Leadership in Qatar Petroleum Company - Case Study Example

• Introduction
  • Overview of Qatar Petroleum Company

This is a petroleum company owned by the state in Qatar, which operates in the oil and gas industry. Its activities include exploration, refining, production, storage, and transportation of oil and natural gas. The refinery activities include processing crude oil into various products. Qatar finished products include super gasoline, petrochemical naphtha, diesel, liquefied petroleum gas (LPG), marine fuel oil (MFO), and premium gasoline. It was founded in 1974, and has its headquarters in Doha, Qatar (Qatar Petroleum, 2016).Qatar Petroleum Company has three departments namely operations, planning, and administration. Each of this department has highly qualified and training of staff. The administration department entails human resources, corporate training department, medical services, general services, organizational, and systems departments. The first well in Qatar state was drilled in 1939, and the largest offshore concessions granted in 1960. The first large offshore fields were also discovered in 1970. Qatar Petroleum Company is located in between Asia and Europe, which has enabled it to add up to the long term demand for energy in the national and international markets.

Qatar Petroleum Company is responsible for all phases of the oil and gas industry in the State of Qatar. The company has a mission to ensure that the state obtains the highest levels of advantages from the resources of oil and gas. Its main objective is to maximise its contribution to the national GDP through efficient, safe, and environmental friendly ways. Other objectives include provision of reliable and sustainable cash flow from a variety of business interest, managing the hydrocarbon reserves, meeting national demand for its products through cost-effective means, achieve high standards of safety, health, and environmental protection, optimizing employment of nationals and managing infrastructure of industrial cities and supporting services in a cost effective and secure way (Qatar Petroleum Company, 2016). These objectives are one of the many ways in which the company will deliver on its mission.

• • Leadership Style in Qatar Petroleum

The departments of Qatar Petroleum Company have been customised in such a way as to develop and improve the skills of the employees to increase their competency in their related fields. These employees are being moulded into future leaders, through activities that enhance their qualities and enhance the utilization of their leadership capabilities. The employees with the highest level of potential undergo training, coaching and mentoring, and their work assessed regularly to ensure improved performance. Throughout this process, their attitudes and traits would be focussed on to determine the requirements of their roles in the departments within which they are engaged. Furthermore, all changes that would be required in the organization are brought through the practical sources instead of reactive basis (Luthans, 1998). The Company operates in an industry with a constant growth and in which the two perspectives of leadership development (Individual and organizatnal leadership) apply. Qatar Petroleum Company applies the individual perspective of leadership, whereby, development of leaders is done by assessing the talent in the leaders’ personality and attitude (London, 2002).

In order to understand the leadership skills in applying leadership development methods, the current leaders in Qatar Petroleum Company have to do their level best (Mumford, et al., 2000). These leaders are analysed closely and the socialisation together with the educational issues considered in the development process. More specifically, the capacity and potential of the employees, plus their motivation, consciousness, and self directive is stressed on. However, this process does not emphasize interaction within the organization in the context of socialisation (Bass et al., 2003).

The leadership style employed in Qatar Petroleum Company is the Directive Leadership style that focuses mainly on power orientation and is used by leaders to shape subordinate’s behaviours at the work place (Eagly & Johnson, 1990). The leader makes the major decisions on all organizational matters. The leader also structures all activities and situations, which are adhered to by other people within the organisation. Furthermore, the leaders also provide emotional intelligence within the organisation. Leaders who follow the directive leadership style are strongly motivated to develop because the leaders manage all decisions regarding team management and organizational behaviour. The leaders regulate less competent employees in a bid to improve work efficiency for all employees in one acord. This style of leadership is highly effective as it enhances coordination among employees (Kritsonis, 2004).

• Major Changes in Qatar Petroleum Company

During the last quarter of 2014, Qatar Petroleum Company initiated a restructuring program due to the low prices of oil in the whole world. It did this by streamlining its activities and consolidating its presence in the international markets, under Saad Sherida Al Kaabi’s leadership. He was appointed as the new Chief Executive Officer (CEO) and president of the company in September 2014. This move increased the independence of the company from the government. The current CEO and president reorganized the company in order to achieve its objective of becoming at par with the industry’s leaders and also becoming a global force in both the national and international markets (Qatar Petroleum Company, 2011). In order to adapt to the changing market demands in the energy industry, Qatar Petroleum has established a model for hydrocarbons, together with various measures. From recent studies, it was established that the hydrocarbons were not economically feasible; hence, strategies have been implemented by several oil companies in order to diversify production and extract value from the reserves.

Since 1974, the company has grown enormously and its big size made it difficult to manage due to the side business interests. There was a decentralised management system with so many departments, which hindered efficiency within the operations of the company. The initiative of restructuring aimed at merging departments and simplifying its internal structure thereby enhancing efficiency of its processes (The Oil and Gas Year LTD, 2015). The restructuring was necessary to improve efficiency of the organization that had been hampered by some of its non-core business interests plus the decentralised operating structure.

Another change that was experienced in Qatar Petroleum was the upstream focus, which entailed recommittment to the upstream activities like exploration of oil and gas. The company has made plans to re-invest approximately $11 billion upto 2028, drilling 150 new wells and double production 90,000 bopd (this is according to Oil and Gas Year LTD, 2015). The company is also reassessing the development plans for its existing plants like Maydan Mahzam and Dukhan fields. These two fields have low production levels of around 225,000 bopd at the Dukhan field and 22,000 bopd at Maydan Mahzam as of 2013 (The Oil and Gas Year LTD, 2015).

The company has also put in place plans to renew production-sharing agreements in order to ramp up production. It has for example, renewed its partnership with the Al Khalij oilfield and the company now assumes a 40% share for the next 25 years. It has also renewed its partnership with Al Shaheen oilfield. This accounts for about 40% of the company’s total production. These partnerships are a strategic plan to optimise exploration activities and enhance its competitive edge in the industry. Qatar Company selects its partners based on their ability to offer technological solutions and optimum financial returns for the state (Qatar Petroleum Company website, 2015).

The company has also made petrochemicals plans as a result of the declining oil prices. The falling oil pries have deemed petrochemicals development not economically feasible. The feedstock that were previously allocated to the petrochemicals were distributed among existing downstream projects such as the ethane in Al Karaana was dispensed to subsidiaries of Qatar Petroleum and Ras Laffan Olefins Company.

The restructuring of the company has led to absorption of the foreign investment arm of Qatar Petroleum Company called Qatar Petroleum International, which was created in 2007. This move combines the strengths of the two companies and enhance the international competitiveness. The investments for Qatar Petroleum International have been evaluated and foreign production acquired after the restructuring ad integration. There are also plans to improve import and export capabilities through its partnership with Exxon Mobil. They have added export terminal to icrease the total tonnage of LNG gas yearly.

As the prices in the oil and gas industry keep fluctuating, companies fight to maintain low prices. Qatar Petroleum’s restructuring and commitment to upstream activities is one of its move to maintain the low prices. The company has turned to oil activities in order to boost its long term profitability and contribute to the government revenues. Although the restructuring has taken place, the company has remained state owned and it still operates via its joint ventures and subsidiaries throughout the hydrocarbons value chain in Qatar state. The company has been exposed to a numbe of risks that has put a limit to the development within the private setor in the oil and gas industry. Despite these challenges, the company has capitalised on the totality of the state’s resources and diversified its interests, thus, cementing its position within the industry (Qatar Petroleum Comapny, 2016). The national and global oil price decline has without doubt affected the execution of the government’s expansion projects, hence, limited finances assigned to the oil and gas industry from the budget.

• The main drivers of change in Qatar Petroleum

The demand for oil and gas is expected to increase signifiantly, owing to the fact that there is continuous innovation in order to cope with the changing market and economic conditions. One of the drivers of chage that has influenced innovation in Qatar Petroleum Company is socioeconomic development, in terms of industrialization, urbanization, agricultural and communication and infrastructure development. All these are dependent on sources of energy, in this case, oil and gas (Deng, 2015). Qatar state has strong ties with Europe, Americas, and Asia continents since the 90’s. Through these ties, foreign investors have been attracted and they have provided support in the development in the industry, hence, the continuous growth. This has further contributed to the need for restructuring of the company.

Petroleum companies harness technological power in order to meet demand. They use tehnology in installing underground pipes used for transporting the oil and gas to the required destinations. They also use technology to drill ocean beds for oil exploration in sites that are offshore. They also use remote sensors to find potential oil reservoirs. Qatar petroleum has also invested in research and development in order to enhance production and minimize negative environmental effects. The rapid changes in technology have propelled the growth of the market,hence, the need to restructure the company in order to meet this demand at the lowest cost possible. In order to cope with the rapid changing technology, Qatar Technology has implementing the SAP software , which will enhance to streamline its internal processes.

The global fluctuation in oil prices has also been a main driver of change in the oil and gas industry. These economic shocks may not always be doom and gloom. The low prices may put the companies in a better position to negotiate deals with host governments when the prices are low compared to when the prices are on top of the roof (Nakhle, 2015). The price levels have an effecton the bargaining power of the companies against the hosting governments. The companies have an upper hand when the prices are lower, although the governments may introduce impromptu changes in order to improve their investment outlook, thus, increase competition between nations for international capital. The low prices of oil caused asignificantly loss to Qatar Petroleum Company and neccesitated the need for restructuring.

During the restructring of Qatar Petroleum, its new vision was announced. It sets out the direction of the company and captures its achievements and heritage to build a future that is based on high level performance both within the Qatar State and in the world. With globalization, Qatar Petroleum’s strategy must address the international market, which has large numbers of customers and stakeholders. The effect of globalization is that the current and future trends in the market are taken into consideration when developing the strategies in order to optimize learning opportunities throughout the various markets in the world. This way, the company will be able to satisfy the customer needs and have a competitive advantage.

Employee diversiry has increased over time and employees now value work life balance more. Therefore, there is a need to consider the design of the workplace as a way to attract and retain employees. Positive results may be obtained through opportunities to arrange work demands around tasks such as conflict resolutions and creative thinking (Lee, 2012). In a bid to minimise costs and maximise the utilization of its workforce, Qatar Petroleum has adapted these principles and changed the old mentality of employees to what is needed to work effectively and maximise the benefits that come along with them. It has engaged its employees throughout the restructuring process. Managers at all levels are set as role models for those below them and the leaders have been equipped with skills to lead.

• Resistors to change initiatives

Employee resistance to change entails behaviours by employees which may undermine the implementation of some initiatives to change. Employee may resist due to the fact that the initiative may pose as a threat to their social interaction, self esteem, status, competence, and job security (Sundaram, 2015). Changes within an organization may cause instability and uncertainity among employees, which may result to reluctance from employees. There are various forms of resistance with one being overt resistane where the change agent together with other people within the organization are aware that someone is resisting the change initiative. Implicit resistance is whereby the change agent is unaware of the resistance. Immediate resistance is where the resistance occur immediately the proposed change is suggested and deferred resistance occurs some time in the future (Tripod, 2016).

There are several causes of employee resistane among employees such as lack of employee involvement (Coyle-Shapiro & Morrow, 2003). According to Taylor and Cooper, (1988), employees are geatly affected by challenges of organizational change. Concerns about change may be linked to both individual and organizational factors. Individually, employees are threatened by the issue of change and what the initiatives may bring. The employees avoid uncertainity at individual levels. They do things that are well known to them and they are not willing to throw away a familiar task for a new one. They are moved from their comfort zones and their routine is disrupted, but they do not like it. Apart from these factors, there is also threat to their job security, fear of loss of benefits, and disturbance to their existing social networks.

On the organizational perspective, threats to change are comparatively low, but only if there is sufficient communication of the change initiative and that the employees contribute towards this process and ensure that their interests and concerns are addressed and protected (Muliki, et al., 2011). Change management may be difficult due to the negative attitudes to chenge by employees (Coch & French, 1948) because they want to still do things the old way and not be moved from their comfort zones.

Communication is an important aspect in the process of change. Senior management should make sure that the change initiatives have been cascaded thoughout the organization. Acknowledgement by employees of the fact that there is resistance may act as a warning to the senior managers who have to change their strategy in implementing such change. Thus, more positive outcomes will be experienced (Henry, 1997). A condusive climate for change should be created and the vision clear;y stipulted, which creates some level of certainity on the part of the employees on what they want to contribute towards the growth of the company. Any feedback received from the employees is also valued as this will facilitate honest communication between the emplyees and the senior management (Freddy & Mbohwa, 2013).

• Recommended leadership style

In order to create a valuable and positive change, the recommended leadership style is the transformational change. In this style of leadership, the leader identifies the need for change, creates a vision to guide the process, and ensures the change has been implemented in tandem with employees. It also increases levels of performance, motivation, and morale to employees through activities such as connecting the employees with a sense of identity to the company’s mission (Burns, 1978). This form of leadership has four elements namely, individual consideration, intellectual simulation, insprirational motivation, and idealized influence. These element imply that managers should establish a vision in conjunctin with the employees and tie together strategy and vision. They should develop the vision and translate the vision to actions. In all these elements, there is an empahasis of employee involvement (Yukl, 1999).

Leaders who exercise transformational leadership style practice intellectual stimulation. The employees are encouraged to express creativity in the challenges they face. The leader offer these challenges with sufficient support in order to achieve these goals. The leaders do this by ensuring that the goals set are within the reach of employees’ capabilities. Another quality of transformational leadership style is the idealized influence where the leaders amplify the characteristics and behaviours that they require the employees to have, which they try to emulate. In addition, the leaders offer inspirational motivation and enourage employees to get into action. The leaders do this by helping followers to feel included in the change process and provide praise and recognition for accomplishments made by them. Transformational leaders provide support and encourage employees at individual level. This is referred to as individualised consideration. They do this by opening communication lines between them with the employees and as a result, employees feel free to share and provide feedback (Cherry, 2006).

Given that Qatar Petroleum company has undergone a number of changes in the past years, it should adopt the transformational leadership style. The company has a new CEO and president, and the rapid changes in the industry have also had a significant effect on the operations of the company. The new president has implemented several changes in the company in a bid to streamline internal operations and increase efficiency in the operations. The strategy also aims at promoting autonomy of the company from the government. The company leaders are bound to experience high level of resistance from both the employees and the government.

These resistances can be beneficial in the sense that the management may take feedback from the resistors and change the strategies to implement the change. However, these resistances may also be costly to the company and it may lose a lot more than just money in the process. Therefore, the management should take into account the qualities of transformational leadership namely individual consideration, intellectual simulation, insprirational motivation, and idealized influence. The employees should be involved in the whole process of the implementing the change inititives. In order to curb the resistance from the government, the management should take note on the causes of resistance and implement these causes in such a way that it will benefit both the company and the government by contributing to the nationl wealth. In short, the company should establish a condusive climate for change and the vision clearly stipulted, which will create some level of certainity on the part of the employees on what they want to contribute towards the growth of the company. Any feedback received from the employees should also valued as this will facilitate honest communication between the emplyees and the senior management.

Conclusion

Qatar Petroleum company is among the most important institutions in the state of Qatar. The company deals in petroleum and natural gas products, and is responsible for mining and processing these natural resources into usable products that are sold to other nations across the world. Considering the market changes experienced, the company had to make some changes to streamline its operations for the better. However, as expected in every change plan, there was some resistance, which the company was able to avert successfully. Nevertheless, the company would have achieved better results if it followed teh transformational leadership ideologies, which enhance a company’s ability to adapt to changes and improve on performance.

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