Creating Leaders in a Volatile Industry

Creating Leaders in a Volatile Industry

by Frank Lloyd | Chief Learning Officer

Increased competition, stiffer regulation, globalization, shifting alliances, mergers and acquisitions, retiring baby boomers, and an increasing number of stakeholders - among other factors - mandate that energy companies have skilled leaders to thrive in today's volatile and complex industry environment. Consequently, an effective leadership development strategy is essential to survival and prosperity.

Pioneer Natural Resources, headquartered in Dallas, is a large independent oil and gas exploration and production company with operations in the U.S., South Africa and Tunisia with more than 1,900 employees.

More than five years ago, senior management at the company recognized that industry challenges would demand a new generation of leaders. They first needed to create alignment and integration within the current management group, formed from the legacy companies that came together as Pioneer. The company was formed through the 1997 merger of Parker & Parsley Petroleum Co. and MESA Inc. Then, in September 2004, Pioneer merged with Evergreen Resources Inc., creating a new core area in the Rocky Mountains that enhances Pioneer's strong foundation in North America.

The challenges of the recent global economic recession prompted the need to improve employee productivity and maintain commitment. The increasing pace of change throughout this period demanded adaptability and agility at all levels of management. As the economy strengthened, an incoming wave of talent, mainly from the millennial generation, had to be integrated into the organization. This only accelerated the requirements for skilled leadership throughout the Pioneer organization.

To supplement its internal training and development resources, Pioneer turned to SMU Cox School of Business to build development options that would enhance Pioneer managers' abilities to coach and give feedback to their employees and equip them to meet industry challenges.

In the past, new managers were typically promoted from within on the basis of technical expertise, and they required development to effectively manage their teams, according to Doug Hull, senior director of HR and administration for Pioneer Natural Resources.

There were few opportunities for managers to attend training or programs where they could share experiences with managers and leaders from other parts of the company. There was no formal plan for leadership development or appropriate educational experience for individuals ready to be promoted to management and senior executive roles.

The company's senior leadership recognized that a leadership development program was necessary to:

a) Increase retention of quality employees.

b) Develop managers and elevate their skills.

c) Provide deeper understanding of the factors that drive the business.

d) Develop in-company and industry networks.

Forging a Strategic Partnership

In its partnership with SMU Cox, Pioneer adapted existing programs, including Competing Through People and Leading Tomorrow's Business, resulting in a multilayered group of leadership development programs designed to enable individuals to gain the skills and capabilities to meet industry challenges and to move through management levels to senior leadership.

"Pioneer and industry-specific information is used in order to address our folks to help them become better leaders, managers and businesspeople with an eye to our business," Hull said.

Now, the core program suite includes the Pioneer versions of Competing Through People and Leading Tomorrow's Business as well as Advanced Performance Management, a third course developed specifically for Pioneer. Those who attend the programs are nominated for participation by their managers. Initially, the programs were open only to managers with direct reports. Participation has since been expanded to include employees who may be supervising people in the near future to prepare them for their new roles.

Competing Through People provides an initial framework for leadership and focuses on people skills for first-level managers and those who will soon be managers with direct reports.

Participants in Advanced Performance Management, a continuation of Competing Through People, have in-depth discussions about real problems they face on the job. It prepares them to handle performance management issues and succession planning using Pioneer case studies and focuses on business skills for midlevel managers.

Leading Tomorrow's Business was developed to help experienced managers understand the financial measures that drive the business. By understanding this, upper-level managers can do a better job of managing their teams in a way that contributes to the company's overall performance. The program emphasizes business skills and managerial competencies to build a big-picture, cross-functional perspective. It is designed to give participants the knowledge, insight and skills needed to think and work cross-functionally in their organization.

Upper-level managers also participate in publicly offered seminars for senior executives in the oil and gas industry, as they benefit from peers in other firms sharing best practices. The highest-potential employees continue to be offered the opportunity to earn MBAs in SMU Cox's Executive MBA program, and additional targeted courses have been developed to meet specialized Pioneer needs.

For example, the recently added Pioneer Innovative Leadership of Tomorrow (PILOT) is a special program for new millennial employees, and the content focuses on team building and organizational culture. As a result of intergenerational understanding fostered through this program, senior Pioneer leaders have begun actively soliciting input from millennial employees on specific organizational issues.

A second PILOT program focused on financial understanding and business acumen is currently being conducted for this group of young technical professionals.

Changing behavior through management education was one of the Pioneer learning team's key objectives. Managers are asked to include in performance reviews how professional development attendees have demonstrated improved performance on the job.

Pioneer HR staff sends an electronic survey to participants following each class. Ratings for all classes consistently come in a 4.15 or above on a five-point scale. Comments have been positive and indicate participants returned to work with a more open attitude and a desire to discuss what they've learned with others. This has led to requests for additional development, as managers who attend these programs become aware of their development needs and those of their employees.

Key Takeaways

Pioneer's experience illustrates six best practices regarding partnership between an organization and a business school.

1. Clearly state the business case.

The Pioneer case for leadership development was rooted in the need to build alignment within the management team in the context of the accelerating changes in the energy industry. A clear business focus helps a school target its program development efforts.

2. Clearly define leadership competencies.

Clearly stated objectives result in an educational design that will achieve the desired outcomes.

3. Identify shared commitment.

Common commitment to a larger goal makes it easier for a firm to work with a school at all the levels needed to develop a successful program - sponsoring executives, training and development staff and program participants.

4. Establish institutional fit.

Find a partner with experience in the organization's industry. Institutional fit enables schools to access a broader range of resources for the client's benefit.

5. Access proven models and best practices.

Identifying a school's approach to leadership development helps tie a program to the client's business case and competency outcomes.

6. Establish a collaborative working relationship.

Pioneer found a school that was willing to listen and respond to its needs. Collaboration permits each organization to leverage the strengths of the other to create a program with lasting impact.

Pioneer Natural Resources applied these best practices and has been able to equip managers to meet the challenges of the fast-changing energy industry.

[About the Author: Frank Lloyd is associate dean at SMU Cox School of Business, Executive Education.]