Talent is the next energy crisis. Here's what we can do about it

In the years ahead, the world will be thirsting for more, not less, energy – affordable, plentiful, reliable and cleaner energy.

Billions of dollars of capital will be made available, and government tax incentives, attractive carbon credits and subsidies will continue to boost energy production. But none of that will translate into greater supply without a sustainable supply of new leaders.

It is forward-thinking leadership that will differentiate and create market advantage. The real competition in energy in the next decade will not be for capital or customers, but for leaders.

Traditional sources of talent for oil and gas – namely trained engineers and geologists – are drying up. Consecutive oil and gas downturns have created a leadership deficit, and baby boomers are beginning to exit the industry.

In renewables, companies are growing faster than the supply of leaders can keep up with, forcing them to be especially imaginative in competing for, retaining and developing talent.

We believe that without a new paradigm of leadership and an associated talent strategy, this global energy crisis will never be solved. Moreover, the world’s voracious thirst for reliable, affordable, plentiful and clean energy may never be fully quenched. The stakes in the talent war have never been higher.

Based on our experience, we offer a set of practical suggestions and considerations to help energy companies build their bench and meet the talent challenge head-on.

Like the energy supply, there are limits in the supply of leaders precisely while demand is increasing. On the oil and gas side, more CEOs and senior executives are electing to retire as equity values have recovered since 2020, and yet other prospective leaders refused to enter an industry considered a pariah and under daily attack from a narrative that questions its very existence.

In renewables, start-ups, capital providers and private equity firms, pre-initial public offering and early-stage companies are all scrambling to fill seats on boards and management teams. The war for talent in renewables is reaching unprecedented levels.

All energy companies must begin to plan for the coming talent crisis. Numbers and supply alone are just the first problem. The new leaders in renewables and oil and gas will need to deepen their skills tool kits as their jobs become increasingly more difficult and complex.

In 2021, we recommended four attributes of the “new energy leader” to deal with the increasing demands and complexities of their responsibilities at that time:

That is a lot. But it is no longer enough. There is growing complexity down every road: strategic complexity, digital complexity, functional complexity and diversity complexity.

So, altogether, we would add three more attributes crucial to leadership in energy today and the next decade. First, a digital dexterity, which will enable leaders to address the supply and emissions challenges more easily and efficiently; second, an agility that enables them to meet the balancing demand for cleaner energy and energy security, energy access and energy affordability, and the full range of stakeholder expectations; and third, a commitment to doubling down on inclusion and diversity – especially experiential diversity – that enhances innovation and performance.

We have specific recommendations in response to the three trends we are seeing in the industry:

In the years ahead, billions of dollars of capital and other incentives will boost energy production, but none of that will translate into greater supply without new leadership.

Just as we need to plant the trees today to provide the shade of tomorrow, we need forward-thinking leaders to differentiate and create the energy market advantages of the future.

This article is a short summary of a 2022 study conducted by Heidrick & Struggles based on interviews with 11 CEOs from both the oil and gas and renewables/new energies industries. For the full report, see 'The next energy crisis? Talent'.