Rana_Imran_Leadership_And_Change_Managment[1]

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ASSIGNMENT

Module: Leadership and Change Management

Course: PGD in Business Management (ABP Level 7)

Institute: Essex College of Management and IT

Submitted to: Fayyaz Qureshi

Submitted By: Muhammad Imran Khan

Jan, 2011

Table of Contents

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Title PagesStatement of Originality 3

Acknowledgement 4

Executive Summary 5

Introduction 6

PSO Gradually 8

Board of Management in PSO 11

Awards & Accolades 12

PSO Network 13

Leadership 14

Theories of Leadership 16

Leadership Style in PSO 18

Reasons for Change 19

Cause-Effect Diagram 20

Change in Organization in General 21

Different Types of Changes 22

Transformation Strategy of PSO 24

Change Models 25

Intervention Strategy Model ( ISM ) 26

Intervention Strategy in PSO 27

Top Down Approach 28

Resistance to Change 29

Stakeholders 30

Benefits of Using Stakeholder-based Approach 31

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Change Process Implementation & Change Agent Role 32Conclusions 33

References 34

STATEMENT OF ORIGINALITY

I hereby certify that iam the sole author of this assignment and that no part of

this assignment has been published or submitted for publication.

I certify that, to the best of my knowledge, my assignment does not consist of

any other material from the work of other people.

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I declare that this is a true copy of my assignment, including any final revisionsand this assignment has not been submitted for a higher degree to any other

University or Institution.

Thank You

Muhammad Imran Khan

Student PGD Level 7

Essex College of Management & IT

ACKNOWLEDGMENT

I Muhammad Imran Khan, sincerely thankful to my GOD and all those people

who have been gave me any kind of assistance in the making of this assignment.

I thanks to all my college management who’s trained teachers gave me

conceptual understanding, which made my job more easy. I also thanks to my

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friends who gave me strength and confidence to complete the assignmentwithout any difficulty.

Muhammad Imran Khan

Student PGD Level 7

Essex College of Management & IT

Executive Summary

In competitive business environment, every successful business process needs

changes according to the environment. Manual to automatic, computerized

system, networking expansion etc. however every process need change. This

report shows the change management of Pakistan State Oil. This assignment

explains why Pakistan State Oil losses its share in the market and why its

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competitors have high share rates. There are some internal as well as someexternal factors because which are the main causes. Suitable model and cause

effect diagram is used for its analysis.

For this purpose, it needs to introduce change within the organization. This

report shows all the details to implement change in Pakistan State Oil for its

future leadership.

INTRODUCTION

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974,

when on January 1st; the government took over and merged Pakistan National

Oil PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company

Limited (POCL).

Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation

(PSDC) came into existence. PSDC was then renamed as State Oil Company

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Limited (SOCL) on August 23

rd

1976.Following that the ESSO undertakingswere purchased on 25th September 1976 and control was vested in SOCL. The

end of that year (30th December 1976) saw the merger of the Premier Oil

Company Limited, giving way to Pakistan State Oil (PSO).

After PSO, s inception, the corporate culture underwent a comprehensive

renewal program which was fully implemented in 2004. This program over the

years included the revamping of the Organizational architecture, rationalization

of staff, employee empowerment and transparency in decision making through

cross functional teams. The new corporate renewal program has divided thecompany’s major operations into independent activities supported by legal,

financial, informative and other services. In order to reinforce and monitor this

structural change, related check and balances have been established by

incorporating monitoring and control systems. Human Resource Development

became one of the main priorities on the company’s agenda under this corporate

reform.

It is due to this effective implementation of corporate reform and consistentapplication of the best industrial practices and business development strategies,

that PSO has able to maintain its market leadership in highly competitive

business environment.

PSO is the market leader in Pakistan’s energy sector. The company has the

largest network of retail outlets to serve the automotive sector and is the major

fuel supplier to aviation, railways, power projects, arm forces and agriculture

sector. PSO also provides Jet Fuel to refuelling facilities at 9 Airports in

Pakistan and ship fuel at 3 ports. The company takes pride in continuing thetradition of excellence and is fully committed to meet the energy needs of today

and rising challenges of tomorrow.

Pakistan State Oil is the largest oil marketing company in the country, is

currently engaged in storage, distribution, and marketing of various POL

products. The current market share of PSO is 82.3% in the black oil market and

59. 4% share in the white oil market, alone speaks volumes about its success.

PSO Major Highlights-FY 2009

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PSO sold 7 million tons of furnace oil- the highest in the last 8 years.

Efficiency managed supply to the power sector despite the liquidity crises.

PSO improved approximately 90% of the country’s POL imports- 3.4 million

tons of HSD and 5 million tons of FO.

Helped in the revenue collection of more than Rs. 161 billion to the GOP

(Sales Tax: 97 billion, taxes: 1.4 billion, PDL: 61 billion).

Extended support to various charitable organizations in the health andeducation sector including contribution for the rehabilitation of IDPs due to the

Swat operation.

Source: http://www.psopk.com/about_us/history.php Visited: january8,

2011time 20:03

PSO Gradually

January 1, 1974:

The federal government took over the management of PNO (Pakistan National

Oil) and DPL (Dawood Petroleum Limited), renamed into POCL (Premier Oil

Company Limited) under marketing of Petroleum Products (Federal Control

Act, 1974).

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June 6, 1974:

The government incorporates ‘’Petroleum Storage Development Corporation’’

PSDC.

August 23, 1976:

PSCDC renamed to State Oil Company Limited (SOCL).

September 15, 1976:

The government purchase ESSO undertakings, vests their control in SOCL.

December 30, 1976:

The Government merges PNO and POCL (State Oil Company Limited) and

renames it Pakistan State Oil Company Limited (PSO).

In 1999:

The new vision program is launched with the new logo of PSO.

Page 9




Source: http://www.psopk.com/about_us/history.php Visited: january8,

2011time 20:03

Vision:

To excel in delivering value to customers as an innovative and dynamic energy

company that gets to the future first.

Mission:

We are committed to leadership in energy market through competitive

advantage in providing the highest quality petroleum products and services to

our customers, based on:

• Professionally trained, high quality, motivated workforce, working as

team in an environment, which recognizes and rewards performance,

innovation and creativity, and provides for personal growth and

development.

• Lowest cost operation and assured access to long-term and cost effective

supply sources.

• Sustained growth in earnings in real terms.

• Highly ethical, safe environment friendly and socially responsible

business practices.

Values:

Excellence: We believe that excellence in our core activities emerges from a

passion for satisfying our customer’s needs in terms of total quality

management. Our foremost goal is to retain our corporate leadership.

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Cohesiveness: We endeavour to achieve higher collective and individualgoals through teams. This is inculcated in the organization through effective

communication.

Respect: We are an equal opportunity Employer attracting and recruiting the

finest people from around the country. We value contribution of the

individuals and teams. Individual contributions are recognizes through our

reward and recognition program.

Integrity: We upload our values and business Ethics principles in everyaction and decision. Professional and personal honesty, dedication and

commitment are the landmark of our successes Open and transparent

business practices are based on ethical values and respect for employees,

communities and the environment.

Innovation: We are committed to continue improvement, both in new

product and processes as well as those existing already. We encourage

Creative ideas from all stakeholders.

Corporate Responsibilities: We promote Health, Safety and Environment

culture both internally and externally. We emphasize on Community

Development and aspire to make society a better place to live in.

Source: http://www.psopk.com/about_us/vision_mission_values.php

Visited: january8, 2011time 20:13

Board of Management

Mr. Irfan K. Qureshi

Managing Director

Mr. Nazim F. Haji

Chairman

Mr. Sabar Hussain

Member

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Mr. Mahmood Akthar

Member

Mr. Pervaiz A. Khan

Member

Mr. Hammayun Jogezai

Member

Dr. Abid Qaiyum Suleri

Member

Source: http://www.psopk.com/about_us/board_management.php Visited:

january8, 2011time 20:18

Awards & Accolades

Page 12

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Source: www.psopk.com/about_us/our_network.php Visited: january8,

2011time 20:45

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http://www.psopk.com/about_us/award_accolades.php




PSO Network

Source: www.psopk.com/about_us/our_network.php Visited: january8,2011time 20:55

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http://www.psopk.com/about_us/images/network_large.jpg




Leadership

Leadership is the art of appealing a group of peoples to act towards achieving a

common goal or a person in any group who possesses the mixture of skills and

qualities that makes other peoples to follow his or her direction.

Types of Leadership Style:

Source: http://www.bized.co.uk Visited: january9, 2011time 10:14

Autocratic:

This type of leaders makes decisions without anyone’s reference that’s why

there is a high degree of need on the leader in autocratic leadership. Can create

de-motivation and separation of staff, may be valuable in some types of

business where decisions need to be made quickly. This type of leader

sometimes force and threats to achieve the goals.

Democratic:

In democratic style everyone have equal opportunities to vote, both leader and

the followers. Processes of discussion taken before finalizing any decision.

Leader takes decision and seeks to persuade others that the decision is correct. It

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may help motivation and involvement and workers feel ownership of the firmand its ideas. In democratic ideas and experiences are shared and improved

within the business. Decision making can delay sometimes in order to take

some time for motivation.

Laissez-Faire:

The leadership responsibilities are shared by all and can be very useful in

business where creative ideas are important. It’s highly motivated, as people

have control over there working life and can make co-ordination and decisionmaking time-consuming and lacking in overall direction. It relies on good team

work and interpersonal relations.

Paternalistic:

In this style leader acts as a ‘father figure’ and paternalistic leader makes

decision but may consult. Always believes in need to support the staff.

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Theories of Leadership

Source: http://www.bized.co.uk Visited: january9, 2011time 10:14

There are many leadership theories to understand the concept of leadership.

Below are enlisted leadership theories and their short definitions to understand:

Great man theory

Leaders are born not made.

Trait Theory

Leaders have inherited qualities.

Behavioural Theories

Leaders can be made rather than they are born. This theory believes that what

leaders actual do.

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Participative Leadership

This type of Leadership actually involves other people to make the decisions for

the particular task to make any decision. This style of leadership avoids the

autocratic style. In this type of leadership decision making is more appropriate.

Most of the organisations adopt this style.

Situational Leadership

In this theory leaders always lead according to the situation. Leaders motivate

the subordinates by different methods.

Contingency Leadership

According this theory leadership style may change accord to the different

situations. One style may not be effective in other situation.

Transactional Leadership

This style of leadership clearly states the rewards of the subordinates.

Punishments are not stated but they are understood to create a formal discipline

within the organisations.

Transformational Leadership

This type of leadership style puts passion and energy into everything. They

develop a vision, sell a vision, finding the way forwards and leading the charge.

Source:www.changingminds.org/disciplines/leadership/theories/leadership/lead

ershiptheories.htm Visited: january9, 2011time 13:14

Leadership Style in PSO

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We have briefly discussed about the different types of leadership theories citedabove. That gives the initiative what type of leadership can adopt by the

organization. If we analyze the whole scenario of Pakistan State Oil, it’s clear

the Leadership style in PSO is Transformational.

Pakistan State Oil is an enormous organization and its Petrol Pumps, display

centers, Stores and maintenance departments are in all cities of Pakistan.

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Reasons for ChangeFollowing are the major reasons for the change in PSO, internal and external

Reason is given below:

Internal Problems:

• Pakistan State Oil losing their market shares which decrease its

profitability, change was necessary for increasing the profitability.

• To Increase the efficiency of the employees.

• Old and the new employees feel dedicated towards the work.

• Proper training sessions for increasing the quality and efficiency of the products.

• Lake of quality professionals.

• Company losing its market share due to decline products quality and bad

customer services.

External Problems:

• Political interference.

• New competitors in the market.

• Quick product replacement in the market.

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Cause-and-Effect DiagramCause-and –effect Diagram is a tool that helps to identify, sort and display

possible causes of a specific problem. It graphically illustrates the relationship

between a given outcome and all the factors that influence the outcome. This

diagram is also called ‘‘Ishikawa diagram’’ because it was invented by Kaoru

Ishikawa or a ‘‘fishbone diagram’’ because it’s just look like fish.

Cause-and-Effect Diagram identifies the possible root causes, the basic reasons

for a specific effect or problem.

Source:http://www.balancedscorecard.org/Portals/0/PDF/c-ediag.pdf Visited:


Cause and effect/fish bone diagram of PSO

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PSO loosing

market shares

Political

Employees

Competitors

Products

Gaining high market

shareGenerate good

quality products

Create stress by

employee unions

Less efficiency of

employees

Unprofessional

hiring

Interference

Decline product

quality No product

replacement

http://www.balancedscorecard.org/Portals/0/PDF/c-ediag.pdf





Change in organizations in General

Change is one of the few things that is constant. In the business world, only

those people succeed who change to the changing situations. They sniff out a

little change in the environment and change dramatically to exploit the changing

situation to their advantage.

Change is good. Changing for good is better. Changing the approach to reach

the goals is the best. Changing the way we do things positively can reduce the

time and the cost of doing things. In business sense, a change for good increases

the productivity and reduces the wastage and cost of producing a good or aservice.

The types of changes that generally take place in an organization are

• Strategic changes

• Technological changes

• Structural changes

• Changing the attitudes and behaviours of personnel

Strategic changes refer to the change in the organizational vision, mission, the

objectives and the strategy adapted to achieve those objectives.

Technological changes refer to the change in the technology being

implemented in the production or in the services being offered. As the

technology is always evolving, companies have to implement newer

technologies as new technologies reduce the cost of production and increase the

profitability as it will result in higher rate of production.

Structural changes are the changes to the structure of an organization. This

change can be both internal as well as external to the organization. Internally,

structural change will include changing the overall way in which the activities

are done, which can include the change in the processes or departments, the way

they function, merging two or more departments into one department., etc.

Changing the attitudes and behaviours of personnel are the changes that are

needed to be made for the purpose of changing the attitude, increasing the

employees’ awareness about the organization, etc. With the advent of new

technologies, the personnel need to learn new things in order to keep up with

the rest of the industry.

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Different Types of ChangesDifferent kinds of change require different strategies and plans to effectively

gain employee engagement and acceptance of change. The three types of

change that occur most frequently in organizations are developmental,

transitional and transformational.

Developmental Change

Developmental change occurs when a company makes an improvement to their

current business. If a company decided to improve their processes, methods or

performance standards this would be considered developmental change.

Companies are continually processing developmental change to some degree inorder to stay competitive. This type of change should cause little stress to

current employees as long as the rationale for the new process is clearly

conveyed and the employees are educated on the new techniques. When major

change such as the decision to close a division, if the company attempted to

implement developmental change as the first step in streamlining the business,

employees may be more likely to accept the change. The employees could see

that the company attempted different strategies before determining that closing

the division was the only option.

Transitional

Transitional change is more intrusive than developmental change as it replaces

existing processes or procedures with something that is completely new to the

company. The period when the old process is being dismantled and the new

process is being implemented is called the transitional phase. A corporate

reorganization, merger, acquisition, creating new products or services, and

implementing new technology are examples of transitional change. Transitional

change may not require a significant shift in culture or behaviour but it is more

challenging to implement than developmental change. The future of theorganization is unknown when the transformation begins which can add a level

or discomfort to employees.

Transformational Change

Transformational change occurs after the transition period. Transformational

change may involve both developmental and transitional change. It is common

for transitional and transformation change to occur in tandem. When companies

are faced with the emergence of radically different technologies, significant

changes in supply and demand, unexpected competition, lack of revenue or other major shifts in how they do business, developmental or transitional change

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http://businessmanagement.suite101.com/article.cfm/organizational_change






may not offer the company the solution they need to stay competitive. Instead of methodically implementing new processes, the company may be forces to

drastically transform themselves.

http://www.suite101.com/content/types-of-change-a28594 Visited date:

January 6, 2011, time 22:55

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Transformation Strategy of PSOPakistan State Oil needs some changes at the management level. The first step

for PSO is to recruit some professionals and experts from the market with

attractive packages and benefits. The ministry of petroleum and natural

resources must have two restructured PSO, s board of management and select

the highly professionals.The Human Resource committee, the audit committee,

and the finance committee must review both policy and execution of new

proposal.

Before launching new strategy they must have to refine the vision, mission and

both long and short term objectivesVision:

To do extremely well in delivering value to customers as an inventive and

dynamic energy company that gets to the future first.

Mission:

Committed to supply the highest quality petroleum product and services to the

customers based and sustained growth in earning in real terms and high, ethical,

environment friendly and safe business practices. Lowest cost operations and

assured access to long term and cost effective supply sources. Pakistan State Oil

management must successfully communicate its vision to all employees.

Objectives:

Pakistan State Oil have to focus on future direction as an energy solution as non

fuel retail. The main objectives are as under;

• Organization of non-fuel retail.

• Market leadership in all key products.

• Establishment of Pakistan State Oil as a brand of choice.

• Consumption of all accessible resources.

Change Models

Page 25




Following are some change models listed below:

• Kurt Lewin change model.

• Richard Beckhard 1969.

• Marshak 2004.

• K.Thurley 1979.

• Bridges 1991.

• The 4 D process of appreciative inquiry.

• The Kuebler Ross model of change.

• John Kotters change model.

• The change journey (HUMAP).

• Cyclical process frame work (CFAN).

• Theory U (Otto Sharmer).

• Intervention System Model ( ISM)

From above mentioned change models, most appropriate change model for PSO

is Intervention System Model

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Intervention Strategy Model to Implement Change‘‘The intervention strategy model (ISM) is based on the premise that messy

change situation may be effectively manage through the application of system

thinking’’ (Ackoff, 1999). This model is based on the traditional investigation

techniques associated with operation and system management.

Intervention Strategy

An Intervention strategy is the technical methodology for successful intervening

in the working processes of the original system. Ultimate result should be a

stable environment, which in incorporates the desired change. After doing the

analysis if Pakistan State Oil intervention strategy, it seems and fit to someextent in intervention system model (ISM). There are three basic approaches in

Intervention system model.

• Definition Phase:

We define our strategy of change, nature, impacts and formulization in this

phase. In this phase identification of the problems is the major part. In case of

Pakistan State Oil first we scanned and analyzed the whole system and indentify

problems they are facing and then formulized the suitable change strategy.

• Evaluation Phase

In phase involved in generation of options and the solution to the problems.

There are wide ranges of techniques available for option generation, for

example brainstorming, Delphi, interview, desk research etc. In the case of

Pakistan State Oil there is no clear picture about the option generation, but there

are solutions for the problems like restructuring, empowerment and

development of employees etc.

• Implementation Phase:

This phase is a practical phase of our intervention strategy, our objectives are

clear, options selected and review and the system is defined. We need a soundstrategy for introducing the change to the system. There are three

implementation strategies available:

1. Pilot Studies: In pilot studies assumptions and procedure can be tested to

review the change. Future acceptance of the implemented change will

increase but it delays full implementation process. Pakistan State Oil is

not adopted this strategy.

2. Parallel Running: It is slow phase out old system, as the new becomes

more reliable and understood. So this strategy is really not suitable for

PSO.

Page 27




3.Big Bang: This strategy maximizes the speed of the change but I t alsogenerate maximum resistance to the change. So, this is the suitable

strategy for PSO to adopt.

Intervention Strategy in PSO

Phases PSO

Definition Phase Identify the problems both internal

and external

Evaluation Phase Find Solution to the problems. For

example reformation, employees

growth

Intervention Phase Big bang strategy. For example

reforming, experts recruiting.

Parallel strategy. For example

empowerment and development of employees etc.

Page 28






Resistance to ChangeDuring the change process, the management will have to face many difficulties.

It’s possible that middle managers also resist against the change. Sometimes any

talk of change created negative vibrations among the old guards. Obviously

sometimes the employees have to spend more time and concentration during the

change, but the leader must have to explain them about the rewards, overtimes

etc.

In PSO there is also a labour union which always create hurdles when the

change is implement from top to bottom, sometimes they stop working and

resist stopping the change.

Page 30




StakeholdersStakeholder is a grouping of people or a person with an importance in the

achievement of business. The major stakeholders in Pakistan state Oil are

customers, share holders, competitors, society, directors, government and

employees.

These stakeholders have direct effect on the growth of the organization and are

directly or indirectly involved with the organization.

These interested parties can usually be grouped into the category like

international donors, national political, security agencies, public civil society,

consumers and labour ministry.

Page 31

Stakeholder

s

Sharehold

ers

Customers

Employees

Governme

ntCompetito

rs

Society

Directors




Benefits of using stakeholder-based approach• You can use the options of the most powerful stakeholders to shape your

projects at an early stage. Not only does it make more likely that they

will support you. Their input can also improve the quality of project.

• Gaining support from powerful stakeholders can help you to win more

resources- this makes it more likely that your projects will be successful.

• By communicating with stakeholders early and frequently, you can

ensure that they can fully understand what you are doing and understand

the benefits of your project- this means they can support you actively

when necessary.

• You can anticipate what people’s reaction to your project may be, and

build into your plan the actions that will win people’s support.

Analysis of Stakeholders:

The first step in stakeholder’s analysis is to identify who your stake holders

are. The next step is to work out there power, influence and interest, so you

can know who you should focus on. The final step is to develop a good

understanding of the most important stakeholders so that you know howthey are likely to respond, and so that you can work out how to win their

support.

Source: http://www.mindtools.com/pages/article/newPPM_07.htm Visited date:

January 4, 2011, time 22:55

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ConclusionsThis report reveals that change apparently seems like a difficult task but if

systematically implement it with the help of theoretical and practical

approaches, it is a n easy process. It introduces new eras within the

organization. In the beginning the stakeholders and some employee’s resists, as

it’s the nature of human beings but when they managed assigned with reduced

stress and reward, any type of change can be easily implemented.

References

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http://www.psopk.com/about_us/history.php Visited: january8, 2011time 20:03

http://www.psopk.com/about_us/history.php Visited: january8, 2011time 20:13

http://www.psopk.com/about_us/vision_mission_values.phpVisited: january8,

2011time 20:03

Randolph E. Schwering, School of Management, Rockhurst University, Kansas

city, Missouri, U.S.A

http://www.psopk.com/about_us/board_management.php Visited: january8,2011time 20:18

www.psopk.com/about_us/our_network.php Visited: january8, 2011time 20:45

www.psopk.com/about_us/our_network.php Visited: january8, 2011time 20:55

http://www.bized.co.uk www.psopk.com/about_us/our_network.php Visited:


www.changingminds.org/disciplines/leadership/theories/leadership/leadershiptheories.htm Visited: january9, 2011time 13:14

http://www.balancedscorecard.org/Portals/0/PDF/c-ediag.pdf Visited: january9,

2011time 17:01

http://www.suite101.com/content/types-of-change-a28594

Visited date: January 6, 2011, time 22:55

http://www.mindtools.com/pages/article/newPPM_07.htm Visited date: January

4, 2011, time 22:55




























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Rana_Imran_Leadership_And_Change_Managment[1]