The Organization Development Process of Pakistan State Oil and the Importance of a Systematic Approach

Abstract

In a mere span of approximately 4 years, PSO has miraculously transformed from a lackluster, bureaucratic company, into role model for government/semi government organizations in Pakistan. With the objective of providing an effective and timely strategic response to the actual and potential business challenges, PSO successfully developed and implemented a comprehensive and far-reaching corporate development program through a systematic approach, which resulted in remarkable accomplishments that have been widely acknowledged and appreciated at various national and international forums. It is the usefulness of the systematic approach that this study aims to establish besides tracing the development process at PSO. The systematic approach to OD consists of six stages; viz: anticipating a need for change, developing consultant-client relationship, the diagnosis, action plans strategies and techniques, self renewal monitoring and stabilizing and continuous improvement. Since OD at PSO is a success story, if we establish by tracing the process it adopted that it was a systematic approach with steps closely related to the steps included in our definition of the approach, the efficacy of our systematic approach would stand proved. A close look at the environment surrounding PSO starting FY 1999-2000, reveals that the disequilibrium of negative growth in the company was brought about by factors such as global economic recession of late 90s, the 9/11 incident, sharp decline in production and consumption of crude oil, Pakistan’s categorization as low priority oil and gas market, government’s decision to privatize PSO, deregulation of POL trade resulting in removal of the government’s umbrella from PSO, increase in dealer’s margin, and the potential in the sector for investment and development that could attract more competitors forced management to look inwards and highlighted the urgent need to become more efficient in order to gain and retain a major market share on sustained basis. This anticipation of need for change is the first step in our approach too. Second stage in our model emphasizes a combination of external-internal consultants to guide and control the process of development in the organization in order to benefit from the plus points of both. PSO however initially relied on Mr. Tariq Kirmani’s acumen to steer its corporate renewal and later added a purpose-built Corporate Planning Department in its head office to look after the organizational development on a sustained basis. Absence of a professional OD external consultant resulted in delays as the required initiates to prepare the organization could not be taken. It also took a longer time to overcome the extra ordinary resistance to change from the employees. Thus the digression, though less significant, from the systematic approach hampered the smooth progress of organizational development. Having a change leader, the organization now set out to the diagnosis of its problems. The management knew that in order to remain competitive in the new environment, it needed to establish the reasons for loosing the market share and take steps to eradicate those in order to increase its sales. Analysis of data collected from width and breadth of the company revealed many reasons. Issues were identified about all the three important aspects: structural, technological and behavioral. It was established that the structure was overly bureaucratic, had a tall hierarchy, its departments were overstaffed, it had become a highly centralized organization, and lacked practical formalization of procedures. Technologically too it was far from satisfactory. It had no management information system, had higher inventory levels, and its out let wore an extremely boring look among others. Behavioral issue included: lack of inter-department, intra-division and inter-division communication, coordination and integration. Based in this successful diagnosis of the problem, moving logically, management embarked upon a series of initiatives in three vital areas to improve individual, group, team and inter-group relationships and ways of working. The initiative taken were integrative, complementary and appropriate – thanks to the systematic approach followed to address the problem. For the change in structure, the interventions were: restructuring which made the organization lean and more competitive, redesigning the line of authority of various levels of management, changing the span of control and the re-arranging divisions and functions. On behavioral side team building, goal setting, total quality management and inter-group development were the main techniques used. Towards technological side, the techniques adopted were putting in place an efficient management information system, internet facility at numerous stations, overhead dispensers, beside job design, survey feedback and reengineering. It was due to the adoption of systematic approach to OD that not only the selection and application of appropriate interventions in a timely manner but also their integration became possible and paid rich dividends in shape of achievement of the desired results. PSO proficiently managed the OD process, stabilizing after every important move. It progressed gradually allowing its members a respite to digest and internalize the initiated change simultaneously managing the routine affairs in an effective manner. Realizing the importance of continuous improvement, PSO has put in place a corporate governance structure and a robust framework of systems and procedures in line with best international practices. CP department has been instituted as a watch dog and a facilitator of change for continuous improvement. The case of PSO’s organizational development has proved, beyond doubt, that to run a successful OD programme, it is essential to follow a systematic approach. It helps to take the people along for the benefit of the organization and people alike.