Why Am I Interested in Diversity in the Energy Sector?
Why am I interested in diversity? Because the energy industry has a problem. When I started in the oil and gas sector more than 40 years ago – yes, I have been around that long – few would have predicted that hydrocarbons would be thought of as evil. Nowadays, there is little understanding of how much good the energy industry has done for humanity, freeing people from spending their working lives toiling every waking hour on the land. Today, most of us would need at least 200 energy slaves, pedaling furiously, to provide us with our daily ration. Put simply, the energy industry has made us all pharaohs!
And this energy source is intensely concentrated. It may surprise many to learn there is eight times more energy in a pound of oil than in a pound of TNT! Finally, this power is cheap; a pint of crude oil costs about the same as a third of a pint of milk. So today much of our energy is incredibly ubiquitous, incredibly concentrated, and incredibly cheap!
Losing Talent & Expertise
Does this mean we should accept climate change as an inevitable price to pay? Of course not. But it does mean we need serious solutions to a significant challenge. And for serious solutions we need: creativity; social license to operate (so that incumbent energy companies can be part of the solution and not excluded as part of the problem); and enough high quality skills and labor to work the problem. We cannot do this without diversity. If you are serious about tackling climate change you need to be serious about attracting more women into the energy sector.
Attracting More Women Into the Energy Sector
Why do I say this? There are endless studies and examples of successful businesses, principally in other sectors, that show creativity is greatly increased with gender diversity. More women on boards correlates with higher share prices and return on capital, for example. What about social license to operate? Around 70% of energy-related purchasing decisions in the UK are made by women, but in the energy sector at present less than 5% of the executive directors are women. If you do not look like, sound like and maybe even truly understand your customers, how do you stand a chance of being able to work with them to find socially acceptable solutions that move us from where we are to where we need to be?
Also, where are the people going to come from to create this new energy infrastructure and to remodel the industry? The attrition of energy industry joiners is much higher for women than it is for men. The industry cannot afford to train and then lose such significant numbers of talented people. The cost in staff recruitment and training is bad enough, but when we add the opportunity cost of lost talent, how do incumbents expect to compete against new players already forming part of the industry’s transformation if they cannot crack this problem?
Diversity Encourages Success
What are my credentials for talking about diversity as a pale, stale, male, industry veteran of over 40 years standing? Probably number one is that I have a daughter – it helps, at least for these purposes! I have also made considerable efforts in recent years to create more diverse teams, with some – but not universal – success. Why have I been keen to do so? Put simply – to make more money. I have been part of starting many businesses from a clean sheet of paper, all of which have needed ingenuity, creativity and in some cases a social license to be able to succeed. I can state without a shadow of a doubt that diversity has been an important factor in my business successes – and has made it a lot more fun. However, I felt sufficiently exercised about the lack of progress in the energy sector as a whole that I helped found POWERful Women and I continue to be actively involved in delivering our target, which is 40% of middle management, and 30% of executive board positions, to be female in the UK energy sector by 2030.
Can these targets be reached? The answer is yes, but not without concerted and continuous effort, given the size of the challenge we face. Of the top 80 UK energy companies, for example, only 30% have two or more women on their boards and 50% have no women at all. Turning to executive board seats, in these same companies only 4% have two or more female executive directors, with 8% having a single executive director, leaving a whopping 86% with all-male executive directors. Recent gender pay gap data only reinforces these same findings.
With such a poor starting point how can I say the targets can be reached? Simply because they must be reached if current energy incumbents are going to be part of the solution. A step change in gender diversity is essential if they are going to be able to transform themselves to meet the challenges that society, their customers and many shareholders are demanding. One only has to look at the growing number of institutions that will no longer invest in hydrocarbon-related businesses for evidence of such stakeholder pressure.
To me, the challenge is similar to safety. When I joined the industry we were perhaps too ready to find excuses for safety failures and in some cases even to accept that deaths were inevitable. But these attitudes have been completely transformed through leadership and a refusal to accept the status quo. Today you are many times safer working on a North Sea rig than you are in your own home! It is interesting that, according to some, the best way to get the next step change in safety performance is to have more women in the workforce, making it easier to improve behaviours. So the seemingly impossible can be done – it is largely a question of leadership.
Leadership Behavioural Changes to Improve Diversity
And if it is behaviour that makes the difference, then, whether male or female, the right place to start is with yourself!
If you are a male leader, make improving female representation one of your key priorities. Which women in your organisation can you mentor? Do you know what your unconscious biases might be? (By definition no, so ask.) I remember a story told to me by one of the most able board colleagues I have ever had, about a woman who wanted a posting as manager of a country where at the time much business was done in none too salubrious evening establishments. Her then boss did not want to put her up for the role because he was reluctant to expose her to inappropriate practices: the reaction of a man brought up to protect women. But, as she rightfully said, this was not his decision to make, it was hers. He realised he had an unconscious bias and dropped his objection; she got the job and proved to be one of the most successful country managers they had ever had. As a man, if you are in a position of leadership in your organisation, make female contribution and diversity as important as safety, and watch your company’s results improve. What did we in the energy industry do with safety to make a real difference? We improved measurement, but crucially we recognised it was about behaviour and leadership.
As a woman, there are things you can do too. Research by Accenture has shown three things make a real difference: firstly, improve your digital fluency (the extent to which you use digital technologies to connect, learn and work); secondly, have a career strategy – aim high, make informed choices and proactively manage your career , such as having a mentor and working for a company that supports women; and thirdly, improve your tech immersion (take opportunities to acquire greater and stronger digital skills and experience adapting quickly to new technology).
How Can Initiatives & Organisations Improve Diversity in the Energy Sector?
- How can initiatives like POWERful Women help and how do they affect you? The organisation works in a number of ways, including:
- Mentoring and advice for aspiring women; both men and women are encouraged to become mentors and mentees;
- Reporting on board statistics and the gender pay gap, to help show what progress is being made; these are statistics that can and should be tracked in your own organisation;
- Corporate leadership: energy companies aiming high and committed to improving;
- Encouraging company pledges towards diversity: is your organisation already involved and, if not, could it be?
- Leadership from government: involved from the very start, the UK government continues to play a vital role in driving the campaign forward.
Vital Role for Leadership in Improving Diversity
If you take away one message, it should be the vital role of leadership. In May, POWERful Women announced the formation of the Energy Leaders’ Coalition, comprising eight leading CEOs from the UK’s energy sector who have made a public declaration to improve gender diversity in their companies and in the sector as a whole. Each recognises that there is a rich pool of talented women in the sector who can make a significant contribution to the growth of their business and to the transformation of the energy sector to meet the challenges of the coming decades. The members are at different stages of the journey to meeting government and industry targets, but all are honest that they have a way to go and will benefit from the experience and support of their fellow CEOs. The Coalition will meet regularly to review progress, share evidence of what works and plan actions to improve. They will act as ‘ambassadors’ to encourage others in the sector to accelerate change by demonstrating the benefits to their business.
Is There a Need for More Women at Senior Level in the Energy Sector?
In summary, is there a need for more women at senior levels in the energy sector? Absolutely. Are our goals achievable? Yes. What will it take? Leadership. Whose leadership? Yours!
So, ask not what the energy industry can do for you, but what you can do for the energy industry. No matter what level you are at in your organisation, it all counts.
Francis Gugen is a Founding Board member of POWERful Women and an oil industry veteran. Read his GEO Profile in GEO ExPro Vol. 14, No. 2 here: https://www.geoexpro.com/articles/2017/06/francis-gugen
Further Reading on Diversity in Oil and Gas...
A selection of GEO ExPro articles similar in content or related to diversity in the energy sector.
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