Fossil fuels, renewables; No matter how we're powering the world, it is the people who fuel the energy industry.

The industry is facing challenges, in both the frontline and the corporate office — Clients often asking how they can recruit, retain, and engage the best people while bridging generational divides.

Those who do will have the most critical capital to deploy against corporate America's biggest challenge. Those who don't will miss a generational opportunity to shape the world.

I'm Jake Purvis, a Partner in Oliver Wyman's Energy and Natural Resources team as well as our People and Organizational Performance team, and I'm based out of Atlanta. My passion has always centered on activating strategy through people. So many of our clients have had brilliant ideas with impeccable business cases that have failed because the people were not equipped and engaged.

I remember watching an upstream operator in the Gulf expertly redesign a world-class air and sea supply chain only to struggle with implementation because the teams were not sufficiently bought in — both in the office and on the rigs. That really cemented this passion for me.

Whether it's, for example, performance management at scale for frontline workforces or operating model design in corporate offices, my expertise is on shaping how people and teams work together to make strategic initiatives stick.

As we work with clients, we see that frontline workforces are facing a growing supply and demand chasm. The need for the frontline is growing. Renewables requires more investment, new projects, and more workers. And the Inflation Reduction Act has created a massive windfall. Energy companies need more people and need them upskilled at a pace not seen since the World War II industrial complex.

Meanwhile, the supply is shrinking dramatically. 20 million baby boomers are retiring in the next five years — that's 15% of the US workforce. And the youngest workers — Gen Z — are not replacing them at a commensurate rate.

Through the most comprehensive study of Gen Z you will find, Oliver Wyman's analysis shows that the priority for the newest members of the workforce is flexibility in hours, location, and working style. 85% of Gen Z prefer a hybrid or remote work environments. That's a foreign concept for the frontline jobs in the energy industry. Whether it's the "three weeks on, one week off" of the oil platform life, or it's the 11 to 12 hours behind the wheel of a waste truck, or the near-on-demand spikes in oilfield services, demand is running up and supply is racing down.

So, how will energy companies adjust to this new reality?

I hear many energy companies believe that the energy transition will be their saving grace because it will provide a great sense of purpose amongst their workforce and potential workforce. But I am skeptical that's the silver bullet — 60% of Gen Z believes that a job does not need to be fulfilling, but rather it should enable them to find balance and fulfillment in other aspects of their lives. Energy companies will need a much more holistic labor and recruitment strategy.

In parallel, throughout the industry, new challenges have emerged in corporate offices. While they may be able to offer a more compelling value proposition to younger workers, are they able to evolve their operating model so that they stand ready to adapt to the shifting industry? 

This requires more nimble teams and better collaboration than ever before. Productive, innovative relationships often do form organically, but organizations cannot afford to put all their eggs in that basket. They must intentionally cultivate the right collaborative practices to enable the whole organization to advance.

This requires leveraging data-driven insights, like organizational network analysis, to X-ray their organizations and fully understand where people and teams are working well, both in their own teams and across.

At the end of the day, set aside the cash flow statements, the physical assets, and the IP. The heartbeat of organizations is their people. The idea-generating brains are their teams and the collective consciousness is their support groups. Especially in this changing, transitioning world, firms in the energy industry will thrive or just survive based on how they set up their people.

I'm Jake Purvis, and this is my take on human capital in energy.

This transcript has been edited for clarity.