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Running head: COMPREHENSIVE REPORT ON GLOBAL STAFFING STRATEGIES
Comprehensive Report on Global Staffing Strategies
Michelle Boykin
University of Phoenix
MBA/530 Human Capital Development
Group ID # MBAA084708
Dr. Pat FitzGerald
November 18, 2007
Comprehensive Report on Global Staffing Strategies
This paper will explain in detail the comprehensive staffing strategy for BP the British based petroleum company’s acquisition of the American based oil giant Amoco. Implementation of strategic human resource audits and possible cultural problems will also be addressed along with possible solutions to these issues. Finally, the author will address the changes in the organization resulting from the merger and how human resources plays an intricate part in ensuring the success and continued growth of the newly formed partnership.
Type of Industry
The British based petroleum company p.l.c. (BP) and the American based oil giant Amoco Corporation (Amoco) decided to merge their companies ensuring growth by setting up a global partnership at a n estimated cost of $110bn (£67bn or $48.2 billion) (BPAmoco, 2004, par.1). On August 11, 1998 the BPAmoco Merger was complete, the company decided to have their headquarters based in London (BBC, 1998, par. 1). The BPAmoco merger ranked as the top three international oil producers, “it is the largest company in Britain and the largest oil and natural gas producer in the United States” (Jones, 1998, par. 1).
According to BBC News (1998), “Shares prices in BP soared after the announcement as the market welcomed news of the deal. Shares in BP surged 15% after the news broke -helping to revive an ailing FTSE 100 index. BP shares were up 101.5p at 874.5p by 1310 GMT while Amoco traded at $46, up from a Monday close of 40-7/8.”
HR Challenges
According to Dreher and Dougherty (2001), “sound HR system design must take into account the context, surrounding any operating business. This context includes a concern for (1) how business strategy and technology influence the way work processes are designed and how these design issues specify the role/ behavioral requirements for key classes of employees, and (2) designing HR systems that are appropriate given the realities of labor market and labor relations conditions.”
Consequently, the first strategy as the CEO of the company is to research all angles before embarking on a complex merger. Plans for extensive research will need to take place throughout the entire merger process and well after the merger is complete. Benchmarking the lessons learned from other successful international mergers will allow BPAmoco HR department to incorporate the best practices ensuring success. Once best practices are established, the challenge for the HR department will be to incorporate these practices while gaining and keeping the competitive advantage (Dreher & Dougherty, 2001, Ch. 1).
Designing an appropriate HR system will require the merger of two systems into one; this will prove challenging for the HR department considering the enormously large workforce of two merged organizations. The first thing the HR department took into consideration was the duplication of assignments, this initiated layoff’s from both organizations, Jones (1998) writes:
One of the first results of the BP-Amoco fusion will be the elimination of 6,000 or more jobs. A large portion of these cuts will be carried out at Amoco facilities in the United States, including its research offices in Houston. BP says it plans to eliminate 1,000 jobs at its refining and marketing operations in Cleveland. The estimated layoffs and other cost cutting measures will result in savings of $2 billion annually (par. 3).
Cultural and Regulatory Factors
Besides the strategic design of the HR department, the CEO will need to
ensure cultural and regulatory practices are merged to reflect the newly formed global organization. BPAmoco will need to establish new employee policies that will incorporate British-American employment laws for US citizens working for BPAmoco abroad.). According to British American Business Inc. (2007), website, below are some of the regulations BPAmoco HR department will need to consider:
The statutory minimum wage is £4.20 per hour for workers over the age of 22, and £3.60 per hour for workers aged 18 to 21. All employees are entitled to sick pay and four weeks paid holiday funded by the employer. All female employees are entitled to maternity benefits, which are administered by the Government in conjunction with the employer. Additionally, there are eight days of paid leave and public holidays per year; the employer is responsible for paying National Insurance (social security) contributions on behalf of all employees. The amount payable is 11.8% on earnings over £89 per week. Employees also contribute up to 10% of gross salary, with a ceiling of £2990. Overtime payments are unregulated and standard practice varies according to sector. Many employers pay overtime at time-and-a-half on weekdays and double time at weekends; Working Time Regulations stipulate that the maximum average hours over a 17-week period should not exceed 48 hours per week ( par. 5-9).
Impact on Organizational Effectiveness
BP Amoco HR department can implement a HRM survey to capture the information needed for a domain statement. By using the information collected in the survey, BPAmoco can learn about the HRM practices currently in place within each company (Dreher & Dougherty, 2001, Ch.3).
The merger between BP and Amoco brought about more benefits, more quickly then either organization had forecast, despite the massive layoffs. This was primarily due to the extensive preparations made by the HR department for the merger (HR, 2004, par1). The integration of best practices between both organizations was the key to success. “ Mini task forces and project teams that included line and HR people were used to integrate the various benefit packages, training recruitment processes and son on” ( HR, 2004, par 3).
Recruitment and Selection Practices
The recruitment and selection practices was taken from the BP performance-management model as it was considered to be “best practice in terms of generating strong performance” ( HR, 2004, par. 3). Undoubtedly, BP’s performance management process consisted of establishing clear and concise performance plans, observation and feedback, timely evaluations along with improvement and development plans. This plan would need to meet all criteria for both the US and Britain labor laws.
Mix of expatriates and internationals
According to the website Direct.gov,
Statistics show that just under 91,000 nationals from eight of the European Union (EU) accession states registered for work between May and September. Up to 45 per cent were already here before 1 May.
Between May and September alone new EU workers have contributed approximately £120m to the UK economy and paid approximately £20m in tax and national insurance. Numbers registering fell considerably in August and September from their peak over the summer and anecdotal evidence that many have already gone home. They have helped alleviate recruitment difficulties in sectors such as hospitality and agriculture, and legalizing those who had previously not been paying taxes. Home Secretary David Blunkett said the scheme was a success. It enabled the Government to monitor carefully the impact of workers coming from the EU on the labour market, he added. ( 2004, par. 1-5).
BPAmoco will need to consider the global mix of employees when considering training programs, and policy handbooks. These items will need to be available in various languages due to the cultural mix of people. “Symbols or graphics as well as words have different meanings in different cultures; a thumb's-up gesture meant to signal a positive thought would be obscene in Sicily. Countries also differ in terms of their recruitment laws and customs” (Noe, Hollenbeck, Gerhert & Wright, 2003, Ch.5, p. 28)
Determination of Skills and abilities
Building world-class performance starts with knowing what people are capable of achieving and grooming and growing from there. BPAmoco can incorporate success factors and competency management modules to inventory each individual's skill set-revealing strengths and weaknesses. BPAmoco will need to consider various training methods and approaches, when implementing a global system.
Training and Development Practices
BPAmoco can “approach training from a coaching, on-the-job, apprenticeship,
job rotation and project team assignment basis, an emphasis on the use of formal training centers and programs (e.g., the corporate campus, teleconferencing, computer assisted and programmed instruction can also be incorporated into the training curriculum” (Dreher & Dougherty, 2001, Ch. 3, p. 9). Once this is completed the HR department will have a base line on the employee, this will allow the organization to quickly evaluate needs and instantly connect employees with learning tools that move them closer to the knowledge that will help them work smarter.
Possible Audit Results
Emphasis on career pathing and associated career development activities can often include the use of HR information systems. ‘These systems characterize employees in terms of career interests, training and development experiences, and measures of current and future capability. Formal career paths help employees identify the knowledge, skill, and ability requirements for higher level jobs. This information can direct individuals as they create training and development plans to help them achieve their career goals” ( Noe,et al. Ch. 5).
A conscious effort was made by the organization to look to the future, therefore, top management appointments were open to people from both organizations” ( BP-Amoco, 2004, par. 5). Out of the top 500 management appointments BP accounted for 60% and Amoco 40%, “these proportions are roughly equivalent to the relative size of each pre-merger company” (BP-Amoco, 2004, par. 5).
Changes in current Organizational Structure
The BP and Amoco worked together by forming integration teams to research what was going well and where the opportunities for improvement were in each company. The teams evaluated potential solutions while prioritizing the best ideas. An action plan was implemented to bring about a positive outcome. For example, “the BP performance–management process was considered to be the best practice in terms of generating strong performance, however, the Amoco model was used when it came to allocating capital.” (“BP-Amoco,” 2004, para.3 p. 9). This type of attention to detail continued once the two companies merged. Several meetings with all 500 managers were conducted explaining the philosophy of the merged company (“BP-Amoco,” 2004, para.6, p.9).
The integration teams took surveys to monitor how people felt about the merger this took place every four weeks using samples of staff in the large locations. The organization did this for 18 months. The feedback from those surveys was used to help managers target their communications with staff more effectively ( BP, 2004, par. 7).
Conclusion
Understanding the HR challenges that may arise as a result to an acquisition is paramount in ensuring the mergers success. This paper has described in detail the strategies involved with a global acquisition involving British Petroleum and US oil giant Amoco. The paper addressed the regulatory and cultural challenges impact on the two organizations along with the recruitment and selection process. In addition, emphasis was placed on career pathing especially important as the merged organization will need to continually train and grow high achieving employees. Next, the paper addressed one of the unique balance’s the BPAmoco acquisition achieved that most mergers have not; this was the ability to layoff over 6000 employees and still is considered successful. This was due to the extensive planning prior to the merger and creation of an integration team focused on integrating best practices. The BPAmoco merger was so successful; companies are benchmarking the steps used to ensure a successful outcome for future mergers.
References
BBC News.( 1998). Business: The Company File BP and Amoco in oil mega merger.
Retrieved November 18, 2007 from http://news.bbc.co.uk/1/hi/business/the_company_file/149139.stm
BP-Amoco. (2004). Human Resource Management International Digest, 12(2), 9-11.
Retrieved July 9, 2007, from Emerald database
British America Business Incorporated.( 2002). Home Page. Retrieved on November
18, 2007 from http://www.babinc.org/investment/london/offices.html
Dreher, G. & Dougherty, T. (2001). Human Resource Strategy. [University of Phoenix.
Custom Edition e-text]. The McGraw-Hill Companies, New York, N.Y. Retrieved October 28, 2007, from University of Phoenix, rEsource, MBA530-Human Capital Development Course Web site.
Economist Intelligence Unit (EU). (2007, October 29). EU economy: Attracting skilled
immigrants. ViewsWire. Retrieved November 18, 2007 from EIU database.
Jones, S. ( 1998, August). Merger will lead to job cuts, british petroleum acquiring US
Oil producer Amoco. Retrieved July 10, 2007, from
http://66.218.69.11/search/cache?ei=UTF-8&p=BP+Merger+with+Amoco+world+socialist+web+site&y=Search&fr=yfp-t-453-s&u=www.wsws.org/news/1998/aug1998/bpam-a13.shtml&w=bp+merger+amoco+%22a+mo+co%22+world+socialist+site&d=MPMykurnO2bF&icp=1&.intl=us
Noe. R., Hollenbeck. J., Gerhert. B., & Wright. P. (2003). Fundamentals of Human
References
Resource Management. [University of Phoenix Custom Edition e-text]. The McGraw-Hill Companies, New York, N.Y. Retrieved October 30, 2007, from University of Phoenix, rEsource, MBA530-Human Capital Development Course Web site.
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