flights, pension, etc. But if you’re an individual wanting to make serious cash salary, the contractors are the place to go (but only as day-rate contractor, I see no benefit to being staff in those organisations whatsoever). Saying that, if you can get into one of the foreign independents (e.g. Lukoil Overseas) there is serious cash to be made at senior management level.

    I have worked for some of the big boy oil and gas developers and quite enjoyed the role, but I didn’t enjoy the company of my colleagues nearly as much as I do working in a contracting organization.

    I’d agree with that. The smartest people in the industry aren’t working in the operators, they’re in the major contractors. They have to be, because they actually need to do some work and perform. As a result, the work pressure and pace is much higher, but the job satisfaction can also be a lot higher. But for all that, I’m glad I work for the operator…suits my style a lot more, for which I need job security!

  7. Tim Newman says:

    @NickQ:

    Interesting article, thanks.

    Personal pride and potential loss of face stops them from assessing their own position but their mediocre performance hinders their chances of escaping from the job they either don’t like or simply can’t do.

    The problem is, they normally have no other option open to them. Oil companies push people into advancing their career, or at least give them the illusion they are, and the only route is to move up into management (Shell seem to think everyone should strive to be the next CEO, with predictable results). Some efforts are being made to recognise that technical seniority is as important as managerial seniority, but they have a long way to go yet. Few engineers I know really want to be managers, but almost all of them are being pushed into management. It’s probably why a lot of the better ones prefer to stay as contractors, they’re just left to get on with their job.

    England went through a long period of doing this with their cricket team and it never worked.

    Boy, do I know about this. I’m praying it doesn’t happen to Alistair Cook. It’s high time they made a bowler captain…

  8. Tim Newman says:

    @dearieme,

    When I was graduating Shell wanted to recruit at the top of the class whereas BP wanted to recruit across the spectrum of the class.

    That’s interesting…I have very little experience with BP, I’d be interested to see what they’re like now.

  9. Bardon says:

    “I see no benefit to being staff in those organisations whatsoever”

    There are many trust me, such as:

    Massive bonuses as a percentage of total cash equivalent salary package;

    Disappearing now and again on full pay, without having to say where you were;

    The ability to consume and charge anything that is nice on a menu at the best restaurants and to the company card particularly on weeknights;

    Being part of what is going on and everybody knowing that you have clout and the consequences of not obeying your direct orders;

    Sacking people and not asking HR first;

    Very long notice periods;

    Parachute clauses;

    Eventual promotion to executive and director levels;

    Getting carried through quiet times if they occur;

    Income protection and other insurance benefits; and

    Actually being able to grow the organisation and see that you have personally made a difference over time.

  10. Tim Newman says:

    There are many trust me, such as:

    I don’t know if these are restricted to those who’ve climbed the greasy pole to the top of the organisation, or things are different in the oil and gas business, or maybe things are different in Australia, but outside of perhaps one or two Amercian engineering contractors, almost none of your list apply to an engineer working in the main engineering contractors who service the international oil and gas business. In fact, I know guys who are leaving staff positions to go contract because they can’t see the benefit. The main one people cite:

    Getting carried through quiet times if they occur

    Anyone working in the international oil business will tell you that in a lot of cases the staff in an engineering company get booted a week or two after the contractors are all shown the door during a downturn or project cancellation. Nobody gets held on standby with no work these days. If you’re good enough, there is enough work around never to worry much about being laid off (as any contractor worth his salt is sitting on 12 months of pay for emergencies).

  11. Bardon says:

    Not engineers, senior managers in multi-disciplined engineering construction contracting organisations, it is prevalent, obviously you need to perform to get there in the first place. It has always been that way down here.

  12. Duffy says:

    “Oil companies need to understand that good managers have a different skillset from good engineers, and that good managers will complement good engineers (the former allowing the latter to be used most effectively).”

    This is in no way, confined to oil and gas. The exact same thing can be said in IT organizations, education and myriad other jobs. Management of people and business units is entirely different than the nuts and bolts of doing the business. I was an IT consultant (don’t laugh) for 12 years and finally moved into management. Now with my rapidly perishing IT skills, I am forced to rely on my team to get the job done while I forecast captial/noncapital expenditure for next quarter.

  13. dearieme says:

    “while I forecast captial/noncapital expenditure for next quarter”: ah yes, calculating Fred’s overtime. Can’t say that that sort of job ever appealed to me.

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  15. dearieme says:

    But hold! Isaac Newton ran the Royal Mint very well, though handicapped by being the cleverest man who ever lived, somewhat autistic, and a religious nut.

    More things in heaven and earth, eh?

  16. Tim Newman says:

    @dearieme,

    Yes, but this is similar to the early days of the oil business, when super-bright engineers managed everything, and managed very well. I think the difference is that then the engineers who could also manage found themselves at the forefront and those that couldn’t didn’t get the opportunity to manage (or at least to progress once they were discovered to be hopeless). Nowadays, all engineers are pushed into management, and the pushing continues even if they are not cut out for it.

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  18. dh says:

    Have to say Tim, your best blog so far. Enjoyed it.

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