Hrm Issues in the Premium Oil and Gas Case
Hrm Issues in the Premium Oil and Gas Case
This essay is based on the Premium Oil and Gas Company (POG) case study. POG, as a global, company is functioning in diversified business environment. It causes in fact, a necessity to deal with varied internal and external environmental issues, that occur within the company. Internal business environmental issues are in control of the enterprise. External business environmental issues, on the other hand, are driven by factors, that are beyond the control of the company (e.g. legal issues). According to the executives, POG company aspires to become a truly global enterprise, known for its modern and meritocratic management, supported by outstanding learning organisation. Nevertheless, some major issues can be found at all levels where company operates.
This paper is focused on POG strategic issues, related to human resources management (HRM) and is divided into three parts. The first section of this paper provides a brief overview of the company aims and outlines the essay scheme. The following section indicates and analyses two main HRM issues, related to POG case, including general justification of the choice made. At the same time, a series of recommendations for POG is provided, before conclusions will be presented in the third part. Two main issues defined by the author refer to communication and knowledge sharing aspects. In general, one of the most significant platforms for company issues to arise are the culture differences between co-workers. Since internationalisation strategies started being implemented by enterprises on a large scale and the number of multinational companies grew rapidly, also multicultural issues have become the substantial matter to deal with.
For POG case, where westernized culture of the headquarter is confronted with eastern way of thinking in Azeri subsidiary (Hercules Meets Buddha), communication issue can be named as one of decisive factors affecting organisational side of the company. The main role of organisational communication (Elving, 2005) is to inform clearly employees about their responsibilities, as well as about company policies and issues. Secondly, communication leads to a better integration and community creation. Hancock and Zayko (1998) also indicate the importance of communication, whereas its lack often provides with resentments between employees. The communication levels in POG may be distinguished between Azeri employees (trainees) and their trainers/colleagues from headquarter, as also between Azeris within their group, what manifests itself in teamwork tasks.
The most appropriate theoretical framework to analyse the communication issues in POG seems to be the concept of Hofstede’s five cultural dimensions (Hofstede, 2001) in relation to Azeri national culture. First dimension in this model refers to uncertainty avoidance, explained by Hofstede (2001, p.161) as “The extent to which the members of a culture feel threatened by uncertain or unknown situation”. In relation to POG case, there is a strong alienation, suspiciousness and reluctance of Azeri trainees to westernized corporate culture. These types of behaviour seem to be typical reaction on culture shock. In result, high level of uncertainty avoidance successfully reduces the efficiency in communication between them and their western colleagues.
The second, and one of the most important dimensions in context of communication is power distance. Mulder (1977) as cited in Hofstede (2001), explained the meaning of power distance by comparison of power determinacy, which is unequal between less and more powerful members of a particular system. Countries like Azerbaijan, exhibit a high degree of power distance, which means that its citizens are a hierarchical society. As a consequence, several problems can be observed in POG communication skills trainings. Firstly, Azeri trainees are afraid of asking questions, as lack of knowledge is seen by them as humiliation. Moreover, there is a strong resistance of rising issues with managers in fear of undermining their authority and damaging relationships with them.
Also trying to draw conclusions from mistakes is very difficult, as taking responsibility is uncommon for Azeri people. POG trainers find these behaviours in total opposition to the company brainstorming working patterns, consistent with open and free to ask POG culture. Another dimension in Hofstede’s model is individualism, as opposition to collectivism. There are several main differences between these assumptions (Hofstede, 2011). In individualistic social framework, only immediate family is expected to take care of its member (“I”- consciousness society). Individualistic approach is concerned with westernized cultures. On the other hand, in collectivist social framework, immediate family is extended to other relatives and non-relative in-group members (“We”- consciousness society). Definition, which more accurately describes Azeri society is collectivism, what POG trainers assumed to be a solid base to develop team working skills for them.
However, as the practice shows, there is a strong recognition of inequality within the group members, resulting from status-conscious society model. In Trompennars and Hampden-Turner seven dimensions’ model (1997), status-conscious approach is defined as ascription theory, where status is based on position. Communication issues arise, when there is a need from trainers to identify responsibilities and contribution of particular members in a team. Communication within the team is also affected by the social status of its members. Next dimension from Hofstede is a differentiation of social attitude in terms of gender. Feminine and Masculine societies can be defined. Feminine society is associated with modest and caring values for both genders. There is a balance between family and work (Hofstede, 2011). Good examples of feminine societies are Scandinavian countries, but also Russia, where the role of women is inherently high and influential in social relations (Camiah and Hollinshead, 2003).
On the other hand, masculine societies reflect patriarchal and traditional structure with male leadership and domain role (Sikdar and Mitra, 2012). This approach is close to Azeri social behaviours, where women role in society is quite limited or at least not equal to this of men. In turn to POG case, a significant communication issue arises between Azeri trainees and female L&D officer. Despite her outstanding qualifications, communication barriers are built because of cultural accretions. Male trainees find it insulting to be advised or educated by female. In result, information flow is highly disrupted. The fifth dimension (Long-Term vs. Short-Term Orientation) is not directly linked with communication issues in this case, however, in general it may be an important indication for multicultural issues based on behavioural patterns. Another issue related to communication is language.
However, this aspect is also highly linked with knowledge sharing issue and will be explained later on in this paper. Considering the main issues related to the communication in POG, identified in this paper, some changes should be provided in order to cope with these issues. A comparison can be made to Elite Hotel case, where cultural differences had also a strong impact on communication between co-workers. Although some recommendations may be covered in both cases. Firstly, the performance for “Communication and Team Working” module should be customized. This module, as a key tool of communication, does not suit to cultural differences between Azeri co-workers and company culture management scheme.
Practical implementation of company rules will not succeed without understanding of these cultural differences by both sides. Taking into account POG’s aspirations to become a truly global and meritocratic company, responsibility and flexibility in management processes should be embedded. In practice, various cultural trainings, as well as cultural events to build up coherent relations, should be provided at the beginning of the training programs. Such cognitive steps ought to improve communication and become a platform to implement practical aspects of the training programme. “Communication and Team Working” module modifications shall focus on overcoming of power distance influences, through engaging trainees to an active involvement in discussion and problem solving proposals. Also individual tutorials for Azeri trainees might help them to overcome communication barriers.
Inequity in terms of ‘team working’ need to be suspended by cultivation of organizational culture, in order to enhance intercultural and intra-cultural communication. Underestimation of female as a teacher should be confronted with a huge, direct and continuous support from high male authorities to break the stereotypes and teach trainees how to overcome them without losing respect in their own environment. Nevertheless, the competences of L&D officer must be proved by this young female. Knowledge sharing process is concerned as another significant issue related to POG case. Whereas explicit knowledge can be formalized, tacit knowledge is strongly connected with communication. Moving further, communication issues have impact on knowledge transfers. Processes of creating knowledge and its management in organizational level have been studied by many authors. Most of them emphasize the importance of capability to transfer knowledge, as a pivotal factor in fields of organizational learning processes (Goh, 2002).
The process of sharing knowledge may be considered from different contexts. Transfers may take place within the same unit in organization, throughout different departments, or between subsidiaries. Knowledge can be also shared between individuals, communities and groups; locally, nationally or worldwide. Argote and Ingram (2000, p.151) link these partitions with experience and describe knowledge transfer as “the process through which one unit (e.g., group, department, or division) is affected by the experience of another”. There are several ways of how knowledge is shared. According to Taylor et al. (1996), there are three main strategies for transferring HRM knowledge. POG strategy characterizes high internal but low external consistency, what indicates centralized HRM system and strong domination of headquarter over its Azeri subsidiary.
There are several important individual factors, affecting knowledge transfer. Integrated capability of these factors may either facilitate or impede the HR knowledge transfer (Lecture 2, Knowledge Transfer and Sharing, Figure 2). Accordingly, some issues related to knowledge transfer in POG case are connected and complemented by communication issues, however they demonstrate problems from different view. Firstly, culture differences between co-workers have a large impact on knowledge transfer. The example of female L&D officer is the most appropriate one to adopt, when knowledge absorption is limited by cultural ties. Another issue is connected with motivation and willingness for cooperation, required to achieve mutual benefits. Lack of co-operative behaviours can be observed in terms of sharing opinions or involving into discussion during the meetings with management board.
Finally, language skills can determine processes of acquiring knowledge, when Azeri workers need to learn English as an operative language in the company. However, English is not the first language for Dutch workers either, who stand for the majority of the company staff. In terms of recommendations, knowledge sharing issues must be solved by POG executives quite fast, bearing in mind the company staffing plans for the next five years. Generally speaking, POG strategy of HRM should become more integrative (rather than exportive) with high internal and moderate external consistency, in order to optimize solutions for subsidiaries like Azerbaijan. There is also a significant role of trainers and expatiate managers for knowledge transfer capabilities.
Country-specific, intercultural training should be conducted for them, as part of their preparation for the job. The Robert Bosh GmbH case is a good example for POG, how to achieve intercultural proximity to improve knowledge transfer. HRM issues in POG company simply highlight, that it is not sufficient for organizations to get adopted to business environment without respecting individuals from different cultures (Trompennars and Hampden-Turner, 1997). Hofstede’s framework clearly indicates these differences, which affect HRM, not only in communication, but also in knowledge transfer.
The deeper the differences, the more complex management issues arise. ‘Communication and Team Working’ module should be customized in respect to Azeri culture, rather than be left unified for all subsidiaries. Also implementation of integrative HRM strategy, jointly with higher intercultural sensitiveness of trainers and expatriates could facilitate knowledge absorption capacities of Azeris. Nevertheless, core values of the company management ought to remain unchanged. There are no simple decisions without both positive and negative consequences involved. In fact, there is no single box with tools to fix problems, and various ways may be chosen to follow.
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University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 19 November 2016
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