Training and Turnover

by Bill Murchison, Jr., President and CEO

At a recent IADC well control meeting, a gentleman stated that he did not want to pay to train other company’s employees. His company was experiencing a high turnover rate, and he was concerned that the money he invested in training his people would be wasted.

In 1970, my family was living in southern Iran. The oil consortium had a 180% turnover rate at that time. The operators, contractors, and service companies all had an extremely high turnover rate. To complicate matters, drilling in Iran was very difficult. There were a lot of problems with lost circulation, very abnormally pressured formations, and mobile and squeezing formations. The consortium, which included Exxon, Mobile, Chevron, BP, Shell, Texaco, and Gulf, determined that what was needed was more training. They required all personnel, whether from the operator, contractor, or service company, to go through an intensive seven-day class. The class covered all the normal problems that would be encountered, how to recognize them, and what corrective steps to take to resolve the problems. The class was highly successful and greatly improved the drilling operations at that time.

Turnover is very costly to a company. Business Week cited that the average cost of losing a typical worker is $50,000.00.1  Putting numbers to that statistic shows that a 1000 worker company with an ineffective training program stands to lose as much as $14.5 million a year.

One of the problems with high turnover is the loss of experience and knowledge. Some industry experts say that it takes about ten months on average for an employee to become familiar with company policies and procedures, and to become a productive employee. During the time it takes to get new employees up to speed, there will be more mistakes, some of which can be very costly, and injuries. One of the keys to mitigate these associated problems is training, which is the approach that the major oil companies used in Iran.

But training does more than prevent operational problems. Research has shown that investing in training helps retain valuable employees. Forty-one percent of employees who rate their company's training programs as poor leave within a year. Among employees who rate their company’s training opportunities as excellent, only twelve percent leave within a year. With the current expansion and growth in the oil business, companies cannot afford to lose valuable personnel. In fact they need to be doing everything they can to retain them and to recruit other skilled workers.

Employees know when their employers value them and invest in their future. In fact, Forbes Magazine stated that the perception that there is not a future at a company is one of the top five reasons that employees leave.2  Investing in the future of an employee with training is extremely important. I would say to the gentleman who did not want to train his employees because of his turnover rate, that if he will make a commitment to train his employees, his turnover rate would substantially decrease.

1 Business Week, March 1, 1999

2 Forbes, Louis Efron, June 24, 2013