HRM POLICY AND SUCCESSION PROGRAM IN NATIONAL IRANIAN OIL COMPANY (NIOC)
S. Ali Hadighi, Faculty Member of NIOC Training Center, Ph.D student of industrial engineering, Mahmoudabad Management Training Center, POBOX 161-46315 Mahmoudabad, Mazandaran, Iran email@example.com Farzam Khanbabaie, Graduate of Industrial Engineering and Ms Student of Systems and Industrial engineering, Mazandaran University of Science and Technology, No42, Atlasi St, Zafar St, Tehran, Iran Farzam_kh@yahoo.com ABSTRACT National Iranian Oil Company (NIOC) one of the largest petroleum ompanies in the c world with about 100,000 personnel has started a program n managers' succession o program according to job careers since two years go. The department of human a resource planning which is responsible for his plan is pursuing three major objectives t namely: succession of managers, uman resource planning, and coordination of h human resource planning. In his paper, at first the general policy of HRM in NIOC t would be explained nd the succession program as one of the most important task a within HRM olicy by the responsibility of human resource planning department p would e talked. In this plan at first the job grades above 16 which are managerial b p ositions has been considered and then the job grades below 16. The major asks from t this program are: career planning, providing the list of relative eniority, succession s planning, survey of election and promotion of anagers, instructors and personnel, m survey and confirming of recruiters nd get the permission of employment, a communication of strategies and olicies of human resource to the planning subp departments, supervising of lanning departments' performance. p Keyword: Human resource management, human resource planning, system approach, uccession program, National Iranian Oil Company. s
1. INTRODUCTION Organizational success depends on the effective blending of machines, money, materials, and human resources in order to achieve both short and long term business objectives because of the uniqueness, complexity, and diversification of enterprise, specialty fields have evolved to maximize the potential benefits of the various essential ingredients. Production management works with manufacturing and develops effective equipment design. Financial management attempts to increase organizational efficiency by manipulating available financial recourses. Finally, human resource management develops program to optimize human potential, in order to realize the goals of both the individual and the organization. Over the last decade, human resource professionals have greatly increased their involvement in corporate
activities. Also they were at one time primarily concern with recruit, selecting, training, and benefit administration, personal departments are now being called upon to assist in corporate planning organization restructuring, productivity improvement, strategy development, and quality improvement activities. The knowledge and understanding of career development, the ways in which career decisions and choices are made, and the employees entry into and departure from organizational life provide a valuable data base for human resource managers today and a great challenge in this respect. Career information contributes to the understanding of individual differences among employees, their motivations, and the influence of numerous variables on job satisfaction and productivity. today, organizations are defined as the summation of personnel's thoughts who rganize them. And they are as dynamic as the earth and o confronting these changes eed a strong management tool especially in human n resource management (HRM). ankind organizations are being considered in level M 8th of 9th level of system ategorization hierarchy in the world which is the social c level. But, theory about rganization and HRM is still half way and far below the 8th o level (Kenneth R. oulding, 1956). Other scientists also have some critics on B "substantial rationality" nd "instrumental rationality" (H.A. Simon, 2001). Some a other management scientist y confirming Simon's theory led them to the theory of b "social systems delimitation" (Curtis Ventris, 1990). The "leveat diamond" model which Harold Leveat for the lements of an organization introduced or the model of e Maheshwari on administrative theory" (Maheshwari, 1994) underlying them all, we " come up to one act that the only dominant factor for success in any business is f human factor. In this respect, necessity for utilizing of unified HRM system by National Iranian Oil ompany (NIOC) for responding to the initiatives, seems to be C unavoidable. Hence, RM department of NIOC carefully considers both hardware H aspects as quantity, esource and also software views like quality, competitive r advantages in the whole. It lso accounts the external affecting forces especially in a international level. This is alled international HRM. And what is necessary for c achieving this goal is strategic RM and strategic management development H associated with human potential anagement which all of them in this era of m knowledge ramp, information explosion, mergence of new technologies, and e unbounded organizations get together for proper esponding to the rapid changes of r elements and environment.
2. HISTORY OF HRM IN NIOC Since 1901 with the premium acquisition of Darcy for extracting the first oil well in I ran, petroleum industry has formed. And till then, Iran has joined to the list of p etroleum zone in Middle East. The discussion of HRM first started from state sector a nd as the impact of British Oil Companies and experts who were working in p etroleum industry in Iran, NIOC was the first company that regarded the HRM and i mplemented its elements in many aspects of the organization's activity (Kazeroni, 1 985). Other organizations then followed the way of NIOC and the first legislation on t his subject has passed in 1922. And in two other periods, one from 1922 to 1941 and o ther from 1941 to 1961 the rules and regulations in HRM have basically been r evised. Now, petroleum industry with the record of more than a century and NIOC m ore than a half of century is one of the fewest industries amongst all which onsiders c HRM in all aspects of its activity. HRM in NIOC is a system involving ystematic s outcome (consequence) characteristics as openness, and also containing nput, i
process, output, and feedback (Report of HRP department of NIOC , Tehran, 005). 2 But, HRM department of NIOC in its view concentrated on five scopes as hown s below:
Theory of company existence
Human resource planning system
Performance management Human resource satisfaction
Outcome management Social value added Social assets Security of external relations
Company macro strategy Company human resource management macro policy
Company input system : recruit, employment, selection
commitment improvement Company efficiency improvement
Internal and external labor market
Education and development system
Promotion company human resource management position
Management information systems
Performance evaluation system
Effectiveness and attaining company goals
National and company macro regulations
Compensation: reward, punishment
Safety and health Personnel behavior changes
Conformity with market and pioneer
Company macro structure National and company culture
Human resource maintaining system
Company output system
Technology and …
Supervising mechanism before the event Supervising mechanism during the event Periodical supervising mechanism
FIG-1, FOCUS ON FIVE SCOPES OF NIOC'S HRM SYSTEM
3. STRATEGIC ROLE OF HUMAN RESOURCE PLANNING IN HRM TASKS OF NIOC Human resource planning (HRP) is a process through which organizational goals would be broken down to smaller more manageable objectives (Fisher C.D. Schoenfeldt, et al. 1990). HRP supports the organization in trading off the surplus and shortages of HR. And, ensuring that right person is sitting in right positions at the right time. It also aids that organizational and environmental changes with the least cost would be managed. There are of course, two views to the position of HRP in the general subject of HRM in NIOC. On the base of first, HRP is responsible for entering human resources to the organization. In this aspect, before the stage of "entering the organization", there is a sub- department in the department of HRM called "HRP" which is responsible for all activities in entering, maintaining, and leaving the organization. So, existing of HRP in the form of organized and even unorganized form has a priority to the process of entering the organization. On the other hand, in many organizations especially those which are at the beginning of establishing, do not have HRP department and entering personnel as member of board, owners, constituters, stockholders and etc. to the organization will take place before 3
establishing HRM department. And these are the ones who supervise the HRP process in those organizations. But, in NIOC the focus is on the first view that HRP as an organized individual department would do its tasks about determining of macrostrategy of HR, macro-policy of HRM, analyzing of internal and external work market, compensation plan, training program, performance appraisal, recruiting and retiring as shown in figure 2 with their interaction to each other.
Human resource top management Cooperative decision making with top management for entering, maintenance and exiting human resource
Human resource planning
Education and development
Organization input: recruit, employment, selection Compensation: reward, punishment
Human resource maintaining system
Organization output system
FIG-2, HRP'S TASKS AND THEIR INTERACTIONS
By regarding this aspect, the elements of HRP system of NIOC gain a great significance and analyzing of each is a part and parcel of the HRP department. These elements could be well differentiated into inputs, process, output, outcome (consequences), and feedback which would be explained later. 4 . THE ELEMENTS RELATING TO THE INPUTS OF HRP SYSTEM It is of extreme importance, what goes into the system. Most of the time, the overall final erformance is directly related to the input as a feed. As it is true in the case of p industrial roduction, which if the raw material be improper from quality point of p view, it would lmost be impossible to produce a quality good as required. We can a also mention the xpression "GIGO" in this case. So, as the inputs are more precise, e accurate, and up to date he better for input management. The first step in HRP is t always data gathering (Fisher et al. 990). There are two main types of information 1 and inputs for HRP of NIOC: 4 .1- Inputs From Outside of the Organization
Inputs relating to the outside of the NIOC, could include the information from present and redictable situation of economy in general, and petro-economy in specific, the p information bout technology related to its mission and series of activities held. And a any other relevant nformation which could affect on labor market conditions and i hence, the need for HR may e in this category. As the example of market condition, b unemployment rate, availability of kills needed, sex, age, race, and rules & s regulations about personnel could be mentioned. In eneral the HR in this aspect can g be classified in three main groups as below: HR in labor market and outside (not entered) of the NIOC. HR in the queue for entering the NIOC (applicants for entry). HR who is getting into the NIOC (nominated HR for entry). 4 .2- Inputs From Inside of the Organization Second type of information is originated from inside of NIOC. As an example the long-term nd short-term program of the company could be named. One of the most a important nformation is the present conditions of the company personnel. i In fact what is needed for proper management of inputs to the HRP system of NIOC includes ppropriate integration of these two types of information for achieving a correct, reliable, recise, and ready access information. For better comprehending of p this concept figure 3 is llustrated below: i
Organization external area inputs
Organization internal area inputs
Current and future world-country macro economy conditions Current and future oil industries conditions Related technology with NIOC missions and responsibilities Competitions External-internal labor market conditions Commercial regulations
Short-long term company plans Current company human resource conditions Company human resource regulations Oil industry policies and baselines
FIG-3, INPUT MANAGEMENT OF HRP IN NIOC 5 . THE ELEMENT RELATING TO PROCESS OF HRP IN NIOC For analyzing the component of processing step of HRP in any organization, it is n eeded to have a look in two subjects one about job and personnel and the other about t he development of programs for adaptation of job and personnel with organizational a nd environmental contingency (Fisher C.D. Schoenfeldt, et al. 1990).
5.1 Subjects Relating to Job and Personnel
On this matter the NIOC is a pioneer in the country. And other companies followed its w ay. This subject consists of some key components which are explained in the f ollowing paragraphs. 1 . Job analysis: About 56 years ago the NIOC implemented a system of pointing method y utilizing the Hay (for managerial positions) approach, and Jacob (for ther b o lower grade position) approach for analyzing the job. In fact job nalysis is a process a which its objective is to acquire information and nowledge for utilizing in job k evaluation, job description, employment, evelopment, and other related subjects. For d analyzing any job, the five teps: gathering of job information, survey of job s information for erification, documenting of job description on the bases of v information cquired, providing job qualification and skills needed, and finally a u pdating of information seems to be a good way of accomplishing (C. H. tone and S D. Yoder 1970). NIOC for analyzing the job uses the narrative ob description and j management position description questionnaire (for anagerial positions) method. m 2. Job holders analysis: After analyzing of the jobs, or some of key jobs, it is necessary that the ob holders or the person who in the future will be employed to be j a nalyzed. The idea of analyzing the personnel is to evaluate the ualifications, q abilities, weak points, and developing areas of HR in NIOC. n this respect, NIOC I considers both analyses mentioned above together or fitting the right person in the f right position. 3. Estimation and prediction of NIOC's demand to the labor One of the main tasks of : HRP department is to approximate the present nd future demand of NIOC to the HR. a For performing this task some ssumptions are being considered. These assumptions a are: the pattern of rends and relationship among variables in the past, present, and t future ould be almost consistent; the productivity ratio by increasing the roduction w p rate would be constant; the business program of the company re realistic. The major a functional methods to be used in this subject are wo types. The first type consists of t methods as Judgmental and Delfi-echnique. The second type includes Mathematical, t Productivity Ratio, and ultiple Regression method. M 4. Estimation and prediction of internal and external supply of labor from o rganization: In these respects, NIOC looks at to the supply of the labor internally and xternally for rapid meeting of its needs in case of changes. It evaluates the e q uality and quantity of labor supplied by considering the individual haracteristic, c skill, knowledge, and ability of personnel who are already mployed by announcing in e its internal weekly magazine called "Mashal" r by HRP department through utilizing o supply information system or arkov analysis. In some cases supply of special skill M or experts is not ossible from inside of company. So, it is of major responsibility of p HRP epartment of NIOC to have an outside view to the external market. In this d r espect by issuing application ad by the most general communication eans and m specifying the job it proceeds for employing. 5.2 Development of Programs for Fitting Personnel to the Organizational and E nvironmental Contingency After defining the job, knowing the qualifications and job description relevant to it a nd estimation of internal and external supply, HRP department of NIOC orients t oward more practical tasks. It means the outcome of subject above would be used to a chieve feasible program. In fact fitting of job holder with the job is a great concern f o authorities in HRP department. NIOC in this respect considers three types of rogram. p
1. Planning for shortages: In any period of time duration that company demand to HR exceeds the supply f HR, we encounter the situation of shortages. Of course, it o depends to the emand, if it is lone-range, HRP department goes for employment d from nternal and external market. If it is short-range, it devises some other ways ike i l persuading the retired or near retirement employee to occupy the position. n some I cases the extra hour pay system is a good solution, although it epends to the attitude d of personnel to the job and could involve some omplexity in this respect. But, one of c the most critical subjects in this case is utsourcing of tasks especially servicing tasks. o Out-sourcing, is one of the ost important issues being considered during past m decade, particularly in pstream oil industry which regulations are more strict in this u field. 2. Planning for surpluses: When the facts show that supply of HR exceeds the demand of the company, n this case we face the surplus condition. Persuading i personnel for on or in ime retirement in this case is a useful tool for improvement. t HRP department lso utilizes slack-time mechanism and one of widely used program a is ntensifying of on the job training in order to promote the skills or acquainting he i t personnel with new skills. NIOC has encountered this problem and what it id was d convincing personnel (without academic education) to predate etirement. The r program worked and almost 30,000 personnel have been etired. Some companies r choose firing of personnel as a solution that surely amages the reputation of the d organization. A research shows that nfortunately most companies select firing as the u first choice of downsizing he Company (J. T. McCune et. al. 1988). t 3. Career planning and succession management: One of the main concerns of HRP department also is to assure the availability f career path plan for promotion of o personnel. Career planning is a program articularly for the HR in managerial 0r p significant positions (Mrac G. Singer, 990). Since managers are key element for 1 almost all programs, this issue ecome of an extraordinary important matter. Many b organizations for the mportance of it, already started the program. And, NIOC as one i of pioneer ompany is doing a widespread program on this subject. At first, they c c onvinced the senior managers of the company. Then the commitment of enior s management assisted to form a committee for handling the program. he committee T held several seminars on this subject. When all managers got amiliar with the goal, f they prepared a detailed questionnaire for each position. he questionnaires have been T filled by the job holders. The committee chose ob specialists mostly from inside of j each organization to survey the filled uestionnaire. The specialists have verified the q answers and returned them ack. The committee now is analyzing the result to specify b a list of one to hree personnel who are qualified at the present or will be qualified in t near uture for sitting in those positions. This can also lead to identify the training f n eeds of the personnel besides specifying the early succeeding person for that ob. j And, finally to provide replacement charts for all managerial positions.
Development of programs for fitting personnel to the organizational and e nvironmental contingency
Job analysis, organization labor demand estimation and internal-external labor supply in inside and outside of organization
Jobs analysis Job holder analysis Estimation and prediction of NIOC's demand to the labor Estimation and prediction of internal and external supply of labor from rganization o organization
Planning for shortages Planning for surpluses Career planning and succession management
FIG-4, PROCESS MANAGEMENT 6. THE ELEMENTS RELATING TO OUTPUTS Department of HRP in NIOC after collecting all related information from internal and external sources and processing them, then it evaluates the output for total performance judgment. These outputs can be divided in two general classes as qualitative and quantitative output. Qualitative outputs are those as providing the atmosphere for promotion of personnel to occupy the senior managerial jobs, to make clear the progress path of HR in any position, consulting in the area of employment, training, performance evaluation, compensation services, and other related policies. Quantitative outputs involve specifying of personnel characteristics needed for a job, balancing of supply and demand of HR in the market, determining of empty position, and the quantity of Hr needed to be employed or be trained. To be brief, in this stage we can compare the performance efficiency of output to the one determined as an objective.
Performance output management of HRP system
Baseline of personnel promotion to top management jobs Clarify personnel promotion baseline in company existing jobs Consulting in fields of employment, education and performance evaluation policies
Specify required personnel specifications for job Adjust personnel supply and demand Specify quantity of required personnel for employment and education Specify quantity of unassigned jobs
FIG-5, PERFORMANCE OUTPUT MANAGEMENT OF HRP SYSTEM
7. THE ELEMENTS RELATED TO OUTCOMES OF HRP SYSTEM It is of importance to differentiate between output and outcome of HRP in NIOC. The relation is so that with desirable outcome we surely have a good output. But, with 8
desirable output we do not necessarily have a good outcome. When we talk about the outcome, we mean consequences and performance effects of HRP is discussed. Performance outcomes of HRP department can also be categorized in two types, qualitative and quantitative performance outcome. Qualitative outcome includes expansion of social value added, quality improvement of selection, employment, training, performance evaluation program. And, Quantitative outcomes involves promotion of organizational efficiency, reduction of personnel cost, paving the way for defining necessary quantitative criteria of employment and other related subjects as shown in figure 6.
Performance outcome management of HRP system
Qualitative performance outcome
Quantitative performance outcome
Assist to create and improve social value added Assist to maintain company capitals Improve selection, employment, education, performance evaluation and manpower retirement plans quality Assist to conformity with competitive environment Systemize selection and employment manpower and managers manual
Improve organization efficiency and decrease company personnel costs Preparing for define measures required for employ new manpower and improve current company manpower quality
FIG-6, PERFORMANCE OUTCOME MANAGEMENT OF HRP SYSTEM
8. FEEDBACK ELEMENT OF HRP SYSTEM In the final stage of HRP department of NIOC what is being considered is controlling and supervising of all stages which have been mentioned above. By accrediting ISO 9001 in NIOC this control on all process is being done more closely. The deviation from objectives would be evaluated in short periodical times. The feedback is a strong useful tool for continuous improvement. It strictly controls output and outcomes of HRP department of NIOC.
9. CONCLUSION As it has been mentioned, the only dominant factor in differentiating successful organization with ordinary is human resource. And, the key factor which distinct NIOC among other organizations is its systematic consideration to HRM and specifically to HRP. HRP department of NIOC is dynamically programming for most crucial area of HR. One of the most important issues in this respect is manager succession program which is running on. Because of the significance of manager role in any aspect of company policy, the importance of this program would be more appreciated.
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