Management and Organizational Behavior: Kuwait Petroleum Corporation - Essay Example

?Running head: KUWAIT PETROLEUM CORPORATION CASE STUDY: (MANAGEMENT AND ORGANIZATIONAL BEHAVIOR ASSIGNMENT) Kuwait Petroleum Corporation Case Study: (Management and Organizational Behavior Assignment) Insert Name Insert Course Title Insert Instructor’s Name 17 October 2011 Outline Introduction KPC challenges Alternative solutions The best alternative solution Conclusion Kuwait Petroleum Corporation Case study: (Management and Organizational behavior assignment) Introduction Kuwait Petroleum Corporation (KPC) was established in 1980 as an integrated State-owned oil company that control government operating companies in the petroleum sector (IBP USA, 2008). It is a conglomerate of companies including: Kuwait Oil Company that produces oil and gas; Kuwait National Petroleum Company, which handles domestic sales and refining; and Petrochemical Industries Company, which produces ammonia, urea, ethylene, propylene, styrene and run various joint ventures with Dow Chemicals within Kuwait and abroad. Others include Kuwait Foreign Petroleum Exploration Company that deals with overseas oil exploration and upstream production; Kuwait Oil Tanker Company; Kuwait Gulf Oil Company that manages exploration and production in the Kuwait parts of the offshore and onshore Divided Zone; and Kuwait petroleum International, which manages abroad refining and retail sales. The company also markets its products in Europe under brand name Q8 and manages maritime transport fleet. Thus, its major includes oil production, refining, transportation, international marketing, petrochemicals, and local distribution of energy products. The KPC is one of the top-ten oil energy conglomerates managed by a complex hierarchy consisting of Board of Directors, which in turn reports to the Supreme Petroleum Council under Kuwait’s Minister of Oil as it Chief Executive Officer (KPC, 2009). Prior to 2005, KPC was locked in various management problems and internal feuding between groups, leading to many professional staff that had been pivotal in success of KPC over the years to seek early retirement. This led to a cry for reform from various stakeholders such as Parliament, labor unions, employees and economist in bid to improve KPC’s performance. That is why there has been need to study the company’s current situation and make recommendations on ways of improving the company’s domestic and international performance. The study will also focus on impediments and obstacles that affected management decision-making speed and execution of major projects. KPC challenges According to studies, KPC was faced by the following major problems. First, the government lacked clear perspective on oil industry and there were no clear future development goals for the oil sector. Secondly, there was duplication and overlapping of roles and organizational responsibilities between KPC and its subsidiaries. Thirdly, the company’s organizational structure is very sophisticated compared with other national and international companies, leading to absence of effective coordination within the company’s units. Fourthly, the company lacks effective management succession planning strategies due to conflict in authority conferred on leadership positions and loss of interest in developing leaders. Fifth, there is general interference in human resource management roles and the company lacks qualified personnel in some technical and managerial activities. Sixth, the operating procedures do not support accomplishment of strategic objectives. For example, the subsidiaries lack sufficient financial and administrative authority to initiate and carry out major projects, thus there is limited opportunity for progression. More so, government controls are a major constraining factor, considering that the company is expected to run on a commercial basis. In addition, most of employees are demotivated and lack a sense of loyalty to the oil industry. Further, the company lacks mechanisms and work methods to transfer technology, leading to reduced capabilities in advancement, research, and development areas. Lastly, the company’s corporate image and reputation has been significantly declining. The company’s minor problems include, first, the role of Oil Ministry in decision making in the oil sector is much marginalized thus it cannot regulate the industry. Additionally, the ministry lacks information related to oil sector, thus hindering industries research development. Lastly, there is instability at the top management levels due to constant swapping of top leaders among the subsidiaries, a thing that can lead to loss of focus (Oxford Business Group, 2008, p.123). Alternative solutions The solution to KPC problems revolves in reforming the company’s management approach to enhance better delegation of duties and responsibilities between the parent company and its subsidiaries, thus avoiding redundancy and duplication of duties, hence improving the organizations overall performance. Apart from streamlining operations of the company, the reforms must also focus on transforming the human resource management within company for better results. Therefore, it is advisable for the management to adopt any of the following management approaches that are shaped by the following most influential management theories. These management theories include Frederick Taylor's Scientific Management, Elton Mayo's Hawthorne Works experiments and the human relations movement, Max Weber's idealized bureaucracy, and Henri Fayol's views on administration. Frederick Taylor's Scientific Management approach, advocates for transformation from old-fashioned system of personal management to a new system of scientific management. The personal management style relies personal brilliance of one leader, while scientific training is based on actual timed observations, leading to the one best practice (vision) that is supported by systematic training of workers rather than giving room to personal discretion at work (Beckford, 2009). Under this theory, workers and management share workload evenly due to the spirit of cooperation that develops from working for one best practice. Elton Mayo's Hawthorne Works experiments approach was formulated in early 1920s by Elton following his productivity experiments involving a group of women at Hawthorne Works. This approach emphasizes that group dynamics and social makeup of an organization are very crucial in determining the productivity of an organization, hence it is paramount for organizations enhance greater participation for workers, improve openness, and trust in the working environment, and pay greater attention to teams and groups in the work place (Beckford, 2009). Max Weber's idealized bureaucracy approach, emphasizing on technically achieving optimal results at expense of emotional or human concerns. Henri Fayol's views on administration approach emphasize on roles at the management level. According to Fayol, management has five principles roles - to forecast and plan, to organize, to command, to coordinate and to control (Singh, 2010). The best alternative solution The best alternative solution is for KPC management to undertake reforms that are aimed at the management level, according to Henri Fayol's views on administration. Here, applying the five primary roles of the management can significantly improve the performance of company, since, forecasting and planning can help the company anticipate the future and lay down strategies for the future developments (Singh, 2010). By this role, the company will clearly state its mission and vision, and lay strategies for implementing them. For example, the company’s vision can be ‘our vision is to be the leading global oil energy company while ensuring sustainable developments for our stakeholders’. Secondly, through organization, the company will be able to develop and make better use of its human and material resources. Thirdly, commanding will keep the operations of the company running smoothly especially when the company reforms its communication chains. Additionally, the role of coordination will help the company to streamline and harmonize its efforts thus reducing issues such as duplication, overlapping, and bureaucracy that has been hindering the company’s performance. Lastly, control will enable the company to carry out its activities in accordance with appropriate rules and regulations thus improving accountability, safety and other aspects. For example, this will reduce stalling of projects resulting from failure to follow the required procedures. The above roles are supported by fourteen principles of administration that will greatly improve the company’s performance and management. These principles include “division of labor, Authority with responsibility, Discipline, Unity of command, Unity of direction, Subordination of individual interest to the general interest, Remuneration of staff, Centralization, line of authority, Order, Equity, Stability of tenure, Initiative, and Esprit de corps” (Singh, 2010, P.45). Conclusion The management at KPC should streamline its chain of command and ensure that duties and roles of each employee are well stipulated and understood. This will improve communication, as well as reduce confusion and internal feuding between groups thus improving the overall company performance. Secondly, it is important for the organization to transform its human resource department into a more independent unit that is free from interference in operations, especially in staffing, promotions, performance appraisal, and training of personnel. Additionally, the management should emphasize on training that will equip employees to translate the acquired information and knowledge into practice, with a view to improve organization effectiveness and productivity, and the quality of the management of people (Silva, 2007). Finally, the management, apart from implementing management reforms, it should also concentrate on reclaiming and improving its reputation and image, as this will also contribute significantly towards employees’ motivation and company’s performance. References Beckford, J. (2009). Quality: a critical introduction. Third edition. NY: Taylor & Francis. IBP USA. (2008). Kuwait Taxation Laws and Regulations Handbook. Washington DC: Int'l Business Publications. KPC. (2009). About KPC. Retrieved from http://www.kpc.com.kw/AboutKPC/default.aspx Oxford Business Group. (2008). Report: Kuwait 2008. London: Oxford Business Group Inc. Singh, H., (2010). Organizational Behavior. New Delhi: FK Publications. Silva, S. (1997). Developing the Training Role of an Employers Organization. ACT/EMP Publications. 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