ORGANISATIONAL BEHAVIOUR – COURSE ASSIGNMENT NO.1
ASSIGNMENT REFERENCE: OB/JAN2009/1
DAVID M JENKINS - 7483571
Organisational Behaviour – Course Assignment No.1
CONTENTS
INTRODUCTION....................................................................................................................................3
A. SHELL EXPLORATION AND PRODUCTION COMPANIES IN NIGERIA (SEPCiN)... . .3
B. UNDERSTANDING THE EPG – SCM ORGANISATION.....................................................5
C. WAS THE EPG-SCM IS AN ORGANISATION DESIGNED AROUND THE SOCIO-
TECHNICAL SYSTEM CONCEPT?.....................................................................................10
D. ATTACHMENTS....................................................................................................................11
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
2 of 11
Organisational Behaviour – Course Assignment No.1
INTRODUCTION
The paper assesses the value of the Socio-technical Approach to understanding the structure and
effectiveness of the Supply Chain Management organisation, (EPG-SCM) of Shell Exploration and
Production Companies in Nigeria (SEPCiN)
A. SHELL EXPLORATION AND PRODUCTION COMPANIES IN NIGERIA (SEPCiN).
1. Who is SEPCiN?
SEPCiN is a relatively new organisation which is subject to much debate between Shell and the
Nigerian Government represented by NAPIMS1, the reasons for the debate are not discussed in this
paper. SEPCiN was created by the joining together of two Shell companies in Nigeria namely,
Shell Nigeria Exploration and Production Company (SNEPCo) and Shell Petroleum Development
Company of Nigeria (SPDC).
SNEPCo was established in 1993 with the objectives of discovering and producing hydrocarbons
from Nigeria's frontier areas and a vision of becoming Africa's leading deepwater Oil and Gas
Company. In the same year a Production Sharing Contract (PSC) was signed with the Nigerian
National Petroleum Corporation (NNPC), and five exploration blocks were awarded at that time.
The relationship between the two parties is one of Client (NNPC) and Contractor (SNEPCo). In
1995, SNEPCo discovered an oilfield 120km off the coast of the Niger Delta, named Bonga and in
November 2005 after 5 years of development and construction activities, oil and gas production
commenced from the Bonga field.
SPDC is the operator of a Joint Venture Agreement involving the Nigerian National Petroleum
Corporation (NNPC), which holds 55 per cent, Shell 30 per cent, EPNL 10 per cent and Agip 5 per
cent. It has the largest acreage in the country from which it has the capacity to produces some 43
per cent of the nation's oil. The company's operations are concentrated in the Niger Delta and
adjoining shallow offshore areas where it has been operating since 1956.
1 National Petroleum Investment Management Services
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
3 of 11
Organisational Behaviour – Course Assignment No.1
2. SNEPCo’s Supply Chain Management Organisation .
At the beginning of 2000, the Royal Dutch/Shell Group of Companies (Shell) was emerging
from one of the most ambitious and far-reaching organizational restructurings of its 93-year
history.2 The result of this re-organisation was to establish a model; which would be adopted
throughout the Shell world. This can be described as a combination of a Function-based
organisation at corporate level (Slide 1, Attachment No 1) and a matrix organisation at a business
level. SEPCiN, being an upstream organisation (Slide 2 Attachment No 1 gives graphic
explanation of the Oil and Gas Industry) became part of the Exploration and Production
Community.
Exploration and Production (E&P) is one of the key business operations of the Shell Group. In
terms of earnings, in 2007 E&P’s segmented earning were US$ 14.7 billion (Slide 3 Attachment
No 1), employing in excess of 18,000 people world wide (Slide 4 Attachment No 1).
Exploration & Production comprises six directorates that grow Shell business and guide and
support their operations around the world. The six directorates are:
Exploration
Business Development
Technology
Corporate Support (Legal & Health, Safety, Security and Environment - HSSE)
Human Resources
Finance
To give the matrix structure there is also a regional breakdown into the 6 major geographic areas
of operation
Africa – EPG
The Americas – EPW
Asia Pacific – EPA
Europe – EPE
2 Organizational Restructuring within the Royal Dutch/Shell Group - Robert M. Grant
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
4 of 11
Organisational Behaviour – Course Assignment No.1
Middle East and South Asia – EPM
Russia and CIS – EPC
This organisation is shown in detail in Slide No. 5 Attachment No 1.
The Supply Chain Management function is part of the Finance Directorate and is represented at
corporate level by a Director (EPF-SCM). At the corporate level SCM aligns its function and
regional roles in a matrix organisation (Slide No 6 Attachment 1) with each region having
Regional Supply Chain Manager (RSCM) who has reporting lines to the Supply Chain Director
and VP Finance of the regional that they are located. In the case of Nigeria the RSCM EPG would
report to EPF-G as well as EPF-SCM. As it is a regional function the Supply Chain Organisations
for Gabon and Cameroon also report back to RSCM EPG, the organisation for these two countries
is no discussed here.
The EPG SCM Organisation shown in Attachment No. 2 is a function based Organisation
providing support to all aspects of SEPCiN operations. The organisation is located in three
geographic areas of Nigeria and operates within two types of agreement with the Nigerian
Government namely a Production Sharing Contract and a Joint Venture Agreement.
B. UNDERSTANDING THE EPG – SCM ORGANISATION.
Huczynski and Buchanan define a Socio-Technical system as “a system which processes both material
technology and a social organisation (job specifications, management structure)”. Taking this as a
reference point, the question is whether or not the EPG-SCM is an organisation designed around the
Socio-Technical system concept.
1. EPG-SCM Role within an EP Company
The function of the EPG-SCM organisation to provide support to the three main areas of operation
within SEPCiN E&P Organisation, these being:
Well Engineering – drilling operations, finding the oil and gas, the core business of any E&P
Organisation.
Projects – These are the major developments required to bring an oil and gas field into
operation.
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
5 of 11
Organisational Behaviour – Course Assignment No.1
Production – Operating the Oil and Gas fields, the Asset Holders.
Each of these operations has three distinct elements namely:
Pre-contract activities – tendering process to establish the lowest technically competent
Contractor (for services) to whom the contract should be awarded.
Procurement of Materials and Equipment – complete process from tendering through to
delivery of materials and equipment, which will either be installed by employees of SEPCiN
or a 3rd party.
Post-contract activities – provision of the services by the Contractor identified during the Pre-
Contract phase.
In the case of Well Engineering and Production these activities are covered by three departments
within the EPG-SCM Organisation namely, EPG SCM CCE (Pre-Contract), EPG SCM PC
(Procurement) and EPG-CCM (Post-Contract).
Project are considered unique one-off activities so they a combination of all three elements and are
stand alone organisations.
The workload is split between the teams but continuity this provided by the CCM personnel who
are involved in from the Contracting Strategies stage through to Contract award when they
formally take over the contracts and run them.
The remaining departments within the EPG-SCM are support functions:
Provide guidance in connection with the Nigerian Content Directive which is being launched
by the Federal Government of Nigeria via the Nigerian National Petroleum Corporation
(NNPC) – EPG SCM NCD.
Staff development, market intelligence and systems support – EPG SCM Business
Improvement.
Governance, approval process and procedures – EPG-SCM Risk management.
EPG-SCM CCM staff and Project Staff are physically located within the function or project for
which they provide support and are considered to be part of that team. As the production
operations are spread across three areas in Nigeria, namely Lagos, Port Harcourt and Warri, the
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
6 of 11
Organisational Behaviour – Course Assignment No.1
remaining functions are spread over these same three areas. Extensive use of email, common
servers, video conferencing, instant communicator and software such as such as SAP and
Omnicom3 allows these teams to act as one unit despite the physical distance between them.
Extensive training programmes have been developed to ensure that all CCM and CCE roles are
fully conversant with this software. In addition Shell Group uses the Supply Chain Academy4 and
sponsors its staff whole wish to undertake the Chartered Institute of Purchasing and Supply
(CIPS)5.
Nigerian staff are rotated between the CCE, CCM and PC departments so as to develop a greater
understanding of the whole contracting process. Continuity in each of these departments is
provided by the use of Contract Staff (shown on the various organisational charts in Attachment
No. 2 by the initial AN – Agency Nigerian; AE – Agency Expat or MPS – Manpower Services).
The EPG-SCM Leadership Team (which comprises of all Departmental Heads) meet every week
to discuss various issues which are impacting the business, and this is passed by each Department
Head via meetings are department and team level.
2. EPG-SCM Organisation and its Culture
In an organisation such as EPG SCM its single most important resource is its people, they have the
greatest capacity to impact its effectiveness and like many of the functions within Shell is a
cocktail of race, cultures and groups all of which have a major influence on the organisation and
the way it functions and the nationality spread is summarised in Table No 1.
As can been seen from Table No 1 whilst the majority of the workforce is Nigerian, the Senior
Management is predominantly of Anglo extraction, 70% in fact with staff from England
dominating the management position. The key management position of EPG-SCM Manager is
held down by an Australian, although he is schedule to leave shortly and his position will be taken
over by an American female.
3 http://www.omniware.com/4 http://www.supplychainacademy.com5 http://www.cips.org/
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
7 of 11
Organisational Behaviour – Course Assignment No.1
The EPG-SCM organisation has been developed over the passed 18 months and whilst the model
was handed down from EPF-SCM, the adapting of the model was undertaken by the EPG SCM
Leadership Team, which is dominated by the Anglo group of societies.
Table No 16
Nationality No Work
Force
No of Senior
Management
(JG 3 and
above)7
% of Total
EPG-SCM
Workforc
e
% of Total
No of Senior
management
Nigerian 190 3 88 30
Dutch 4 0 2 20
British – English 11 5 5 50
British – Welsh 1 0 0.5 0
Australian 1 1 0.5 10
American 1 1 0.5 10
Malaysian 1 0 0.5 0
German 1 0 0.5 0
Chinese 3 0 1 0
Venezuelan 1 0 0.5 0
Indian 1 0 0.5 0
Total 215 10
Does the organisational structure reflect the characteristics you would expect from an Anglo
society?
The Hofstede study when considering the various societies identified indices against which were
set various cultures; Attachment No.3 is a summary of each of the indices for the groups identified
6 Data obtained by writer from a review of the Staff database and EPG-SCM Organisational charts, accuracy +/- 10%.7 JG 3 – Job Groups 3 and above – includes head of Section and Mangers
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
8 of 11
Organisational Behaviour – Course Assignment No.1
in Table No 18. The writer has provided indices for Nigerian as a comparison to those for West
Africa, as he feels that the huge changes in the environment since the Hofstede study have had a
major impact on the culture in Nigeria9. Such changes include prolonged period of democracy,
technological advances such as mobile phones, internet access and satellite TV.
Using Hofstede’s analysis of Anglo societies suggests that:
Rating low on the Power Distance index would result in an organisation that would be
consultative and creating participation.
Rating high on Individualism versus Collectivism would result in an organisation that
rewards individual achievement rather than a team.
Rating high on Masculinity versus Femininity would result in an organisation which
encourages promotion, challenging work and high salaries.
Rating low in Uncertainty Avoidance would result in an organisation where there is a
relaxed attitude about the future, staff progression planning would low key, compliance to
procedures and guidelines would be relaxed etc.
Does the EPG-SCM organisation reflected the four traits identified above?
Firstly the organisation design and operation does allow for a consultation and participate.
Whilst graphically it may appear to be hieratical it is a flat structure with only 3 levels,
Regional SCM Manager, SCM leads and the rest. This means the communication lines are
short and information passes quickly up, down and across the organisation.
Whilst it cannot be seen from the organisation charts, there is great emphasis on
individual achievement, with staff being recognised for individual effort. Omnicom is used to
monitor individual performance and data from this system is used as the basis to evaluate
performance against Key Performance Indicators which impact performance bonus and
ranking.
The organisation by its very structure shows that promotion is possible, hard wok can
achieve that and with it brings increase in salary.
8 Management Worldwide, Hickson and Pugh9 The writer has been involved with Nigeria since 1983, having lived there for a total of 21 years. He is married to a Nigerian National. His assessment is not based any empirical data or research and is subjective based on local knowledge of the environment.
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
9 of 11
Organisational Behaviour – Course Assignment No.1
The organisation in having a Business Improvement and Risk Management Departments
is clearly showing that processes and procedures and compliance to them is an important
factor to the success of the organisation and is judged by it. Staff development planning and
commitment to training is key to the development of Nigerian staff for future roles within the
Global SCM Organisation.
C. WAS THE EPG-SCM IS AN ORGANISATION DESIGNED AROUND THE SOCIO-TECHNICAL SYSTEM CONCEPT?
Did assessing the EPG-SCM Organisation using the Socio-Technical Approach allow us to establish if
it had been designed around the concept?
The dominance of one culture that prevailed during the development of the organisation is clear. In the
4 traits identified as being typical Anglo, 3 were very prevalent in the EPG-SCM Organisation. The
forth, being that relating to processes and procedures is the result of a number of factors including:
Need to comply with government decrees and legislation, e.g. Nigerian Content Directives,
Sarbanes-Oxley Act.
Nigeria is typical in its approach to bribery; it is not seen in the same light as it is in Anglo
cultures. This is changing by procedures have been set up specifically for operating in Nigeria.
The role now being undertaken by EPG-SCM in connection with Health, Safety, Security and
Environment Compliance. EPG-SCM act as the monitors to assess the performance of the Shell
Company Representatives and Contractors based on strict Shell Group criteria.
It is clear that EPG-SCM place great reliance in technology as part of their day to day operations and
have ensured that the staff are trained to utilise it. Whether this will result in a better working
environment is doubtful as the same software is used to determine performance and hence reward.
The stress placed on individual performance rather than team performance is such that within Shell the
traditional Africa culture of working together has been changed. This combined with the external
forces is one of the factors that the writer considers the Individualism versus Collectivism ranking for
Nigeria to more towards Individualism than Hofstede.
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
10 of 11
Organisational Behaviour – Course Assignment No.1
Consideration of the individual appears, from the organisation’s view to be so that it will benefit the
organisation, if the individual also benefits so be it, but that is not the purpose e.g. training to improve
performance, to cut costs; not training to develop the staff to facilitate promotion.
Overall it is felt that elements of the organisation may have been developed after consideration the
socio-technical system, overall this does not appear to be the case. The Social system has been largely
ignored, perhaps because it was felt that Nigerian staff would generally accept what they were told by
the management i.e. High Power Distance. As indicated by the writer this, in his opinion has changed
and next reorganisation should take such issues into account.
D. ATTACHMENTS
Attachment No.1
Attachment No. 2
Attachment No. 3
Assignment Reference: OB/Jan2009/1David M Jenkins - 7483571
11 of 11