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The New Project Leader
1. Heidrick & Struggles reveals the increasing
demands being made on the future generation
of Project Directors within the fast-evolving
natural resources sector
by Luigi Slaviero, Partner, Industrial Practice
and Hugues Mercier, Associate Principal, Leadership Consulting Practice
The new
project
leader
2. Professionals within the natural resources
industry are faced with ever more complex
and daunting projects within the context
of a highly competitive and political
marketplace. And in an age when mitigating
risk is more important than ever, the role of
the Project Director in particular is becoming
increasingly demanding.
The new generation of Project Directors are expected
to know as much – if not more – about the world of
stakeholder management, corporate communications,
governance and leadership as it does about engineering.
Management skills and accountability are growing in
importance. And the scarcity of Project Directors willing
and able to take on these new demands is compounding
the human resources challenge for the industry.
The risk managed by a single Project Director can
represent up to one third of a company’s entire portfolio
risk and can therefore have a huge impact on the
organisation’s financial health as well its corporate
image. The savvier corporations have recognised this
and acknowledge the need for professionals with
strong leadership skills as well as technical know-how.
Projects have become so complex that no one person
can master all the technical challenges. Teamwork and
communication are crucial.
Following in-depth interviews with leaders in the natural
resources industry, Heidrick & Struggles has identified the
benchmarks and best practices that are being developed
to enhance project management capabilities and, in turn,
sustain the pipeline of the future generation of Project
Directors.
Survey findings
Talent challenges
The physical and political challenges of leveraging natural
resource reserves in hostile and remote regions are
significant. Moreover, industry insiders are concerned that
difficulties in finding talent equipped with the necessary
capabilities are constraining successful and timely project
delivery. The risks of failing to address talent management
include financial loss, brand damage and team burnout,
so it may come as no surprise to learn that many
organisations are now paying closer attention to their
governance and hiring policies.
These firms are looking at the way they drive projects, and
how they address their project leadership capabilities.
They are reassessing the competencies needed by their
project management function. And they have identified
the need for strong leadership and commercial skills.
The governance environment has evolved too, along with
the increased complexity and multi-billion dollar capital
expenditure level of projects. Collaborating with new
partners such as global supply-side alliances and larger
consortia for complex projects with high political visibility
has increased the governance burden. And as the stakes
and expenditure increase, so do the risks.
Dealing with such challenges requires robust risk
management, contract management, accountability and
front-end commercial astuteness, as well as insightful
forecasting ability. And with many Project Directors now
responsible for managing stakeholders’expectations
– including those of politicians, suppliers, clients and
external partners – the ability to carry out a plethora of
challenging and time-consuming responsibilities can
represent the key to success.
Forces of change in
project management
2 The new project leader
3. Locating talent from other sectors, such as IT,
infrastructure or transport, is slowly becoming more
commonplace. Anecdotal evidence shows that there
have been several successful cases of senior Project
Directors moving from one sector to another, such as from
aerospace technology to gas or oil. After a few months
(or even weeks) of learning the jargon they are frequently
operating on par with their peers.
One executive agreed,“The Project Director profession has
been elevated to a leadership role, with communications
expertise a necessity, plus the ability to manage a project
via management information dashboards. Precisely
because of these additional skills, it is possible to attract
Project Directors from other sectors.”
Managerial and
leadership behaviours
Project Directors are no longer simply accountable for
delivery. They are acting as‘mini-CEOs’covering a large
spectrum of activities. Intellectual and technical skills are
of course necessary but behavioural and communicative
dimensions – or leadership intelligence – are now crucial
for success.
According to one VP global projects,“We as a firm believe
that the winning Project Director has the talent of the
general manager, or a mini-CEO – who creates a‘company’
(the multi-billion dollar project), manages its lifecycle and
also manages its‘closure’(i.e. commissioning for hand-over
to operations).”
Another executive concurred,“We realised quite rapidly
that three-quarters of the skill and competency sets that
are required for successful project leadership are the
same as for the company’s general, firm-wide leadership
programme through which it develops its business and
general managers.”
This change in skill set is starting to be recognised by
organisations and is evidenced in recent hires. A large
international oil company has recently started recruiting
future Project Directors from the Navy, for example.
“Engineering and technical skills are nice-to-have but
leadership skills are a must-have. This trend has emerged
in the last decade and we try to bear it in mind when
appointing new Project Directors,”confirmed its VP
Human Resources.
Generation gap
There is another area of concern, too – the acute
generational gap in the natural resources industry. Several
of Heidrick & Struggles’interviewees, all executives in
leading natural resources corporations, admitted that the
problem is“grossly underestimated”. Many engineering
graduates are no longer heading to exotic destinations
to work on mega-projects, but are instead turning to an
urban career in finance or consulting, and the more family-
friendly work-life balance that comes with it.
Respondents also noted a decrease in commitment to jobs
and organisations, a contrast to the historically committed
‘company people’. One VP global project services said,
“We are aware of the concerning phenomenon of younger
talent looking for immediate outcomes, or instant
gratification. There does not seem to be a high patience
or willingness to work through the learning curves.”This
trend evolved in Generation X, and seems to be even more
acute in Generation Y.
The widening gap between aging engineers and Project
Directors and the scarcity of new talent is compounded
by risk-averse companies’reluctance to give a younger,
un-proven, project manager a high responsibility role.
Likewise, project management roles are often seen by
potential recruits as‘too risky’.
Transferable skills
There is also an historical tendency for the natural
resources industry to look for talent within its own sector
or, worse still, within the same natural resource, such
as gas. This practice frequently ignores the widening
role of the Project Director – that of a true management
professional first and foremost, over and above his or her
capabilities as a specialised engineer.
According to one executive,“The companies that say
‘talent must come from our sector’are living in the past,
because what they are really saying is‘a Project Director
is a super technician, a super engineer, a super process
wizard.’The more advanced and informed view is‘a Project
Director equals a project management professional and a
leader of people.’”
Heidrick & Struggles 3
4. Effective teamwork
In addition, Project Directors are increasingly finding
themselves in the position of“talent officer”, acting as
human resources managers as they take on accountability
for managing and developing their project team. Projects
have become so complex that no one person can master
all the challenges. The required expertise is so vast that
specialisation at the top of the organisation can in fact be
damaging to the project, with the risk of time and money
being spent unwisely on the smallest engineering details,
rather than the bigger business picture.
Teamwork and the presence of varied expertise have
become crucial. Teams need to be multi-disciplinary
and multi-cultural. To manage such a diverse team, an
efficient Project Director must have an entrepreneurial or
commercial (“P&L”) attitude and excel at developing and
communicating with people.
This new focus on the need for emotional intelligence and
astute communication skills in Project Directors cannot
be underestimated, especially in the face of increasingly
demanding projects and with billions of dollars at stake.
One of the executives interviewed commented,“There
is a risk of underestimating the psychological profile of
a Project Director. Not all engineers or technical profiles
have the right psychological decision making profile –
far from it.”
For another executive, recognising“good work on a dirty
job”is a vital part of appraising Project Directors. He
explained,“Acknowledge people who are stepping up
to the plate on a train-wreck project where no one else
would or could: it is a sign of leadership and courage.”
The role of Project Director has become so important that
one global transport and infrastructure company is now
telling its young talent that“for an advanced, executive
level career in our company, project manager or Project
Director experience is a must-have on your CV.”
It will no longer be surprising to see a mega-Project
Director holding a vice-president or even a senior vice-
president rank, reporting directly to the CEO of the firm,
especially if they are involved in projects of high-value to
the overall organisation.
A word of warning
Project Directors, however, are not always the saints of
mega-projects. With the scarcity of Project Director talent
and the increase in responsibility has come an increase in
power, something that some Project Directors are wielding
to the detriment of the wider company.
Business efficiency suffers – and company risk increases
– when Project Directors have a low acceptance of
firm-wide methods, for example, or yield too easily to
figure 1
The skills and expertise of
the new Project Director
A typical Project Director in natural
resources has an Engineering degree, often
complemented by a business education.
They have occupied various roles in project
engineering, project construction and
corporate project/function, and have
been exposed to project complexities.
A successful Project Director will have
had experience in leadership and people
development, finance and technology.
4 The new project leader
5. client demands. As one global HR director explained,
“Today, the Project Director is king. They have a high
degree of freedom and discretion. With the liberty and
empowerment they enjoy, some Project Directors have
conceded business too much or too easily to clients.”
Developing
Project Directors
Best practices
The methods adopted by the most forward-thinking
organisations to nurture and develop Project Directors
are evolving to meet the increasing demands of the role.
These companies are using three main strategies, which,
when combined, can significantly impact individual
development. Heidrick & Struggles’research indicates that
individual development is driven by:
• on-the-job training
• internal mentoring/external coaching
• formal academic training (which can also
be delivered internally)
1 On-the-job training
Successful companies have developed initiatives to
encourage efficient on-the-job training opportunities,
including internal reorganisation, streamlining reporting
processes and methods for early detection of potential
talent.
Internal organisation
Organisational models have evolved to help support
projects and develop talent. Large projects are being
divided into packages and smaller semi-autonomous
tasks, for example, which not only increases individuals’
responsibilities but also helps manage the risk associated
with the project. Being given the opportunity to lead
these tasks helps to develop talent, and represents an
opportunity for future Project Directors to experience
the company’s standard processes and protocol. Project
control or executive assistant positions are also a way
to increase exposure to political, project and control
complexity. Moving between functions and projects
allows junior staff to cross-fertilise experience and
expertise while mitigating company risk.
Reporting line
Large projects may have multiple partners, which can
create complex relationships between project teams
(which can be composed of different companies’staff)
and parent companies. Streamlining reporting routes
shortens the decision-making process while ensuring
efficiency. Given that natural resources Project Directors
bear a significant part of the company’s financial risk,
many organisations have adapted their reporting line to
aid communication with top management.
Early detection of potential
A major tool in improving staffing decisions is a‘people
review’, in which a leadership team reviews a group
of people and collectively builds a consensus on each
individual. This enables the organisation to identify
potential next steps for career development while
ensuring any potential risks are acknowledged. These
collective decisions emphasise the fact that no manager
owns his or her resource pool. Not only does early
detection of talent shape careers, it also helps to ensure
that staffing decisions take into account individual
development needs as well as project requirements.
2 Internal mentoring
/external coaching
Successful companies are using mentoring to enhance
and to improve the transfer of knowledge and experience
between seasoned Project Directors and more junior
project managers. The mentor relationship reinforces the
feeling of community within the‘project population’and
is a way to impart non-written information or unofficial
protocol. Mentoring can be complemented with external
coaching to accelerate career trajectory.
Heidrick & Struggles 5
6. 3 Formal Academic training
In order to ensure Project Directors are effective and best
practice is shared, some companies are sending their
high performers to top academies to provide them with
training in finance, HR, legal, PR and negotiation skills. This
training is often completed by in-house workshops. This
is an effective way for companies to create a community
of seasoned managers. It also supports the sharing and
use of company standards, tools and processes, ensuring
structured project delivery, and making talent more
portable within the organisation.
The need to develop leadership and behavioural
competencies has led forward-thinking companies to
invest in leadership development training too. In order
to measure the impact of this training, companies
have developed competency models tailored to their
population of Project Directors. These frameworks are
similar in terms of emphasis and scoring to those used
by executive search firms when assessing executive level
candidates.
Training can be used at different stages of the Project
Director’s career. In the early stages, the emphasis will be
on technical skills such as finance, HR and law. Later the
focus is on leadership.
The impact of such strategies is two-fold. Individuals are
developed faster and more effectively, while staffing risks
are mitigated by balancing inexperience with control
and by supporting people with processes and expertise.
The head of a project academy for an international oil
company said,“We have been pleasantly surprised by
the power of combining development training and
community building. Project Directors regularly go to the
academy to learn, close a specific competence gap or to
teach. This reciprocity has proven highly motivational for
all involved.”
Is your company
growing the new breed
of Project Directors?
Analysis of Heidrick & Struggles’survey findings identified
three critical questions that organisations need to consider
in order to optimise project management and to control
related risks:
• What project governance is in place?
• How do we nurture talent within the project
management function?
• How do we promote the leadership competencies that
are necessary for successful Project Directors?
All this requires support from senior management as well
as a robust training and development programme. Those
responsible for nurturing the talent pipeline – which
should include the Executive Committee as well as HR –
need to have a clear understanding of the necessary skills
and competencies in this ever-changing profession. They
need to know that there is now a need for an emphasis
on‘soft’metrics as well as technical expertise. Successful
project management is not just about delivering projects
on time and within budget. It must also involve a focus
on the team, effective people management, a persuasive
leadership style and true client and partner satisfaction.
A talented Project Director will display managerial flair
by building internal and external relations, fostering
open participation and non-hierarchical communication,
proactively leading teamwork across a variety of situations
and thinking ahead while also learning from past
experiences. Tomorrow’s success depends on growing
this talent and on helping this new breed of Project
Directors to deliver ever more complex, multi-billion
dollar projects.
Methodology
Heidrick & Struggles conducted a survey on project management in the natural resources industry in 2009. This involved
38 in-depth and confidential interviews with Project Directors and other senior executives. Almost 40% of Project
Directors interviewed had a distinct non-technical experience within their career – such as a managerial, financial or
commercial position. The scale of project management represented in the survey exceeded US$63 billion.
6 The new project leader
7. Industrial Practice
Our Industrial Practice team, which consists of the
Natural Resources Practice and other specialty practices,
combines unparalleled search resources with a deeply
consultative approach. Working closely with the client,
we develop the ideal candidate profile against the
organisation’s unique competitive challenges, business
objectives, and leadership culture. By considering far more
than candidates’functional or industry backgrounds,
we enlarge the talent pool to help find the talent most
qualified to meet those business objectives and address
the client’s real hiring needs. Perhaps most importantly,
this approach helps avoid the disastrous mismatches
between candidate’s capabilities and role requirements
that have plagued many industrial companies during this
time of dramatic change and increasing complexity.
Our dedicated group of over 125 consultants has deep
experience in each industry sector. We serve every region
around the globe, including China, Russia, the Middle East,
Eastern Europe and other emerging markets. The more
than 1200 assignments we conduct for clients each year
include executive search, leadership development and
consulting projects. This work has earned us outstanding
customer satisfaction ratings and created long-standing
relationships marked by the trust we develop and the
results we deliver in every engagement.
Luigi Slaviero is a Partner at Heidrick & Struggles, and co-
leader of the global Natural Resources Practice.
lslaviero@heidrick.com
Leadership
Consulting Practice
Heidrick & Struggles partners with the world’s most
prestigious companies to build and develop winning
leadership teams. Our experience has taught us that
managing leadership talent is as important as acquiring it.
To help clients transform how they manage their leaders
– and ensure the sustainable business success their
stakeholders demand – we have assembled a global team
of deeply skilled consultants well-versed in leadership,
senior team dynamics and strategic human capital
management.
Our services are designed directly with clients to
address Leadership Risk at the individual level (Strategic
Leadership Assessment, On Boarding), team level (Top
Team Effectiveness and Alignment) and organisational
level (Board Performance, M&A due diligence and Talent
strategy). Our Leadership Consultants offer clients
tailor made leadership solutions that drive required
organisational change, enhance leadership teams, develop
top talent and improve business performance.
Hugues Mercier is an Associate Principal in the Paris office
of Heidrick & Struggles, and is a member of the global
Leadership Consulting Practice.
hmercier@heidrick.com
Heidrick & Struggles 7
