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Compensation trends spotlight: Energy and Natural Resources 

 

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Beyond Data

By Gwenael Van Bergen | December 21, 2020

Compensation surveys and industry research highlight key trends in the Energy and Natural Resources industry. 

COVID-19 significantly impacted the day-to-day operations of Energy and Natural Resources organizations. Most organizations can expect a moderate or large negative impact on business through the first half of 2021. With staffing reduced to the minimum safe levels and organizations focused on deep cost-cutting, more than 50 organizations have filed for bankruptcy since the crisis unfolded in March 2020.

Nonetheless, we saw a greater prevalence of qualitative metrics as well as environment, sustainability and governance (ESG) considerations in pay outcomes. The topics of pay for performance, ESG KPIs, and diversity and inclusion analysis have emerged as priority concerns and top of the talent and reward agendas for key players in the industry. Organizations are starting to focus on good succession planning and upskilling, especially for aging industry workforces. The shift to renewables and consolidation of industries will also impact operational models, potentially leading to job architecture redesign.

Rapid technological progress and generational shift in natural resources disciplines will also require Energy and Natural Resources organizations to broaden their talent strategies and/or enhance their total rewards proposition to attract and retain the right talent.

Based on our 2020 compensation surveys and industry research, we observed a few key trends in the Energy and Natural Resources industry this year.

Budgets for salary increase decreased slightly between 2019 and 2020. For 2021, the sector projects between 3% to 4% average salary increase rate across all levels and regions (with notable per-country variance).

Actual bonus payouts are trending below target, but most organizations are not changing their short-term incentive plans

Compensation trends in the Energy and Natural Resources industry

Base salary movements

There was a slight decrease in the year-over-year salary increase rate from 2019 to 2020. Approximately a quarter of respondents from our recent salary budget planning survey indicated they had implemented a pay freeze in 2020, while 15% decided to postpone salary review.

Projected salary increases for 2021 appear consistent across most levels in the industry, at an average of 3% to 4% globally with notable variances country by country (Figure 2). Many organizations remain optimistic for 2021, with over 75% expecting to conduct a regular salary review.

To manage labor costs, a prevalent action for many organizations was to freeze or reduce hiring. Several organizations had also decided to reduce hours or workweeks than implement layoffs. Notably, most organizations in this sector did not take fundamental pay-related changes in response to the pandemic (Figure 3). Less than a third reduced or delayed merit increases and less than 20% implemented a salary freeze or reduced annual bonus accruals.

Industry hot jobs

Our survey data shows a greater than average increase in market demand for jobs clustered in these main functions: legal, petroleum/oil and gas disciplines, analytics and risk.

Figure 4 – Hot Energy and Natural Resources industry jobs in selected major markets
Country Job Title Base Salary 50th
Brazil Petroleum Engineering 1
Brazil Drilling 2
Brazil Geophysics 3
Brazil Natural Resources Exploitation/Operation/Production Generalist/Multidiscipline 4
China Market/Segment Development 1
China Sales, Marketing and Business Development Generalist/Multidiscipline 2
China HR Business Partner 3
China Predictive Analytics/Business Intelligence 4
France Risk Management Generalist/Multidiscipline 1
France IT Performance Management 2
France IT Architecture (Systems Design) 3
France Data Science and Business Intelligence Generalist/Multidiscipline 4
Germany Technical Specialty/Skilled Trade Generalist/Multidiscipline 1
Germany Product Management 2
Germany Treasury Operations 3
Germany Regulatory Affairs and Compliance 4
Spain Sales, Marketing and Business Development Generalist/Multidiscipline 1
Spain Safety 2
Spain General Audit 3
Spain Mergers and Acquisitions 4
United Kingdom Well Operations Generalist/Multidiscipline 1
United Kingdom Natural Resources Production Operations 2
United Kingdom Drilling 3
United Kingdom Petroleum Engineering 4
United States Legal Generalist/Multidiscipline 1
United States Reliability Coordination 2
United States Aviation - Pilots 3
United States Nuclear Operations Training - Licensed Senior Reactor Operator 4

Bonus payout and short-term incentives

The bonus funding for 2021 remains strong for the industry from a performance standpoint. It would benefit organizations to stay cautious of persisting market forces that could affect the global economy, including the pandemic and geo-political shifts, and may have a downward effect on bonuses next year for all industries.

Considering the key markets and job levels identified in Figure 5, there is an average 3% gap between actual bonus pay outs and targets, which shows a fair approach to organizations’ recognition vehicles.

The tremendous impact of the pandemic on every type of business has forced organizations to reevaluate their priorities. Access to high-quality compensation market data is crucial in supporting your organization’s decision-making process. Participate in our Energy and Natural Resources compensation surveys to get vital data that can help you overcome challenges. Join us.

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