An Energy Perspective with Jon Verlander
Jonathan Verlander, one of the most knowledgeable executive search professionals in the energy industry, joined Alex & Red this year. Jon began his career in geology and business planning with Shell and Enterprise Oil, followed by a decade in energy finance with Royal Bank of Scotland, Société Générale, and Commonwealth Bank of Australia.
We visited with Jon about the metamorphosis taking place in the energy sector, and how it impacts his clients’ talent acquisition and development.
Q: The energy and power sectors, in which you have spent your whole career, have experienced significant change and face an uncertain future. What are the three most significant issues your clients are facing today?
Great question. Before I answer, let me say how pleased I am to be part of the Alex & Red and The Alexander Group family. There are many executive search firms serving the energy space, and none of them have a stronger commitment to long term client relationships. It is an ideal platform for me to continue to serve my clients and expand the firms’ footprints in these sectors.
So, returning to your question about energy and power … the three primary issues are transition, transition, and transition.
First and foremost is the big transition -- decarbonization of our economies and societies.
Decarbonization is one of the biggest issues affecting all of us. It has been interesting to observe companies and individuals in the oil and gas industry, for example, shift from viewing decarbonization almost as an existential threat to their very existence, to an opportunity that drives them personally and professionally.
Decarbonization and the transition of our energy usage is not a binary, either/or, situation. We are inevitably going to transition to lower carbon societies and economies, but in many diverse ways, at varying speeds, and with the involvement of many stakeholders. This is a complex picture!
But decarbonization is not only about reducing our extraction of oil and gas, but also about the reduction of carbon emissions in everyday activities. Whether companies are responding to client, employee, society, or investor demands, most companies are seeking to reduce their carbon footprint. This translates into the need for leaders and experts with different skill sets to drive new sustainability goals and projects within a company. For example, this may be the addition of a new Head of Sustainability or ESG; a drive to implement energy efficiency improvements and local power generation and energy storage at offices, manufacturing sites, etc.; or the creation of a new business unit to take advantage of low carbon or energy transition opportunities.
Q: And this leads to opportunities for your clients?
Exactly. The transition of our economy and society to lower carbon activities and impact means that I am often working with clients to transition or reposition their business strategy and focus.
I’ve been working in these sectors – both directly and indirectly – for over 25 years. Although it makes me feel old to say this, when I started my career, there was a distinct difference between the energy and power sectors and the companies that operated within them. I was an intern at BP in the 1990s when British Petroleum, under John Browne’s leadership, was beginning to reinvent itself and invest in renewable power. The reaction was equal parts amusement, despair, and excitement.
Today, the lines that did exist between energy and power have become blurred or dissolved all together, and many companies are seeking to transition their businesses, the sectors in which they operate, and their clients and customers.
Q: How does this transition impact talent needs of your clients?
A large part of this major transition is a movement of talent, expertise, and know-how among quite different companies and sectors.
My search practice still has a foot firmly in the finance and traditional energy industries, sectors I have served for many years. I believe the traditional oil and gas industry will have an important role to play in the world for a while longer.
However, for several years, I have been increasingly working more for clients who have come into this broader energy space for the first time - such as investors in new technology to be deployed in the energy sector, or industrial companies that want to decarbonize their own activities or find decarbonization solutions for their clients.
Our clients are increasingly drawing on the breadth of our knowledge across many industrial sectors to look beyond the narrow window in which they operate to recruit new leaders or experts for their business. The rationale for this varies. For example, in sales and marketing, it can be about sector knowledge or client relationships. In other instances, our clients are seeking people who bring with them experience gained in areas like technological transformation, energy efficiency, supply chain management, distributed energy resources, or cost management.
Q: How do you think this transition will play out in the future?
Whether or not we like it, politicians have a crucial role to play in the transition taking place in the energy industry. They aid in this transition by way of creating laws and incentives to shift to lower carbon activities. However, the tragic events in Ukraine, and consequential impact on global oil and gas markets, appear to have lessened the appetite of politicians to enact laws. They resist any legislation that will impose any taxes on their constituents, who are already angry about rising gasoline prices or heating bills, and are unwilling to pay for this transition. I believe this means we will have to get used to being in an energy transition for longer than we perhaps expected or wanted.
Continued investment in the technologies that will help us through this journey is critically important. I believe investors will be looking for truly scalable solutions and not just novel, smart solutions to problems. In several of my search engagements, strategic investors and partners are becoming more important as they bring expertise and know how in things like supply chain management, project management, routes to market, and knowledge to assist with the scalability of these technologies.
Although I don’t believe a sector such as the oil and gas industry is going anywhere in my lifetime, it will continue to face headwinds in the form of reduced appetite from investors and from increased regulation. An example being the recently proposed SEC regulations around the reporting of carbon emissions. Perhaps we will see an increase in private ownership of assets and companies, but regardless, such companies will always need smart, commercially astute, technically competent leaders.
My view is that we will see continued transition as sectors merge, and competitors and clients work together as co-investors or in joint ventures to find technological, commercial, and social solutions. This is an exciting time to be in the energy industry as an executive search consultant. Although it is not a well-defined journey and will undoubtably have some twists and turns, it is rewarding to be able to partner with our clients and share our expertise with them as they chart their course on this journey.