Inspectioneering Journal

Laying Off “Safety”: Managing Knowledge Transfer Through the Downturn to Maintain Industry Best Practices

By Greg Fletcher, Principal at North Highland Worldwide Consulting, and Josh Arceneaux, Expert Practitioner at North Highland Worldwide Consulting. This article appears in the March/April 2016 issue of Inspectioneering Journal.


It is estimated that there have been more than 250,000 layoffs in the oil and gas industry since the price of oil began to drop precipitously in late 2014. With oil not expected to rebound significantly for at least the next year or so, we should be ready for even more workforce reductions. In addition, there is the ongoing reality of baby boomers retiring from the workplace – also known as the impending shift or crew change.

The industry has been addressing this conundrum over the last decade, with the recent workforce reductions accelerating the shift. The first wave of baby boomers reached the potential retirement age of 62 in 2008, and more will continue to reach this age until 2025. Despite the reduction in workforce – with gaps in key experience, skills, and knowledge – operations, maintenance, and capital projects will continue to move forward to meet energy demands. Most importantly, these operations must still be executed in a safe and sustainable manner, with a focus on maintaining asset integrity and reliability.

Implications for the Oil and Gas Industry

What are the implications for companies across the oil and gas industry who have made the difficult decision to lay off hundreds and thousands of workers, primarily due to market conditions? 

While there are indeed financial impacts to recruiting, onboarding, training, and retaining new employees, there are also potential impacts to safety and increased exposure to risks at job sites. The tenure of these employees may range from 2 to 35 years at one company. Not only do these individuals possess technical skills and industry expertise, they also possess the knowledge of how that particular company operates, knowledge about specific pieces of equipment and systems, how projects get executed, how often and to what degree assets are inspected, or the sound a compressor makes before it’s about to fail (even when the indicator levels appear normal).

In some cases, these skills, processes, procedures, and work steps are available through training or varying levels of documentation. Unfortunately, this information is often missing or incomplete, and only resides fully in the person’s head that has just left the workforce.  

Why Knowledge Management Matters

According to Peter Drucker, a high profile management consultant, educator, and author, “there is a vast quantity and diversity of information stored in people’s heads. If one of them walks out of the door and takes the knowledge with them, it takes 20 to 30 times that person’s salary to replace.” 

Many companies are scrambling to retrieve this knowledge and information from departing employees before they leave. Unfortunately, it is often too late to thoroughly capture pertinent information not already debriefed in an employee’s final days (or day). Departing employees are typically emotional or disengaged, and focused on their personal needs. Therefore, it is important to establish an effective, comprehensive knowledge management program to proactively capture, share, maintain, and retain this valuable knowledge, particularly when it relates to safe and reliable projects and operations.

The Gartner Group defines knowledge management as “a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers.”

Companies with leading edge knowledge management programs tend to employ an intentional strategy for transferring knowledge, and maintain an organizational culture where knowledge transfer is promoted within a learning environment. Leaders can have a significant impact on organizational culture and establishing a learning organization as they set the tone and direction for promoting knowledge sharing behaviors and attitudes.

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