When the spring sun shines in Calgary, it’s a pretty good bet that it will convince more than a few Italian sports cars to come out of hibernation. And they won’t all be driven by bankers.
This year, as the April bonus season wraps, the city can count on seeing a few more high-revving supercars. Shortages of qualified executive managers – engineers, geophysicists, geologists, reservoir engineers – are prompting wage wars so competitive that one of the world’s top head hunters is warning that it’s headed into bubble territory.
In fact, bonuses of 100 per cent salary – and in some cases 200 per cent – plus hiring packages that can hit $300,000, are now soaring above levels seen in the last boom. The bonuses are coming in cash, too, as executives and mid-level manager look for profit at a time when energy stocks are broadly underperforming, leaving most options granted in previous years under water.
“If you go back to 2008 or 2009, they were not at this level at all,” said Robert Travis, managing director of Boyden Calgary. Boyden is a top-10 global executive search firm, with more than 70 offices in 40 countries.
Its view on Calgary’s salary situation: “It’s not sustainable,” Mr. Travis said. “We are in the middle, it feels like, of a compensation bubble.”
Canada’s oil patch faces a number of difficulties. The proliferation of new ways of working – from innovations in extracting oil sands, to the broad-scale adoption of underground fracturing, or fracking – has driven strong needs for the small set of people experienced in those areas. International competition is also heating up: firms in Eastern Europe and Australia, which are looking to use fracking to unlock their own oil and gas, are also coming to poach talent.
The demographics of an aging western labour force, which is both draining away people to retirement and conferring negotiating leverage on those who stay, aren’t helping.
At the same time, companies in the oil sands are showing an increasing preference to hold on to their own talent. They are tapping many decades’ worth of oil supplies, after all. It makes more sense to nurture in-house expertise, than to bring in outside help that might not stick around.
“With all of the current emphasis on the next 50-plus years of heavy oil activity, we’re seeing less and less of a reliance by some of the major companies with ownership outside of Canada dropping in expats in top leadership roles,” said Mr. Travis. Plus, the oil sands are unique. Often, those outside Canada don’t have the expertise to make Fort McMurray tick.
All of which translates into a salary bonanza. And Boyden sees no sign of a slowdown. Barely five months into 2012, and the 2011 bonuses are already looking meagre.
Some employees are “very much expecting generosity on the side of their employers” in next year’s season, Mr. Travis said. “I expect many team members to be exceeding 100 per cent in the next bonus go-around.”
Gentlemen, start your Ferraris.