People, Organization and Culture - Abu Dhabi National Oil Company - Case Study Example

PEOPLE, ORGANIZATION AND CULTURE By Name Course Instructor Institution City/State Date Table of Contents PEOPLE, ORGANIZATION AND CULTURE 1 Table of Contents 2 Introduction 3 The Context, Organization and Its Appropriateness to the Study 3 Nature, Structure and Behaviour 4 Micro and Macro Environment 6 Other Drivers 8 As the world leading oil and Gas Company, ADNOC has to keep pace with resources as well as demanding the oil and gas industry. For this reason, the company has been focusing on developing sour gas fields in order to boost oil production promote the petrochemical sector development. Thanks to its continuous expansion of business processes and activities, ADNOC has been able to retain its competitive position for four decades. Still, the company faces stiff competition from other national oil companies such as Petroleum Development Oman L.L.C, National Iranian Oil Company, Bahrain National Oil Company, Kuwait Petroleum Corporation, and Qatar Petroleum. 8 Strategic Considerations 8 Methodologies and Limitations 9 Analysis 10 Conclusions and Recommendations 12 References 12 People, Organization and Culture - Abu Dhabi National Oil Company Introduction The leaders are more and more being bombarded with organisational changes nearly at every level. Given that change has become crucial for business survive; leaders have been forced to become transformative in order to thrive. In the oil companies as it will be demonstrated in this report, leaders often face the challenge of continuous innovation as well as creativity. In the modern-day marketplace, successful leaders are those able to collectively work with the people in the organisation to improve the working culture and processes. This piece focuses on leadership using Abu Dhabi National Oil Company as the case study. The Context, Organization and Its Appropriateness to the Study Abu Dhabi National Oil Company (ADNOC) is an oil and gas company involved in the production, exploration and processing of oil and gas, marketing, oil refining, petrochemical as well as chemical production, distribution of refined products, and maritime transportation (Bloomberg, 2016). Established in 1971, ADNOC is headquartered in Abu Dhabi, UAE. In the last few years, the company started expanding its business processes and activities with the objective of improving its competitive advantage. As a result, ADNOC has turned out to be the leading oil company in the world thanks to its high interests in downstream as well as upstream business activities, which includes distribution, shipping, transportation, and marketing. Recently, the company announced its plan to cut 5,000 jobs before the end of 2016, and already approximately 2,000 employees have been laid off in order to cut costs since the prices of oil have been plummeting because of slow economic growth (Bloomberg, 2016). Presently, the company has almost 55,000 employees. ADNOC is appropriate for this study because it faces a number of leadership problems; for instance, the number of female leaders at the company is exceedingly low (10 per cent). There is the need for measures at ADNOC that would help promote diversified culture, employee engagement, and programs that would promote women empowerment in the organisation. Given that the women empowerment strategy espoused by ADNOC has failed to promote equality at leadership positions, the ability of women to bring a diversified experience in the organisation have been undermined, resulting in less innovative business solutions. Still, ADNOC’s leaders have placed much emphasis on people as well as on organisation’s long-term sustainable growth. The leaders have a comprehensive and long vision, and every formulated strategy is in line with the organisation’s vision. Evidently, company’s leaders have continually demanded persistent improvement and change in ADNOC’s structure which has been its foundation of growth and prosperity. According to McAuley (2016), ADNOC has a silo mentality since its key companies depend heavily on BP, ExxonMobil, Total, and other foreign partners. This results in a major challenge because of conflicts regarding the strategic aspirations. Nature, Structure and Behaviour Without a doubt, the choices made by leaders as well as the quality of the choices made can enormously influence the productivity and safety of the company at the organisational and individual level. At ADNOC, the leaders always demonstrate core leadership principles as well as values since they are positively connected to the improvement of processes and systems which result in a working culture that is safe. With skilful and committed, ADNOC leaders have successfully driven not just productivity and safety, but they have also improved employee engagement and development. The ability of the leaders to challenge themselves to see productivity and safety as simultaneous and harmonious concepts has enabled them to optimise both. The ADNOC leaders are experienced and efficient people who have successfully changed the organisational culture using their expertise and technical knowledge. At the organisational level, they always act as role model and lead by example; therefore, making employees understand that various aspects of the organisation have become much easier. The company has made some organisational changes with the objective of attracting young technocrats; therefore, the top-tier leadership at ADNOC was changed. Still, the company lacks a leader with the ability to change how people in the organisation think. As mentioned by McCrimmon (2005, p.1065), a leader should be able to carry the day devoid of working hard to influence their potential followers. At ADNOC, leaders depend on their personality, influence, or their position authority. Thought leadership is a crucial growth strategy that is lacking at ADNOC since the majority of leaders at the company have been unable to change the client engagement rules, but they represent the value of corporate accountability and market leadership. As pointed out by Barber and Warn (2005, p.1033), managing projects effectively depend on project members’ improved skills, innovative techniques, resources availability, and ability to use technology to manage and control resources. ADNOC has continually been searching for improvement with the objective of controlling events that could potentially become chaotic. For this reason, the company has worked determinedly to improve the leaders’ managerial and technical skills through leadership development programs. Micro and Macro Environment This report utilises PESTLE Analysis to examine the macro-environment of ADNOC. With the view to political factors, UAE political standing is influenced by a number of factors; for instance, the country has seven emirates, each having its governmental organisations that facilitate the country to be managed flexibly. Still, the ongoing conflicts between UAE and the neighbouring countries regarding land and oil reserves often negatively influence ADNOC business operations. Importantly, UAE’s trade relations with other countries are healthy and have played a crucial role in ADNOC business expansion. In terms of economic factors, UAE GDP is exceptionally high; thus, the environment wherein ADNOC operates is economically sustainable. In addition, the unemployment rates are exceedingly low, searching for skilled employees is a challenging task not just for ADNOC but also other companies in UAE. Considering that UAE has the highest Foreign Direct Investment in the GCC region. Social factors can in one way or other influence ADNOC business operations; for instance, the majority of Emiratis have well-paying jobs which normally sustain their comfortable lifestyles. The increased FDI in UAE has led to increased number of expatriates leading to increased mix of different cultures. Base on technological factors, innovation, has played a crucial role in ADNOC’s business success. For instance, the company relies on technology to transport oil and gas under the water using pipelines. Some of the legal factors that influence ADNOC include strict legal regulations, such as specific obligations for oil drilling, fields’ development as well as decommissioning legislations, and so forth. Furthermore, the environmental laws significantly influence ADNOC business operations. In terms of environmental factors, ADNOC is required to adhere to the environmental laws, reduce pollution, produce environmentally friendly products, and utilise a percentage of its revenue in environmental restoration as well as remediation. Micro-environment can be described as the internal factors such as partners, employees, and customers that influence the making business of decisions. ADNOC’s micro-environment may be divided into different small parts that are very crucial for the business. The company’s customers are the most crucial component of the company’s microenvironment; therefore, ADNOC place concentrates on monitoring consumers’ trends with the objective of making possible changes and creating a resourceful relationship with them. For this reason, the company always ensures it is a step ahead; making an effort to measure the needs and requirements of the customers as well as producing products that meet the demands. ADNOC’s partnership with global companies has led to numerous initiatives and investments that are mutually beneficial. Some of the main partners include BP, Shell, Occidental Petroleum Corporation, Japan Oil Development Company, China National Petroleum Corporation, ExxonMobil, Borealis, the Linde Group, and Korea National Oil Corporation KNOC. ADNOC has partners in countries where it operates oil and gas fields such as Yemen, Nigeria, Libya, Vietnam, Peru, Canada and many others. SWOT Analysis Strengths Weaknesses Present globally Strong market position Socially and environmentally sustainable Innovative Good brand image and reputation at global level Legal action because of unfair monopoly and infringement of environmental laws Overreliance on global partners Opportunities Threats Strategies for expansion Stabilised home market Increasing demand for oil and gas products Oil price volatility Increasing competition from other national oil companies across the globe Other Drivers As the world leading oil and Gas Company, ADNOC has to keep pace with resources as well as demanding the oil and gas industry. For this reason, the company has been focusing on developing sour gas fields in order to boost oil production promote the petrochemical sector development. Thanks to its continuous expansion of business processes and activities, ADNOC has been able to retain its competitive position for four decades. Still, the company faces stiff competition from other national oil companies such as Petroleum Development Oman L.L.C, National Iranian Oil Company, Bahrain National Oil Company, Kuwait Petroleum Corporation, and Qatar Petroleum. Strategic Considerations ADNOC understands that engaging employees in the oil and gas sector industry is valuable since it is crucial for reducing employee turnover and improving production as well as profitability. Following the recent economic recession, Radda et al. (2015, p.109) posit that implementing employee engagement has become more important since it promotes employee retention. ADNOC leaders have worked hard to make sure that people in the company understand the organisation’s objectives aims and goals in order to make them more productive as well as offer improved services. Employees’ engagement has become a strategic consideration for leaders at ADNOC since it makes people feel interested and attached to the organisation. Underperformance has resulted in misalignment of several oil companies’ strategies together with its organisational parts that are interacting but complex. To solve this, ADNOC has come up with new operating frameworks, which focus on the economics of the market and are tailored in order to meet the customer needs and shareholder expectations. The framework includes numerous elements such as defining the needs of the people and creating initiatives to bring about fundamental change. Another element is a market-like mechanism that facilitates leaders to allocate scarce resources. ADNOC’s organisational improvements have been possible through culture change, which has involved drawn out interventions. Even though culture change was beneficial for supporting and creating ADNOC’s organisational transformation, the company did not make structural changes that could have served as the primary intervention for the changing culture. The simplicity of ADNOC’s organisational system is comparable to the vision, guiding principles and values in the organisation, decisions making processes in the organisation. As pointed out by Keene (2000, p.17), leadership plays a crucial role teaching the people the skills as well as knowledge in order to enable them to become creative co-creators capable of releasing inherent creativity. Methodologies and Limitations Data was gathered through interviews, which involved listening and talking systematically to people as well as through conversations. Open questions were used to facilitate the gathering of credible and reliable information from the 10 interviewees. The interview method was selected because it is a suitable way of gathering data and gaining knowledge from the interviewees. Therefore, the interview was used to gather information from ADNOC’s employees and leaders. Interview Questions 1. Why does insufficient knowledge regarding organisational decision-premises often result in flawed organisational identities replacement with individual identities as well as values? 2. Why should leaders understand how identity and relations emerge in the organisation? 3. What is the significance of personality in influencing, understanding, and predicting performance, affect, and choice? 4. Why is it imperative for leaders to understand the significance of interpersonal communication processes? 5. How can a leader make work environment conducive to improve employee job satisfaction? 6. Do you agree that leadership is an alignment of resources as well as individuals to improve efficiency and productivity? 7. What is the connection between proactive decisions that influence the project direction and reactive decisions which solve the problems that exist in project management? 8. What behavioural characteristics and personal factors are relevant to organisational leadership? 9. What is the relationship between innovation and effective leadership at ADNOC? 10. How are employees motivated at ADNOC? Analysis With the view to the first question, the majority of respondents were of the view that when leaders at ADNOC encounters problems while making decisions, they find it challenging to discover the problems’ root causes. A number of respondents cited that lack of sufficient knowledge regarding organisational decision-premises has led to biased decisions at the company. For instance, lack of experiences amongst the leaders with regard to managing diverse workforce pose a serious challenge. Torpman (2004, p.904) concurred that pathologies in decision-making cannot be entangled easily, especially when they are intertwined with the employed leadership system. When the leaders were asked why they understand how identity and relations emerge in the organisation, they answered that it facilitates them to engage with the employees and promotes human interaction. As mentioned by Karp and Helgø (2008, p.35), as a social phenomenon, leadership is loaded with power as well as symbolism that facilitates the interaction in the organisation between the leaders and employees. Most respondents agreed that personality is important because it makes them to positively associate with openness to optimism as well as new experiences. Furthermore, they agreed that personality has an effect on the performance, as also observed in Latham and Pinder (2005, p.490) study. According to the respondents, it is imperative for leaders to understand the significance of interpersonal communication processes because it helps them explain communication behaviour as well as understand different meanings associated with the communication. This finding echoes Manusov and Spitzberg (2008, p.42) argument that having knowledge about interpersonal communication processes can help one understand different meanings when communicating with people from different cultures. The majority of respondents also appear to be satisfied with their work since ADNOC has numerous job satisfaction motivators such as financial incentives. Leaders at the company have been able to optimise ADNOC’s efficiency and productivity through rewarding and incentives. According to the interviewed leaders, leadership is alignment but does not include humanistic characteristics such as the ability to change an employee’s perception or behaviour. The leaders also mentioned that they depend on technological tools to improve the project management abilities. Some of the behavioural characteristics and personal factors that are relevant to organisational leadership according to the respondents include conscientious commitment, vigour and personal motivation. At ADNOC, the relationship between innovation and effective leadership according to the majority of the interviews depends on the level of learning and training. Leaders with high-level education and training can easily create an innovative workforce capable of reducing risk exposure. At ADNOC, employees are mainly motivated through financial incentives, promotion, and work/life balance. Conclusions and Recommendations To sum up, it is plainly evident that employees at ADNOC are motivated not only motivated by rewards and financial incentives, but also by improved working conditions, diversity, and organisational culture. To effectively motivate the employees, ADNOC leaders should ‘walk-the-talk’, by ensuring that the constantly communicate the organisation’s vision to make sure that the company is heading towards the right direction. Furthermore, the company’s leaders should concentrate on motivators like freedom to choose and improving employees’ competencies and skills. The leaders have to make sure that the company’s recognition and reward system is not only reliable but also time-tested and trusted. Therefore, the ideal style of leadership for ADNOC is a combination of transformational elements and transactional abilities in order to ensure there is intellectual stimulation, motivation, idealised influence. More importantly, ADNOC’s leaders should introduce leader development programs so as to exhibit its commitment to promoted improved management of talent. References Barber, E. & Warn, J., 2005. Leadership in project management: from firefighter to firelighter. Management Decision, vol. 43, no. 7/8, pp.1032-39. Bloomberg, 2016. Company Overview of Abu Dhabi National Oil Company. [Online] Available at: http://www.bloomberg.com/research/stocks/private/people.asp?privcapId=9707943 [Accessed 5 December 2016]. Karp, T. & Helgø, T., 2008. The future of leadership: the art of leading people in a “post-managerial” environment. Foresight, vol. 10, no. 2, pp.30 - 37. Keene, A., 2000. Complexity theory: the changing role of leadership. Industrial and Commercial Training, vol. 32, no. 1, p.15±18. Latham, G.P. & Pinder, C.C., 2005. Work Motivation Theory and Research at the Dawn of the Twenty-First Century. Annual Review of Psychology, vol. 56, pp.485-516. Manusov, V. & Spitzberg, B., 2008. Attribution Theory: Finding Good Cause in the Search for Theory. In Baxter, L.A. & Braithwaite, D.O. Engaging Theories in Interpersonal Communication: Multiple Perspectives. London: SAGE. pp.37-49. McAuley, A., 2016. Sheikh Mohammed signals backing for Adnoc strategy. [Online] Available at: http://www.thenational.ae/business/energy/sheikh-mohammed-signals-backing-for-adnoc-strategy [Accessed 5 December 2016]. McCrimmon, M., 2005. Thought leadership: a radical departure from traditional, positional leadership. Management Decision, vol. 43, no. 7/8, pp.1064-70. Radda, A.A., Majidadi, M.A. & Akanno, S.N., 2015. Employee Engagement in Oil and Gas Sector. International Journal of Management & Organizational Studies, vol. 4, no. 3, pp.105-16. Torpman, J., 2004. The differentiating function of modern forms of leadership. Management Decision, vol. 42, no. 7, pp.892 - 906. Read More