Increasing Operational Efficiency: Keeping Personnel at the Forefront of Decisions
When the attitude of the crew seems fixed and nothing could be done, it's time for “what-if” thinking.
The year 2020 was a major hit to industries worldwide, especially to oil and gas, as the oil price dropped below $10/bbl for the first time in 20 years. The oil price crash did not bode well for the companies operating in the industry, be it owners or services companies. The people feel the heat too, as companies are still seeking cost compression/reduction to ensure survival.
Improving operational efficiency is one of quickest ways to reduce cost and improve return on investment, as the same inputs (capital, raw material, and human resources) produce greater return. Here, we will ponder how workers’ attitudes contribute to operational efficiency.
The story began with a personal observation at a drilling site. Two crews, Crew A and Crew B, were contracted to work for two different companies, and the crews displayed very different attitudes. Crew A workers were highly motivated, completed the job on schedule, and sometimes exceeded planned progress. Meanwhile, Crew B tried to delay their job completion, blaming the weather, incomplete tools, etc. This strange phenomenon spurs the question, why did both crews exhibit totally different working attitudes when it came to job completion?
Both crews had similar education levels and cultural backgrounds. The only way to find out the answer for this phenomenon was to talk to them, understand what they perceived, and discern their motivation, be it remuneration, work satisfaction, colleagues etc. After some coffeehouse session with both crews, the underlying reasons were compiled.
Although Crew A and Crew B were hired under contract, their contracts were very different. The operation for Crew A was run 24/7 while Crew B had daylight operations only (6 a.m.–6 p.m.). For Crew A, this translated to continuous operation with two sets of personnel, while Crew B suspended their work at the end of each working day and continued their progress the following day. Crew A had lower Non-Productive Time (NPT), as the machinery was running all the time (with backup) and workers planned their breaks on rotation. On the other hand, the daily routine for Crew B began with the warming of machinery, and all personnel took their breaks together. Thus, the effective working hours for Crew B was much lower than Crew A, resulting in progress delay and more NPT.
Year 2020 was a tough year for both crews. Although both were on their last contract of the year, their outlook for the future was different. Crew A’s company management frequently reported that the company was actively bidding for contracts worldwide, so they were motivated to complete work with a good track record to help secure future contracts. Crew B had no idea what their future held after the current contract was completed. They would potentially be out of work after this project. Thus, they intentionally stalled their progress with the objective of getting extra working days before they were unemployed.
Crew B had their contracts extended due to all the delays, but extra working days created the unintended consequence of higher costs. To reduce the cost, the company reduced staff benefits by not allowing the workers to claim overtime. (A minimum of 1 hour overtime was given each day for report writing.) When their overtime remuneration was removed, Crew B was demoralized, and they refused to work the extra hours even when they could not meet the planned progress daily. Low morale coupled with reduced benefits spelled disaster for the company.
Improvements By All Parties
Up to this point, it might seem that the attitudes of both crews were fixed, and nothing could be done to make the crews more effective. This is where “what-if” thinking comes in.
Crew A was considered “operationally efficient,” so there might not be much room for improvement. However, their statistics speak otherwise. Crew A’s company had mapped out the job completion month by month for different teams. Best-performing teams each month were rewarded with small tokens such as cash vouchers. The company’s management also explored ways to improve working synergy, such as with senior-junior pairing. Proper incentives coupled with better working synergy will boost the crew’s performance at work.
For Crew B, it was necessary to restore trust between the company and these workers. First, dialogue was needed between both parties with the purpose of renewing their pact of remuneration—the company’s promise to workers—and job-completion deadline—the workers’ promise to their company. Once the trust was rebuilt, worker motivation could be improved with incentives if their work progress exceeded planned progress. A good track record eventually improved the company’s competitiveness and increased its chances of getting contracts.
For management, it is always important to know your staff’s level of motivation. If your staff is at Crew B’s level, dialogue is a good place to begin. It is also important to be familiar with the issues faced by the staff and what can motivate them to contribute. Human resource is the greatest asset to a company, as technical know-how and work experience is hard to replace. A motivated staff is the greatest enabler for a company, ensuring it stays competitive even in bad times.