Forces responsible for change
The major objective of the research is to understand and identify the change management strategies that can help the companies to deal with the potential market challenges. Change can be the foundation of the competitive advantages but to become effective, the change management programs should identify the potential areas of conflict as well as address the needs of every individual in the organization. In order to understand the change management process, the report considered the change occurred at British Petroleum UK.
The oil and gas sector of UK observed a tremendous scenario. The oil and gas industry in UK has come under considerable pressure over the past 15 months since the price of oil dropped more than 60% from a high of $110 a barrel at the end of 2014 (Shuen, Feiler and Teece 2014). It is also identified that oil price, in respect to the recent trends, is placing a considerable pressure on small oil and gas organizations. Many of the organizations are presently running the operation in survival model. The report effectively shows how British Petroleum, UK. implements the changes in its operation as the strategic direction for the organization’s future.
British Petroleum-
British Petroleum is a global oil and gas organization headquartered in London. It has become the third largest energy organization in the world measured by the revenue. The organization is over 80 nations and it produces around 3.8 million barrels of oil equivalent per day (bp.com 2017). The firm has several division of market but BP America is the largest division and largest producer of oil products.
2.0 Evaluating the changes implemented by British Petroleum during the period 2014-2016
Undoubtedly, British Petroleum is the world’s biggest petroleum organization. The firm has strengthened its positions in UK market in spite of the potential market challenges. Though British Petroleum has achieved a tremendous growth in last few years, the recent price drop in UK has changed the scenario and the firm has shocked the stock market with unexpected sales. As the consequence, the firm observed the zeal of restricting and implementing changes in the firm. UK giants is developed to layoff some 500 workers as the part of their strategic plan to cut down 4000 from its global upstream sector (BBC News 2017).
Nevertheless, this change might not be effective for the organizations as BP might lose skilled employees and competencies. The major challenge, the firm needs to deal with is reduction of cost of operation. By reducing the cost of operation, the firm could gain sufficient returns in the business. However, due to some significant issues in the external market like Shell’s global operation and Exxon’s competitive strategies, BP has observed the forces of implementing the changes in the operation.
2.1 Forces responsible for change
- The price of oil and gas products in UK market has unexpectedly increased. Several divisions in the market have probably become the major reasons behind such expected changes
- The supply chain network in UK oil and gas sector brought out another challenge. The estimation of oil production done by OPEC did not go with the recent trends. The supply of oil products in UK market did not reflect on the demand (Ftiti, Guesmi and Teulon 2014).
- Shell’s existence and their CSR strategies have become the threat forBP as the Shell has become the biggest gainer with the profit hike around 6%, which is 1.6% higher than British Petroleum (BBC News 2017).
- The senior management or the leaders at British Petroleumlack the skills and competencies to deal with the potential market challenges that organization is supposed to deal with in the coming future.
2.2 McKenzie’s 7s model of change
Strategy-The most significant alteration that has appeared in organizational operation is the change its leadership. In order to pay attention to the increasing cost of oil and reduction of employment, the cost efficiency is the major strategic change implemented by the organization. To incorporate this particular change, some workshops were implemented and the board members of h firms were included in the discussion to develop a better strategic option for the change. Nonetheless, these workshops were restricted to deal with the bigger change.
Evaluating the changes implemented by British Petroleum during the period 2014-2016
Structure- The business needs to be organized in a particular form of shape that is generally referred to as an organizational structure (Drew and Coulson?Thomas 2013). However, the strategy of restructuring proposed by the new CEO at British Petroleum largely affected the management at each level. As the change is not communicated at all level of management, the leader may have to deal with the resistance of change. Some employees might have to work under new leader, where they lack communication. As the result, the organization lacks required productivity. Conversely, it is also identified that leaders in the organization have always accepted the change. Though managerial decisions are not shared with the low level of management, the leaders at BP tend to encourage the employees about the new changes.
System- As mentioned by Singh (2013), system is the daily activities and methods that members engage to get the job done. However, due to the proposed changes in the firm the workflow might be diminished, as the employees lack their existing position of jobs. In addition, organizational restructure at British Petroleum creates the issues of communication, which delays the process of getting things done.
Shared Valued- Alshaher (2013) commented that all members of the organizations share the common core ideas or build the concepts around which the business is developed. Nonetheless, as the price of oil and gas has dropped in UK market, certainly, BP needs to devise new strategies to deal with the market challenge. However, the firm has to concentrate on the new objectives; thereby, the employees lose the base of sharing common goals.
The absence of common goals and values restrict the staff working towards the common destination as the leading team. If the employees at British Petroleum have to work under new leader or different leadership style, the organization as a whole deals with weak values and common goals (Valvi and Fragkos 2013.). Hence, the employees tend to follow their own personal goals that could be different from the organizational ones. Likewise, organization’s CSR goals might also be affected.
Style and culture- As put forward by Gyepi-Garbrah and Binfor (2013), all organizations have their own distinct culture as well as management style. It might include the dominant values, beliefs and norms and these could develop over time as well as become relatively enduring features of the organizational life. The former CEO Tony Hayward was admirable but the exit of this new leader brought in a new scenario. The new CEO Bob Dudley at British Petroleum is reliable on the autocratic leadership style, where the managerial decisions are taken without the opinions of employees. Thus, employees lose their purpose and destinations.
Staff- The organizations are built up of humans and the people working in the organizations make the real differences to the success of the firm in the growing knowledge-based society (Alshaher 2013). However, the scenario at BP is little different as the new leader proposed the strategies of cost efficiencies, where to control the operating cost, the firm reduces the percentage of employment. This means many employees might lose their existing job positions. Some may permanently lose their job in the organizations.
McKenzie’s 7s model of change
Skills- Hence, the company determines the strongest skills represented within the organizations. The firm has to identify whether the firm lack skills and competencies. As put forward by Naipinit (2014), the firm should fulfill the skills gap by hiring new skills. Nevertheless, instead of hiring new employees, BP focuses on cutting the number of existing talents. Here, there is a possibility that organization might lack skills and competencies in the coming future.
3. Kotter’s eight-step change model to be implemented for the change management
The eight-step model of Kotter is effective enough for bringing in certain or new changes in the organization. As put forward by Shuen, Feiler and Teece (2014), the potential change requires the consecutive formulation of the change in the organization. The evaluation of changes has been done in the following.
Create urgency- The oil and gas market in UK is shaken by the recent alternation in the political environment, which as the outcome, has increased the price of products. Compared to the supply of the product, the demand is high. This alternation brings in the scope of change in the organization. In addition to this, the increasing competitors in the market remain as the threats for BP, which also forces the firms to implement changes (Raufflet, Cruz and Bres 2014). The management has become aware of this potential change with much efficiency.
Building a guide team- The changes in the leadership has been implemented bringing a discussion with the senior management. The board executives and the CEO of the company were consulted about the changes in the organizational structure (Valvi and Fragkos 2013). This change of organizational structure was communicated to other authorities.
Creating the vision for change- The intact strategy of change was incorporated. As mentioned by the change in the leadership is essential as the leader with critical approach and knowledge of external market is necessary to compensate the situation that has taken place.
Communicating the visions- It is observed that change in the leadership was communicated among the employees and others bodies when it is finalized. It is also identified that official press declaration and announcement were disclosed on the web portal of the organization (Perrons and Jensen 2015). As BP is a giant company with multiple divisions, communication could be challenging factor for the management and boards.
Removing obstacles- There is an old cliché that change in the leadership often creates the barriers in the business operations. The firm might have to observe the turmoil in the organizations while replacing the existing leader.
Creating short-term wins- As the oil and gas sector in UK is dealing with major issues like economic and political change in the sector; the organizations observe the need of certain actions to deal with the challenge.
Building on the change- The change was implemented following a certain procedures. The leaders need to work together instead of scoring points or deflecting blame. The earlier leader was replaced with the new leader. While implementing the change, the complete change, the opinions of internal and external stakeholder were taken into the consideration.
Strategy
Anchoring the change in the corporate culture- The change at BP was implemented following an industrial procedures. The leader in the organization was given the opportunities and authority to take the major responsibility needed for organizational growth. The leader Mark Bly and the incoming executive Bob Dudley will take the responsibility of all operations that are implemented to common standard and for auditing compliance with those standards (bp.com 2017).
4. Significant role of leadership in the change implementation process
The managerial activities at British Petroleum are entirely controlled by Committee of Managing Director and governmental bodies as the BP is government owned organization. This board of management also takes the responsibility of forming Group’s management team. Due to the recent failure or poor hike in the profits, the organization lacks an effective leadership. Therefore, the change occurred in the firm is implemented by the board of management rather than the individual leaders (Valvi and C. Fragkos 2013). On the other side, the CEO of the company Bob Dudley, as well as other non-executives members of the organization also takes the responsibility for implementing the changes in the business operation (bp.com 2017)
Furthermore, it is also observed that the leaders of BP effectively implement their commitment towards the organizations. The leaders have never been resistant to any kind of changes that organization requires. It is identified that understanding the importance of brand image, the leaders of British Petroleum in UK have taken the initiative of social development as the CSR strategies. It is expected that, the implementation of this strategy could create a positive brand image of British Petroleum, which might be reflected on the sales. As British Petroleum is a government owned organization, the firm is more concerned about the environmental and social development. As it is a government owned organization, the leaders at BP are more concerned about the environmental changes.
The breadth of vision and the emphasis put by the leasers at British Petroleum on the generation as well as the application of ideas instead of narrow focus on the financial performance has made the firm sustainable in the competitive environment. The leaders at BP have become receptive to ideas and the concepts drawn from the economies, biochemistry, anthropology and biology. As the result, the firm has implemented several management techniques such as “multiple scenario analysis”, “business portfolio planning” as well as cognitive planning (bp.com 2017). Therefore, it can be mentioned that leaders in the organizations are concerned enough about organizational development. The organizations as a whole understands that change requires intensive planning with the key ideas. So, the proposed change needs to be realistic as well as relevant enough to hold up the ideas.
Recommendation
Alternative to layoff”- This strategy could help British Petroleum to control the cost more effectively, increase productivity as well as boost profitability. The firm needs to employee a consulting process that involves every employees and the full support of every level of the organizations from level C on down. In addition to this, to maintain the cost efficiency at the time of crisis, the firm could implement a voluntary layoff by reducing the workweek, unpaid leave. The reduction of vacation time could be effective when the firm need to control the costs. To avoid resistance to implementation of the recommended strategies, the firm could implement the following principles.
- The leaders at BP should build an effective communication with the human resource department of the company. Thus, they could ensure that layoffs are conducted after a significant consideration of the employee benefits slated for elimination.
- The leader needs to clearly identify both short-term strategies such as reduced hours, unpaid leaves and the long term strategies with the inclusion of organizational restructure to minimize the total employment cost.
- The CEO or the leaders should pay an equal attention to the employees who may lose their jobs as well as those who stick to the firm. Especially, for though workers who are leaving, providing faire severance, the firm needs to offer the opportunities for re-training as well as outplacement resources. In addition, for the remaining employees, the organization should develop a two-way communication channel between the leaders and the staff members to give them scope of sharing their concern. The leader needs to make sure that those who remain with the company are aware of resources and support provided by the firm to those who remain with the organizations. This could make a significant difference to future employee productivity. This also lessens the increase in deliberate turnover that follows the forced layoff.
Structure
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