Nov 30, 2021 12 min read
Replacing the “Oil” in Oil Marketing Companies: An HR Perspective on ICE-to-EV Transition
As the world moved from the 19th to 20th century and internal combustion engine cars started replacing animal-driven carriages on road, oil was expected to drive the human race for a long time. Hardly could have anyone imagined that just about a century later, we would be witnessing the beginning of the end of Petrol and Diesel driven vehicles. While it is still too early to write the obituary of the internal combustion engine, clearly Electric Vehicles (EVs) are becoming a reality, and not just a distant dream.
An increasing number of nations are pledging to stop the production of ICE (Internal Combustion Engine) vehicles by the end of the decade. In India, currently, the proliferation of EVs is extremely low. However, growing pollution concerns, government’s focus on reducing dependence on crude imports and consumers’ need for cheaper operation costs are slowly but gradually propelling India ahead in the EV race. There are visible speed bumps, but it is just a matter of time before ‘EVs will overtake ICE vehicles in India.
The government is taking measures to speed up the adoption of EVs in India. The two-phased FAME scheme (Faster Adoption and Manufacturing of Electric Vehicles in India) and various state subsidies reflect the government’s intent to boost EV sales. However, it is only when the operations and economic benefits of EV outweigh those of ICE vehicles that this transition would accelerate.
The transition would impact almost every stakeholder in the automotive value chain. From OEMs, who will virtually have to go back to the drawing board to design efficient and economical EVs, to components makers, who will need to cater to a totally new market, from requirements of increased R&D in light-weighting to totally new fields of study like BMS (Battery Management System). However, one of the most drastic changes would be in terms of fuel supply. As the need for Petrol and Diesel declines and is replaced by demand for rechargeable lithium-ion batteries, OMCs, globally and in India, find themselves at the crossroads – whether to continue catering to ICE vehicles on the roads till the last tank is filled or to take part in this transition and prepare for the next phase of growth.
OMCs by DNA are marketing companies with refining as a core function. The real strength is in their presence in virtually every nook and corner of the country and the ability to reach out to customers in far-flung areas. They also have a dedicated workforce that understands customers’ needs in terms of what? when? and where?
One of the ways in which OMCs can be catalysts in the ICE-to-EV transition is by leveraging their existing robust infrastructure to serve the emerging EV market i.e. by equipping petrol pumps to serve as swapping/charging stations for EV batteries. Given the presence of Petrol Pumps on highways, cities and towns, motorists would find it very convenient to seek out petrol pumps to cater to their battery charging/swapping needs.
Organizations are not just brick and mortar structures nor can they be defined by their financial performance alone. The most valuable assets of any organization are its people. It is these people who will undergo and lead one of the most definitive transitions in the functioning of the Oil sectors in India. While the changes in Operations – Refining - Retailing are well documented and intuitive, the shift in deliverables of the workforce are more complex and somewhat intangible.
There are three possible areas that OMCs will need to focus on in terms of people development for change management. The list below is not exhaustive but indicative of an industry in transition.
- Developing an Agile Workforce – If OMCs wish to retain their position as key stakeholders in the electric vehicle segment, their workforce will have to be ready for three key transitions. Since the change from ICE to EV will not be 100% (ICE vehicles already on the road will continue to ply for a long time) they will need to manage the additional requirement of serving the EV sector. Thus the workforce will need to be extremely agile.
- Changes faced by the refinery staff – Till now, the refinery staff has excelled at producing a range of petroleum products to cater to the civilization. Petrol & Diesel have been the key products. As the demand scenario changes, there will be a need to leverage technology to alter the product mix. There will be more focus on other crude derivatives including but not limited to petrochemicals. This would entail focused training and development of the specific competencies of refinery staff.
- Changes faced by sales & marketing staff – the commercial vehicles segment would be the last one to see a significant shift to EVs – 2Ws and passenger vehicles are more likely to see an early shift. Therefore, there would be a limited change in Fleet Sales Officers role over the near term. However, segments such as Lubes and Branded fuels will see a faster change. Given that the sales and marketing staff know the pulse of the market, focusing on training to leverage their skills to attract EV customers is a must.
- Changes in Organizational decision making – as OMCs enter an uncertain environment, data-driven decision making becomes vital. Analyzing real-time data to come up with predictive insights will be needed for optimizing operational efficiency.
- Enabling network partners in embracing this change –dealers & distributors of OMCs are the face of the organization. Thus the dealer network will have to be educated and upskilled to face the impending changes in their position in the value chain.
- A scenario is envisaged where a Petrol Pump will offer fuel as well as serve as a Charging/swapping station.
- There are possibilities of enhancing the Allied Retail Business segment by engaging with the customer visiting the petrol pump.
- Along with the dealers and distributors, the driveway salesmen, mechanics employed by them will also need to be upskilled for the new technology and tasks.
- Backend investments and know-how about battery variants, inventory of various types of batteries will also be required.
- Liasoning with new stakeholders - the EV era will bring in new stakeholders– power distribution companies, battery manufacturing companies and even vehicle manufacturers. OMCs will need a dedicated workforce for -
- Ensuring uninterrupted power supply from the power distribution companies. This might be a challenge in remote areas of the country
- Forging strong tie-ups with the battery manufacturers to ensure replacement of faulty batteries, possible servicing and even procurement of new batteries will be required at Petrol Pumps. This is more pertinent for the swappable batteries.
- Entering possible strategic alliances with the battery manufacturers so that specific charging requirements, if any, and the latest fast charging technology can be offered.
All these changes are long term and might not happen immediately. However, to be ready for the inevitable, there is a need to do extensive planning and preparations
The biggest challenge faced by the HR team at OMCs is to ensure that workforce across departments and hierarchical levels are ready for the changing times. This would require extensive training, development programs, multiple modules for Employee Engagement to drive the Sustained High-Performance Culture that OMCs have been known for in India.
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