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Oil and Gas

Five Leadership Issues Worthy of Board and Executive Attention Oil and Gas Power and Utilities

 



​Introduction

The oil and gas and power and utilities industries are undergoing major transformation. The uncertainties linked to commodity prices, changing operating and business models, the effects of technological innovation and cybersecurity, expanding regulation and oversight, new competitive forces and a host of other major risk drivers all are contributing to dialogues in boardrooms and executive offices. Most significantly, executives are asking if they have the right leadership talent in light of the challenges they face.

From our conversations, the following five issues and their implications on leadership talent have emerged as top of mind for oil and gas and power and utilities sector executives:

  • Identifying next-generation leaders

  • Improving capital allocation

  • Mitigating risks

  • Embracing and managing technological change

  • Creating a board ready for the future

We hope this executive briefing document will serve as a discussion starter for thinking through how to attract and retain the right leadership talent in the face of these challenges.

Identifying Next-Generation Leaders

  • Future oil and gas and power and utilities executives will be doing business in a very different industry from the one we know today. Companies need to think about which executive profiles will enable the organization to thrive in an increasingly connected global industry.

  • The broader senior executive talent pool is getting smaller because of limited hiring in the 1980s and an aging workforce. Hence, preparing for CEO (and other senior positions) succession is critical as the competition is likely to intensify.

 

Improving Capital Allocation

  • While power and utilities are also facing significant capital allocation demands, a focus on maximizing the value of each capital dollar is on the oil and gas space—best-in-class capital allocation remains a make-or-break factor in regard to how well oil and gas companies will emerge from the industry downturn.

  • The role of the CFO has evolved, as the ability to allocate capital effectively has become very important for better project execution.

 

Mitigating Risks

  • Oil and gas and power and utilities companies are facing more pressure to minimize risks and future-proof the business in a challenging economic environment, volatile world events and fast-changing technologies.

  • In addition to the finance team, the legal function; the health, safety and environment team; and the cybersecurity teams are increasingly at the forefront, ensuring that the company is well-protected against external risks.

 

Embracing and Managing Technological Change

  • The rise of new technologies is impacting oil and gas and power and utilities companies and changing the operating environment. Investments in innovation and a corporate culture ready to adapt new technologies will be main differentiators going forward.

  • There is an opportunity to embed next-generation digital and data analytics capabilities, as well as leadership talent in organizations.

 

Creating a Board Ready for the Future

  • An effective board is one that represents a rich variety of perspectives, allowing companies to develop (and execute) robust strategies while simultaneously managing risk.

  • The work of the board of directors has never been more complex. Traditional issues like CEO succession and remuneration remain, while shareholder activism, digital transformation and cybersecurity present new challenges.

 

Endnotes

IDENTIFYING NEXT-GENERATION LEADERS

  1. 2015 CEO Succession Study, PwC

  2. Russell Reynolds Associates’ proprietary analysis of 100 CEOs (68 oil and gas and 32 utilities) of the largest oil
    and gas and utilities companies globally, 2016

IMPROVING CAPITAL ALLOCATION

  1. Russell Reynolds Associates’ proprietary analysis of 63 CFOs (36 oil and gas and 27 utilities) of the largest oil
    and gas and utilities companies globally, 2016

  2. Proprietary research, Russell Reynolds Associates, 2016

MITIGATING RISKS

  1. The Global State of Information Security Survey, PwC, 2016

  2. Russell Reynolds Associates’ proprietary analysis of 78 top legal executives, 2016

  3. The Rise Of The GC: From Legal Adviser To Strategic Adviser, NYSE Governance Services, February 2016

EMBRACING AND MANAGING TECHNOLOGICAL CHANGE

  1. Digital Pulse Survey, Russell Reynolds Associates, 2015

  2. Proprietary research, Russell Reynolds Associates, 2015

  3. The Global State of Information Security Survey, PwC, 2015

CREATING A BOARD READY FOR THE FUTURE

  1. Russell Reynolds Associates’ proprietary analysis of 100 top energy boards, 2016

  2. The Shareholder Activists’ View, FTI Consulting, 2015

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We recruit, develop and advise leaders who are able to succeed in this increasingly complex business of upstream, midstream, downstream, and services and equipment companies.
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Discover more about our expertise in

Oil And Gas


We recruit, develop and advise leaders who are able to succeed in this increasingly complex business of upstream, midstream, downstream, and services and equipment companies.
Learn More

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Five Leadership Issues Worthy of Board and Executive Attention Oil and Gas Power and Utilities