Change is blowing through the corridors of public sector undertakings (PSUs) in the oil and gas space. For instance, next year we could well see ONGC adopting what is popularly called “job bidding” for senior positions. Candidates can apply for a position and then the talent council will take a call on whether they make the cut.

This is very different from the seniority-based promotions of the past. It’s not just candidate selection. From talent supply to retention, leadership development to succession planning to performance management, the HR policy of oil PSUs is undergoing a dramatic change.

It all started when the the Ministry for Petroleum & Natural Gas set up a Task Force on Improving HR Management in oil PSUs in 2016.

Earlier this year, in April, to implement the proposals of the task force, Dharmendra Pradhan, Minister for Petroleum & Natural Gas, constituted a committee headed by MA Pathan, former Chairman, Indian Oil Corporation.

Grappling with change The compulsions for change are understandable. Gone are the days when the oil and gas PSUs – IOC, ONGC and so on – had the field virtually to themselves. With competition heating up, they need to guard their skilled manpower, as well as build a competent leadership pipeline. Another big challenge is to align human resource policies with new business strategies and then build capacity.

Ask those who have worked both in the public and private sectors about the key HR difference between the two set-ups and they point to ‘flexibility’ in interpreting procedures and processes. In a PSU the HR culture is rigid in interpretation of HR policies but in private sector it’s case-to-case. This manifests in many ways – reward, remuneration, career growth, development opportunities.

UD Choubey, Director-General, Standing Conference of Public Enterprises (SCOPE) says HR in PSUs is facing many challenges such as managing globalisation, change management, leadership development and succession planning, work diversity, creating consistent corporate culture based on ethics and transparency, and talent management.

All this is now addressed by the Pathan committee recommendations. However, what is intriguing is why only the oil PSUs have been singled out for new HR policies. Typically, all central public sector units are governed by the broad guidelines issued by the Department of Public Enterprises/Department of Personnel and Training.

Unique challenges Perhaps the explanation lies in the nature of the work and workforce in this sector. With a combined workforce of about 1.4 lakh – ONGC and Indian Oil alone contribute over 33,000 regular employees each – these PSUs face unique challenges. It is very difficult to benchmark performance of officers of the same cadre in the exploration and refining segments. While the input can be the same, output is not. An explorer might not get any results as exploration is a risk and there is no guarantee of returns. For refiners, input and output can be measured.

Even within the oil PSUs, the requirements of ONGC and Oil India, which are mainly into exploration and production, are very different from that of IOC, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. GAIL, which is into gas marketing and transmission as well as petrochemicals, has significantly different needs.

MA Pathan agrees that a uniform policy will not work well. He says, “We are going to give a broad structure. Based on the broad structure the oil PSUs will create their own policies to fit their requirements.”

However, five common areas have been found: Source (supply side of talent), Develop (leadership development), Perform (performance management), Affiliate (engagement and aligning different set of employees) and HR excellence (transforming HR functions as process custodian).

“Our mandate is to look into long-term policy and connect the missing links today. Synchronise the whole thing in such a way that there is a synergy between manpower and business strategy,” said Pathan.

On the broad criteria to be adopted, DD Misra, Director - HR, ONGC, says, “Each PSU will work based on its requirements, but the basic idea is to prepare, identify, assess and develop internal cadre three levels below the board for senior positions. To achieve this, preparation will start right from induction level. All PSUs will improve their connect with academia.”

Oil and gas is a tough industry, and the cadre has to be developed from day one, so it has to be seen whether the courses offered are complementary to the industry requirements, he adds.

For example, the ONGC Board recently approved a succession planning policy named Deeksha: Developing Experienced, Esteemed & Kaleidoscopic Successor for Higher Achievements. It identifies critical positions, mapping behavioural competencies with respect to job description, matching executive profile to roles, and encouraging eligible executives to apply for specified roles. Misra goes on to elaborate that the average age of ONGC employees is 45 years, which is now reducing with the planned induction approach as part of the HR strategy. Though the attrition rate from resignations is minimal, attrition due to superannuation in the next 3-4 years would be around 1,800-2,000 annually up to 2021.

While Pradhan and his team have taken an initiative, the challenge is implementation. Loyalty alone is not a retention tool – better incentives and policies are needed. Can it be a roadmap for other PSUs to follow?