Premium Oil And Gas Azerbaijan Management Essay
During the last few decades, we have been witnesses to an increased consolidation of world through globalization and integration of the world of business. Companies are conducting business on international and global scale, taking full advantage of loosened regulations and advancement in technology and infrastructure. Notably, globalization offers tremendous opportunities for enterprises to trade and conduct business on a single global market. However, these rapid changes in the business environment inevitably lead to the collision of different cultures and business practices. In an interconnected world of commerce, with a numerous diverse cultures and nationalities, companies will need to adjust and modify their operations and products in accordance to the host country business environment specifics. Furthermore, firms will need to employ staff from variety of countries and cultures. Thus in the new global economy, the importance of international human resource management is constantly increasing. Multinational companies (MNCs) often face cross cultural issues, while navigating their corporate culture through the local business environment. (Wocke et al, 2007, p.829).
Multinational companies (MNCs) have been on the forefront of globalization by moving goods and services to customers spread across the globe, reaching far beyond their domestic markets. One such company is the Dutch holding company, Premium Oil and Gas, which employs over 80 000 people in more than 80 countries. POG Azerbaijan is the subsidiary unit set to explore the rich oil and gas reserves of the Caspian Sea.
The company experiences difficulties implementing its corporate culture in the host country environment, resulting in arising challenges in particular in three areas of its Human Resource policy – recruitment and selection, learning and development, corporate culture. The main issues addressed in this essay are recruitment and selection of personnel for the needs of POG Azerbaijan. Reason behind that choice is because the main function of the human resource management is recruitment and selection, and in knowledge based economy talent is an increasingly scarce resource (Harris, Brewster and Sparrow, 2003, pp.81-98). The essay seeks to remedy these problems by analyzing relevant theoretical frameworks and providing recommendation based on them.
Currently, POG Azerbaijan employees around one thousand employees of whom forty percent are native Azeri workers. The goal is to increase the local workforce to ninety percent in five years’ time, while the total number of employees doubles. Recruitment and selection are problematic for the company, because POG is experiencing difficulties acquiring geoscience specialists and other qualified personnel. Furthermore, the selection process lacks the trust of the nationals and is characterized with high level of nepotism and securing employment through connections.
In the highly competitive business world of today, employees must be considered as one of the most important assets to an organization. The effective management of human resources, recruitment and selection are essential functions for any organization which is determined to achieve long term success in its business activities (Torrington et al., 1991, pp.182-201). Moreover, for every organization seeking to attract talented and educated workforce it is fundamental to develop specific techniques to allure candidates, in order to be able to choose from broad range of professionals (Newell, 2006, p.68). In the particular case of POG Azerbaijan, recruitment and selection are of critical importance due to the fact that the qualified engineers and geosciences are crucial for the operating of the oil platforms and infrastructure. When organization recruits the right people, provide them with sufficient training and reward their labor that tends to produce good results for the company’s current and future success. For example, for POG Azerbaijan insufficient qualified engineers and geoscientists may result in missed potential opportunities of oil exploration, oil platform and infrastructure disabilities or the need of hiring costly expatriates to fulfill the missing positions.
From the information presented in the case, it is apparent that the senior management of POG Azerbaijan is focused on transforming the company into transnational organization. Despite that it is evident that the company is using Ethnocentric staffing policy – appointing mostly parent country nationals (PCNs) on management positions, regardless of where they are. In the case of the Azerbaijani subsidiarity of POG ninety percent of the executives are of Dutch nationality. However, the company is aimed at increasing the local workforce to ninety percent in five years’ time, emphasizing on appointing host country nationals (HCNs), transferring its staffing policy from ethnocentric to polycentric (Dowling, Welch and Schuler, 1999, pp.70-72). Analyzing the characteristics of the local business environment, the company would highly benefit from such a transition and would be able to take advantage of the host country nationals’ knowledge about the local business practices and specifics. Not to mention the potential savings of paying costly remuneration to expatriate employees.
Recruitment and selection problems of the company are a consequence of differences between the company’s corporate culture and the culture of local human resources. The goal of the company is to double its workforce in the next five years, meaning recruiting and selecting one thousand new employees. In order to improve its recruitment outlook the company may establish its own Talent Management program. Talent management is the process of requiring and developing human capital for the needs of the organization (McKinsey & Company, 2001).The process consists of four interconnected stages – attracting, selection, development and retaining of talent.
Source: Own interpretation
Through the implementation of talent management program, POG Azerbaijan would be able to find and select the right people, develop and deploy their talent for the current and future benefits of the organization.
Another recommendation to the company is to establish close relationships with local universities and study programs. That will enable the company to allure talented students with full or limited sponsorships in the forms of scholarships or grants and even summer internships. Thus, graduate students would possess not only theoretical knowledge, but practical as well, which should fasten the transition from university and limit the potential training period. In investing in the future generation, POG Azerbaijan would emphasis its social responsibility and engages in building the future generation of professional in Azerbaijan. However, the potential benefits of such a tied relationship with the educational institutions are limited to a certain level, because of the long period needed for completion of higher education and the dormant rewards would not represent a short term solution of the problem.
It is also recommended for the company to engage in broad advertising campaign for higher awareness of careers within the firm in geographical areas with sufficient knowledge of it (Newell, 2005, p.123). The campaign could be in the form of TV and radio commercials, business periodical articles and through Internet resources. Scope of the campaign is on national level, but could also be introduced in the neighboring Russian Federation, due to the fact that there is a large Azeri diaspora, especially in Moscow, and Azeri expatriates working for Russian oil companies could be attracted by the possibility of working close to their home and family. In addition to that, the human resource department could try to allure specialists from the competition. According to the information presented in the case, the Caspian Sea is a rich oil and gas region; therefore it can be assumed that a significant number of competitor organizations will be present. Potential employee’s perks and benefits in the form of company’s share distribution among employees, company’s dormitories for the workforce and their families, discounted food coupons, gym and health center, company’s retirement fund, and even kinder garden for the children of the employees can be introduced. Practices, highly unlikely for the domestic business environment, should emphasize the attractiveness of a future career within the company and distinguish it from the competition. Major drawback of that strategy is that the added perks and benefits will incur in extra labor costs for the company.
The business unit of POG in Azerbaijan is also experiencing particular challenges in its selection of human resources process.