Case Study - Premium Oil and Gas
Premium Oil and Gas (POG) is the Dutch holding company of one of the world’s largest petroleum and gas groups. The organisation employs over 80,000 staff in 80 countries and is best known to the general public through its 25,000 service stations.
POG’s main activities are the exploration and production of crude oil and natural gas, together with the marketing, supply and transportation of these products. The company earns revenues of around £100 billion per annum based on its daily production of two million barrels of crude oil and eight billion cubic feet of natural gas, plus daily sales of six million barrels of refined products.
Over 90 per cent of POG’s executives are Dutch nationals, of whom five per cent are women. This concentration can be explained by the company’s Dutch origins and its consequent patterns of recruitment.
Recently, POG’s Chief Executive Officer, Ruud van der Zende, has pronounced that for the company to achieve its aspiration of being a ‘truly great global company’ it must work towards building a top management team that is visibly diverse. It should also continue to strive towards being ‘genuinely meritocratic’ at every level, attracting and retaining talent across the globe regardless of background, gender, nationality or sexual orientation. POG’s stated intention is to respect different cultures and the dignity of individuals in all countries. The company also aspires to be a ‘modern, global learning organisation’. This will enable organisational knowledge and best practices to be spread right across the whole company. The aim is to run a company that is responsive and flexible and that is distinguished by core values and objectives that are embedded everywhere.
This vision represents quite a challenge for a giant of a company that seeks to connect its central headquarters with more than 120 decentralised business units. For years, business unit leaders were ‘encouraged’ to operate in many ways as if they were running their own separate business. While they were required to comply with corporate policies and procedures, they were absolutely accountable for the achievement of annual performance targets, which were subject to regular monitoring. The rationale behind this management structure was its professed ability to ‘facilitate rapid responses to new situations without the need for constant referrals to headquarters’. In response to the vision set out by Van de Zende, business unit leaders have to adjust their conventional way of reporting and communication with the headquarter. Many of them find it extremely challenging.
One such business unit is POG Azerbaijan, enticed by the oil and gas reserves of the Caspian Sea, which are comparable to those in the USA and the North Sea. POG has been involved in offshore exploration in Azerbaijan for ten years, but has only recently begun actual production, delayed by political uncertainty and complex government relations. The development of offshore platforms and export pipelines represents for POG a £10 billion investment, which is critical to its long-term future. Currently, POG Azerbaijan employs just over a thousand employees. While on one hand, POG Azerbaijan began to make profit. On the other hand, to maintain the continuous growth and meet the targets increasing year on year, the CEO of POG Azerbaijan, Dr Rachel Woodhouse (an experienced Dutch expatriate), knows the future success rests on a strategy plan that not only responds to the vision of Van de Zende, but also responds to the development needs of POG Azerbaijan. As part of the strategy plan, Dr Woodhouse has to address the following challenges urgently.
Firstly, to meet the current production target in the next five years, the company is set to double its workforce. Dr Woodhouse has targeted to increase the local workforce to 90% of the total from the current 40%. Privately, though, she thinks this is unrealistic. Recruiting qualified...
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