Facing changes in business operational dynamics requires embracement of organizational transformations. The current paper investigates the value and mechanism of enhancing organizational change with particular focus on the Emirates National Oil Company (ENOC). The company embraced change through alteration of governance structures from four to seven segments.
It also considered implementation of an organizational change that was tagged Shared Service Concept (SSC). Implementing these changes called for alteration of roles and responsibilities of some personnel who were in charge of running the company.
Consistent with Lewin’s model for organizational change implementation, such changes must be accompanied by increased pay packages. However, this strategy was not the case for ENOC. The paper recommends reconsideration of this omission, which may affect the morale and motivation of ENOC’s workforce.
Emirates National Oil Company (ENOC) is a huge energy group in Dubai that was established in 1993. Based in the UAE, ENOC is owned by the Dubai government. Most of its operations are in Dubai and Northern Emirates in the UAE. ENOC processing Company, EPCL, is one of ENOC’s subsidiaries run by Jebel Ali refinery whose operations are mainly in Dubai.
As stipulated in the company’s vision, the main interest of ENOC is in gas and oil. ENOC has more than 20 subsidiaries, which are owned both directly and indirectly. Since ENOC was established, it has made enormous progress towards meeting the company’s objectives and achieving its mission and vision.
ENOC’s vision is “to be a leading regional integrated oil and gas group, which is highly profitable and socially responsible towards employees, community, and environment” (ENOC 2012, Para.1). This vision is developed through the statement of the mission of the company.
The company sates that its mission is to gain sustainable development in the effort to maximize the profitability of the organization. It plans to meet the energy growing needs of the people of Dubai by having an up-to-date technology to use in the implementation of the organization’s practices.
By so doing, it will achieve an excellent performance by giving customers the best service by exceeding their expectations in terms of quality and service (ENOC 2012, Para.3). Additionally, the company aims to gain and maintain industry standards in environment, health, and safety together with bringing, making, and retaining employees with top talents.
Faced by various operational challenges, the company has considered various mechanisms of inducing organizational change in the effort to gain competitive advantage in its industry of operation. An organizational framework for change is the review of the organizational structure, which checks deeper into the relationships between positions in the organization (Spector 2007).
The review seeks to improve the organizational needs. ENOC has been encountering various organizational challenges, which prompted for putting in place various organizational changes to enhance the performance of the organization.
Purpose for Adopting Change
Organizations in all industries are interested in maintaining their levels of competitiveness for continued delivery of value to their owners- shareholders. In fact, according to Bertscherk and Kaiser (2004), “any organization in today’s fast moving environment that is looking for the pace of change to slow is likely to be sorely disappointed” (p.395).
This argument means that organizations need to welcome and embrace change that would increase their performance. Zhou and Tse (2006) support this assertion by maintaining that organizations that are reluctant to embrace change risk losing their competitive edge and hence miss the capacity to realize the needs of their clients together with delivering value to shareholders and other interest groups (p.249).
In the line of improving service delivery and hence retaining of clientele of ENOC, the company’s management found it plausible to initiate various changes. Some of these changes include the introduction of the shared service concept (SSC) and the restructuring of the organization to enhance management and governance.
The above changes were paramount in terms of addressing the challenges articulated to the status quo. Indeed, the change management theory suggests, “organizations benefit from change that result in new ways of looking at customer needs, new ways of delivering customer service, new ways of strengthening customer interaction, and new products that might attract new markets” (Oxtoby, McGuiness & Morgan 2002, p.312).
By simply asking how and why an organization is not able to attain certain specified goals in the organization’s visions and mission statements, an opportunity is created for adoption of creative and innovative strategies for enhancing success. In fact, change at ENOC is not only significant to the owners of the company since they would benefit from increased returns owing to good governance practices but also to the employees.
Leigh and Media (2013) support this augment by further maintaining, “change is important in organizations to allow employees to learn new skills, explore new opportunities, and exercise their creativity in ways that ultimately benefit the organization through new ideas and increased commitment” (Para.3).
This argument implies that organizational change is all about enhancing the performance of employees by putting in place mechanisms of enabling them to achieve better outputs. One of such an approach is diversification of the jobs done by employees in organizations.
Appreciating this noble paradigm of organizational change, it perhaps underlines the significance of ENOC changes in terms of restructuring the organization to comprise seven structures rather than four strictures, as it was previously the case before implementation of the change.
At ENOC, change was implemented for various reasons. The organization structural changes were implemented in 2011 in the effort to keep at the pace with the growing need for increased performance in the quest to acquire competitiveness. In fact, before this change, 30 companies comprising the business segments of ENOC were managed through only four structures.
These segments were corporate departments and the international refinery marketing and retail while not negating supply and trading segment. The main task of these four segments was to provide cute management of noncore together with core business of the organization. However, management and alignment of these cores and noncore business were incredibly difficult to realize.
Faced with this challenge, the organization’s board strategically focused on enactment of organizational change that would ensure more business focus together with better alignment.
The most effective and practical change adopted by the board was restructuring of the organization to create four more business model management segments that were consistent with the business activities of ENOC. The aim was to make such business activities for ENOC more effective and efficient.
Parties and Stakeholders involved in the Change
Change within any organization affects all parties that are involved in the day-to-day running of organization affairs including the employees. For the case of ENOC, implementing change in the organizational structures and the inculcation of the shared service concept, many stakeholders, rather than just the subordinate employees were impacted.
The realization of SSC governance required proactive participation of the shared service executive committee (SSEC). In the realization of change, this committee was mandated to carry a number of responsibilities. One of such responsibilities was to set the strategy and strategy directions.
This step entails approval of the SSC missions and vision together with values that comply precisely with the corporate objectives driving the spirit of change.
It also involves making approval for the strategic plans of the SSC and business plans, deriving and facilitating the implementation of the operating principles for clients that would enhance better service provision, and presenting various concerns of SSC in other organizational managerial forums.
Successful implementation of the change also required the inputs of the policy and stewardship, operations management, and the financial management personnel. From the context of the financial management, the personnel serving in the financial management docket at ENOC were impacted by the change.
In addition to their traditional roles in the organization, implementation of the shared service change added extra roles to them. They were required to facilitate success of change through making approval for the SSC budgetary requirements, labor plans, and unit prices for the service provided.
They also made approval for capital expenditure coupled with capital allocations related to SSC besides providing financial objectives of SSC, setting targets, and providing audits for financial performance of the SSC.
The operations management also needed to take up extra roles that added into their workload at ENOC. The personnel in operations management were required to make approval for the proposals akin to successful execution of outsourcing services and establishing various criteria for determining the priorities and mechanisms of resolution to various customer disputes coupled with other service units.
They were also required to evaluate and make recommendations that endorsed appointments for the senior management together with user’s council memberships and utilizing the KPL performance standards to review performance of the endorsed persons. They were also to establish existing gaps in SSC anticipated outputs.
For the successful realization of the calls for change to embrace the SSC strategy, the policy and stewardship personnel were anticipated to achieve two main things. The first one is to provide approvals for the SSC-particular policies and procedures that would produce success of the desired change.
Secondly, they were mandated to enhance consistency in the operations of SSC in a manner that measures up to the policies and objectives of the corporate.
After identification of the necessary changes in organizations that would produce short-term and long- term success, the next step is the implementation of the changes. This step is done with the help of a particular theoretical model for change implementation such as Lewin’s Model and Sequential Model among others. An example of change models is shown in fig.1 below. Booz & Company deploys this model.
Considering the purpose and the parties involved in enhancing change at ENOC, it is evident that ENOC change is implementable through Lewin’s Model. Spector (2007) supports this assertion that Lewin’s model for organizational change is realized through three main stages: unfreezing, moving, and refreezing (p.29).
In the unfreezing stage, an organization creates and interrogates whether the current practices (status quo) are appropriate. For ENOC, the response to this query was no. Consequently, the company progressed to stage two of the Lewin’s model for change implementation entailing the redesigning and reorganization of responsibilities and roles of various stakeholders who are in charge of implementing the changes (Spector 2007).
Fig 2: An example of an organizational change model
Source: Booz & Company (2010)
The second stage aspect was successfully achieved through determination of mandates of various stakeholders who were charged with enhancing the SCC and restructuring of ENOC. However, the third stage in the Lewin’s model, which is alignment of pay-and-reward systems with the new responsibilities and roles, is missing in the case of ENOC.
According to Lewin’s model for change implementations, in the first stage an organizational also needs to consider “diagnosis of internal barriers to improve performance followed by promotion of supporters or removal of resistors in the second stage” (Spector 2007, p.29). In such an effort, an organization has to create new structures. This argument perhaps explains well ENOC experience with organizational change in 2011.
Assessing the Effectiveness of Change
The effectiveness of change may be assessed from a number of dimensions. One of such dimensions is the extent to which the adopted changes comply with various standard practices coupled with the existing industry success benchmarks. Therefore, it is important for ENOC to review its performance upon implementation of changes for consistency with KPL’s standards.
Where gaps are identified, possible recommendations for additional changes are made. Evaluation is aimed at comparing the strategies of change with the desired outputs (Piderit 2000, p.785).
Indeed, in any organizational change, apart from the persons that are influenced by the change in terms of alteration and or additions of their roles and responsibilities, parties who gain from the change are also part of the change. The gains achieved act as indicators of the effectiveness of the change.
From the above argument, owners of ENOC who are also the shareholders of the company are the chief beneficiaries of the of the ENOC’s organizational change. The goal of the SSC change strategy for enhancing the performance of ENOC is tied within the paradigms of the relevance of adding value and delivering it to the organizational stakeholders. Value here implies adding benefits to the shareholders.
However, this goal cannot be achieved without increasing service demand, which is achieved by increasing the value of the service delivered by a company to the clients-customers (Leigh & Media 2013). This argument implies that the effectiveness of the change can be evaluated from the context of the magnitude of clientele demand for ENOC’s services.
The above argument underlines the significance of alteration of the organizational administrative structure of ENOC in the quest to deliver services that are cost effective, timely, and value adding.
Measuring the effectiveness of organizational change from the context of the capacity of SSC change to satisfy the diversified needs of customers means that customers are plausible indicators of success of any change that is adopted by an organization.
With regard to Zhou and Tse (2006), such an attempt is crucial in helping to “leverage resources and systems to enhance processes and service levels to build and maintain a sustainable customer-centered partnership with all stakeholders” (p.260).
The central argument here is the objective of organizational change is to influence customers by adding value to the services delivered to them in the effort to retain and maintain them as stipulated in the mission statement of ENOC Company.
Changes of organizational structures and SSC strategies are important aspects of organizational change that would enhance the long-term and short-term performance of ENOC. Consistent with the third stage of the Lewin’s model for change implementation, an organization aligns its pay and reward systems with the altered roles of various organizational stakeholders.
The discussion of paper identified that this aspect was missing for the case of ENOC. As a recommendation, in the quest to ensure that ENOC succeeds with implementation of the changes, the company also needs to consider keeping the personnel in charge of the changes motivated and aligned with the organizational goals and objectives of the change.
This step needs to be done through a revision of reward and remuneration packages for all personnel whose responsibilities and roles in the organization have increased because of the new organizational changes.
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Booz & Company 2010, Shared Service Centre, Booz & Co., Dubai.
ENOC 2012, ENOC Vision and Mission Statement, https://www.enoc.com/en/
Leigh, R & Media, D 2013, Why is Change Important in an Organization? https://smallbusiness.chron.com/change-important-organization-728.html
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Zhou, Z & Tse, D 2006, ‘Organizational changes in emerging economies: drivers and consequences’, Journal of International Business Studies, vol. 37 no.13, pp. 248-263.