Untapped Reserves 2.0

Although the oil and gas industry has made significant progress toward greater diversity, much remains to be done to gain the performance and productivity benefits that a diverse workforce provides.

A collaboration between the World Petroleum Council and Boston Consulting Group

Introduction

Since 2017, when the World Petroleum Council (WPC) and BCG first examined attitudes about gender balance in oil and gas, the industry has experienced significant disruption. In addition to the severe effects of the COVID-19 pandemic, the global energy transition and the continued growth of digitization have accelerated both the need for and the pace of change.

The percentage of women working in the oil and gas industry remains unchanged at 22%, the same level reported in 2017. The pandemic and associated oil price shock likely impacted progress, which underscored the need for continued focus, commitment, and action to improve diversity and inclusion (D&I) . There are glimmers of hope: the number of D&I policies and programs introduced by companies is up by about 50% since 2017, indicating that even though outcomes stalled, the commitment to act and lay foundations for future progress strengthened throughout the period.

Challenges Persist in the Sector

More must be done to achieve gender parity and improve diversity. Significant gaps in policies and programs remain. Less than half of companies link leadership compensation to D&I goals. And only one-third have procedures to ensure “blind” screening of candidates to remove unconscious recruiter biases.

Companies must take urgent action to boost diversity among their employees and make diversity a strategic priority if they are to thrive in a data-driven, low-carbon world. This new world will require innovation, and innovation requires diversity; BCG has found that companies with greater diversity outperform others on both innovation and EBIT.¹ To attract and retain a more diverse talent pool, companies need to adopt practical measures such as flexible working and must accelerate efforts to create an inclusive environment. In addition, industry values and priorities must align more closely with those of potential new hires—on climate issues, but also on social equity issues and on the definition of diversity itself.

While other sectors have realized the importance of purpose-led work, better work-life balance, and equity, many oil and gas companies have only recently begun to commit to this journey in earnest. Our research shows that although the importance of race is increasing in the oil and gas sector’s D&I conversation (based on industry press coverage), gender remains the primary topic.

So far, oil and gas companies have undertaken fairly simple and straightforward D&I initiatives and have met local regulatory and legal requirements. Further progress will require business leaders and managers to take harder steps—questioning unconscious bias far more and making deliberate decisions to boost diversity and inclusion in their hiring choices, policies, and support throughout employees’ career life cycle. Such an effort calls for a more intentional and proactive approach, led from the top, that embeds D&I values in all key business processes, especially HR-related ones. According to our findings, five challenges require especially urgent attention:

Underrepresentation of Women in Entry-Level Jobs. While 44% of male and female STEM graduates and young professionals worldwide indicate an interest in working in the oil and gas industry, women occupy only about one-quarter of the industry’s entry-level positions.² This results in a slimmer pipeline for women to be promoted from within.
Lack of Women’s Representation in Technical and Operations Roles and Expatriate Positions. Women continue to be underrepresented in these areas—both of which are critical to improving a person’s promotion prospects—despite the willingness of nearly two out of three women in our employee survey to accept international assignments and alter their career plans.
Low Uptake of Existing D&I Policies. About half of the male and female employees we surveyed said they don’t use their company’s D&I policies and programs. While some employees said that doing so was “too much effort,” others said that they felt unsupported unless their supervisor was also from a diverse group.
Persistent Unconscious Biases Around Gender-Related Challenges. Although they are more aligned now than they were in 2017, women and men still differ in their views about female career challenges, with a significant perception gap remaining in several areas. Men hold over four-fifths of decision-making senior and executive-level positions, increasing the risk that a lack of understanding of the actual barriers faced may negatively impact women’s prospects for advancement.
Low Female Representation in Senior Roles. The proportion of women in senior-level decision-making positions is half that of women in midlevel positions, particularly in business and administration roles (where the numbers dropped from 26% in 2017 to 13% in 2020). This pattern holds true across regions and is consistent with our 2017 findings.

Signs of Progress Emerging

There are some positive signs that companies have taken action since 2017 to support diversity:

About 67% of the companies we surveyed in 2020 have a dedicated D&I team, typically within HR, compared to 39% in 2017; and 74% of companies track relevant D&I key performance indicators (KPIs), versus 40% in 2017.
The CEOs of 77% of companies have publicly pledged to meet D&I targets—up from 38% in 2017.
About 70% of the employees we surveyed in 2020 believe that the industry has improved the way it addresses D&I since 2017.

The industry’s more active approach has yielded positive results in important areas. While women’s overall representation in the industry has remained flat, the share of women in global companies (those with operations in multiple countries) has risen slightly from 24% to 25%, and the proportion of women at global companies entering the industry as university graduates has also increased slightly, from 26% to 28%. In addition, the number of D&I policies and programs implemented by companies (across all types of interventions) has increased, on average, by about 50%—a significant and very positive shift since 2017.

Notably, all of the companies that we surveyed in 2020 offer maternity leave, and more than 95% of them support equal pay, offer paternity leave, and have sexual harassment policies in place (versus 90% of companies offering maternity leave, 67% of companies supporting equal pay, and 56% of companies providing paternity leave in 2017). Now that these critical table stakes (which are often mandated by governments) are widely in place, companies are starting to explore more advanced policies and programs, including childcare support and making diversity a key component of leadership remuneration.

A Structured Approach to Accelerating Progress

The business case is clear. By creating a more diverse and inclusive culture, oil and gas companies can benefit from greater depth and breadth of perspective and can boost business performance. According to Catalyst, a nonprofit organization, companies with more women on their board of directors outperformed those with the least on three financial measures: return on equity (53% higher), return on sales (42% higher), and return on invested capital (66% higher). Another study shows that companies with top-quartile performance on ethnic and racial diversity enjoyed 35% higher financial returns, and those with top-quartile gender diversity were 15% more likely to have returns above industry mean.³ But how can senior leaders create an environment that attracts, retains, and advances diverse individuals whose profiles differ from the dominant ones?

In the course of our research, we’ve identified three essential elements that together form a framework for a successful D&I strategy. (See Exhibit 1.)

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They are as follows:

Foundational D&I Policies and Programs. Companies need to ensure that strong policies and programs are in place so that they can track progress and maximize business performance. For example, they must introduce procedures to ensure that managers are held accountable for achieving D&I goals and to embed D&I values in decision making, in addition to providing basic (and often regulatory) requirements such as maternity/paternity leave, equal pay, and anti-discrimination policies.
Strategic Operating Model and Targeted Interventions. Companies must create a strategic operating model that enables them to attract a more diverse talent pool, retain diverse staff throughout the employee journey, and ensure that diverse individuals advance into senior-level jobs. For example, companies need to ensure that their policies and processes are impartial and gender neutral, and take a transparent, merit-based approach to assessment.
Clear, Sustained Commitment from Senior Leadership. Strong, visible commitment from senior leadership, supported by clear accountability, is a key factor in determining whether male employees consider diversity, equity, and inclusion important. This includes having clear targets and aspirations to signal that D&I is a strategic priority for the organization and to foster accountability within leadership for driving D&I outcomes.

Our research and industry engagement indicate that the following six ways of addressing these ongoing challenges are likely to have the most impact across all career levels:

Reinforce leadership commitment through visible and sustained support.
Track baseline metrics and set clear goals and targets.
Ensure that there is no bias in promotion pathways.
Empower employee resource groups to improve program and policy effectiveness.
Link D&I outcomes to capabilities around innovation and adaptation.
Actively create an inclusive environment.

The first two approaches are especially relevant for the “leadership” level in our framework, while the final four relate to the “operating model” level of the framework.

To support companies in identifying the actions they need to take to drive an increase in diversity outcomes, BCG and the WPC have developed the Diversity and Inclusion Maturity Assessment tool, which rates companies across 12 parameters and gives a score ranging from one to five for each one. The parameters cover factors ranging from CEO commitment to flexible working, and they fit into the five categories contained in the framework above. Using this tool, companies can develop momentum and create more targeted policies and programs to move the needle on D&I. (See “ Our Tool for Assessing (and Advancing) D&I Maturity .”)

The Oil and Gas Industry Today

Headline progress on women’s representation in the oil and gas industry has stalled at 22% since 2017. In addition, the oil and gas industry continues to underperform other sectors, ranking in the bottom third for gender parity among nine sectors. (See Exhibit 2.) Within the industry, however, we noted some pockets of improvement at the regional level.

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Pockets of Regional Improvement

Europe has seen the greatest improvement in gender equity since 2017. Women’s representation has risen from 24% to 33%, helped by increased interventions from governments in Germany, the Netherlands, and other countries. (See Exhibit 3.) For example, in Germany, under the Wage Transparency Act, employees can ask their employer to disclose how their pay compares with male or female colleagues, so the act enables workers to discover the average salary of employees of the opposite gender who perform an equivalent job. In most other regions, women’s representation either improved slightly or remained the same. The only region to see a decline in women’s representation is Asia-Pacific.

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How Global Companies Performed

Approximately 40% of companies in this year’s company survey are multinationals that operate in multiple countries. Companies in this global category in 2020 include the industry’s biggest players and are broadly comparable with those in 2017. Global companies tend to set more D&I goals and policies and to be more active in pursuing these objectives than regional companies. Among global companies, women’s representation increased only very slightly, from 24% to 25%.

The overall decline in representation as women progress from midcareer positions to more senior roles exceeds 50%—a figure consistent with what we observed in 2017.

The data also reveals several other significant developments among global companies, the first two related to the “attract” component in the framework operating model and the third related to the “retain” and “advance” components:

The proportion of women entering the industry as university graduates has improved but is still less than one-third of the total graduate intake. Companies are using policies and programs such as targeted marketing campaigns and partnerships with universities to recruit female graduates, but attracting sufficient talent in general remains an issue.
Women are underrepresented in entry-level technical jobs that do not require a degree, despite being overqualified. As in the past, women are underrepresented in entry-level technical positions that don’t require a degree—and women who do secure these roles are more likely to have a degree than their male colleagues (57% of women versus about 40% of men). As a result, the relatively few women selected for these jobs tend to be overqualified. At the same time, these roles are valuable ones for successful female candidates because they provide on-the-job apprenticeships and training that enable women to progress in technical areas later in their careers. This area clearly warrants further attention from global companies.
The decline in women’s representation between middle-level and senior-level positions is as pronounced as it was in 2017 and is consistent across all regions. While some companies have started to take action, not enough are introducing programs to address the decline at senior levels. Our research shows that 50% of women feel that sponsorship is an important pathway to promotion and senior-level advancement. Companies interested in supporting increased senior diversity should focus on sponsorship and mentorship programs, and should link executive compensation to meeting D&I targets.

Key Findings from Our Employee Survey

In general, men and women continue to express different views about their company’s efforts to tackle gender imbalances, although the gap is narrowing. Our research identified the following developments:

Men were more optimistic than women about the D&I progress their company had made since 2017. Overall, 75% of men and 66% of women said that there had been “some” or “significant” improvement. In addition, twice as many men as women said that their organization’s current promotion criteria were fair, whereas twice as many women as men said that companies needed to put more effort into promoting women.
Sponsorship and mentorship career obstacles are unique to women. Some obstacles to career advancement, such as unfair evaluations and an absence of international experience, were problematic for both men and women. Others, however, including a lack of mentoring and sponsorship and a lack of supervisor support, posed particular problems for women. (See Exhibit 4.)

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Women use their company’s attraction and retention policies less than men do. Women were less likely than men to say that they have used their company’s retention policies (23% versus 30%) or advancement policies (34% versus 38%). Examples of such policies include mentorship, education assistance, technical training, and predefined advancement programs. This may indicate an underlying issue with how the policies are designed—or with how they are presented and accessed within organizations—that renders them ill suited to diverse employees.
The D&I policies and programs most used by men and women differ. Women were most likely to favor mentorship (54%), employee resource groups (54%), and balanced promotion slates (53%). Indeed, women were twice as likely as men to think that employee resource groups are helpful. By contrast, men favored technical training to maintain skills (54%), visible role models (44%), and access to career progression opportunities (44%). Women also valued technical training (45%), visible role models (46%), and access to career progression opportunities (50%), and they generally rated the value of D&I programs overall more highly than their male colleagues did. Women value unconscious bias training more than men do. Significantly, 20% of female respondents, but only 8% of male respondents, thought that unconscious bias training was helpful. Since more companies are introducing unconscious bias programs, according to the findings from our company benchmarking, the data suggests there may be a lag between delivery and uptake among target audiences.
Women and men are more aligned in their views about female career challenges in 2020 than they were in 2017. More men in 2020 agreed that women get less support and are overlooked for promotion. (See Exhibit 5.) However, since men continue to hold the majority of decision-making roles in the industry, the remaining gap between men’s and women’s views on these points is likely to continue to negatively impact women’s career prospects until a more transparent conversation about the barriers faced in the advancement of diverse candidates occurs.

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Career Progression Trends for Women in Technical and Business Roles

Among all companies, our research uncovered two major findings about gender balance in different job types:

The proportion of women working in business and administration (such as sales, business development, and finance) falls by more than 50% from entry-level roles to senior-level roles. This is consistent with our findings in 2017. The reason for the decline may be that skills developed in these areas are more readily transferable to jobs outside the oil and gas industry. Consequently, if their existing employer’s culture or level of inclusion is not positive for them, these employees can move to another company, or even another sector, that may be more inclusive. At the same time, because corporate functions consist largely of business and administration roles—an area where women are still better represented—it comes closer to achieving gender parity than any other functional area in the industry, particularly for early career steps. (See Exhibit 6.)

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The proportion of women in technical and operations roles—equipment handling, maintenance, and other field service disciplines—remained relatively stable across career steps, most likely because the relevant qualifications, skills, and experience are less transferable outside of the oil and gas industry. Women’s representation within this group remains very low, as women account for less than one in eight technical and operations employees at all career levels. (See Exhibit 7.)

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Experience in technical roles tends to be a prerequisite for senior leadership positions with profit-and-loss responsibility. Both male and female employees in our survey believed that technical aptitude was essential for promotion to a senior level: 71% said that technical expertise was the main criterion for senior-level advancement, and 60% said that being an engineer or having a similar technical education was the primary factor. Without rapid action to improve intake—of early-career hires but also of lateral hires into midcareer roles—and to retain women in these technical roles, it will become even harder to progress toward gender parity in oil and gas leadership in the years to come.

Some leading players are revisiting their job requirements for middle management technical positions. For example, they are taking the view that a diverse individual with an accounting or commercial background and strong leadership and strategic skills may be able to leverage the technical expertise within their team more effectively, allowing that individual to succeed in what was previously seen as an exclusively technical role.

Major Developments Affecting the Industry

Three major developments impacted oil and gas companies in recent years and created major shifts in the way the industry functions: the energy transition, post-COVID-19 flexible working policies, and an expanding definition of diversity that extends beyond women to create a more inclusive environment for all types of people. Progress on all three fronts is critical if companies are to attract and retain talent, especially as more people make career choices based on their values. Another BCG study found that 57% of respondents to a global survey—and 90% of respondents from underrepresented (diverse) groups—would consider leaving their current job for one at a more inclusive organization if their company didn’t meet baseline D&I criteria. The research estimated the cost of replacing those employees at more than $25 billion a year.⁴

The Energy Transition

The energy transition has accelerated since our 2017 survey, impacting oil and gas players worldwide. Several oil and gas companies have responded by expanding into new, greener areas—including renewables, sustainable fuels, and electric vehicle charging networks—and many leading players are rebranding or setting net-zero goals.

Responding to the challenges of the energy transition will require innovation in what has historically been a quite conservative sector. Companies with above-average diversity on their management teams reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity.⁵ Now, more than ever, oil and gas companies must make diversity a strategic priority for their organization if they want to succeed in a future driven by the energy transition.

Companies that actively and visibly take action to create clean energy businesses can attract a more diverse talent pool. According to the World Petroleum Council 2020 Youth Survey, about one-third of respondents viewed the energy transition as one of the things they like most about their careers. (See Exhibit 8.) Emphasizing a company’s efforts to advance the energy transition will increasingly become a prerequisite for success in recruiting diverse talent.

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Changes Due to COVID-19

In oil and gas, as in other sectors, COVID-19 has been an incredibly disruptive force since it emerged. Companies took many different approaches to D&I issues in the midst of the pandemic, but several leading companies recognized the need to maintain or accelerate their D&I policies and programs:

During its 2020 restructuring program, Shell recognized the risk and cost of regressing on diversity, so it proactively protected its D&I progress by incorporating diversity-based KPIs into the program. By ensuring accountability through access to data for decision makers, these indicators helped the company increase the proportion of women in leadership positions by more than 4 percentage points. (See “ Case Study: Shell.”)

Argentina’s state-owned oil company, YPF, recognized that there was an unequal division of responsibilities for household work when employees went into lockdown. In response, it started a campaign urging men in the organization to “share the load” of care duties at home to support equity outcomes. (See “Case Study: YPF.”)

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Case Study: YPF

YPF, Argentina’s oil and gas company, employs around 20,000 workers. Lengthy national lockdowns and stringent social distancing measures during the height of the COVID-19 pandemic caused the company’s employees to reorganize their working and domestic routines. While most of the YPF workforce adjusted to full remote working, field staff supporting essential operations continued to work onsite to safeguard Argentina’s energy supply.

D&I Outcomes

YPF uses employee surveys covering diversity- and gender-related topics to develop and prioritize D&I actions for different groups within the company. This approach enables YPF to maintain momentum in key D&I areas and to gauge the success of individual initiatives, helping ensure their effectiveness.

To boost transparency around its D&I efforts, YPF publishes several reports. In 2017, the company began including a section specifically about D&I in its annual report. The following year, it included a diversity report as part of its broader sustainability report. Managers communicate progress on gender- and diversity-related KPIs every six months to the company’s executive committee and annually to the board of directors. In addition, the company publishes details about its D&I initiatives and wins internally and externally.

Unique D&I Interventions

In July 2020, YPF conducted an employee survey to understand how COVID-19 was impacting gender roles and the use of time by men and women during the pandemic. Approximately 1,700 employees—about 60% men and 40% women—responded, with only a very small number opting to answer anonymously. The survey revealed that the pandemic had reinforced traditional, stereotypical gender roles. For example, men spent less time than women caring for children and more time doing paid work. Women did the bulk of cleaning and care activities, spent less time doing paid work, and had less sleep than men. “Our goal with the time-use survey was to sensitize our employees—to initiate the dialogue,” said Poli Argento, YPF’s diversity lead.

The results led YPF to make promoting co-responsibility a key element of the company’s D&I approach. It concluded that diversity and gender equity considerations should be incorporated into decisions within the company about assigning roles and tasks and fixing objectives. In addition, the company set out to promote more equitable career development programs for men and women employees, increase respect for other groups within the organization, create more flexible working arrangements, encourage greater sharing of domestic duties at home, and raise awareness of D&I challenges.

After the survey, YPF ran a campaign promoting greater co-responsibility within the company via its internal social media channels. It encouraged employees to share domestic tasks, by asking them questions such as “Did you help your kids with their homework?” and “Did you wash the dishes?” The campaign had more than 17,000 views and over 400 reactions, and it generated conversations between social media users.

“As companies, it is difficult for us to get into the private spaces of our employees. But it is hard to achieve equity if we do not have visibility about the realities experienced in each household,” explained Argento. “To break stereotypes, we must take more steps forward.” At the same time, the company wanted to endorse a different perspective. “It is okay for a man to say, ‘Today I am going to pick up the children at school and I cannot go to this meeting,’” she said.

Supported by the survey findings and its refreshed D&I agenda, YPF launched external communication campaigns, podcasts, and virtual meetings with its business partners to advance improvement in key D&I areas. In company-wide open talks (the first about diversity during COVID-19), employees from diverse groups reflected on how to improve inclusion and gender equality. In another talk, senior leaders from the company shared their own experiences with tackling co-responsibility at home and managing gender integration in their teams.

Challenges and Opportunities

The company has found that a more inclusive approach not only improves employees’ experience of work, but also helps YPF achieve its goals. However, challenges related to changing attitudes that reflect gender-based stereotypes remain. Many male field workers still believe that women should be treated differently with regard to issues of safety or physical strength. “One female field worker put it like this: ‘When a man and a woman lift something, the assumption is that the man is helping her. But when two men lift something, it’s considered teamwork,’” Argento said. Reeducating workers starts with better understanding the needs of others and not making assumptions, she noted.

Overall, female employment was more impacted by the pandemic than male employment. According to a BCG survey across all industry sectors, women, on average spend 15 more hours on domestic labor each week than men do.⁶

However, women who remain in the oil and gas sector seem to feel the impact of COVID-19 on their career only slightly more negatively than male colleagues do. (See Exhibit 9.) Both men and women see flexible work models as a positive development over the past two years. In our employee survey, about 65% of male and female respondents said that they expect to benefit from the new models that have been introduced or expanded as a result of the pandemic.

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Our survey also found that company leaders emphatically believe that the changes in working practices are here to stay. “Our plan is to continue with the option of home working—to some degree—once things go back to the new normal” was a common refrain across conversations in all corners of the globe. But while 84% of oil and gas companies provide some form of flexible working, other options are less widely available: 76% of companies in the sector provide unpaid leave, and just 41% allow job sharing. Introducing programs to formalize these new workplace approaches will be important in boosting employee retention and attracting the next generation of diverse talent to the industry.

Our employee survey indicates that caring for a dependent person affects women’s job choices more than men’s, but such responsibilities have a noticeable impact regardless of gender: 30% of women with dependents and 48% of men with dependents would be willing to take on an international assignment, versus 61% and 66% respectively for individuals without dependents. (See Exhibit 10.) The best approach for companies to take is to avoid making assumptions about personal circumstances, and instead to ask and offer opportunities equitably. Although both men and women with dependents may decide to decline assignments that entail relocation, a substantial number of those with dependents (30% of female respondents and 48% of male respondents in our survey) indicated that they would say yes. The bottom line is not to assume what the answer will be, but instead to ask each individual directly.

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Expanding the Definition of Diversity and Inclusion

The oil and gas industry needs to take action on all fronts to embrace diversity in its broadest sense, foster greater inclusion, and build equity. Today, we see a disconnect between companies and their employees about what constitutes diversity and inclusion. Many employees expect a broader dialogue than companies currently provide, particularly on race, abilities, and socioeconomic diversity. (See Exhibit 11.)

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In recent years, companies’ conversations about D&I have become more frequent and have slowly expanded to encompass other forms of diversity such as race and ability. The share of press coverage focusing on race in the oil and gas industry increased by 13 percentage points from 2019 to 2020 (on a normalized basis), particularly in light of the Black Lives Matter movement in the US, although gender is still the primary D&I topic. (See Exhibit 12.) Compared with the D&I discussion in sectors such as mining, construction, and even technology, the conversation at oil and gas companies is relatively balanced, although there, too, gender remains the dominant topic.

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For example, bp has broadened its D&I agenda to reflect the importance of equity and is prioritizing actions related to people of color. (See “Case Study: bp.”) This effort has included rolling out policies and programs that actively promote its intention in its two biggest markets—the US and the UK—and incorporating diversity, equity, and inclusion as a core part of its strategic framework.

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Case Study: bp

bp is reimagining energy and transforming from an international oil company to an integrated energy company with investments in renewables, electric vehicle charging, and digitization. It recently announced greater equity for its workforce, customers, and suppliers as one of its strategic aims, recognizing diversity and inclusion as an objective in its broader sustainability goals.