Pink Petro held its Global HerWorld Energy Forum on Tuesday, March 1, with the theme “The New Energy Reality: Innovation, Diversity, & the NextGen.” Pink Petro is a networking resource to develop women as leaders in a male-dominated industry.
Keynote speaker Regina Mayor of KPMG gave the keynote address titled “The Inclusive Workforce.” Mayor’s address highlighted three key areas in which she believes using diversity and inclusion will allow the energy sector to survive a downturn. Those three area include gender, global, and multigenerational inclusion.
U.S. Army teaches how to lead from the front
To begin Mayor explained her experience as she went to jump school during her training in the U.S. Army. Mayor was one of a few select females to attend jump school in 1987, a time when women were not yet allowed to enter combat. Not only did she jump, she was the first to jump out of her plane, followed by nine other men.
After the experience she noted this was the beginning of an opportunity to be a leader. Other soldiers commented that after seeing Mayor jump, they knew they had to follow through. The Army presented her with the opportunity to “lead from the front,” which she has been able to do as her leadership skills developed over the years.
Diversity leads to higher productivity, profit
Mayor went on to explain that diversity is not only important, but also profitable. She notes companies with diverse executive boards have a 53 percent higher return on equity (ROE) than other companies. Those companies also have earnings before income tax (EBIT) margins 14 percent higher than other companies, a significant margin, especially in a downturn. Mayor noted three areas crucial to diversity and inclusion:
- Gender. Women outpaced men in college enrollment in the last 20 years. Hiring educated women brings leaders into the workforce. An inclusive workplace environment for women assures that these educated leaders stay with the company and continue utilizing their skills.
- Global Inclusion. The second crucial diverse population, Mayor said, is global and multicultural diversity. She explained that the energy sector does an above average job in this aspect. The largest energy companies can be found in more than half of the existing countries in the world. That alone allows for diverse leadership, but can always be improved upon.
- Multigenerational Inclusion. The third and least common diversity group Mayor advocates for is generational inclusiveness. As adult diaper sales increase and baby diaper sales decrease, the generation gap is more noticeable. Currently there are seven workers supporting every one retired worker. By 2050 that number is expected to be 3.5 workers supported one retiree. In 2014, Millennials made up 35 percent of the industry workforce and are expected to reach 50 percent by 2020. Understanding and bridging the generation gap is vital to industry progression. There was a lack of hiring in the 80s during a downturn, which has left a gap of people between the ages of 35-55. Additionally, 50 percent of the industry workforce is eligible to retire in the next 5-7 years. It will be important to utilize Millennials to fill their positions as these employees reach retirement.
Using diversity to improve during economic downturns
Mayor reminds listeners that the energy sector is cyclical. In the last 40 years, commodity prices have dropped by 33 percent four times. Smart companies will learn to develop proactive responses to these cyclical turns rather than reactionary responses.
Smart companies will not abandon development programs, use layoffs as their main tool for budgetary cuts, and will find other innovative ways to save money. First, development programs bring leaders for the future. Eventually, commodity prices will rebound as they have in the past. Talent will stay with companies after the improvement if the company took care of them during downturn times. Additionally, those who invested in training programs will have the best talent already at their disposal during upturns. Secondly, the Millennials are already technologically innovative and advanced. By using those skills companies can find ways to cut back on operational costs that last a lifetime, rather than one time cuts of layoffs while simultaneously attracting those necessary employees.
Are diversity quotas necessary?
Finally, Mayor concluded by discussing the importance of quotas. BP recently shared results of its diversity programs, highlighting where it was successful in meeting goals, and where it was not. By publically sharing diversity program results, shareholder and societal expectations are set and companies hold themselves accountable to hitting these goals.