project one pso
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This project discusses research that was undertaken about the HR practices of Pakistan State Oil. The group studied all the HR practices of the company but the main focus was study the appraisal system & training and development of employees in the company.
Aneeqa Haris Urooj Ikram
Alia KhawajaNabiha Sajjad
Muniba Atta M. Abdullah
April 26, 2013
Sir. Amjad Bhatti
Course Title: Compensation & Benefits
Dear Sir,
Please have a look at the final report on the project “Critical Analysis of
PSO HRM System”. This report includes all the necessary details,
discussion and features of Compensation and Benefits that is needed to
be implemented in the above said organization.
Yours faithfully,
Aneeqa HarisUrooj IkramNabiha SajjadAlia KhawajaMuniba Atta M. Abdullah
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I. Acknowledgement
We would like to thank our teacher “Sir. Amjad Bhatti ” who has been a
source of constant guidance and has proven himself as one highly
professional Mentor.
We also acknowledge ourselves for the effort we have put in to complete this
project.
Last but not the least we are thankful to our Parents who have taught us
everything and made us what we are today.
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1. EXECUTIVE SUMMARY 5
2. INTRODUCTION 6
3. OBJECTIVES BEHIND (PSO) ORGANIZATION STUDY 7
4. OVERVIEW OF PSO 8
4.1. HISTORY 8
4.2. NATURE OF THE ORGANIZATION 9
4.3. BUSINESS DRIVERS / VOLUME & PRODUCT LINE 10
4.3.1. RETAIL 10
4.3.2. INDUSTRIAL CONSUMER 10
4.3.3. STRUCTURAL REFORMS 10
4.3.4. INFRASTRUCTURE 10
4.3.5. GROWTH OF PSO 10
4.3.6. CONTINUOUS GROWTH 11
4.3.7. CASTROL (UK) 11
4.3.8. AIR TOTAL (FRANCE) 11
4.3.9. EXXON CHEMICALS (SINGAPORE) 11
5. STRUCTURE OF PSO (ORGANIZATION STRUCTURE) 11
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5.1. MAIN OFFICE 11
5.2. HRM OPERATIONS 12
6. STRUCTURE OF HR DEPARTMENT 13
7. FUNCTIONS OF HR DEPARTMENT 14
7.1. MAJOR FUNCTIONS 14
7.2. APPRAISAL SYSTEM AND PERFORMANCE MANAGEMENT 14
7.2.1. POLICIES 15
7.2.2. LEADERSHIP 15
7.2.3. DECISION MAKING 15
7.2.4. RATIONALITY 15
8. CRITICAL ANALYSIS OF PSO HR DEPARTMENT 16
8.1. HRM PRACTICES AT PSO 16
8.2. ANALYSIS OF PSO HR DEPARTMENT 16
9. SHORT FALL OF PERFORMANCE MANAGEMENT AND APPRAISAL
SYSTEM 17
10. CONCLUSION & RECOMMENDATIONS 18
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1. Executive Summary
Pakistan state oil is the largest oil marketing company of Pakistan and
also among the top 1000 largest companies in Asia. Pakistan state oil
was set up on December 29th, 1976 through the merger of ESSO
undertakings with Pakistan national oils limited (PNOL) and Premier Oil
Company Limited (POCL).
PSO is currently the largest oil marketing company (OMC) in Pakistan
and is engaged in the storage, distribution and marketing of petroleum
product, Petro-chemicals, LPG and CNG. The company has the largest
market share ie.40% market share in motor gasoline and 60% market
share in diesel oil. It operates largest retail network (350 outlets) in the
country. PSO is committed to begin the preeminent marketer of
petroleum product and services to its customers and achieving its goal
while maintaining high level of efficiency and profitability.
PSO has reported a strong financial performance. Its revenues have
grown at a CAGR of 13.8% since 1996. For the fiscal year ended June
2003, PSO generated sales revenue in excess of Rs. 169 billion (US $ 2.8
billion) and after tax profit of Rs.2.25billion (US $37.5 million). PSO is the
third largest public listed company in Pakistan by equity market
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capitalization. It is recipient of Karachi Stock Exchange Top 25
Companies award for 17 consecutive years.
PSO is well-managed company and is focused to meeting the energy
requirements of Pakistan. The company recently embarked upon an
extensive program of restructuring, rationalization of its network of
retail outlets, improving its marketing image through a nationwide
initiative to refurbish and re brand key retail stations and further
improving efficiencies by streamlining its structure. It has adopted
modern management practices and prepares its strategic business plans
regularly. It continuously monitors its performance vis-à-vis annual
plans.
Privatization of PSO is also under way, whereby JP Morgan financial
advisory consortium is assisting the govt of Pakistan in privatization
process. The company being financially sound, well entrenched in the
petroleum product marketing business, with 2
Sound and efficient track record of performance is expected to receive
active response from the prospective buyers.
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2. Introduction
This project discusses research that was undertaken about the HR
practices of Pakistan State Oil. The group studied all the HR practices of
the company but the main focus was study the training and
development of employees in the company.
A theoretical framework is developed from a literature search and this is
used by the group as model for further research. The group collected
data within this framework and analyzed it according to the
requirements of the project. To collect the data required group
members visited regional office of PSO in Islamabad and also collected
data from several outlets of PSO.The web site of PSO is also used as
source of data by the group.
At PSO, they Strongly believe that Human Resource are the asset that
should be appreciated with the passage o time. Consequently, PSO
considers the strong focus on training and development of their
employees a value added and worthwhile investment.
Then by the detailed study of the training and development practices
used by the company some recommendations are made and on the
basis of the analysis of company’s practices conclusions are drawn.
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3. Objectives behind (PSO) Organization Study
In today’s fast and competitive business environment any company can’t
grow without giving importance to its HR strategies and practices, and
among those the most important is the practice of employee training
and development.
In this project our group tried to study the HR practices that are being
practiced by the PSO and area of our main focus were the practices of
employee training and development.
We find that alongside the development of its physical facilities, PSO is
deeply conscious of the pivotal role that human resources play in the
success of an organization. As a matter of fact, human resource
development has been identified as an area of key importance. While
strengthening the ranks of its work force with quality professionals at
various levels of management, the company also undertakes several
initiatives for improving productivity and efficiency at all levels of
services. Through computer training, various courses, sponsorships of
staff for studies at professional institutions and seminars, the company is
providing its employees on going opportunities for continuous self-
improvement and learning.
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4. Overview of PSO
4.1. History
Pakistan state oil company limited was established in 1976,PSO was
formed through the amalgamation of three state controlled oil
marketing and storage companies, Pakistan National Oil {PNO}; Premier
Oil Company {POC} and oil company Limited {SOCL}, formerly ESSO
Undertakings.
Following were the events taking pace in history which led to its
formation,
01-01-1974 Federal Government takes over management of PNO
[Pakistan National Oil] and DLP [Dawood petroleum Limited],
renamed into POCL [Premier Oil company Limited] under marketing
of petroleum products [Federal control] Act, 1974.
03-06-1974 Government incorporates. ‘Petroleum Storage
Development Corporation PSDC
23-08-1976 Name of PSDC change to state oil company limited
[SOCL]
15-09-1976 Government purchases ESSO undertakings, vests the
same in SOCL.
30-12-1976 Government merges PNO and POCL into SOCL. [state Oil
company limited], and named it as Pakistan state oil company
Limited.
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4.2. Nature of the Organization
As the largest oil marketing company of Pakistan, PSO is engaged in
storage, import, distribution marketing of petroleum products
petrochemicals aviation and bunker fuels LPG and CNG dominates the
country’s fuel and energy need. The company has largest retail network
in the country and the most extensive terminal and depot network. PSO
has listed in Asia’s largest 1000 companies by Asia Week.
Since its inception in 1976, the company has been meeting more than
70% of country’s fuel needs. PSO’s 3805 outlets all across the country
markets more than 12 million tons of fuel products annually. This
network is supported by PSO’s 28 storage facilities with a capacity of
more than 800,000 tons. PSO took a major step in improving its
distribution facilities by acquiring 12% equity in the 800 km long Karachi-
Mehmoodkot White oil Pipeline. 20
As part of PSO’s policy of providing better customer service it has
embarked upon its new vision retail development program. Equipped
with the most modern facilities like
• Electronic dispensing units,
• Auto car wash,
• Convenience stores,
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• Internet facilities and business centers these state of the art designed
stations provide greater customer confidence and a friendly
environment.
As a manifestation of PSO’s greater customer focus a 24hr PSO customer
service had been launched where customers can lodge their queries and
suggestions about various PSO products and services.
4.3. Business Drivers / Volume & Product Line
PSO has an impressive record of profitable financial performance.
Revenues has grown at a CAGR of 13.8% since 1996 and earnings before
interest, depreciation amortization (“EBITDA”) has grown at a CAGR of
10.6% over the same period. For the fiscal year ended June 2001, PSO
generated sales volume of 12.6 million tons with sales revenue in excess
of Rs. 169 billion (US $ 2.8 billion) and after tax profits of Rs. 2.25 billion
(US$ 37.5 million). PSO is the third largest publicly listed company in
Pakistan by equity market capitalization, and a recipient of the Karachi
Stock Exchange Top 25 Companies Award for 17 consecutive years.
Following are the main business drivers of PSO,
4.3.1. Retail
PSO is the market leader in the retail sector in Pakistan with
approximately 40% market share in motor gasoline and over 60% in
diesel oil. PSO owes this competitive position in part to its extensive
dealer financial retail network of more than 3,750 outlets, which if by far
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the largest in the country In the last two years the company has
embarked on a scheme of rationalization, closing down unprofitable
stations, and upgrading and re-branding others.
4.3.2. Industrial Consumer
The industrial consumer division enjoys high volumes and generates
steady profitability and cash flows. The division has long-term contracts
in place with Independent Power Producers (“IPPs”) in Pakistan. Other
major customers include state-owned utilities and various commercial
consumers. The division’s primary product is fuel oil in which PSO
has an approximate 85% market share. From the locomotives of railways
to the giant turbines of power project, all are fuelled by PSO.
4.3.3. Structural Reforms
In recent years the GOP has appointed senior management personnel
from the private sector to run PSO. The new management team initiated
structural reform program for the company. Upgrading its retail outlets
and concentrating increasingly on high margin products. In FY 2000 PSO
incurred Rs. 967 million (US$ 18.6 million) of capital expenditure,
primarily on the Company’s new vision retail development programme.
PSO is now moving towards a marketing strategy which is similar to that
employed by multinational OMCs presenting Pakistan.
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4.3.4. Infrastructure
PSO owns key important terminals and has an over-whelming advantage
in terms of the storage capacity and geographical coverage of its depot
network.
4.3.5. Growth of PSO
PSO is the largest of the three marketing companies in Pakistan; it has
consistently maintained an edge over its competitors Shell and Caltex.
With an overall market share of 72% in 1997-98 it sold 6.244 million tons
of petroleum products during the half year ended 31st December 1999
against 5.633 million tones sold during the corresponding period last
year, showing an increase of 10.8%.
4.3.6. Continuous Growth
PSO continues to expand its physical, technical and marketing resources
to meet the requirements of the country. PSO has maintained
International collaborations to import latest technology. They are:
4.3.7. Castrol (UK)
Blending and marketing of lubricants in Pakistan.
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4.3.8. Air Total (France)
Technical and commercial agreements in Aviation Sciences and
technology.
4.3.9. Exxon chemicals (Singapore)
Petro-chemicals business and technology.
5. Structure of PSO (Organization Structure)
Managing people is one of the most critical aspects of organizational
management in the 21st Century. No matter whether an organization
is a non-profit, start-up enterprise, or mature business employees are
crucial to achieving objectives, delivering results and being
successful. The activity once known as personnel and now more
commonly described as human resource management (HRM) is a
fundamental aspect of successful management.
5.1. Main Office
Main office rather head office of PSO is located in Clifton, Karachi and
the exact details and address of PSO Head Office is,
Address: PSO House,
Khayaban-e-Iqbal, Clifton,
P.O.Box 3983,
Karachi 75600, Pakistan
UAN: 021-111 111 PSO (776)
Tel: (92 21) 99203866-85
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Ta'aluq Careline: 0800-03000
Email: Taaluq@psopk.com
5.2. HRM Operations
1) HR planning (i.e. to forecast and foresee the future business and
employee needs and plan for them)
2) Recruitment and selection job descriptions, selection tools,
background checks, offers
3) Compensation (i.e. methods, consistency, market)
4) Employee relations (i.e. labor agreements, performance
management, disciplinary procedures, employee recognition)
5) Mandated benefits (i.e. social security, unemployment insurance,
worker's compensation, COBRA/HIPPA)
6) Optional group benefits (i.e. insurance, time off benefits, flexible
benefits, retirement plans, employee assistance programs, perks)
7) Payroll (i.e. internal vs. external options, compliance)
8) Recordkeeping (i.e. HRIS, personnel files, confidential records, I-9,
other forms)
9) Training and development (i.e. new employee orientation, staff
development, technical and safety, leadership, tuition reimbursement,
career planning)
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10) Employee communications (i.e. handbook, newsletter, recognition
programs, announcements, electronic communication)
11) Internal communications (i.e. policies and procedures, management
development, management reporting)
6. Structure of HR Department
Alongside the development of its physical facilities, PSO is deeply
conscious of the pivotal role that human resources play in the success of
an organization. As a mater of fact, human resource development has
been identified as an area of key importance. While strengthening the
ranks of its work force with quality professionals at various levels of
management, the company also undertakes several initiatives for
improving productivity and efficiency at all levels of services. Through
computer training, various courses, sponsorships of staff for studies at
professional institutions and seminars, the company is providing its
employees on going opportunities for continuous self-improvement and
learning.
In recent years, health, safety and environment (HSF) has emerged as
one of the major themes of corporate governance at PSO.
Understanding the significance of safe and healthy work practices, a
comprehensive HSE policy has been devised and the HSE manuals and
procedures finalized. According to this policy, no new vision outlet can
be 49
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commissioned before a comprehensive HSE audit. Likewise HSE audits
are being conducted at installations and depots, followed by necessary
corrective action. In order to
increase awareness, HSE awareness sessions are frequently organized
for all employees throughout the organization.
As They Strongly Believe That Human Resource is the asset that should
be appreciate with the passage of time. Consequently, PSO considers a
strong focus on the development of a value added and Worthwhile
Investment.
7. Functions of HR Department
Following are the functions of HR Department,
7.1. Major Functions
Some of the major functions of HR Department are as follows,
Initiating the Recruitment Process
Screening Applicants
Managing The Applications
Selecting the Interview Panel
Interview Scheduling and the Interview Environment
Making the Selection Decision
Candidate Evaluation
Training & Development
Training and Development Goals
Training and Development Support
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Work Place Learning
Values
Appraisals
7.2. Appraisal System and Performance Management
Performance evaluation takes place annually for the purpose of annual
increments. The appraisal also assists human resource in the career
development of an employee.
7.2.1. Policies
Policies are made to define processes to be practiced by management.
and the polices are made by the research conducted by HR department
keeping in view the needs of the company and employees.
7.2.2. Leadership
PSO is a sale and customer oriented company that has the main goal of
maximizing the profit. The major interest of the company is to increase
the market share, sales, profit and revenues. Majority of the decisions
are made and implemented in order to fulfill this goal.
For this reason the leadership is also trained according to this goal and
more centralized system is adopted by the company.
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7.2.3. Decision Making
Decision-making is an important aspect of the company, which needs to
be thoroughly evaluated before making a final and firm decision. The
working of organization depends upon top management; so good and
firm decision in the organization will have a direct impact on the working
environment of such organizations. The manager is responsible for
taking the decision of effected matter keeping in view the after effects.
The decisions must be in interests of the organization.
7.2.4. Rationality
The managerial decision-making is rational. Which means that the
mangers make consistent, value-maximizing choices within specified
constraints. A style or situation in which a manager can make accurate
decision and the outcome of every alternative is known.
8. Critical Analysis of PSO HR Department
During our physical visit at HR Department following are some of the HR
Practices we had identified through critical analysis that have been
implemented by PSO HR Department and are in accordance with our
provided theoretical knowledge of the subject,
8.1. HRM Practices at PSO
Following are the HRM Practices identified followed in the HR
Department as per the shared theoretical knowledge of books.
HR Planning
Recruiting
Selection
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Training and Development
Compensation
Performance Management
Employee Relations
Company’s Performance
8.2. Analysis of PSO HR Department
PSO has also taken several initiatives for improving the overall
productivity and efficiency of its staff through computer training, in-
house courses, sponsorship for studies at professional institutions and
seminars. In analyzing the HR practices, we have compared the HR
practices of PSO and Shell Pakistan.
Human resource development has been identified as an area of key
importance. While strengthening the ranks of its work force with quality
professionals at various levels of management, the company also
undertakes several initiatives for improving productivity and efficiency at
all levels of services. Through computer training, various courses,
sponsorships of staff for studies at professional institutions and
seminars, the company is providing its employees on going opportunities
for continuous self-improvement and learning.
In recent years, health, safety and environment (HSF) has emerged as
one of the major themes of corporate governance at PSO.
At PSO, They Strongly Believe That Human Resource Are the Only Asset
That Appreciate With The Passage Of Time. Consequently, PSO
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Considers A Strong Focus On Their Development A Value Added And
Worthwhile Investments.
9. Short Fall of Performance Management and Appraisal system
Very highly efficient and executable appraisal system is designed by HR
Professionals to make sure that every employee gets the equal
opportunity. Not any such short fall or defect was found in HR process as
the above mentioned report clearly identifies smoothly executed
appraisal system.
Appraisal system followed up training and development system is
cleverly designed to make sure that every employee gets the equal
opportunity in regarding to professional and prosperous career through
it.
Still through an in depth analysis of HR and their policies, we identified
one flaw that was to the book following of rules and regulations of HR
making it difficult for employees to adjust with the environment
specially the new employees.
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10. Conclusion & Recommendations
Pakistan state oil (PSO) is the largest company of Pakistan not only in the
field of oil marketing but also otherwise. It has been included in Asia’s
top 1000 companies and thus is surely a pride for Pakistan. Although up
till now it is Govt owned but it is about to be privatized in a month or so.
As expected after privatization the company would be further more
prosperous and generative in terms of revenues.
PSO certainly has a competitive advantage over all it’s competitors
because of the vast network of it’s outlets all over Pakistan but at
the same time a great deal of responsibility is required by them as
they are not only an oil marketing company but they have some
responsibilities towards the people of Pakistan.
Take an example of a PSO outlet in Chitral, while deciding to
undertake this project or not the feasibility report rejects the idea
of building it but being a Pakistani socially responsible company if
even one public transport bus goes there then they have to build a
petrol station over there.
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PSO has been very innovative and successful since it realized the
competition has actually started after SHELL came and acquired
the market share from PSO. But after coming up with all those
“new vision” outlets, PSO has proved to be never far behind.
Marketing strategies starting from “Gold card” to…………………..
“PSO LOYALTY CARD” has been amazingly good and can be rated
as first class strategies.
A major problem faced by PSO is the misconception in people’s
mind that the oil used by shell is imported and of better quality, as
shell is a foreign company in Pakistan. Although the sources are
same but still shell is also aware of this fact and is exploiting it.
PSO should do something about it like printing brochures that
could explain people about the only sources available in Pakistan,
emphasizing upon the fact that no oil is coming to Pakistan from
any direct abroad sources.
Caltex basically has some control over the market because of the
lubes it sells and the profit margin on lubes is much higher than on
petrol. But as PSO and CASTROL have come together to make the
right combination of “Top two together” they can overcome this
problem as well.
PSO has done very well in the financial sector, since its new vision
period and will continue with the pace. Innovations and up to
dating of the outlets in accordance with the needs of the changing
world is a very important step towards both marketing and
financial prosperity.
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The other problem faced by PSO because of the competition is
that the land acquiring at old or new places the bid gets too high
that the land acquired becomes too expensive.
PSO is becoming better day-by-day and after privatization the
modifications and changes they are expected to bring “Sky is the limit”.
11. Reference
Book References
o Mc GJRW- HILL
o Human resource management
o International 4th Edition, December 2001,
Chapters
o 1.Human Resource Environment, Page # 51
o 6.Selection And Placement, page # 216
o 7. Training, page # 248
o 9. Employee Development, page # 374
Internet References
www.psocl.com
Personal Resources through Interview
o Kh. Haris Mehmood
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Installation Manager PSO bulk oil terminal, Machike
o Rana Muhammad Idrees
Dep. General Manager HR department PSO house, Karachi.
o Chaudhary Naseer
Dep. General Manager IR department PSO house, Karachi.
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