Petroleum Industry 2020: People First: People KPI
- Abdul-Jaleel Al-Khalifa (2007 SPE President)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- February 2007
- Document Type
- Journal Paper
- 12 - 16
- 2007. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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- 110 since 2007
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Our industry leverages talent and technology to extract the maximum benefit of hydrocarbon resources. The ultimate objective, of course, is to enhance the socio-economic development and well-being of human kind. Our industry business model towards achieving this noble objective has over the years resulted in corporations that follow a market economy. Is this the best and most efficient business model? Are we maximizing the benefit of hydrocarbon resources—that is, are we finding and recovering the highest volume of hydrocarbons in the most cost-effective way? The answer, unfortunately, is no. For example, the current ultimate oil recovery averages 35%. This is very low compared to the maximum physically allowable recovery of 70 to 80%. The current finding success ratio is only 20 to 30%, which can be improved to 50%.
Can we enhance our business model to achieve these objectives? The answer, fortunately, is yes. So, why do not we do it? I believe that both our current financial model and corporate cultures require a fresh look and major reforms. Last month, I emphasized the role of leaders in changing corporate cultures, such as setting fair policies and living the values of fairness and excellence in their day-to-day actions. Corporate leaders can walk this talk and start assessing and reporting a people key performance indicator (KPI) that reflects their sincere desire to support their people and to boost the performance of our industry.
I will explain the proposed people KPI, and then will continue last month’s analysis of our current financial model.
I strongly believe that a frequent companywide assessment of workforce engagement is essential. Results can be reported as a people KPI and shared with all stakeholders. This KPI will complement other reported indicators, such as quarterly earnings, cost per barrel, and reserve replacement ratio. This KPI is essential for two reasons: it promotes the value of people, which is the right thing to do; and it will improve the performance and extend the life of our industry.
A people KPI is extremely important for all stakeholders:
- Corporate boards can monitor the performance of their executives in relation to people issues. Similarly, executives can assess the performance of middle management and institute immediate changes when needed,
- Employees will communicate their concerns, remain engaged, and continue to be innovative.
- Investors and market analysts can utilize the people KPI to assess a company’s long-term viability. This will complement the quarterly earnings data that reflect short-term performance.
Survey Focus and Results. Healthy organizations tap the hearts and minds of their people, and help them draw on their utmost potential in a happy and engaging environment. These organizations enjoy the brightest innovations and the most cost-effective performance.
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