Organisational Behaviour: Saudi Aramco - Article Example

 Organisational Behaviour: Saudi Aramco Introduction This assignment focuses on the internal organisational structure and culture at Saudi Aramco, a large, multi-national oil business. This paper will highlight the cultural aspects of Saudi Aramco, focusing on the organisational culture which exists at the company and how this culture impacts routine business operations. This assessment aims to paint a clear picture of what drives the cultural mechanisms at the company and the degree to which the business culture supports organisational goals. The point of view is that of Fire Instructor for the Fire Protection Department at Aramco, however this position works with many different, diverse employees at the organisation, thus from a cultural perspective, personal insights into what drives the organisational culture are used to describe the cultural make-up of Aramco. Relevant organisational theories are utilised to justify determinations regarding culture at Aramco. A strong corporate culture exists at this company where management creates objectives and then imposes them, top-down, to the rest of the business. Informative business overview Saudi Aramco is a multi-national organisation specialising in oil extraction and processing, working within a well-developed logistics infrastructure which provides oil to an abundant volume of countries around the world. Currently, the business works with over 20 international affiliates (Saudiaramco.com, 2009). This gives the business a much broader, global presence which provides the necessity for Saudi Aramco business leaders to be well-versed in foreign culture and be adaptable in a variety of cultural scenarios. To illustrate the industry size of Saudi Aramco, the business currently produces 8.9 million barrels of crude oil daily, with an annual output of 3.26 billion barrels (Saudi Aramco, 2008). In terms of gas production, Saudi Aramco produces 3.0 trillion cubic feet of gas annually (Saudi Aramco). In comparison to other oil and gas producing organisations across the world, Saudi Aramco ranks in the number one position for oil output and this conglomerate business hails itself as being “among the leading producers of natural gas” in the world (Saudiaramco.com, 2006, p.1). This represents a highly competitive environment as both a producer and a supplier to different organisations and international buyers. Saudi Aramco is also highly diverse in terms of technological sophistication, recently launching a multi-million dollar software system known as InFusion which streamlines the functions of production, accounting, data reconciliation and information system management into an integrated software package (Process Engineering, 2007). Technological sophistication such as this has allowed the business to connect multiple, overseas divisions into a single platform for business development. Saudi Aramco has been in business since 1933, originally named the California Arabian Standard Oil Company (CASOC), but through changing global demand and different regulatory/governmental forces, the business has been redeveloped and improved and is now known as Saudi Aramco (Saudi Aramco). This 76-year-old company now invests considerable resources into creating more environmentally-friendly fuels and has shifted some of its focus from traditional production-oriented operations to a human resources focused organisation (Saudi Aramco). Saudi Aramco currently employs 54,000 employees who work within different, multi-national divisions of the company across the world, representing over 50 different nationalities and cultures (Saudiaramco.com). As an investment toward human capital growth, Saudi Aramco works consistently to provide superior staff training and even the development of human diversity campaigns related to women (Saudi Aramco). Thus, Saudi Aramco is a diverse, people-focused organisation which maximises human capital as a means to remain competitive and develop operational innovation in multiple business divisions. Saudi Aramco organisational culture The culture of Saudi Arabia is often considered to be “closed and extremely conservative” (Williams, 2004, p.15). This is likely due to the strong Islamic faith and values which have governed Saudi Arabian society for decades, where rules-oriented organisations have become commonplace to ensure unity of purpose. Saudi Arabia is also a collectivist culture, meaning that the ideas and values of groups are considered to be more paramount to individual opinion or individual business contribution (Al-Sawar, 2005). There are elements of the strong corporate culture observable at Saudi Aramco, a type of culture where “culture is seen as an input that can be manipulated to contribute to organisational success. It is management created and imposed on the rest of the business” (School of Management lecture, 2009, p.20). Saudi Aramco senior leadership recognises the importance of diplomacy and cross-cultural relationships with foreign citizens and global buyers, therefore this cultural aspect is consistently reinforced from the top-down to ensure that all divisions and business partners remain focused on cultural diversity. Pless and Mack (2006) describe the culture of inclusion model where people of multiple backgrounds, beliefs and mindsets work together effectively and use their voices to be heard and accepted. This is noticeable in multiple operational divisions from technology and R&D as well as other support services such as the Fire Protection Department. All of the internal business divisions and support services work with multi-national business leaders and foreign regulators, therefore these attitudes are considered to be some of the most primary human-oriented characteristics which lead to business success. Diversity training is ever-present in all layers of management and staff support divisions. Said one business leader of Saudi Aramco, “We will never give up that mix of cultures which gave us such strength throughout the last 30 years” (Eedle, 2004, p.20). This focus on diversity has also created a “very cosmopolitan business culture” at Saudi Aramco (Eedle, p.20). The term represents sophistication from a cultural perspective in which broad-based cultural understandings are consistently reinforced from senior management. Leadership flair for diplomacy in business negotiations and the training tools provided to support service groups in this area are always noticeable at Saudi Aramco. There is a strong sense of value for foreign buyers and other foreign regulatory agencies, in terms of providing respect to these external forces, and compliance to these same strong, corporate values is expected of multiple business groups. Schuller (2005) suggests that educating employees to value cultural differences is the most effective method of creating an inclusive culture. This is an aspect of the strong culture at Saudi Aramco where training in diversity is constantly promoted at the highest levels. Diversity focus is yet another example of the strong culture which exists at Saudi Aramco, as these values are built at the highest levels of the organisation and then promoted throughout all lower workforce ranks to ensure that the entire organisation remains focused on cultural diversity. Failure to conform to these values can lead to reprimands or negative performance appraisals. In Saudi Arabia, it is also identified that most managers enjoy maintaining a comfortable distance between subordinates (Bjerke and Abdulrahim, 1993), giving leaders a high score on Hofstede’s Cultural Dimensions scale measuring power distance. Because of the corporate culture which exists at the company, where demands for social-oriented compliance are driven at the highest levels, high power distance is commonly witnessed at the company. Even though there is a strong push for diversity and employee development in today’s Saudi Aramco, when it comes to the relationships between superiors and subordinates, there is a noticeable, comfortable distance between managers and the generic business worker. It is not common for junior or senior managers to create an off-site social event which inter-mixes different hierarchical levels of the business. Instead, managers tend to socialise in their own private groups whilst the staff members are left to these same social rules and values when considering off-site socialisation. Fairhurst (2009) offers that in organisations where high power distance exists, it is often very difficult to challenge senior officials which can create negative perceptions of leadership in employee groups. This is another aspect of the strong corporate culture at Saudi Aramco where challenging senior leaders is not commonplace and, often, to do so can lead to reprimand or other negative disciplinary consequences. This power distance is comfortable and very controlled by senior leaders. It is also identified that Saudi Arabian culture generally leans toward femininity in relation to Hofstede’s Cultural Dimensions (Bjerke and Abdulrahim). Society, family and friendship are some of the most common values in this region and are all noticeable at Saudi Aramco. Even though the different leader ranks generally do not socialise with staff or support members, the value of these relationships are part of the Saudi Aramco organisational culture. There are many motivational business strategies in place which capitalise on these social values, such as providing internal staff and support groups with flexible scheduling or higher paid-days-off in order to reinforce the company’s commitment to the social relationships of its workers. It is not uncommon, either, to witness many workers speaking openly of their caring and support for family and co-workers as part of this femininity social trait. These types of conversations are encouraged at the highest levels of the organisation to build stronger group relationships and a motivated group of staff professionals. As part of the collectivist culture which exists at the company, group cohesion and inter-group support is a highly-valued aspect of human capital which senior leadership consistently attempts to reinforce and publicise. Rogers and Spitzmueller (2009) offer that in collectivist organisations, higher motivation to learn is present based on perceptions of unity toward strategic goal attainment. This is highly evident at Saudi Aramco where group projects and even diversity training are embraced as this has become a strong element of the business culture. The collectivist culture seems to provide better goal-setting and goal-achievement as employees would rather work in social groups rather than individually. Team-based work is applauded at the senior level and constantly reinforced and controlled, thus another aspect of the strong culture at Aramco. The company’s focus on relationships as a tangible corporate tool for success is also visible in the company’s corporate values statement. These values include fairness and integrity, teamwork, trust, accountability, and citizenship (Saudiaramco.com, 2009. Starting at the highest levels of the corporate culture, fairness and integrity as part of ethical business design are regularly reinforced through internal publications and training literature. Aramco has even taken the time to create various case studies of organisations which have failed to follow a fairness and integrity model to illustrate how these unethical business scenarios can create long-term and problems at companies. Thus, mutual group respect and respect for the needs of other external forces is a common theme at the business. Citizenship is measured by the level to which the business gives back to local communities and the degree of professionalism displayed by multiple support service groups, such as the Fire Protection Department. Management training in these areas reinforces how to become a better role model for subordinate workers and the company provides the methodology for being a better corporate citizen. These mentoring-focused programmes have created much more motivation in many different divisions of the company because they promise teamwork, integrity, and positive citizenship for all employees. In the Fire Protection Department, as one example, employees appreciate the mutually-respectful environment and thus remain dedicated to project tasks and assignments. One business and leadership expert identifies that “effective mentoring can improve retention, build morale, increase commitment, and accelerate leadership development” (Zachary, 2007, p.16). There is a strong aspect of mentoring and relationship-buiding at the company which is one of the most fundamental aspects of senior leadership. These values are promoted top-down and many of the leaders actually demonstrate these values and promote interpersonal respect in all business dealings with internal stakeholders and external clients. These beliefs are viewed as controllable aspects which are mandated, yet another example of the strong corporate culture at the firm. The business is also very prone toward avoiding uncertainty, another element of Hofstede’s Cultural Dimensions scale. This is a common trait for Saudi Arabia (Askary, Pounder and Yazdifar, 2008) and is very noticeable at Saudi Aramco. The corporate culture, despite its focus on human resources and mentoring, is also very rigid about meeting with success. Therefore, any situation which requires assuming an element of risk is highly scrutinized by management officials prior to granting authorisation to make the decision. For example, if a member of the oil processing division were to offer suggestions on how to better improve production capacity by changing internal processes, this decision would be analysed by multiple layers of management as part of a risk assessment. Unlike other companies which make rapid decisions, Saudi Aramco leadership remains focused on long-term risk management and generally will not support or approve decisions which have uncertain outcomes. Risk avoidance, in some situations, creates negative motivation in staff workers due to the time involved in getting what are sometimes simple approvals. Coupled with the analysis of the decision, employees are often not willing to offer process improvement suggestions because they feel that their offerings are not worth the effort in the long-term. Alessandri (2008) suggests that in organisations where high uncertainty avoidance exists, as the level of risk is perceived to be greater by senior decision-makers, the leaders will often escalate the process of gathering information to support whether a risky decision should be made. This can cause problems with employee/leader relationships. This theory supports the strong culture at Saudi Aramco as employees are often unable to challenge senior decision-makers for risky decisions and simply do not feel it is a battle which can be won. Thus, tangible employee/leader relationships are negatively affected due to high uncertainty avoidance at the senior levels, which is one aspect of the strong culture which requires modification to adopt more risk and actually consider the ideas from employees about taking the business in a new direction. All of the values identified in this assessment, such as fairness and citizenship, make up the company’s non-official mission in regards to how the company conducts business in multi-national environments. In terms of social responsibility, the company’s mission is to “to make the facilities and communities in which we operate cleaner, healthier and safer places to work and live” (Saudi Aramco, p.38). The culture at Saudi Aramco is very supportive of this mission, by creating the top-down initiative to ensure that all divisions of the business remain focused on positive citizenship and projecting fair and ethical business practices to a diverse clientele. Managers are given the training and tools necessary to communicate with diverse external forces and self-promotion of the business and its environmental innovations are well-supported. The aforementioned mentoring and coaching programmes developed by senior management at the business provide a system of rewards when employees have been developed into more diplomatic and citizen-focused representatives of Saudi Aramco. In the Fire Protection Department, safety is a key concern and the business uses innovative and interesting tools to ensure that this organisational goal is complied with. Training videos often depict workers in interesting social situations as a means of building staff motivation toward learning some very complicated fire protection rules and regulations. At the same time, other support service groups are consistently assessed for their own internal job safety, such as using auditing to ensure that chairs are ergonomic by design and the development of comfortable work environments. When these audits occur, it sends the message to the company’s diverse workforce that the leaders take their safety concerns seriously and are willing to provide them with tools that make their job roles more rewarding and satisfactory. There is an open-door policy in relation to staff expression of problems in the organisation related to not only safety but a wide variety of issues, thus the culture supports the needs of the employee in multiple areas of business. The company has also developed a performance management system, which is often used to reward groups for their commitment to achieving superior outcomes in their assigned tasks. Mathis & Jackson (2005) describe the performance management system as a process which observes, identifies and rewards (or punishes) for meeting objectives linked with organisational strategy. Managers are always available in multiple divisions to identify employee strengths and weaknesses and these comments are recorded in a staff profile record. During the employee’s annual performance review, both positive and negative comments as part of a 360 degree feedback method are available for the HR assessor. Together, the staff member being assessed for performance and the HR professional discuss their contributions toward meeting organisational goals and can thus provide a quality system by which to measure performance. The risk-avoiding culture, however, does have disadvantages in terms of driving better motivation in staff members. Because of the aforementioned timeframe and high-level assessment of what are sometimes low-priority or low-risks decisions, employees are not as inclusive when it comes to offering improvements to policy or procedures. This is highly noticeable in the Fire Protection Department where certain safety protocols or processes have been known to cause employee discomfort or problems. When employees have suggestions about improving these systems, in nearly every situation, the employee offerings are rejected by departmental leadership or senior management. This is also noticeable in other areas of the business where employees seem to believe they are being held to rigid operational and process standards with no opportunity to be heard as a business innovator. Though the open-door policy exists at Saudi Aramco for the free expression of these ideas or concerns, most often the suggestions are rejected due to perceived risk or basic uncertainty related to the expected outcomes of the employee-generated solution. In this area, the high levels of uncertainty avoidance which exist at the company creates negative motivational outcomes and does not fully provide employees with the type of environment they demand which is more inclusive to their unique contributions and ideas. This could be a product of the high level of power distance at Saudi Aramco where senior managers do not feel that the ideas and concepts provided by employees deserves similar recognition as that of their own management peers. Whatever the case, the risk-avoiding corporate culture is so predominant that it has even affected some employee turnover ratios as employees seek a new job opportunity elsewhere which focuses more on individual innovation and free expression of new business ideas. In the Fire Protection Department, several employees have left for this reason, thus it can be said that Saudi Aramco is not always supportive of organisational goals for success as the senior leaders often seem to view risk as an alarming or worrisome scenario. This would tend to represent some elements of the corporate culture as being rigid and inflexible and this directly impacts employee motivation. However, some of this risk-related lack of support is offset by the warm and welcoming environment which exists at the company in multiple levels. Whenever foreign buyers or regulation committees tour the Saudi Aramco facility, employees from multiple levels of support are given opportunities to converse with the visitors. When it has been scheduled that foreign buyers or regulatory agencies will be touring the facility, specific areas of the business are spotlighted for these tours. As one example, it would not be unheard of for a member of the Fire Protection Department or accounting services to take the lead in a tour discussion to point out their unique department attributes and innovations. This strongly sends the message to both the staff member and the visiting officials/buyers that the company strongly values relationships and diversity and will allow employees to show their knowledge and skills to foreign business professionals. In many situations, successful presentation by junior staff members has led to promotions, future job offers from impressed visitors, or even on rare occasions an invitation to join off-site socialisation functions with managers and visitors as a reward for their positive discussion and focus on positive citizenship. This warm and inviting, highly-diplomatic business environment strongly boosts motivation as it sends the message that the staff is considered to be very valuable and integral to long-term success. Conclusion and recommendations In most areas, even though the culture is developed and driven at the highest levels of the business and then reinforced top-down through the ranks, the organisational culture at Saudi Aramco is congruent to meeting employee needs. There is a people-focused structure at the company which reinforces the importance of social relationships, despite the power distance which exists at the business, which builds strong, cohesive peer relationships in multiple divisions. This is an example of the culture of inclusion, an aspect which is strongly regarded at the most senior levels and then manipulated/controlled to ensure compliance. The Fire Protection Department, as the relevant example, has benefitted strongly from this new human resources-focused organisation and many staff members in this area work together more like family members than simple co-workers. These inter-departmental, healthy relationships are also noticeable in areas such as finance, manufacturing, and R&D. Unlike some competitors in this similar industry which focus more on quality control and compliance to regulations, Saudi Aramco actually promotes the off-site socialisation of peer employees and will provide considerable leniency when social discussions occur during work hours. This helps to promote a healthier and more diverse working environment where positive socialisation is the expected outcome of job role function. The only notable recommendation for Saudi Aramco is to consider the positive benefits of being less risk-reluctant as this causes measurable declines in motivation and in terms of how employees view themselves as valuable human capital. More risk-accepting companies make faster decisions based on instinct and measurement, thus employees are given more flexibility as contributors to the company’s goals. When even small-scale improvements are sent to multiple assessing divisions for risk analysis, this can create an internal staff culture where employees simply will not speak their minds as they come to expect their ideas to be rejected. However, this would involve changing the corporate culture at the highest levels of the organisation to be more accepting of risky scenarios. There are negative outcomes of the strong corporate culture at Saudi Aramco, such as high uncertainty avoidance and the negative impact of damaged employee/employer relationships. It is recommended that the senior management officials of Saudi Aramco actively consider the potential benefits of being more risk-focused, so long as safety and human health is not impacted, to create an even more unified organisational culture which prides individual innovation and suggestion. In terms of risk, the culture at Saudi is somewhat harmed by being controlled at the corporate leader level. References Alessandri, Todd M. 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(accessed 7 Aug 2009). Saudiaramco.com. (2009). Corporate values. http://www.saudiaramco.com/irj/portal/anonymous?favlnk=%2FSaudiAramcoPublic%2Fdocs%2FAt+A+Glance%2FCorporate+Values&ln=en. (accessed 8 Aug 2009). Saudiaramco.com. (2009). Operations map. http://www.saudiaramco.com/irj/portal/anonymous?favlnk=%2FSaudiAramcoPublic%2Fdocs%2FOur+Business%2FOperations+Map&ln=en. (accessed 6 Aug 2009). School of management lecture. (2009). Module 2 Organisational behaviour. Schuller, Steve. (2005). Develop diversity culture through a sequential process. Hotel and Motel Management, Duluth. 220(14), p.13. Williams, Bob. (2004). Shifting Saudi sands. Oil & Gas Journal. 102(23), p.15. Zachary, Lois J. (2007). Mentoring culture. Leadership Excellence¸Provo. 24(5), p.16. Appendix A – The top-down organisational structure at Saudi Aramco There is clearly a centralised hierarchy at the company with specific departments or leaders responsible for the accountability of operations. Read More