Organizational Change in Shell Oil Company, Free Essay in Management

Published: 2022-03-18
Organizational Change in Shell Oil Company, Free Essay in Management
Type of paper:  Essay
Categories:  Company Management Supply chain management
Pages: 7
Wordcount: 1691 words
15 min read

The contemporary organizations face growing and changing world, as well as, dynamic and unpredictable environments that need regular assessment. For a business to succeed in the present world, it must continuously evaluate the market needs as this will enable it to stay updated. The organizational change allows an enterprise to remain profitable and competitive. Indeed, most corporations struggle to exist when they cannot fulfil demands and challenges surrounding their internal and external environments. Therefore, the present paper examines an organizational change in Shell Oil Company and explains ways in which lessons learned from such a process demonstrates successful chain management.

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Organizational Change

Organizational change refers to the process through which an enterprise changes from its present situation to preferred one to increase its overall effectiveness. Aldulaimi (2015) defines organizational change as any transformation in the technology, structure, or culture of a firm that aims at improving the effectiveness of such an organization. In their study, Armenakis, and Bedeian (1999) define organizational change as any transformation that occurs in the entire external and internal environment of a firm. In a situation where a regulatory framework is interrupted by specific external and internal forces, the transformations are likely to occur. Principally, organization change may be autonomous or deliberate, but in several instances, managing such a move is entirely instrumental.

Change Management

Organizational change is a critical issue in the modern environment for any vibrant business. It is a significant approach to adapt to the continuously changing environment, as well as, the competitive market (Nadler 1981). Therefore, in all organization planning, managing change is essential to the success of both competitiveness and productivity. Reportedly, adjacent organizational structures bring about conflict of interest and organizational viscosity within the firm that influences the organizational change, thereby making the firm incompetent in the business environment where it operates (Benn, Dunphy, & Griffiths 2014). Managing change cycle refers to the refurbishment process through which the incorporation adapts to the internal and external environment (Bracken 2003). Principally, change management is a tactically scheduled technique to initiate and manage the process of change within the structure, technology, culture, and team attitudes and behaviors towards the change transition within business processes, technology implementation, as well as, any other policies of the organization (Bergeron, Raymond, &Rivard 2004). Principally, the change management entails transforming or modifying the organization to improve or maintain its effectiveness.

Organizational Change within Oil Shell Incorporation

Company Background Information

Shell Oil is a company based in the United States and a subsidiary of Royal Dutch Shell. In the year 1907, the incorporation was established by the union of two major oil giants. Currently, it is the biggest and the oldest joint venture in the world. It is among the leading natural gas and oil producers in the US. It is also the leading marketer of natural gas and gasoline in the US, as well as, the manufacturer of petrochemicals across the globe. Presently, the company is operating in more than fifty countries and has over 22, 000 workers in the US alone offering energy in technically innovative approaches.

Specific Change in Shell Oil Company

From the beginning of the year 2000, Shell Corporation passed through a detailed organizational change in both its external and internal aspects and had come up with a completely different outlook. The firm has experienced transformations in structural perspectives and some minor alterations in the cultural and technological issues. More importantly, Shell Company has undergone organization restructuring where it changed from a mechanistic bureaucracy to a flexible and straightforward leadership structure.

Reasons for Leadership Change in the Shell Oil Company

The revolutionary change in the oil exploration and marketing industry in the 19th century caused a dynamic business environment for the organizations, and thus there was a need for a proper organizational restructuring (Bass 1999). Shell reacted to this important need and planned to rearrange its business to adhere to the newly required changes in the competitive oil markets.

Initially, Shell Oil Corporation adopted a very rigid and formal organizational structure with primary weight on the standardization within the enterprise. Bass (2005) reported that this was to offer quality products and services to customers. The firm was following a mechanistic bureaucracy. Furthermore, its techniques, procedures, and culture were borrowed from the mother company for different operating firms that Shell owned. Coordination and control was another aspect of Shell. Initially, it was believed that effective coordination within the company could only be achieved through appropriate control. Therefore, workers lacked autonomy and authority under their job requirements. On the same note, planning in the company was outdated and considered suitable only for long-term success.

Before the change, Shell Corporation experienced numerous challenges because of its organizational structure (Grant 2002). First, managers were overloaded with work. Organizations with mechanical bureaucratic structure have decision making and centralized authority vested on the highest ranked managers. On the same note, managers must take part in daily guidance and supervision. For these reasons, this organizational structure in Shell Oil Company maximized work overload on the manager and made it difficult for the manager to participate in the innovative and creative works. This resulted in the lack of professionalism and low-quality products. Secondly, mechanistic bureaucratic is rigid, static and tightly regulated structure. Typically, it stresses on standardized activities (Fernandez, & Rainey 2006). For this reason, there was no provision of change in the working procedures and system based on the growing environment within the region where the company was operating. Therefore, it was difficult for the firm to adapt to entrepreneurial activities in the vibrant business environment. Mechanistic bureaucratic structure made it difficult for Shell Oil Company to make decisions effectively. Dvir, Eden, Avolio, and Shamir (2002) reported that with the structure, subordinates are not involved in the process of making decisions. In fact, they do not have the rights to offer information and suggestions to the manager during decision making. Only the highly ranked subordinates were involved in the process of making a decision. However, given that few individuals were involved in such a process, the organization could not make practical choices (Cook, Macaulay, & Coldicott 2004).

Using mechanistic bureaucratic structure, Shell Oil Corporation experienced a single way communication. The structure emphasized on autocratic leadership as information was conveyed vertically only from top managers to employees in the lower levels (Fernandez, & Pitts 2007). Furthermore, it was only the manager who provided information on guidance and instructions to employees. Such a way of communication did not support smooth operation of the firm. The firm also experienced difficulty in coordination. With the mechanistic bureaucratic structure, particular duties were assigned to people according to their skills and expertise. These individuals perform their duties properly. Unfortunately, there were no means of maintaining coordination over their performance forcing the top management to spend much time. As a result of mechanistic bureaucratic structure, Shell Oi; Company experienced numerous challenges and loopholes including the absence of business vision, aggressive market rivalry, bureaucratic structure, and environmental factors. As such, restructuring was necessary to counter these challenges and make the enterprise more competitive.

Leadership Theories

It is the most appropriate theory for the organizational change in Shell Oil Company. The theory believes that individuals are motivated by the job that must be executed (Howell & Avolio 1993). Therefore, the more structured an enterprise is, the greater the achievement. This theory believes that people do their best to the enterprise that can be a basic need and they will put their interests after fulfilling that of the organization. The theory stresses on cooperation. Besides, collective stress and action are included in the lasting objectives of an organization. According to the method, people exist within the pretext of the community instead of competing with one another (Podsakoff, MacKenzie, Moorman, & Fetter 1990). On the same note, duties are designed to be desirous and challenging, and that the entire system stretches to put the society above the individual egos.

The theory states that transformation leaders are the role models within the organization and depict a charismatic personality that affects others and make them gain the desire to have the same personality as leaders (Yammarino, & Dubinsky 1994). Reportedly, idealized influence can be better expressed through the willingness of a transformational leader to take risks and adhere to a specific set of convictions, values, as well as, ethical principles in the activities he or she undertakes. The idealized influence assists the leader to build trust with the employees and consequently makes the workers trust their leader as well. Inspiration motivation is another critical aspect of transformational leadership theory. It refers to the ability of a leader to instill motivation and confidence and a sense of purpose to the employees. Therefore, the transformational leader needs to articulate a succinct vision, communicate expectations of the group and show a dedication to well-established objectives.

Intellectual stimulation is another essential domain of transformational leadership. Usually, transformational leadership pays much attention to autonomy and creativity among the employees or followers. Therefore, the leader must support his or her followers by involving them in the process of making decisions and stimulating their efforts to be innovative and creative as possible to come up with viable solutions (Zheng, Yang, & McLean 2010). Therefore, transformation leader takes assumptions seriously and solicits ideas from employees without condemnation or criticism. He or she assists to change the manner in which employees think and frame obstacles and challenges. Individualized consideration is the final domain of the transformation leadership theory. According to the theory, each employee or members of the organization has specific desires or needs. Therefore, the leader must recognize or determine these needs through observation. Besides, through mentoring or coaching, the transformational leader offers better chances for customized training meetings for every employee (Gregory, Harris, Armenakis, & Shook, 2009).

Applications of Transformational Leadership Theory to the Change Process in Shell Oil Company

Because Shell Oil Company was known by its workers, the initial step that the management took was to recruit qualified market specialists from outside the business. The departmental heads were incorporated into the team. Intuitively, the top management views themselves as the role models for the behaviors and actions promoted by the organizational change. They agreed that they should accept these changes to act as an excellent example to other employees but also...

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