(Solution) New 5CO01 Organisational performance and culture in practice Assessment ID / CIPD_5CO01_23_01

The first structure is used in Saudi Aramco which is Hierarchical. Saudi Aramco is the leader in Saudi Aramco oil and gas sector (Aramco, 2024). This is as a leader in the production of energy and chemicals driving global commerce and enhancing living standards of international populations. The organisation hierarchical structure is illustrated in the following;

Figure 1: Saudi Aramco organisation structure

The advantages of use of hierarchical structure include;

Improved career development– By use of the hierarchical structure, which is detailed, it is possible to improve overall career. According to CIPD (2024), employees are able to move from one level to the other which is associated with better pay and benefits.

Increase in loyalty– With clear flow of authority from the top, employees are able to become loyal to their leadership. This is while being committed to their functions (Saputra & Mahaputra, 2022).

For disadvantages, they include;

Costly– As evidenced in their structure (figure 1), the structure is defined with a set of levels. For their entire levels, maintaining them is a cost-intensive practice.’

Reduced decision making success– In the overall hierarchy, multiple stakeholders would be engaged which limit effectiveness of the decision which is made. The decision on employees remuneration and different support (Joseph & Gaba, 2020).

Rationale of Hierarchical Structure

The McKinsey 7-S model can be used to demonstrate rationale of adoption of the structure (Chmielewska et al., 2022). The model is inclusive of hard factors which are strategy, structure and systems with soft elements being shared values, skills, style and staff. The identified factors are interrelated. By embracing the identified factors, they work in collaboration to assist leveraging on competitive advantage. This is with best systems and shared values embraced appropriately. Also, for skills and strategy, hierarchical structure leads to improved career growth. This is with the entire command structure being appropriately planned.

Structure 2- Exxon functional organisation structure

Exxon is an oil and gas based organisation in KSA. It is a major competitor for Saudi Aramco involved in refinery of oil and gas sector (Wagner III & Hollenbeck, 2020). The organisation operates by application of functional structure with different departments working in collaboration. The structure is as illustrated in the following;

Figure 2: Exxon Organisation background

The advantages include;

Motivated and satisfied employees– By use of a functional structure, improvement of the scope of the employees satisfaction in their roles is enhanced. This is noted by Chmielewska et al. (2022) as due to lack of forceful attitude for the employees to execute their functions.

Optimum use of resources– With the departments being independent, there is an assurance of utilising all the resources allocated for them.   The outcome of this is reduced wastages of resources.

The disadvantages include;

Low productivity– Since the structure has many departments which could lack required collaboration, failure of one employee would lead to the entire organisation failure. This is since coordination is not effective hence less performance.

Unmet goals– The expression of the employees in terms of their expectations, feelings and needs is limited and not detailed. This means that the organisation will lack an understanding of all their employees expectations hence not attained.

Rationale of Horizontal Structure

Galbraith’s Star Model is appropriate to evidence importance of horizontal structure (Galbraith, 2021). This is owing to its relevance for developing an organisation holistic and detailed practice. The structure is similarly elaborate and guided by strategy pursued by the organisation (Artavia Muñoz, 2023). With less staff in different departments, using the structure guides in recruiting, development and retention of best employees.

Organisation strategy is defined as the direction of an organisation which evidence how the resources are used for guiding entire operations, markets venture, inventories and operations (CIPD, 2024a). Ansoff Matrix Model is applicable in defining organisation strategy (Zugay & Zakaria, 2023);

Figure 3: Ansoff Matrix Analysis

An example of an organisation strategy is Saudi Aramco expansion strategy in their onshore and offshore operations. According to Zugay and Zakaria (2023) in order to achieve this the organisation has been investing in innovation and technology for success in their operations.

Organisation strategy and products

By coming up with strategic goals, the product development roadmap is initiated. For Saudi Aramco, the roadmap is essential for managing the evident customer complaints of products defect rate at 90% in a timeline of 3 months. The ability of Saudi Aramco strategy being linked with their provided products guarantee their leverage in competitive advantage and dominating KSA oil and gas industry.

Strategy and Services

By developing the used organisation strategy, an elaborate and attainable goals are identified and eventually achieved. According to Brunetti et al. (2020), an active collaboration among all stakeholders lead to services customisation to their needs. This is with all the services required to be delivered being appropriately budgeted in terms of resources.

Strategy and Customers

The effectiveness of an organisation strategy is directly contributing to satisfaction level of clients. The strategy defines how these strategies are adhered to strictly for meeting customers’ expectations of the services which are being delivered. This lead to increased satisfaction and also expectation achieved.

In regard to vertical integration, Heeringa et al. (2020) identify people practice professionals as being involved to design the set strategy. This is while having an aligned corporate demands and entity practices. Conversely, Aloui et al. (2022) identify horizontal integration as ensuring all people practice professionals working in collaboration with each other hence improved results.

The different factors can include;

Economy

Broadly speaking, for UK economic environment, Chen et al. (2024) identify its growth in year 2024 to be approximately 3%. Also, in KSA, Chaaben et al. (2024) report found expectation of economic growth to lead in 3% other countries in the Middle East. This is with the economy gradually improving to change from over-relying with oil and gas products to diversified economy.

Priority– For the identified economic context, Saudi Aramco is supposed to make sure their priority is expanding their operations in the other sectors in KSA. For example, in 2023, the organisation started investing in education sector. This can be improved by sourcing support from KSA government.

Social

This is primarily informed by the existing population changes influencing organisations operations. For example, in KSA, there has been an increase in Generation Z and Millennials venturing labour market. This is with the population growth in the country with 20%. This has a direct implication on recruitment strategies, retention and career growth

Priority– Considering this factor, priority need to be Saudi Aramco invest on modernised technology as part of provision of strategic rewards for attracting the Generation Z and Millennials in their workforce.

Technology

As illustrated in Nordhaus (2021), today, technology demand has increased with an upward of 40% in contemporary business sector. The priority of majority of these entities is to enhance technology in their practices. For KSA, the technology popularity is evidenced by the increased reliance on AI, robotics and other employees resources systems.

Priority– For Saudi Aramco case, reconsideration of their recruitment strategy and investing in technology in their resourcing strategies. Also, employees resource planning (ERP) systems need to be included as part of the organisation operations.

The importance of identifying the internet of things is identified in Pathak and Solanki (2021) to include the fact that upto 80% of contemporary entities have been embracing use of technology as part of their practice. This is with recent development in AI attracting an upward of 60 million users. In KSA, the video conferencing have similarly been on the rise where upto 5 million users have been recorded using the technology. Cumulatively, these technologies harness productivity and effectiveness of organisations operations. The negative/disadvantage of this trend include data security issues, a lot of costs being used in their implementation with a likelihood of technology becoming obsolete.

The technologies used include;

Artificial Intelligence

This is a type of technology which simulate human-based intelligence through the application of machines and specifically computer-based. The advantages of this include team-based working with best practice in recruitment, performance management and career growth. This is supported in Tschang and Almirall (2021) by identifying AI as making it easier recruiting from a broad talent pool of an organisation. The disadvantage of this however include challenge to maintain data privacy in contemporary entities.

Impact on Workers

For employees, by use of AI, their performance is increased on their assigned roles owing to increased automation. Also, the work is more valued with performance increased.

Impact on working practices

Taking into account of working practices, Haleem et al. (2022) identify application of AI as leading to 90% increased cost saving and efficient practice. Also, human-based mistakes ar4e lowered in their practice.

Compensation Management Software

In today business environment, the technology is used in most organisations. It is identified in Zuleha and Syarief (2021) as detailing how remuneration is offered, bonus issued and categories of benefits.

The advantages include guaranteeing increased pay and fairly prioritisation of diversity and inclusion (Haleem et al., 2022). This is with efficiency and holistic inclusion of various people in communication strategy. The drawbacks on the other hand are issues with privacy of data sourced, bias and confusion prevalent. For Saudi Aramco case, data of staff are noted to be characterised with immense sensitivity with often misunderstanding and as such not well used.

Impact on Workers

This positively influence how a culture of fair-based pay is achieved by providing staff with a real-time data being provided successfully. This guide the progression and reward package appreciation.

Impact on Working practices

This positively impact how the employees are facilitated and supported towards putting optimum efforts in their operations. The outcome of this is increasing their overall performance in their functions.

The basic assumption of this model is that organisation culture has a direct and positive implication on successful organisation operation (Coghlan, 2021). This is by the theory identifying the culture evidencing artefacts, espoused values and underlying assumptions. For the artefacts, this is visible environment including architecture, technologies, office structured and hence observed, collected and measured. This is with espoused values evidencing rationale of performing in a particular manner. The underlying assumptions entail perceptions, thinking and feeling. The strengths of this model include good culture being used hence successful organisation operations. Nevertheless, it is not clear on how the different components which are part of this theory are interconnected.

Considering the values factor of this model, employees are included to implement a philosophy and belief of appropriateness of their culture. According to Coghlan (2023), this increase the implementation of collaboration with all organisation employees involved.

Maslow Hierarchy of Needs

This model for human behaviour evidence identify satisfaction of employees is as a consequence of achieving their entire needs. According to Abbas (2020), employees capitalise on an increased commitment level in their functions with provision of rewards and supporting organisation operation in place. The satisfaction level is influenced by factors including psychology, safety, love and belongingness, self-esteem and actualisation. The advantage of this theory is evidenced by their influence in increase on their commitment and getting motivation in their function.

Psychological needs guide how they are comfortable in work environment and hence increased work-life balance (Abbas, 2020). The safety needs are evidenced as influencing the issues linked with health and wellbeing and work-life balance. Love and belongingness offer a sense of job security hence readiness of staying for long in an organisation by reduced staff turnover. This is with self-esteem of the employees leading to various rewards groups offered including motivation and commitment.

Positive Impact

People practice positively guide the organisation to work within specified values and beliefs as part of their operations. For example, as evidenced in Chatterjee et al. (2024), as part of the organisation resourcing process, this is done within the organisation existing values and objectives. This is possible since people practice professionals establish opportunity to take part in L&D practices therefore reducing turnover.

As part of organisation design part of people practice professionals roles, they ensure they engage staff in appreciating existing values. In Saudi Aramco case, people practice professionals use interviews and psychometric tests in a consistency manner while consistently achieving integrity.

Another identified positive implication is that appropriate culture support different policy implementation. This is with CIPD (2024c) identifying people practice professionals as ensuring they guide employees to subscribe to an entity values. This is with entire discrimination and harassment mitigated.

Negative Impact

There are negative implications of the people practice professionals to enhance organisation values and culture in that they often contribute to failure of the input of organisation in health and wellbeing. As stipulated in Herzberg 3-factor theory (Zhang et al., 2020), hygiene and motivation aspects have a direct influence on how employees are committed. The function of people practice hence is prioritising on strategies for improving wellbeing and staff motivation in executing their functions.

In regard to rewards management, failing in offering sufficient rewards as an instrumental area reduce how staff are committed. Considering the organisations which do not implement appropriate practices by people professionals, they are not effective in role modelling. This is with lack of trust in organisation culture, informing how priority is set, improved performance and integrated appropriately.

ADKAR Model

In line with this model, the best change management strategy adopts the steps of Awareness, Desired, knowledgeable, abilities and enforcement (Paramitha et al., 2020). The rationale of this is change implementation with right leadership and management. To achieve awareness, this is pursued by engaging different people. For Saudi Aramco, the theory contribute to possibility of identifying different issues hindering change and success in their growth. The challenge of this include failing in prioritising change and first-hand. The relevance of the process include what Paramitha et al. (2020) identify as being aware and interested in implementing change and guiding transition from issues in place and to guide their operations. Also, awareness and capability for embracing to change is important for people professionals.

Kotter’s 8 Forces of Change

This include creating a sense of urgency, recruitment of successful/powerful leaders, building a vision of change and communicating it, eliminating any obstacle, creation of prompt/quick winning and building this momentum. By following the identified steps, Todd (2022) note that a successful management of the change is achieved since every action is tracked. For example, in Saudi Aramco, Post-COVID pandemic, implementing remote working involved prioritising on the identified stages where the change was successfully implemented on time (3 months) with less costs incurred.

Kubler-Ross Change Model

The primary assumption of use of this model is that change is experienced in a set of 5 different manner (Chavan & Bhattacharya, 2022). The experiences are found ranging from denial, anger, bargaining, depressed and acceptance of the change. From start of embracing a change process, employees tend to deny the importance of change.

In line with the model, in process of change, anger is evident. The anger is due to the perception that they would end up losing their positions when change is being pursued. Further, during denial, Jaskara and Permana (2022) note that the employees express this due to shock, pain and disbelieving the relevance of change. The pain is due to lost opportunities or lack of ability to implement the requirements. By reacting, a sabotage of the process implementation and resistance of the change implementation is evident.

To summarise the application of Kubler-Ross Change Model, it is effective in evidencing different stakeholders direct or indirect inclusion in change by reacting or responding to the process (Chavan & Bhattacharya, 2022). The need to prioritise on interests of different stakeholders is owing to their necessity of inclusion in driving change.