Organizational Redesign At BPCL

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Organizational Redesign At BPCL:

Organizational Redesign At BPCL The Challenge Of Privatization BHARAT PETROLEUM CORP. LIMITED By – Gulsehar Sabri

Company Background:

Company Background BPCL- Government owned company incorporated under The Companies Act,1956 with its headquarters in Mumbai Business – Refining , Storing, and distributing of petroleum products Paid up capital- Rs 300 million (GOI-66.2%,Private hands-33.8%) Areas of operation- retail, lubricants, LPG, aviation Fuel

History :

History 1975 – GOI acquired Burmah Shell Refineries (business- storing and distribution company) BSR, a foreign company established in England in 1928. 1976- BSR renamed Bharat Refineries Limited & 1977 to BPCL. Between 1991-1994, GOI disinvested part of holdings to FII and BPCL employees (66.2:33.8)

Crisis:

Crisis Before deregulation 3 main players: BPCL, HPCL, IOL (private player Reliance, Essar ) Enjoy monopoly under APM of GOI. Private cannot compete openly. After deregulation Open Competition in industry 1999 deregulation effect on lubricants : market share dropped from 16% to 4% Retention of market share serious issue

Issue:

Issue Loss of market share due to increase in number of players. Product prices will be determined by import parity prices. Margins set by competitive pressures will be more volatile and highly uncertain. Shifting of allegiance of dealers and distributors. Trained and Experienced manpower will be lured away by new entrants. Retain customers and remain profitable

Need for Redesign:

Need for Redesign Increase in demand for petroleum products in India. Strong customer focus needed to understand and respond quickly to customers need and expectations. Speed at which staff respond to the market will determine the success of organization. Main focus on customer loyalty. To focus on customer and make decision faster- de-layering the hierarchical organization and by empowering staff. Main Aim Of Redesign- to be ready for change

Organizational Redesign:

Organizational Redesign Started in 1998 with the help of consultant Arthur D. Little and its group of consultants. They formed a Project Group with over 30 people drawn from different functions and regions with a General Manager as their leader. It was called Project CUSECS meaning customer service and customer satisfaction. Their main thrust areas were better customer service, profitability, creation of strategic business units (SBUs) and dividing the organization into regions. After redesign ,the organization is mostly participative and team based with absolute delegation of authority.

Initial Phase of Redesign:

Initial Phase of Redesign BPCL capacity of 7 to 8 million tons, whereas the demand about 16 to 18 million tons of crude per year. To address this gap, BPCL acquired Kochi Refineries, which has a capacity of about 8 million tons and is looking forward to expand opportunities in the refinery business. Hired the internationally renowned consultancy firm McKinsey on formulating an effective retailing strategy and opening of convenience and grocery stores.

PowerPoint Presentation:

KOCHI REFINERY

2nd Phase – Organizational Redesign:

2 nd Phase – Organizational Redesign Change of organization structure from functional to divisional enterprise. Spread over 4 geographical locations 6 SBU ( refinery, retail, Industrial, Lubricants, LPG, Aviation) Management was told to carry out broad visionary exercise. 2500 managers participated Created a clear corporate vision, identification of shareholder & statement of core values

PowerPoint Presentation:

Corporate Centre SBU Finance Personnel Refineries Lateral Thinking Mechanism Support Services Marketing Organizational Information System HRM Finance Projects (Marketing Engineering

Change in Vision:

Change in Vision “Core competence is not refining crude oil but selling products” “Business partner first, business partner last” (main theme of business) “It’s a great place to work” (HRM) “Service today, to be there in future” (lubes) “People above oil, we care for you, we exist because of you” (Retail)

HRM Redesign:

HRM Redesign Embedded support Services- each SBU has an HRM personnel. Shared Support Services- supports tasks that have enterprise-wide and region-wide implications. Corporate services- providing of services i.e. providing information and support proactively. They provide support to the main business

Recruitment Process:

Recruitment Process Redesign entailed strengthening the field force to boost marketing and customer focus. 50% increase in the sales force and frontline staff but without any additional recruitment (hiring freeze). Redeploying management staff from back office and retaining them. Recruitment done for only specialized and new jobs Introduction of competency mapping Promotion expected only after 3 years in BPCL. System of Job Rotation- for promotion experience of 3 departments . Major focus on Retention and Redeployment of Employees

Performance Management System:

Performance Management System Visionary Leadership and planning (VLP) workshops. Functional perspective changed into team based, collaborative, cross functional mindset. Employees invited to participate in learning experiences through Foundations of Learning (FOL) Rewarding good performers/teams to achieve performances (combination of monetary and non monetary reward) Rightsizing through VRS Performance measure – Financial (ROCE, ROI, IRR) and Customer satisfaction (Market share and CLI).

Effect of Organizational Redesign:

Effect of Organizational Redesign 2003 2002 2001 2000 1999 Net profit 12,500.28 8,498.30 7,927.16 7,038.55 7,012.35 Manpower 12670 12638 12264 12094 11704

By – Akanksha Chaudhary Barkha Tulysan Deepa Patra Digvijay Singh Parmar Gulsehar sabri:

By – Akanksha Chaudhary Barkha Tulysan Deepa Patra Digvijay Singh Parmar Gulsehar sabri THANK YOU

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