For over 20 years, the national oil companies (NOCs) in the Egyptian oil and gas sector have been suffering from a high turnover rate, notably among experienced engineers. Having such a conundrum has made the Egyptian sector face numerous technical problems.
A sample paper entitled Determinations of Engineers Turnover Working for National Oil and Gas Companies in Egypt, written by Abdallah Farahat from Agiba Petroleum Company in 2018, has shed light on this issue. This paper proposes a conceptual turnover model, specifically for the Egyptian oil and gas sector.
Accordingly, this paper recommends a framework to analyze and control the turnover phenomenon among workers, specifically in Egypt’s oil and gas sector.
Turnover Reasons Among Workers
Speaking of the turnover problem, Egypt has been witnessing this trend as a result of the high immigration rate among well-educated and experienced workers, including seniors and managers who occupy significant positions in their institutions. Their immigration should be alarming to organizations, scholars and governments, as they should pay greater attention to this phenomenon to curb the increasing turnover rate. Accordingly, retaining those experienced workers help ensure success, provide competitive edge for firms, and encourage new workers to be enrolled in the sector.
When it comes to the Egyptian oil and gas sector, several NOCs form joint ventures (JVs) between the Egyptian General Petroleum Corporation (EGPC) and/or international oil companies (IOCs). These companies are managed by the Egyptian side, and are subject to national and local labor laws. It has been found that the turnover problem lies in the strategy of these companies because they suffer from the lack of a robust human resources management system, as well as insufficient plans in training, recruiting, or retaining workers. Consequently, the turnover rate inevitably increases.
The Turnover Model
This paper introduces a framework which mainly aims to understand the reasons why Egypt’s oil and gas employees leave their work, and how to eliminate this phenomenon. The model considers turnover as a dependent variable, which is measured in an experiment or evaluated in a mathematical equation. The model also includes independent variables which include the job fit, alternative opportunities and organization factor. These variables are interchangeable and are used to test the effects of the dependent variable.
Furthermore, the model contains moderating variables to measure the direction and the strength of the relation between the dependent and independent variables. These moderating variables are labeled as job stress which measures the relation between job fit and turnover, oil prices that influences the relation between alternative opportunities and turnover, in addition to the organization’s culture, financial system, and supervisory level.
Concerning the hypothesis of the turnover model, it mainly consists of three paths.
The first path is where the job stress is the moderating variable. Since there is a reverse relationship between the turnover and job fit, increasing job stress will lead to raising turnover intentions.
Job stress is witnessed in the oil and gas industry because the employees work in harsh environments and under stringent conditions. Among these conditions is that the employees might be working away from their families, as well as working for long hours. In addition to that, employees might be working around the clock to solve technical problems and/or monitor critical situations because a little mistake could lead to catastrophes.
Furthermore, job stress does not affect the work performance only, but it also has a direct impact on the employees’ health and life. In other words, stress accumulation negatively affects employees’ health and performance; which often results in being nonproductive. That is why maintaining a work/life balance is critical. To do so, companies need to observe their employees’ behaviors and attitudes to release their stress regularly.
In the second path, an alternative job is directly related to turnover, with oil prices as a moderating factor. When oil prices increase, more jobs will be created; hence, the turnover rate will increase accordingly. This can be seen when experienced employees seize the opportunities they receive and move to other companies. From the employees’ perspective, they believe that this move will satisfy their self-esteem in new powerful positions; thus, it will help enhance their careers and increase their outcomes.
Moreover, when oil prices increase, new exploration and production (E&P) activities become available in the oil and gas market. Consequently, investors are encouraged to boost their investments and create new job opportunities.
Speaking of the third path, organization factor has a reverse relationship with turnover. This is because if an organization has a good culture, professional managers, and fair payment system, the turnover rate will drop. It is also important to consider the several factors which lay under the organization such as policies, regulations, management, treating employees, firm culture, organization structure, facilities, and compensation. However, this model focuses mainly on policies, laws, and regulations.
As for the organization’s policies, they are defined as a set of principles and rules adopted by an organization to help reach its goals, determining employees’ rights and responsibilities. Thus, any vague rules will cause work disorder and instability. Accordingly, successful firms always update their systems in order to cope with the workers and market requirements. Such type of companies always succeeds in attracting the most skilled and responsible workers.
Looking at the organization’s culture, it mainly specifies the shared values and beliefs within the organization. Thus, the organization factor can be enhanced, improving unity and teamwork.
Moreover, the organization’s payment system is really important for workers. Thus, when this system or the key performance indicators (KPIs) are not clear enough, this could lead to having inequality. This may happen because salaries do not always reflect employees’ responsibilities and their duties.
Furthermore, the organization’s management is crucial for its success and stability as it reflects its strengths, in addition to its managers’ ability to direct their workers efficiently. Hence, any lack of communication between managers and workers will create a skills gap.
The oil and gas sector is one of the most promising industries in Egypt, which help in achieving Egypt’s vision 2030 and in boosting its economy. Consequently, investing in developing and supporting the sector’s employees is crucial. Thus, the conceptual model proposed in this paper is considered as a seed to analyze the employees’ behaviors and the reasons behind the high turnover in the oil and gas sector. It can be seen as a role model to improve organizations’ policies in order to support employees and upgrade their performance.
It is critical to note that the factors used in this model were selected in compliance with the Egyptian situation. According to the model, the organization is acknowledged as the most important factor that governors have in order to establish a solid system that works for the sake of employees and employers alike. This model can further be tested practically and academically to measure the significance of these factors. This will help human resources managers and decision-makers to enhance their policies and retain professionals.