Organizational Change - ExxonMobil Corporation - Case Study Example

Organizational change Organization change: a case study of ExxonMobil Corporation Introduction Change is a planned and managed process that involves implementation of new processes, new leadership styles, new technology and new working methods. Change arises from either the external or internal environment (Cameron & Green, 2012). The changes in external environment such as advancements in technology, shifts in consumer demands, demographic changes, the ecological changes such as global warming and economic changes such as movements in the interest rates and economic cycles like depression and d boom trigger a change in the organization (Cummings & Worley, 2009). The purpose of change is to attain a competitive edge through responding to changing consumer needs and tastes. Change will improve the morale and productivity of employees and ensure higher collaboration and efficient communication within the organization. According to Kotter’s 8 step model, the change leaders must establish urgency for change, create a guiding collation and outline the change vision (Kotter, 2012). The managers of change will then communicate the vision, empower action through removing obstacles such as employee resistance, create short-term wins, implement continuous improvements and anchor the change in the corporate culture (Gilley, 2005). The paper will diagnose the need for change at ExxonMobil and use Kotter’s 8 step model in illustrating how the change will be implemented. Company background ExxonMobil is the global largest publicly-traded oil and gas company that engages in oil and gas exploration, production, transportation and marketing across the world. In 2012, the company had 25.2 billion barrels of proven reserves and its 32 refineries that are located in 17 countries have a throughput capacity of about 5.4 million barrels per day. The company brands include Esso, Exxon and Mobil and has diversified in the provision of petrochemical building blocks. According to the Company website, the guiding principles aim at making ExxonMobil the world’s premier petroleum and petrochemical company through continuously attaining superior financial and operating results (Gilley, 2005). The company is committed to enhancing the long-term value of its investments through providing investors with superior returns and also meeting the constant changing needs of the customers. The company provides employees with opportunities for professional and personal growth and is committed to high ethical standards and operating within the regulatory framework. In the recent past, the company has experienced negative reputation due to underwater well blowout in the deep-water Gulf of Mexico (Gilley, 2005). Diagnosis of the need for change ExxonMobil has faced several criticisms emanating from the impact of its operations on the natural environment and inability to implement processes that ensure efficiency and productivity in meeting the changing market conditions. In 1989, ExxonMobil faced a crisis after it spilled 11 million gallons of oil in Alaska since the national marine parks, fisheries and sea otters were greatly affected by the water pollution (Cummings & Worley, 2009). The incident was attributed to tiredness of ship crew, working under influence of alcohol and inadequate well trained crew members. The company has been accused of cooperating with government regimes that abuse human rights and violate fundamental freedoms especially in African countries such as Angola where bonus payments for oil exploration by the company funded weapon purchases during the civil war in 1998. In 2003, ExxonMobil is alleged to have illegally traded with Sudan and bribed Kazakhstan President in order to acquire 25 percent of Tengiz oilfied. In 2001, the company is said to have assisted human rights abuses such as torture and murder through employing and supporting Indonesian military forces (Cummings & Worley, 2009). The company has been accused of discrimination based on sexual orientation of the employee. According to Daily Telegraph in 2012, ExxonMobil has transformed to be the most hated corporation since its chief executive officers are skeptical about climate change and have increased the oil drills in fields leased by dictators such as Equatorial Guinea and Chad due to its habit of paying bribes and kickbacks to such dictatorial regimes. Recently, ExxonMobil has been accused by the Securities Exchange Commission for engaging in fraudulent practices, dubious accounting methods and bribery of officials in order to deceive the stakeholders that the company is making impressive returns and increase the market value of the company in the financial markets (Cummings & Worley, 2009). Some external environment changes that have triggered change at ExxonMobil include the increasing global awareness of climate change and need to conserve the natural resources such as oil and gas (Cummings & Worley, 2009). Accordingly, technological revolutions and advancements in the oil exploration and drilling operations require the company to implement environment-friendly drilling methods that lead to high discovery rates and conserve the natural ecosystem. The accounting practices, bribery and fraudulent deals have exposed the company to numerous litigation cases and fines thus ExxonMobil must comply with the prevailing business regulatory policies and laws and professional accounting policies that reflect the true financial position of the firm (Cameron & Green, 2012). The existing internal business environment such as the business strategy, the processes, organisational structure and people has triggered a need for change and the management is expected to anticipate and implement the necessary changes in order to attain a competitive edge in the market (Cummings & Worley, 2009). ExxonMobil mission and strategy is vital to the existence of the company and the company should remain committed to enhancing the economic returns while adhering with its obligations of conserving the environment (Cummings & Worley, 2009). The leadership of the company that comprises of senior executives like Andrew Swige, Mark Albers, Michael Dolan and Rex Tillerson must implement cultural changes in their leadership that will ensure subordinates are motivated and follow the company policies in their duties. The management must remain committed to making the company the world’s petroleum and petrochemical company that will attain superior financial results and adhere with high ethical standards. According to Mathew (2011), the leadership style should inspire the efforts of the subordinates towards the attainment of the shared vision and strategic objectives such as the need to prevent further oil spills and increase the oil discovery rates. The management must find new innovative methods of finding safer and cleaner ways of meeting the global energy needs (Gilley, 2005). Another aspect of change that is required at Exxon Mobil is a cultural change that will require a change in the norms, beliefs and values that determine the interactions between several stakeholders and guide the behavior of the employees (Cummings & Worley, 2009). In this case, ExxonMobil employees have demonstrated unethical behaviors such as excessive consumption of alcohol while on duty in the exploration ships, fraud and embezzlement of company assets and lack of integrity in their work. In this case, the company must implement a culture of trust, integrity, safety, commitment, community focus and cordial relationships in order for the employees to remain committed to the shared organizational objectives (Mathew, 2011). The company organizational structure has hindered effective coordination of the global operations, efficient communication and faster decision-making thus the company must reduce the high hierarchies and delegate some responsibility to the project heads in different geographical areas in order to avoid future oil spillage disasters and ensure faster response to emergency situations within the company. The company must change the current employment systems and emission reduction systems (Mathew, 2011). The company must attract highly qualified and motivated staff and change its remuneration policies in order to ensure high talent retention. Accordingly, the company must support more research and development activities in low-emission technologies and mitigate the GHG emissions that will eventually ensure a shift to renewable energy sources, natural gas and nuclear energy as the preferred energy sources in the US economy. The company must adhere with the cap-and-trade policy on emissions and pay taxes for excessive emissions in order to ensure such money is utilized in combating climate change and improving the livelihoods of the poor in the society (Cummings & Worley, 2009). ExxonMobil management practices have led to poor work climate thus leading to poor working relationships and limited teamwork. The company has faced numerous employment-related lawsuits and go slows that have threatened the operations of the company. In this case, the work unit climate is also poor since employees have negative perceptions of their job due to lack of effective safety clothing and equipments (Cameron & Green, 2012). The employees are exposed to high hazards such as dangerous chemicals, sea disasters and work-related accidents. The company has not made continuous learning and skills acquisition part of the corporate culture and has failed in fulfilling the individual needs of employees such career advancement opportunities, job enrichment and work-life balance (Sharma, 2007). The employees are demoralized due to poor working conditions and thus the company has experienced low productivity and low overall employee satisfaction. Kotter’s 8-step approach to the change Kotter’s 8 step approach to change is useful is instrumental in implementing successful change at ExxonMobil since the model is capable of changing the behaviors of people and implementing new vision for the company. Change management requires commitment by all stakeholders and highlighting of common shared vision by the leadership of the company (Mathew, 2011). Establish a sense of urgency According to Kotter’s model for change, the initial step is establishing a sense of urgency for change through highlighting the need for change. The management must highlight the decline in innovation and research, the increase in oil spillage disasters, the numerous lawsuits due to unethical practices such as bribery, corruption, political involvement and aiding human rights abuses in foreign countries (Mathew, 2011). The management will the decline in the number of oil fields, the slower oil discovery rates, the need to adapt to changes in technology and the poor record of the company in conserving the natural environment. The management will also identify threats such as increased competition from Dutch Shell, the shifts of consumer attitudes towards ethical companies and renewable energy sources, low employee morale, the increase in job-related accidents and tall organizational structure that has hindered faster decision-making and communication within the organization (Kotter, 2012). The management must develop future scenerios that may happen if changes are not implemented such as the decline the company financial performance, negative corporate image, high taxes due to increase in green-house gas emission, high fines and high employee turnover. In this case, the management must offer the employees some short and convincing reasons for change in order to create urgency for the need of the change and involve the stakeholders in talking about the planned changes (Mathew, 2011). Create a guiding/powerful coalition The second step in the implementation of change according to the model is to form a powerful coalition that will guide the change (Gilley, 2005). The powerful coalition must consists of powerful individuals who are committed to the change and who are capable of influencing the opinion of subordinates in the company (Cameron & Green, 2012). The change coalition must coordinate their efforts and work as a team in highlighting the areas that need changes and bringing together other people in the company to accept change. Development of change vision The third step will entail development of the change vision that people will easily understand . The change vision must consist the ideals and values that will guide the change and entails as short summary of the overall vision (Gilley, 2005). There must be a strategy of executing the vision. The change vision in this case will be to enable ExxonMobil attaining high financial and social performance through innovative solutions in its operations and adhering with ethical standards and legal framework in its operations. The change vision must be driven by values such as integrity, trust, commitment, honest, transparency, respect for human rights and community focus (Kotter, 2012). Communicate the vision and buy-in change The fourth step is communicating the change vision frequently and powerful in order to attain buy-in to the change (Gilley, 2005). The guiding coalition and management must talk about the need to change the culture, implement new processes, change the recruitment and training policies, flatten the organizational structure, adhere with the legal framework of operation, avoid bribes and ensue professional accounting practices (Cameron & Green, 2012). There is a need to communicate the need to attain higher employee productivity, remain committed to the shared organizational vision, improved working relationships and ensure teamwork in the company. Accordingly, there must be safety policies that will guide risky oil exploration operations and methods of improving the work-life balance in the drilling fields. In this case, the management must address the concerns and grievances raised by the employees such as need for additional training and apply the change vision in all aspects of the company such as sourcing for raw materials, training of new employees and conducting oil and gas exploration activities. In this case, the management must align their leadership and managerial styles with the change vision and lead by example in getting the subordinates to remain committed to the change (Mathew, 2011). Remove obstacles Just like all other organizational change, there will be resistance and other obstacles to the change thus the management build on change buy-in in all its processes. The management must address the employee concerns such as fears of layoffs, new technologies, new behaviors and working methods (Cameron & Green, 2012). In this case, the company must hire leaders who are committed to change in the main roles, change the organizational structure in order to facilitate information dissemination and feedback and address the changes in the job descriptions (Kotter, 2012). The management must emphasize on the need of high performance, the need of ethical business practices and take quick action to remove all other barriers of change. The management must train and empower employees through job enrichment, delegation of responsibility and authority and implementing performance appraisal and feedback systems that determine the overall productivity of the individual employee (Jung, 2013). Accordingly, the compensation systems can facilitate change and the company must recognize the people who remain committed to change or display the expected behaviors in the company. Create short-term wins The sixth step is creating short-term wins that are easy to attain and that will motivate the staff towards the overall change vision attainment. The short-term wins act as early goals and targets that will steer change and determine the progress towards overall change process (Jung, 2013). The short-term wins can include the reduction of lawsuits by 10 percent within the first year, the increase of company revenues by 10 percent within the next year, the improvement in employee retention and satisfaction rates within a year and development of innovative drilling methods within the next five years (Gilley, 2005). The company must also focus on short-term wins that will determine the reduction in work-related accidents and improvement in the work-unit climate such as growth in project teams and level of cooperation within the company (Jung, 2013). The management must hold regular reviews to determine the change progress and implement corrective actions. Build on the change/continuous improvements The seventh step is to build on the change through continuous improvements and learning process. The management must build on the positive achievements and continue to discourage negative behaviors that may jeopardize the change vision (Cameron & Green, 2012). There is a need to ensure continuous improvements in the working methods, processes and technologies within the company and improvement of the internal environment in order to attain competitive edge in the market and eventually ensure high financial returns to stakeholders and sustainable operations that conserve the ecological environment (Kotter, 2012). The new accounting systems must be capable of detecting and deterring fraud and new technology must enhance oil discovery rates and reduce carbon emissions. Anchor the change in corporate culture According to Kotter’s model, the last step in the implementation of the change at ExxonMobil will entail anchoring the change in the corporate culture in order for the change to determine the daily aspects and interactions within the company (Jung, 2013). The company must recognize the original members of the change coalition and tell success stories of past leaders who inspired change in the company. Accordingly, the values of the change such as trust, integrity, ethical standards, community focus, innovation and commitment must remain central to the day-to-day interactions and operations of the company (Kotter, 2012). The change must be anchored in the beliefs, norms, stories and values that are critical in ensuring the change. There must be succession plans that will ensure the changes remain central to the future of the company (Gilley, 2005). (Retrieved from blogs.ubc.ca.) Conclusion Implementation of change at ExxonMobil will enable the company comply with the existing regulatory framework, attain positive corporate reputation and enhance its economic value in the market. The company will be capable of controlling unethical business practices such as bribery, dubious accounting practices and employee conflicts. Lack of change at ExxonMobil has lead to negative corporate reputation, high job dissatisfaction, poor communication within the organisation and lack of shared vision for the company. In addition, the company has faced employee conflicts and high organizational hierarchy that has hindered faster decision-making and coordination of operations across the globe. Implementation of change at ExxonMobil will enable the company to have new vision, new processes, new leadership styles and culture that will contribute to ethical operating methods and high adherence to societal expectations. References: Cameron, E & Green, M. (2012). Making sense of change management: a complete guide to the models, tools and techniques of organizational change. Philadelphia: Kogan Page. Cummings, T.G & Worley, C.G. (2009). Organization development & change. Mason: Cengage Learning. Gilley, A.M. (2005). The manager as change leader. Westport, CT: Praeger publishers. Jung, C. (2013). Importance of change management in organisations. Munich: GRIN Verlag. Kotter, J.P. (2012). Leading change. Boston: Harvard Business review press. Mathew, S. (2011). The Act of change management: a principled approach for leaders. London: iUniverse. Sharma, R.R. (2007). Change management: concepts and applications. New Delhi: Tata McGraw-Hill. Read More