Bechtel Corporation - Essay Example

?Table of Contents Introduction 2 General ment of Results 3 Analysis (positive or negative impact, especially positive consequences) 3 a.Policy 3 b.Leadership 4 c.Objective 5 d.Inputs 6 e.Performance 7 f.Technology 9 g.Work Procedures 10 Recommendations 10 Value Facet Analysis 11 a.Cultures external to the organization 11 b.Organizational culture 11 c.Employees’ values 11 d.Suppliers’ values 12 e.Customers’ values 12 f.Third party values 12 g.Competitors’ values 13 h.Owners’ values 13 Conclusions 13 Bechtel Corporation Introduction Bechtel Corporation is the world leader in engineering, construction and project management. Its portfolio include energy, transportation, communication, mining, oil and gas, and government services. Its projects range over a wide geographical area, from Alaska to Australia, applying such diversified areas of expertise in roads and rail systems; seaports and airports; fossil and nuclear power plants; refineries and petrochemical facilities; mines and smelters; renewable energy; defense and aerospace facilities; environmental cleanup projects; communications networks; pipelines; and oil and gas field development (Bechtel Corp.com, 1). Bechtel began as a small family business, a railroad-grading operation in the Oklahoma Territory, some 110 years ago. Since then, it has built its reputation in the engineering and construction industry, and has grown into a multinational company simultaneously attending to hundreds of projects worldwide. Its signature projects include: the Bay Area Rapid Transit; Channel Tunnel & Rail Link; Cingular wireless expansion; Hong Kong International Airport; Hoover Dam; Hurricane Katrina disaster relief; Iraq reconstruction; Jubail Industrial City; Kuwait oil fires; Tacoma Narrows Bride; and the Three Mile Island cleanup. The firm remains a privately owned business. It now has its headquarters in San Francisco, with offices worldwide employing 53,000 employees. Its 2011 revenues amount to USD$32.9 billion, and its new contract awards are valued at US$53 billion (Bechtel Corp.com., 1). The company continues to grow its revenues and projects, but faces a possible weakening of the economy the in the coming years which may adversely affect the construction industry (O’Connor, 1), Bechtel included. General Statement of Results Bechtel is one of the leading international construction firms. It has developed competitive competencies in various other specialized but fields. Supporting this special capability is the firm’s commitment to ethical business principles, quality of output, and safety of employees and customers. The company’s policies are people-centric, placing emphasis on the welfare of customers, employees, suppliers, and the community above the prospects of profits. Its leadership is value driven, both within and outside the organization, as evident in Bechtel’s mentoring program that has midway in its second decade. Objectives are set by management with the participation of the organization’s stakeholders, and performance measures. Quality of inputs is ascertained by a system of registration of suppliers who are oriented and trained according to Bechtel’s standards. Technology is at a premium in Bechtel, with several of the innovations the company intended for application in the construction industry being accorded recognition through prestigious international awards. Work procedures at the company have consistently stressed quality but not at the expense of employee and customer safety. As with all firms, however, Bechtel has problems with its unions, and accusations of cronyism and taking advantage of Iraq’s destruction as a result of the U.S.-led invasion, since it received one of the first and largest contracts in Iraq. It appears from this that Bechtel’s very competence and success has been the cause of aspersions levelled at its reputation. Analysis (positive or negative impact, especially positive consequences) a. Policy Bechtel’s vision is to be the world’s premier engineering, construction, and project management company. The company’s policies are to develop lasting and productive relationships with their customers and partners, employees, and the communities they serve. It is the company’s policy to anticipate the need of customers and deliver on commitments the company makes. The company shall create opportunities for the employees to achieve the extraordinary, and promise to reward successful efforts. The company shall earn the communities’ respect as a responsible and responsive corporate citizen. Bechtel aims to ‘integrate global and local perspectives, promote sound management of resources, and to contribute to a better quality of life. The company commits to standards in safety, quality and productivity, and has undertaken to continuously explore process improvements towards this end. Each member of the organization is expected to observe the same commitment within the sphere of their duties and functions in the organization. Lasting improvements are aimed to be introduced through safety, quality and skills training programs for local workers (2012 Annual Report 15) b. Leadership Together with corporate leadership, employees in the organization are given latitude in making choices within the sphere of their competence or duties. In providing direction to rank-and-file, Bechtel’s philosophy is that people ‘have to choose to follow the rules.’ It is part of the culture of the organization to empower individuals and impress upon them that the organization cares for them, and that doing what is right becomes an internal value with them. People are expected to take the initiative to do the right thing without being told by a superior. Bechtel Corporation has found the need to develop effective performance-based leadership and talent management programs with the aim of keeping its competitive position in the industry. In Bechtel, leaders are actively engaged to sponsor mentoring and provide mentoring themselves, both to members within the company and members of the community. The benefits of this cascade down through the social strata. Within the organization, the premium leadership and management behaviours may be changed to achieve optimal performance. Bechtel implements a value statement and nine covenants, in a manner that describes to employees the manner in which they have agreed to relate to one another and work together. This core value statement becomes the central theme in the company’s performance-based leadership. This is a process which was begun in 1998 and is still being realized within the organization. The company’s top 20 leaders became engaged in learning and extensive coaching, which experienced they cascaded through the top ranks of the firm. Unfortunately, despite these laudable programs, the image of the company has been marred by its having won one of the largest and earliest contracts in the post-war reconstruction of Iraq. It has become a target of criticism and accusations of cronyism because it received a $680 million contract from the government to rebuild the damages resulting from an unpopular war. The company has also been beset by labor union problems in the home country. (CorpWatch 1) c. Objective The setting of organizational goals and work objectives are not only performed by policy makers but by all members of the organization. Employee satisfaction is a key element in workforce performance management, and the setting of performance standards and targets is best undertaken in collaboration with the individuals upon whom the performance measures shall be imposed. This type of employee engagement is central to the corporate culture grounded in initiative, leadership, and pro-activeness that is being developed. Aside from its internal manpower, the company also looks outward to customers and partners to set effective goals that are relevant to the business environment. The company partners with other companies, either within the industry or either forward or backward along the supply chain, and actively obtains feedback and insights from its customers concerning its products and services. The firm manages the talent among its workforce by setting annual performance goals in line with business objectives. Senior leaders write these goals with inputs from within the organization, and provide periodic feedback on employees’ success based on their performance vis-a-vis the goals. ‘The goal-setting process is often used to sensitize people to new areas that they might not think of otherwise’ (TM,1). d. Inputs In order to develop competency for quality, safety and consistency, inputs to the production processes must meet quality and sustainability standards. Suppliers and subcontractors are critical elements of Bechtel’s production teams. They are required to undergo a registration procedure and instructions on the observation of business ethics, environmental, safety and health standards, and quality and compliance. After registration, suppliers are required to be instructed on Bechtel’s supply chain requirements, the specific project opportunities, and provide the company with updated information concerning the capabilities and sustainability of the materials sourced for Bechtel (Bechtel Corp., 1). In order to monitor supplier quality and on-time delivery for all Bechtel products globally, the Bechtel Supplier Quality & Expediting (BSQE) corporate organization was created. It is comprise of quality and schedule experts who are integral to Bechtel’s corporate wide quality and compliance program. BSQE is charged with conducting the pre-award survey and audit assessment, source surveillance and post award survey and audit assessment, for both prime supplier and sub-supplier facilities (Bechtel Corp. 1). Another integral corporate organization is Bechtel Expediting (EX) the task of which is to visit prime supplier and sub supplier shops in order to obtain shop schedules, expedite work progress, and anticipate and assist in the identification and resolution of potential and actual problems that have the tendency to hold up projects and delay schedules (Bechtel Corp. 1) e. Performance In the construction business, quality is measured in terms of how well a facility is designed and how well it performs over its life. The firm has amassed the resources and knowledge to undertake almost any construction job anywhere in the world. Project managers’ expertise both on the technical side as well as the construction side ensures compliance with regulations and labor laws in nearly all the local jurisdictions throughout the world. As a result, the company has established a track record of working smoothly and collaborating with both government agencies and labor organizations. Furthermore, several innovative construction techniques which were pioneered by Bechtel have become industry standards. (Bechtel Corp., 1). Bechtel was named the top U.S. construction contractor for 14 consecutive years by the Engineering News-Record (ENR). It measures its performance through the scorecard system with the objectives earlier developed as the targets for performance. The company registered record-breaking revenues for the last five years; the following graphs show the new work booked and the workoff revenue figures for 2007-2011. (Bechtel Corp., 1). New Contract Awards                                 Revenue In billions of U.S. dollars                                 In billions of U.S. dollars             The diagrams shown above illustrate the firm’s financial performance of Bechtel through the years of the financial crisis and the economic recession that forced many companies to either downsize or close permanently. In the construction industry, the health of the economy is determinative because a give-and-take relationship exists between the two. Increase in Gross national product (GDP) drives demand for real estate which drives construction. Conversely, construction involves massive spending on a long-term durable which tends to boost GDP growth. In the UK, construction accounts for roughly 8 per cent of the country’s GDP (O’Connor 1). Looking at Bechtel’s financial performance, however, one may note that the volatility of earnings was as severe as the effect on other industries and even on other construction firms, although new contract awards correctly abruptly during the crisis years 2009 and 2010, and then recovered significantly thereafter. The company could credit its resiliency to the long-term nature of large-scale construction projects, which spread revenues over several years. Also, the multinational capabilities of Bechtel enabled the firm to hedge the weak demand in the home country with strong demand and investment in the host countries where it has a presence. The company’s strong financial performance would not have been possible had it not possessed a strong performance culture. Bechtel has been able to develop this through a system of talent recruitment, development and management. Bechtel seeks talent out in its College Relations program whereby it builds strong relationships with universities that train engineers. From this pool of potential talent, the company develops the right skill base that would support the use of the company’s tools and processes. (TM 1) f. Technology Bechtel has built a name for itself, not only as a company that keeps abreast of the latest technology, but more so as an innovator in engineering, project management, and construction. In 2012, it has received awards for the following innovations: A new photonic method which produces high-performance, protective coatings against corrosion, wear, and various other modes of degradation in extreme environments; The first plastic material with the capability of efficiently distinguishing neutrons from gamma rays, which is key to identifying nuclear substances like uranium and plutonium and differentiating them from benign radioactive sources; A technology which does away with the use of valves by using a laser to repeatedly access and reseal completely sealed containers. The technology has several applications, one of which is advancing the safety of sampling high-hazard waste containers to improve leak-testing of pacemakers before use (Bohne,1) g. Work Procedures Uppermost in the topic of work procedures is the implementation of strict safety measures for employees. Bechtel has earned the reputation of being one of the industry leaders in safety. It has formulated guidelines and procedures which employees are expected to follow to ensure their safety. Some of these are as follows: (Cable 29) Materials must be delivered close to where they will be used, to prevent the occurrence of back strain and injury in lifting heavy loads. Materials must be stored a waist height, and work should be raise to waist level wherever possible. Rest breaks should be encouraged, as fatigue can make workers more susceptible to injuries. Carts, dollies, forklifts and hoists must be used to move materials, particularly for materials that equal or exceed 50 pounds. Because of its riskiness, trench work must be supervised by a competent person; protection from cave-ins are required where excavations are deeper than 5 feet, unless made entirely in stable rock, or if a cave-in may be possible. Work areas should always be inspected each day before start of work, as needed throughout the shift, and after rainstorms and other similar changes in conditions. Access/egress (e.g. stairway, ladder, ramp) is mandatory for excavations deeper than 4 feet. Recommendations The company is extremely competent in its field, however its reputation has come into attack as a result of labor union movement and its perceived ties to politics. These matters cannot be avoided because big business will always have its detractors. Large construction projects will necessarily bring Bechtel into close contact with political leaders, not all of whom have a favorable public image. Labor union movements are also an unfortunate but unavoidable fact of doing business with large numbers of construction personnel. The company should however strive to build a more socially responsive public image by pursuing the CSR programs (i.e., mentoring) through which it may spread the benefits of big business among the community. Value Facet Analysis a. Cultures external to the organization The firm has no problems with the cultures of its host countries, however it does have a problem of being perceived as a political opportunist by some militant and vocal sectors of society. This should not last very long unless the company continues to accept projects of questionable backing. Bechtel should mount a public information campaign to inform the public of the laudable intentions and goodwill the company maintains despite its participation in these projects. b. Organizational culture The organizational culture sought to be fostered in the company is grounded in integrity and respect, quality, and zero accidents. Innovation and leadership are also sought to be ingrained in the members of the organization, which they could practice within the context of their jobs and functions. c. Employees’ values Bechtel seeks to engage its employees to better align their values with those of the companies, however there will always be the conflicting values introduced by labor organizations and unions functioning within Bechtel. In the conduct of their jobs, it is possible to positively motivate the employees to work towards the company’s goals, by recognizing the efforts and lauding the achievements of those employees who shine in the workplace. d. Suppliers’ values The suppliers seek to deliver the best quality materials, supplies and equipment within the time specified by the company, in order not to cause any delay in the completion of the project. Beyond this, the suppliers have been oriented by the company during their registration about the firm’s standards of sustainability and ethical principles which must be observed in the sourcing of such materials. These policies should be strictly abided with, unless the supplier risk the cancellation of its contract with the firm. e. Customers’ values Customers are increasingly concerned that the products and services of the company be produced sustainably and without harm to the environment, in addition to the firm’s compliance with specifications of the planned construction. The company should maintain attention to quality, and compliance with the agreed-upon schedule, budget, and all government regulations with regard to the project. f. Third party values Third parties in the construction industry would refer to the greater community and society which is impacted by the structure and its process of construction. Third party interests would include preservation of the environment, the welfare of the community, and fair treatment of the workforce, a good number of whom are likely residents of the community. The firm should take care not to exhaust the community’s natural resources or utilities, not to unduly create noise or release pollutants to the environment, or to transgress into the property lines of their neighbors. g. Competitors’ values Competitors will have legitimate interests in competing with Bechtel for the projects open for bidding, but these should be within the bounds of ethical practice and good faith. In some large projects, competitors will collaborate in accomplishing specific jobs, during which time competitors will value a sharing of knowledge and expertise. Such sharing is expected to be pursuant to ethical business principles and should not violate proprietary rights. h. Owners’ values The company culture and values are grounded in integrity and respect, quality, and zero accidents. Bechtel takes pride in upholding the highest standards of ethical business culture. It does not tolerate unfair or unethical behaviour, and all employees are held to comply with these standards as well as the laws applicable in the local, state, federal, and in-country jurisdictions. Bechtel is a member of Transparency International- USA and the Ethics and Compliance Officers Association, and is signatory to Principles for Countering Bribery, an initiative of the World Economic Forum. Bechtel likewise builds its reputation on quality and excellence. The company employs Six Sigma and other initiatives to monitor and improve its performance for its customers. Finally, the company adheres to zero accidents and a world class safety program. It is among the safest companies in the industry, with 80 per cent of the projects completed each year without a single accident. In 2011 alone, the firm achieved more than one million consecutive work hours in 47 projects. Conclusions Bechtel Corporation is a prominent player in the global construction industry. It is known to have an unstinting passion for quality, a penchant for innovation, and an obsession for safety. It has received numerous awards for state-of-the art research and development, and it is generally acknowledged to be an expert in the construction of roads and rail systems; seaports and airports; fossil and nuclear power plants; refineries and petrochemical facilities; mines and smelters; renewable energy; defense and aerospace facilities; environmental cleanup projects; communications networks; pipelines; and oil and gas field development. Despite its apparent competence, the firm has been criticized for the seeming political nature of some of its projects, and it has its share of recurring labor problems. These problems are unavoidable for a large business involved in the types of projects that necessarily bring the firm into contact with governments and authorities, and which deal with large groups of organized workers such as in construction. Bechtel will also be facing possible weakness in the demand for construction services as the economy may tend to weaken. All these taken into account, Bechtel appears to be advantageously positions to weather out the unfavorable market, and its partnering and constant dialogue with customers, employees, suppliers, and the community may eventually dissipate the negative publicity the irm has been subjected to. Works Cited Bechtel.com ‘Corporate Overview.’ 2012. Available 12 December 2012 at http://www.bechtel.com/overview.html Bechtel Annual Report 2011. Available 12 December 2012 at corporate website. ‘Bechtel: Profiting from Destruction.’ CorpWatch June 5, 2003. Available 12 December 2012 from http://corpwatch.org/article.php?id=6975 Bohne, J ‘Innovations at three Bechtel sites recognized by scientific community.’ Bechtel.com. July 10, 2012. Available 12 December 2012 from http://www.bechtel.com/2012-07-10.html Cable, J ‘Hammering away at construction hazards.’ Occupational Hazards. May 2006. pp. 29-32 O’Connor, S ‘Weak construction growth raised GDP worry.’ Economy. April 13, 2012. Available 12 December 2012 at http://www.ft.com/intl/cms/s/0/d54ddb12-854a-11e1-a394-00144feab49a.html#axzz2F2JbBJHX TM Talent Management. ‘Bechtel: Crafting an Effective Performance Culture.’ TM Talent Management. 2012 Available 12 December 2012 from http://talentmgt.com/articles/view/bechtel_crafting_an_effective_performance_culture/6 Read More