Employment Trends and Job Satisfaction in the Oil and Gas Industry

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EMPLOYMENT TRENDS AND JOB SATISFACTION IN THE OIL AND GAS INDUSTRY: THE EFFECT OF CORPORATION SIZE

Abstract

The popular press has recently reported that the oil industry is entering an evolutionary phase withseveral potentially long-term trends beginning to emerge. The authors present a review oftheoretically relevant work relating to these trends and a study examining the expected effectsthese trends might have on the employment environment in the oil and gas industry. The study was conducted in two phases. The first phase was focus-qualitative using interview groups. The results of these focus groups indicated that the oil industry is experiencing a period of consolidation and downsizing. Reasons cited for these trends included depressed oil prices, minimized revenues, and decreased cash flows. The interviews emphasized that efficiency could be improved through the use of centralized budgeting, capital intensive labor, improved maintenance, and reward systems. The second phase involved a survey administered to employees of large and small oil companies in West Texas and New Mexico. Published scales for job satisfaction were used to study differences in perception of job security and motivation between large oil company and small oil company employees. Results show higher job security, job satisfaction, and general motivation levels among employees of small oil companies. The authors conclude with a discussion of relevant research and management implications.|

INTRODUCTION

Managers of large, independent, and small oil companies are increasingly realizing that the oil and gas industry is in a state of flux, with several long term trends expected to significantly affect the role of the American oil worker. (Chellgren 1995; Haines 1995)

Researchers have investigated several dimensions of these industry trends, including the move to more corporate mergers (Haines 1996); the focus on industry consolidation particularly in the gas-gathering and marketing arenas (Haines 1995); the increased incidence of downsizing (Tobias 1996); the escalation of overseas production, particularly from non-OPEC countries (Gill 1995); the United States increased importation of foreign production (Hirsch 1996); the increased use of new 3D seismic techniques and horizontal drilling (Brown 1996); the cost-increasing effects of OSHA and EPA regulations (Chellgren 1995); and the need to boost cost efficiency (Baumann 1996).

These trends combined with the expectation of low forecast gas prices (Haines 1995) are causing the oil and gas industry to focus on decreasing costs and boosting productivity. Indeed, the focus on cost cutting seems to be the major industry trend (Haines 1996 ). This industry position is best summarized by Cross Timbers Oil Co president Steve Palko when he echoed the words of many:

no one is expecting strongly increasing product prices, so the thing to do is become more efficient by reducing costs per net equivalent barrel. We have to show growth without an increase in oil and gas prices. Thats just reality today. (Haines 1996)

This cost focus is responsible for modifying the employment environment of the American Oil and Gas worker. Indeed, the cost focus is causing the major employment trend of increased cutbacks and layoffs.(Knott 1996)

Existing literature has highlighted several other employment trends. The most important of which are: the decreased number of full-time employees caused by the increased use of temporary trainees (Walden 1996); the increased reliance on contract workers (Knott 1996); the intensified use of advising firms (Haines 1996); the trend towards more joint research and the sharing of information (Chellgren 1996); the attempt to improve operating efficiency through technical awareness (Baumann 1996) and cross functional groups (Zignon 1994); the effort to streamline management in order to enhance corporate maneuverability and responsiveness to market change...
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