Critical risks in the energy industry — and what to do about them

The energy sector seems to be doing well, especially in the Pittsburgh market. But with that upswing comes two challenges that growing employers are facing: staffing shortages and increasing automobile insurance rates.

While these challenges aren’t limited to the energy industry, nearly all companies in the sector are struggling with them, says Tony DeRiggi, area vice president at Arthur J. Gallagher & Co.

Smart Business spoke with DeRiggi about what he’s hearing from the energy industry and ideas for managing these challenges.

Why are energy companies having trouble finding employees?

As these companies grow, they’re struggling to find good people. Certain jobs are especially hard to fill, such as welders or drivers with a commercial driver’s license (CDL). Most people who are skillful and have experience are already working. Many of the younger generation, those ages 22-30, aren’t choosing to do these jobs, even though they pay very well.

With difficult, physical jobs, many of the potential candidates willing to perform them have challenging work history issues, such as a DUI, a history of quitting jobs or they haven’t been working. The hiring company may be afraid that if it invests the time for new hires to get drug tested and trained, they may end up quitting. It’s a balancing act — managing turnover while striving for an acceptable return on investment.

While this is a problem across the board, the energy companies that didn’t downscale as drastically during the downturn rebounded quicker. Obviously, businesses couldn’t pay for more people than needed, but when the energy sector turned around, there was a bit of a hiring frenzy. The people with the most favorable employment history were picked up first, and now there’s not enough qualified people in the talent pool.

How can companies overcome these staffing shortages?

Employers can get creative about finding candidates and increase recruiting efforts. Training and mentoring programs may need to be improved. Experienced employees can record detailed videos for operating important heavy equipment, for example, or rotate assignments to broaden experience and increase knowledge transfer.

Consider adding programs to make your organization a more attractive destination. This includes flexible schedules, paid time off, child care, employee assistance programs, and a total rewards program that incorporates an attractive compensation and benefits bundle with the promise of potential growth in the company.

What’s happening with automobile insurance rates? What can companies do about it?

In general, insurance companies are charging higher rates for any type of automobile exposure — it doesn’t matter if a business has heavy trucks or small vehicles on the road. The reason for the increase is more frequent and more severe accidents than history would predict, which is largely attributed to distracted driving.

Every company should implement hands-free driving and Bluetooth devices. Many companies don’t allow handheld devices in the car. Some have rules where employees aren’t allowed to answer their cellphone, Bluetooth or not, while they’re driving.

A few companies have added technology, such as Lytx or GreenRoad, to help safety ratings. These fleet safety solutions are usually used for commercial vehicles because it’s an investment per vehicle. They score drivers and let them know when they accelerate too fast, swerve, speed or hit the brakes abruptly. The problem is if a driver slams the brakes to avoid a deer, it’s a ding on the score. However, this technology should bring down close calls and accident claims.

Whether or not a company invests in safety technology, employers can create bonus structures for safe driving with different award levels. If someone’s score is low enough, management can move them to a different job or provide additional training.

If a company’s driving record improves, insurance companies will notice. That requires a strong fleet safety program with management support, ongoing supervision, driver training and ongoing education, vehicle maintenance and accident investigation. As a safe risk, insurance companies will be more inclined to compete for your business, even in a market where rates are generally rising.

Insights Insurance/Risk Management is brought to you by Arthur J. Gallagher & Co.