How To Solve Your Energy Compensation Pains in 3 Easy Steps
In today’s energy industry, compensation challenges seem to be the largest frown face on the pain chart. Given the dynamic pressures facing boards and management teams, it’s easy to understand why this is the case. Combine a tight labor market, especially for engineering talent in the energy market, along with energy investor pressures, commodity price volatility, private equity competition for talent, and shifts in energy transition strategies, and it’s easy to understand that solving the compensation formula is nearly as complex as turning natural resources into profitable energy.
The following outlines three easy steps to relieve your energy compensation pain and unlock your team’s potential.
Define your Energy Compensation Goals for Long-Term Success.
It’s difficult to know how to pay the right people if there is not a goal in mind. This should include annual goals, long-term goals, exit strategy goals, etc. Additionally, how to compensate your team against market practices and to align with these goals is equally important. Research has proven the most successful companies have a compensation philosophy, and that philosophy provides above market median compensation in the variable pay categories such as short term and long-term incentives.
Use Market Data to Develop Competitive Energy Compensation Plans.
Executing on the company’s compensation philosophy is best accomplished with great market compensation data. Getting good market data is typically the number one challenge for most energy companies. Specifically, energy companies want to ensure they are addressing the acute pain of how much to pay in base salary, annual incentives, long-term incentives and benefits. ECI has been recognized as the gold standard for E&P compensation and benefit data for the last three decades. Now expanding back into oilfield services, midstream and alternative energy segments, ECI can serve as the backbone for determining current and future market positioning, in particular with the challenging portions of incentive data that most companies struggle with.
Communicate Energy Compensation Strategies Clearly to Employees.
Providing employees compensation clarity and a roadmap for future succession has become one of the most crucial elements of compensation programs in the energy market today. Employees have increasingly asked for clarity on their total rewards as well as what it may be in the future. Illustrating to employees where the company is going, how compensation decisions are made and how they can fit into the future can be as valuable of a currency as paying market-competitive compensation.
As the energy industry continues to navigate both longstanding and emerging challenges, the need for visionary leadership has never been more pressing. Adopting refined compensation philosophies, competitive compensation and benefit packages, and concise communications are essential components to solve the complex challenges of attracting and retaining top talent in the energy industry.
Discover how ECI’s data solutions can transform your compensation strategy.
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