Management Functions in British Petroleum - Essay Example

The Company A report on management means the application of overall knowledge of the and to apply all the knowledge and understanding of management on organization is an uphill task. This report is on the management functions in British Petroleum. The reason why this organization is chosen is that it is the company which has a multinational presence yet it is very British in essence. Though, it is difficult to give an overall picture of the organization but all effort has been put in to portray a true picture. The Background British Petroleum, known simply as BP since 2000 in order to convey a less localized image in the face of its ever-increasing global influence, is one of the largest and most profitable private sector energy corporations in the world. Employing close to 100,000 people and daily serving millions of customers worldwide, BP handles energy at all levels, from exploration and production to refining and marketing to developing gas, power, and renewable sources. BP was originally founded in 1909 as the Anglo-Persian Oil Company by William Knox D’Arcy who was given a concession by the Shah of Iran to search for oil in the region. The company expanded slowly, with a few bumps along the road due to the changing political conditions. By 1954, it had formally adopted the title of The British Petroleum Company, and in the 1960s, it started to widen its horizons beyond the Middle East and explore hitherto untapped oil-rich areas, such as Alaska (USA) and the North Sea. Through development and acquisitions, BP has steadily increased its transnational dominance to attain its present towering position in the league of petrochemical giants. The Management Management functioning is systematic and well organized. Different department heads report directly to the Managing Director. Each of the different department heads have their respective managerial and non-managerial staff working for them. Department heads are responsible for the functions assigned to their departments. Management philosophy and practice is conventional and standards are not very different from the norms prevalent in the organizations of the same structure. Managers and employees fulfill their duties & obligations and they try to live up to the expectations of the top managers. The attitude of the top managers is guiding and encouraging and the overall approach to management is somewhat team oriented with emphasis on world group collaboration. Though, there is inter-departmental communication present in the organization the tasks are defined for each department. Middle managers communicate to top managers but first-line manager are restricted to their respective department heads. So, in a nutshell we can say that the management philosophy of the company is rather participatory though the elements of bureaucracy are also present. Management Functions Strategic Plans: The blue print of strategic plan is made to achieve the strategic goal and for this purpose the long term planning is done by the top managers of British Petroleum such as new product development, capturing new markets, conducting research, improving products etc. Goal Setting: Specific and measurable goals are set for the company on every level which provides the employees and managers with the yardsticks. Strategic goals are set by the top managers for the company related to its profits, sales, growth, expansion and products. Then tactical goals are set in every department such as production and sales targets in production and marketing departments respectively. Similarly, operational goals are set by lower levels Tactical Plans: Tactical plans are made by the department head in the company to achieve its main target. For instance, four marketing managers plan for different products and different zones or regions. Operational Plans: Operational plans comprise the schedules made by operational staff as the supervisors in the production facility make schedules and charts to implement their targets of production. Organizing: The Company organizes its resources in a functional approach. So, people are grouped together and tasks are assigned on the basis of common skill and function. So each functional department organizes its resources according to its respective need. Control: Major control factor in is to adhere to standards. The standards are defined at every level and the top managers in every department keep check and balances to ensure that the main tasks are performed and goals are achieved. Continuous appraisal is the part of management function of every department head. Leading: Leading, influencing and motivating functions have also been assigned to the respective department heads. Each department head is a leader in his own right so there is not one leader but many leaders on the whole. Shifts in Management Style Many forces of change like fierce competition, fast technological advances, acquisitions, mergers, and growth of other economies etc. were playing their role in the shift in management style in all major organizations. The companies that adapted to the changes moved ahead while those who were not able to keep pace with the needs of changing times experienced over capacity, high cost, low productivity and inefficiency. Businesses moved from simple financial controls to long range planning to strategic planning and then to strategic management. British Petroleum could not have stayed with the old style of management and embraced modern practices of strategic management. In the ever changing business scenario, separate companies were getting together to form larger ones by way of mergers & acquisitions. Hundreds of millions, or even billions, of dollars deals are made as a result of different companies joining together and thus also create headlines in the business world. Most companies carry it out to improve their business fortunes. British Petroleum also jumped on the band wagon when British Petroleum merged with the Amoco Corporation (Amoco), forming BP Amoco. HR Function The management of all the permanent employees and the contractual employees of the company and the performance of all related human resource functions were carried out by the head office which had the centralized human resource department. This central head office for human resource management carried out all the required functions for all the branches. “BP has a substantial commitment to HR strategy. A team of three professionals work with the V.P. for Human Resources in conceptualizing HR programs and policies including culture change, vision and values, and essential behaviors. This team works closely with the BP Corporate Strategy Team to ensure that BP strategy includes appropriate consideration of HR issues” (White, 1992). To cut costs, increase productivity, and provide a higher level of service to their employees BP has adopted the policy of outsourcing its HR function. Since outsourcing, British Petroleum (BP) has experienced more timely and accurate payroll processing, quicker responses to employee benefit questions, and standardized HR processes company-wide. BP has also been able to reduce its HR staff. Open Door Policies: HR department’s strength at British Petroleum is its open door policy according to which any employee of the company could go to his immediate or superior manager or they could contact anyone in the HR department regarding any issues that they could have. It is also the result of the open door policy that employees could contact HR dept. for sensitive issues like harassment, bullying, favoritism et al and most of the time action is taken for the complaints of the employees. “Our OPEN program consists of various behaviors which can be observed, measured, and consequently developed. We have an obligation to explain our expectations (including behavioral requirements) and provide support to our employees during this change. We see the performance appraisal and the employee survey as feedback mechanisms, and training and coaching as the means to help our employees make the transition” (White, 1992). Motivation: Maslow’s hierarchy of needs provided management with ideas to motivate employees. Compensation, promotion, job design, social events, better working environment, benefits, job security, etc. were some of the concepts that management function started paying attention to. Later theories were also used in formulating HR policies with regard to motivation of employees. Management realized that satisfaction could be achieved by motivation factors like challenging work, responsibility, recognition etc. and incorporated these features in the strategic policies. Diversity: Diversity is another good element of the management. HR works to get the benefits out of their diverse workforce. Diversity is considered a benefit rather than a problem. The presence of minorities, people belonging to different religious, ethnic and social backgrounds have added value to the overall work experience at BP. Harassment Issues: Modern organization like BP with HR department also has different sensitive issue like harassment to face in their organizations. Hostile working environment to personnel belonging to a particular group related to sex, religion, ethnicity etc. may result in the issue of harassment. These issues are most difficult to deal with because they could be very subtle at times. Since these harassment cases are not related to performance or productivity they are most difficult to deal with. Many of the times people’s comments on the basis of sex or religion can hurt someone’s feeling and such person then can make harassment charges. In the light of these changes and to better manage workforce, HR department at BP has formulated special training programs and policies intimating workforce of the consequences of their actions or words. Issues like harassment that were generally brushed under the carpet can now be discussed openly. Employees have gained a lot of importance and most of their issues are now important. Leadership An organization can succeed only if the employees working in it have the real sense of ownership and everyone in the organization shares the common vision. That is they are so involved with the business and activities of the organization that they own its problems and issues. In order to involve and motivate the employees and to inculcate a sense of ownership among employees, organizations carry out many activities. Sharing the vision and goals of the company is one of the most practical and fruitful ways of instilling the sense of ownership among employees. This philosophy builds trust and trust further creates a sense of ownership. In the environment of trust and ownership, overall goals and objectives of the company are understood by the employees in a better way resulting in better performance not just by the employees individually but also collectively by the company or organization. The company has definitely established its mission and vision and its leadership has been providing guidance to its great workforce. However, the leadership has also been criticized for its lack of complete orientation with the modern management practices. “Tony Hayward, the current head of exploration and production, told staff in America, where BPs reputation has been hit by a series of problems, that the top brass was out of touch. ‘We have a leadership style that probably is too directive and doesnt listen sufficiently well. The top of the organization doesnt listen enough to what the bottom of the organization is saying,’ he said (Macalister, 2006). Criticism on True Empowerment Employees must be empowered to take action based on the basis of their understanding of different situations and scenarios within the organization. This empowerment will develop their problem solving skill and they will become a part of the big picture. Whether employees are working individually or they are part of the cross-functional teams, HR departments and organizations today give employees the freedom and responsibility of making independent decisions. The reality is however is not very encouraging. Even in well-known companies like BP the problem of seclusion of employees at the lower levels is felt. The problem is acute because organizations like British Petroleum are so large and spread across continents. The decisions take time to flow even from top to bottom. Also when some initiative is taken somewhere in the middle or bottom layer, it takes time to reach the top management. In this scenario, management must devise some strategy break through this problem. Ethical Concerns This rise of British Problem, however, has not been achieved without its share of problems. One of these was the explosion in a BP refinery in Texas in 2005 that resulted in many casualties. It was attributed to a lapse in safety precautions that was a result of the cost-cutting measures instituted by the top management. Further missteps that led to corrosion and leakages in the pipelines at their Prudhoe Bay, Alaska setup necessitated the scaling back of operations in that important oil-producing region. Other controversies that have plagued the energy company include its association with the occupying Indonesian forces in West Papua and its involvement in the Baku-Tbilisi-Ceyhan pipeline (in Central Asia). In today’s age when media is active and any negative news can hurt the image of the company in the eyes of general public, management at British Petroleum should have some introspection with respect to its previous policies and procedures that led to such problems. Any cost cutting measure should not compromise on ethics. Ethics should be the basis of all management, HR, marketing, and operations policies. Future Ahead BP has made a conscious effort to soften its negative image as a multinational oil company by engaging in more environmentally friendly initiatives. Among other things, this entailed a stronger commitment to pollution-free alternative sources such as solar, wind, and hydrogen energy and the marketing of low-sulfur diesel fuel for industrial use. Hardcore preservationists nonetheless criticize the genuineness of these steps. Among consumers throughout the world, BP continues to enjoy wide-scale respect and patronage, its sub-brands, such as Castrol (for automotive and specialist lubricants), inducing instantaneous recognition. This will ensure that it continues to repose smugly among the super majors (the six largest energy companies in the world) in the coming years. There are some leadership issues making the headlines but on the whole management has been able to develop a modern culture. The HR function is highly specialized and takes good care of the needs of its employees. Like many other multinational giants the decision making and true empowerment has not seen the light of the day at companies like British petroleum. Decisions still flow from top to bottom and employees at certain levels feel left out. Companies like British Petroleum and other multinational have to look into the issue and try to further develop a culture that supports true employee involvement so that the company can grow exponentially. References: White, A. (1992). Organizational Transformation at BP: An Interview with Chairman and CEO Robert Horton. Human Resource Planning. 15(1): 3+. Macalister, T. (December, 2006). BP exec attacks management style. Guardian Unlimited. Retrieved on April 28, 2007 from: http://business.guardian.co.uk/ British Petroleum. Wikipedia Encyclopedia. Retrieved on April 28, 2007 from: http://en.wikipedia.org/wiki/BP British Petroleum. Retrieved on April 28, 2007 from: http://www.bp.com/home.do?categoryId=1 Read More