Comprehensive Change Management Process

Comprehensive Change Management Process

Insert name

Institutional affiliation

Comprehensive Change Management Process

Introduction

Contemporary organizations exist in a dynamic and highly competitive environment where the only constant is change. As such, the phrase “swim or sink” is applicable to the contemporary business environment. Organizations have to ensure they do all it takes to not only survive but also thrive in the midst of cutthroat competition. This requires organizations to maximize their strengths and limit the impact of their weaknesses as different organizations have different strengths and weaknesses. The ability and speed with which an organization can identify areas within its operations where changes are needed and implement the required changes may be difference between surviving and thriving or collapse. This paper will focus on Saudi Aramco, a Saudi multinational petroleum and gas company. It would identify the problems facing the company, causes of the problems, the need for change, proposed changes, implementation of the changes, and monitoring and evaluation mechanisms of the change.

Brief Description of the Organization

Founded in 1933, Saudi Aramco is primarily state-owned company that specializes in the production of petroleum, gas, and petrochemical products. It is the world largest oil producer. The company is officially referred to as Saudi Arabian Oil Company. It is headquartered in Dhahran, Saudi Arabia. Saudi Aramco is the most profitable company in the world. The company has an estimated 270 billion barrels of proven oil reserves, which are second largest in the world. Saudi Aramco is the company with the largest daily production of oil in the world. In 2019, it was producing approximately 11.8 million barrels of oil per day. Saudi Aramco has more than 75,000 employees working in different units of the company globally. The government owns 98.5% of the shares of the company with the remaining 1.5% being owned by investors. As of 2019, the total equity of the company was $276 billion. In 2019, the company’s annual profits were $88.2 billion, which made it the most profitable company in the world. In fact, this figure represented a 20% reduction on its $111.1 billion in annual profit in 2018. Saudi Aramco’s core values include citizenship, safety, accountability, and excellence. Being anchored in these core values has propelled the company’s growth and profitability. Saudi Aramco’s vision is to be “the world’s leading integrated energy and chemicals company, focused on maximizing income, facilitating the sustainable and diversified expansion of the Kingdom’s economy, and enabling a globally competitive and vibrant Saudi energy sector” (Saudi Aramco, 2020a, para 1). Saudi Aramco’s mission statement claims that the company “believe(s) in the power of energy to transform lives, enhance communities, advance human progress, and sustain our planet” (Saudi Aramco, 2020b, para 3).

Problems or Issue Facing the Organization

Despite the fact that Saudi Aramco is one of the most profitable companies in the world, it has recently been experiencing a reduction in its profits. As previously mentioned, the annual profits of the company in 2018 were $111.1 billion. They reduced by 20% in 2019 to $88.2 billion. During the first quarter of 2020, the company’s net income for the first three months of the year was $16.66 billion, which represented a 25% reduction in profits from $22.21 billion during the same period in the previous year. During the second quarter of 2020, Saudi Aramco’s net income was $6.6 billion with the half-year profits of the company being $23.2 billion. The net income of the company during the second quarter of 2019 was $24.7 billion with the half-year profits being $46.9 billion. This represented a 73.4% plunge in the net income profits and a 50.5% reduction in the half-year profits of the company. The company continued to experience a reduction in its profitability during the third quarter of 2020 as it recorded a net income of $11.8 billion, which represented a 44.6% reduction in profits from $21.3 billion during a similar period in the previous year. The company has experienced significant reduction in profits in 2020 due to the impact of coronavirus pandemic on demand as economic shutdowns have reduced energy requirements. However, it is vital to note that the company’s profitability was already on a downward trend even before the onset of the economic impact of the coronavirus pandemic.

Saudi Aramco has also been losing its competitive edge in the market slowly in relation to its ability to attract and retain talented employees. In ability of the company to take care of the welfare of its employees has led to the poaching of its employees by other companies. For instance, the company’s employees are not adequately equipped and trained on the current skills in the market. Technological changes has led to a reduction in employee morale, as a significant number of employees do not have the necessary skills to use modern equipment. This has led to a reduction in the productivity of the employees and the company at large (Ramady, 2017). The company’s employees have been using the skills they acquired several years ago when they were hired.

Causes of the Problem

Saudi Aramco responded to the reduction in its productivity by implementing a downstream expansion strategy. This involved acquisition of other companies downstream in the value chain. This would help in cushioning the profits of the company from losses due to fluctuations in the price of oil. Nevertheless, the introduction of this strategy would lead to a change in the operations of the company. The strategy requires the organization to provide effective training to its employees to promote synergies with the operations of the acquired organizations. The company should ensure it not only recruits a competent team but also provides them with regular training to ensure they have the skills and knowledge required in the market currently.

Proposed Change

The proposed change is training employees on how to use current technologies in the energy sector. Saudi Aramco strives to become an integrated energy sector. Therefore, it is vital for the company to ensure its employees have the skills that would enable the company achieve this vision. The acquisition of companies downstream in the value chain would necessitate the company to change its operations. This is because these companies use different systems and technologies. Therefore, it is vital for employees whose operations involve interactions with these companies to have the requisite skills and knowledge. Otherwise, the downstream expansion strategy would lead to inefficiencies that would limit its success. Retraining employees would also help in creating an organization culture that would facilitate the success of the downstream expansion strategy. For instance, the company should create an organization culture that promotes the exchange of information among employees in different units or subsidiaries of the company. Sharing information would ensure Saudi Aramco’s operations and the operations of the company’s it acquires progress seamlessly.

Plan to Implement the Change

The implementation of the change should occur systematically. The organization should first acknowledge the importance of the change. The implementation of the change would affect several employees, departments, and units of the organization. Therefore, the first step of the implementation of the change would involve explaining to the employees the importance of the change (Cawsey, Deszca, & Ingols, 2020). During this step, it would be vital for the leadership of the organization to support the changes. I would create a guiding coalition that would advocate for the change. The guiding coalition would comprise of managers and supervisors of various departments and units of the company.

Communication is vital in the implementation of organizational changes. Therefore, there should be effective communication channels between various stakeholders that would be affected by the change. Effective communication would help employees understand the importance of the change and how it would affect them. Training them would provide them with the skills and expertise required to meet the current needs on the market (Griffin, Phillips, & Gully, 2016). It would also enable them to function effectively in the new makeup of the company as it strives to become an integrated energy company that owns several entities downstream in the value chain.

Training would be undertaken at a company retreat. The training would also double up as a team-building activity. The company would provide both general training and specialized training. General training would be provided to all employees of the company. It would involve informing employees about the changes in the operations of the company due to the implementation of the downstream expansion strategy. The company would inform the employees the role they should play to facilitate the success of the strategy. Specialized training would be provided to employees of a single department or unit. It would involve providing them with information on how to use the latest technologies, the impact of the downstream expansion strategy on their operations, and how they can coordinate their activities with the activities of other units, departments, or subsidiaries of the company.

The employees who participate in the training would be awarded certificates to indicate they participated in the training. After all employees have been trained, the company should create support teams that would help the employees and other stakeholders in the implementation of the required changes (Griffin, Phillips, & Gully, 2016).

Measures/Control Mechanisms to Determine the Effectiveness of the Change Management Process

Stakeholder adoption metrics, performance metrics, and objective metrics would be used to evaluate the effectiveness of the change management process. Stakeholder adoption metrics involve evaluating feedback from employees. The feedback would be vital, as it would help in determining whether the employees understand the change and how they should apply it. It would also help in identifying any challenges they are facing in the implementation of the changes. Effective use of this metric would enable Saudi Aramco track employee’s individual progress in relation to the implementation of the changes.

Performance metrics would evaluate different aspects of the change. For instance, it would evaluate the completion of the training, the effectiveness of the communication within the organization, achievement of milestones, and resource utilization within the company (Harbour, 2017).

The objective metric involves determining whether the effectiveness of the change in meeting the organization’s objective of becoming an integrated energy company. Some of the parameters that would be used to measure the effectiveness of the changes include the company’s growth, market position, technology implementation, performance improvement, and efficiency of the organization.

Lessons Learned

Effective change management is a vital aspect any contemporary organization as it enables organizations to implement changes effectively. This helps in maintaining or improving the competitiveness of an organization. However, change should not be implemented haphazardly. Systematic introduction of changes increases the chances of success of the change.

References

Cawsey, T. F., Deszca, G., & Ingols, C. (2020). Organizational change: An action-oriented toolkit (4th ed.). Thousand Oaks, CA: Sage drafting.

Griffin, R. W., Phillips, J. M., & Gully, S. M. (2016). Organizational Behavior: Managing People and Organizations. Mason, OH: Cengage Learning.

Harbour, J. L. (2017). The basics of performance measurement. Boca Raton, FL: CRC Press.

Ramady, M. A. (2017). Saudi Aramco 2030: bulkpost IPO challenges. Basingstoke, England: Springer.

Saudi Aramco. (2020a). Our Vision. Saudi Aramco. Retrieved from: https://jobsataramco.eu/our-business/our-visionSaudi Aramco. (2020b). Who we are overview. Saudi Aramco. Retrieved from: https://www.aramco.com/en/who-we-are/overview#