Culture in Oil, Gas & Energy: The operational lever you can’t see – how to harness and transform culture

Oil, gas and energy companies have rarely faced so many competing priorities and challenges.

The aggregation of individual behaviours within a company, culture is observed in the way people interact with one other and the decisions they make. Culture reflects the company’s values and enables its purpose.

From a physical safety point of view, the global industry fatality rate remains seven times higher than other sectors; in 2021, the fatal accident rate increased by 36% (IOGP, 2022).

Psychological safety has recently come to prominence as a critical driver of quality decision making, healthy workplace dynamics, greater innovation, and more effective execution. Yet, research shows high levels of inappropriate behaviour, and minimal reporting rates. A holistic cultural shift is required across all industries (Martin-Guzman, 2022).

This is especially relevant in oil, gas and energy at a time when the war for talent remains fierce. The oil price crash of 2020 triggered 107,000 layoffs across the industry in the US alone, with a similar trend felt across the globe (Egan, 2020), negatively impacting the industry’s reputation. The current wave of younger personnel is also questioning the industry as an employer from a values standpoint, a challenge the industry has not yet found a narrative to counter.

From a macro-economic point of view, global production is now forecast to grow 1.7% year on year through 2025 (IEA, 2022), in opposition to the situation prior to start of the war between Russia and Ukraine. Concurrently, operating costs have increased at unforeseen rates, with global inflation reaching 8.8% in 2022 (Oguz, 2023). In such a dynamic environment, improving the top and bottom-line performance of operated assets is critical to protect margin. This requires high-performing teams.

Investors have also started approaching the industry with caution due to questions on profitability as well as poor public perception. More than 80 global financial institutions have announced they will restrict lending to the sector. More than 100 have announced their divestment altogether (IEEFA, 2022). The competition for capital to fund the extension of existing or new assets has never been greater.

From a decarbonisation standpoint, the oil and gas sector must reduce total emissions by 3.4 gigatonnes of carbon dioxide equivalent to support the world to achieve net zero targets by 2050 (IEA, 2018). Tangible roadmaps with clear and fast paths to implementation must underpin decarbonisation targets.

Organisational Culture

The aggregation of individual behaviours within a company, culture is observed in the way people interact with one other and the decisions they make. Culture reflects the company’s values and enables its purpose.

All of these challenges will be addressed more effectively in workplaces where positive, high-performing cultures are prevalent.

Transforming culture in a technical mindset environment

Transforming a culture is never easy. For oil, gas and energy professionals – whose expertise tends to be geared towards solving technical challenges – it can be especially confronting, as a culture shift is an adaptive, rather than a technical, challenge. Adaptive challenges require a growth mindset and willingness to experiment – trying, failing, learning and repeating – towards a satisfactory outcome.

Faced with an adaptive challenge, oil, gas and energy leaders may default to remedial mechanisms that have worked in the past, and those are mostly of a linear, sequential nature. These will not succeed in culture transformation. Whilst it is time and resource intensive, prioritising the development of a growth mindset will ultimately bear fruit.

How do you actually transform your organisation’s culture, to a state where each individual contributes productively to your company’s overall wellbeing and performance – from a human, operational and financial standpoint?

Adaptive Challenges

Unlike technical challenges with clear, known solutions, adaptive challenges are more complex and ambiguous. Answers are not ‘correct’ or ‘incorrect’, but require changes in attitudes, values and ways of operating.

Start with self-reflection and set culture goals

Whether you think your organisation has a culture problem or not, check your assumptions and identify your true state. Begin by examining the diversity of your executive management and their perspectives. Culture comes from the top, and lack of diverse thinking may point to self-perpetuating attitudes.

Ask yourself:

• Do we have a diverse, inclusive team that respectfully challenges each other, or do we have similar profiles?
• Have we defined good leadership?
  How do we role model these characteristics?
• Are company values alive in our organisation? How are they demonstrated in practice? How much time does management spend discussing commercial vs. culture risk?

Leadership teams brave enough to self-reflect will be able to objectively assess the current state and put remedial actions in place. Culture must be tackled with the same diligence that the industry has applied to process safety and reliability.

Before you can move forward, map out the ideal culture. Is the management structure hierarchical or flat? Should individuals connect across teams? Will culture vary by site? Which diversity and inclusion levers will be put in place? Where is psychological safety as important as physical safety? If necessary, update your core values so they support these decisions.

We see organisations heavily promoting their values, but when you scratch the surface, the true culture differs.

Keep in mind...

Changing culture involves changing mindsets, those deeply held beliefs that shape how people think, feel and behave. In our opinion, that change will happen faster and more concretely if entrenched in a foundation of psychological safety.

Fostering psychological safety must be a critical component of changing culture. It is both an outcome of change and an ongoing enabler of ongoing improvement.

This shift will drive altered behaviours over the long term.

The goal: a psychologically safe environment, to enable a high-performance culture

How do you actually transform your culture into one in which each person can contribute fully to the organisation's human, operational and financial wellbeing – a psychologically safe culture?

The model below describes the four factors that influence the personal values an individual holds. These are largely within their control. The constant interactions of individuals with the broader context creates ongoing fluctuations on how each individual impacts the company's culture – and vice versa. This must be managed on an ongoing basis, to ensure the organisation's culture remains aligned with its intent.

It's important to understand the factors that govern an individual's personal values. These are largely within workers' control, but can be influenced by the physical environment, social context and leadership's commitment.

Rules and procedures
Clarify the behaviours you want.

Are rules explicit? Are procedures aligned with how you define 'good'? Are they part of employee performance reviews, KPIs and exit interviews? Can workers feel confident in the incident reporting system or is the burden placed on the reporter?

Behaviours
Endorse culture-aligned behaviours.

Which actions are actively rewarded vs. explicitly corrected? How do you verify that psychological safety rules and procedures are followed? How will you encourage a necessary 'okay to try and fail' mindset?

Beliefs and attitudes
Beliefs drive behaviours.

What we really think drives our actions, even when no one is watching. Beliefs and attitudes are influenced by life experiences, but they can be challenged – especially when we see others behaving differently. The organisation must drive people to adapt their thinking by promoting a growth mindset.

Situational awareness
Recognise risk to psychological safety.

Calling out unsafe situations and behaviours is critical. Even a predominantly psychologically safe culture may foster unconscious bias or blind spots. Genuine inclusion and diversity builds situational awareness and guides culture change.

Physical environment
Your surroundings convey your commitment

The physical environment includes equipment, facilities and even uniforms, as well as what is posted on the walls. Does your environment reflect your aspirations for a psychologically safe, diverse culture – or does it reflect the past? Ask more diverse members how the environment could be more inclusive.

Social context
Leverage a site's unwritten rules.

Social norms around worker interactions can be difficult to oppose—people want to fit in. Ask employees to reflect on behavioural patterns they have observed and consider them in the context of the culture you want to achieve.

Leadership commitment
Influence through role modelling.

All levels of leadership must clearly signal that a culture shift is a strategic priority. Leaders play an important role in influencing the physical environment and acceptable social contexts, so each must undertake this process with an open mind. When selecting leaders, consider their ability to model mindsets and behaviours you want to sustain.

Workplaces
Recognise site-specific issues.

Consider any conditions that could increase the risk of psychological distress in individual workplaces. How can the organisation support workers in even the smallest and most remote sites, including offshore?

Turning psychological safety theory into reality

There are concrete actions that will help create a favourable environment for a psychologically safe culture. Our experience shows that positioning culture as a safety issue will increase takeup and accelerate change, especially in an industry like oil, gas and energy which has driven safety as a core value for decades. Like physical safety, psychological safety is everyone's responsibility.

Psychological Safety

In a psychologically safe culture, all workers feel they have a voice – and that it is valued and respected. As a result, everyone flourishes and contributes their best to the company's objectives.

Embedding a high-performance culture into your organization

Organisation-wide, four critical elements enable enhanced cultures to be sustained over the longer term (Fig.3). Psychological safety is one of the critical enablers. The extent to which elements contribute across all four elements to the overall result varies every time and is often difficult to predict. Refining the approach is an ongoing process.

• Senior leadership understand and consistently and visibly demonstrate the required behaviours. Selective use of symbolic actions by senior leaders
• Enrolling key influence leaders throughout the business to provide the required coaching
• Developing and communicating a compelling case for change, i.e. "what does success look like"
• Enabling frequent, interactive and informal communications – with an emphasis on why the change matters at a personal level
• Designing comprehensive skills development programs to ensure that people have the required skills, capabilities and confidence to behave in new ways
• Delivering the training in a way that allows people to safely experiment with new skills and capabilities – a combination of formal and informal training
• Assessing, and if necessary or feasible, redesigning the organisational structure, processes, systems and tools to better support the required changes in mindsets and behaviours
• Consistently recognising and rewarding people who exemplify the required behaviours and applying consequences to those who don't

At a practical level

Creating an action plan will take place across multiple fronts, through companywide, site-specific and individual-orientated initiatives. Ensure that all aspects of your business, from head office to exploration and production – and every location – are included in your action plan. Other initial actions options are listed here.

Talk to those who live your culture daily.

Employee feedback is key to an accurate reflection of your prevalent culture.Survey fatigue can be an issue, but surveys may still provide valuable insights, as can structured interviews across stakeholder groups, and focus groups to probe specific points. External moderators, guided by your internal team, can facilitate meaningful, candid communication.

Set up individual feedback loops.

Leaders should seek performance feedback, using a mix of collection methods across varied groups, with the intention of encouraging diverse views. Be ready to hear uncomfortable statements among employee perceptions—and be pleasantly surprised by positive comments on actions you didn't realise mattered.

Be visible.

Show teams you're pursuing change.

Formalise learnings, prioritise and initiate change.

Aggregate insights from across data sources and look for immediate improvement opportunities to act on while you develop a transformation plan.

Hire for culture alignment, not just technical skills.

Think through ideal recruit profiles and seek candidates who demonstrate your organisation's values. Specify and interview for soft skills that might be lacking in the current team.

How you will know it's working

Shifting culture takes time and may involve stops and starts. Measuring longer-term progress requires implementation of a cultural health management plan.

In the short term, however, simply walk around your sites and offices. Engage in impromptu conversations, making a point of interacting with those who stay in the background. Choose a safe space and time for sharing negative, dissenting and constructive perspectives.

Before long, you should start sensing greater optimism and hearing anecdotes that suggest early adopters are taking note. This will increase over time, with lingering dissension mainly the old guard resisting change.

Some leaders may find this challenging, as senior leadership may not regularly practise active listening skills. However, if leaders want the workforce to move forward, they must be ready to do the same.

Transforming your culture will pave the way to high-performing teams, geared to delivering on your company's objectives, across human, operational and financial performance.

Case Study:

Connecting culture to production goals

We have successfully leveraged this approach with a global LNG processor. With its sights set on nearly doubling production by 2027, this company embarked on a roadmap of operational turnarounds, capital projects and culture change.

A baseline cultural maturity assessment identified a gap in employee involvement, suggesting a need to develop capabilities among supervisors. 

Through a five-phase approach, dss⁺ ensured efficient, targeted development. The organisation’s cultural maturity against 14 critical elements was initially assessed with key gaps highlighted. A capability development programme was subsequently rolled out, which provided a tangible way of linking the organisations' Vision Mission and Purpose to the way frontline teams operate. The team also aligned around a set of foundational practices, a shared way of ‘how we do things around here'.

Initially, the rollout was focussed on the operational team and subsequent phases served to link support functions to the common safety and productions goals. A key focus of the program was for cultural roadblocks to be removed and to intentionally shape the way teams interact.