hr process and impact of training and development on employee’s performance at pso

INSTITUTE OF BUSINESS AND TECHNOLOGY

HR Process and Impact of Training and Development on Employee’s Performance at

PSO

Prepared By

Ayesha MirzaBM-25067

Course Code : MKT-606

MBA (Human Resource Management)

FACULTY OFMANAGEMENT AND SOCIAL SCIENCES

FALL - 2010

HR process and Impact of Training and development on Employee’s Performance at PSO

INSTITUTE OF BUSINESS AND

TECHNOLOGY

ABSTRACT SUBMITTED BY: Ayesha Munawwar Mirza

DISCIPLINE: MBA (HRM)

TITLE OF PROJECT REPORT: HR process and Impact of Training

and Development on Employee’s

Performance at PSO.

MONTH OF SUBMISSION: November, 2010

NAME OF PROJECT SUPERVISOR: Dr. Noor Ahmed Memon

ABSTRACT

This project discusses research that was undertaken about the HR

process and impact of training and development on employee’s performance at

Pakistan State Oil. I have studied all the HR practices of the company but the

main focus was to study the impact of training and development on employee’s

performance in the company.

A theoretical framework is developed from a literature search and this is

used by me as a model for further research. I have collected data within this

framework and analyzed it according to the requirements of the project.

To collect the data required I have also visited regional office of PSO in

Karachi and also collected data from several outlets of PSO. The web site of

PSO is also used as source of data by the group.

Institute of Business and Technology


At PSO, they strongly believe that Human Resource are the asset that

should be appreciated with the passage of time. Consequently, PSO considers

the strong focus on training and development of their employees a value added

and worthwhile investment.

Then, In the last by the detailed study of the impact of 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.



ACKNOWLEDGEMENT

All praises for Almighty Allah whose uniqueness, Oneness and

wholeness is not challengeable. All respect for his Holy Prophet Hazrat

Muhammad (P.B.U.H) who enabled us to recognize our creator.

I am grateful and deeply indebted to Dr. Noor Ahmed Memon my

teacher, mentor and project advisor for his helpful insights, cooperation, support

and continuous encouragement throughout this project. Without his guidance I

will not be able to do this of a good standard and a quality. He really is a person

from whom I learnt a lot and who knows how to motivate other person.

Many people have contributed in the completion of this project and I would

like to thank my friends Mairaj and Yasir for sparing their precious time, whose

support and guidance help me throughout my work to complete this project in

time.

Last but not least I would like to thank my parents for their moral support

and prays and my lovely sister Madiha for always being there for me when I

need her.

Ayesha Mirza



TABLE OF CONTENTS

ABSTRACT

ACKNOWLEDGEMENT

1. INTRODUCTION 1 1.1 Introduction 1

1.2 Purpose of Study 1

1.3 Research Objectives 1

1.4 Research Methodology 2

2. LITERATURE REVIEW 3 2.1 Human Resource Management 3

2.2 Recruitment and Selection4

2.3 Training and Development6

2.4 Local Literature on Training and Development 11

2.5 Foreign Literature on Training and Development 12

3. PAKISTAN STATE OIL 14 3.1 Introduction 14

3.2 Vision and Mission 23

3.3 Corporate Planning 23

3.4 Brand Management and Communication Department 25

3.5 PSO’s Physical Resources 28

4. HR PRACTICES AT PSO 32 4.1 Human Resource Management 32

4.2 Recruitment 33

4.3 Derecruitment 34



4.4 Selection 34

4.5 Orientation 35

4.6 Compensation and Benefits 35

4.7 Appraisals 36

4.8 Decesion Making 37

4.9 Motivation 38

4.10 Controlling 40

5. TRAINING AND DEVELOPMENT AT PSO 41 5.1 Training 41

5.2 SAP 42

5.3 HR Module 42

5.4 Development 52

5.5 Relationship with Society 53

5.6 Social Welfare Activities 54

6. ANALYSIS OF HR PRACTICES 58 6.1 Comparison of HRM Practices at PSO and SHELL 58

6.2 Comparison of HR Practices with SHELL Planning 59

6.3 Recruitment 59

6.4 Selection 60

6.5 Employee Training Methods and Development 61

6.6 Compensations and Benefits: 61

6.7 Performance Management 62

6.8 Employee Relations 63

6.9 Company’s Performance 63

6.10 Future of PSO As Compared with Its Competitors 64

7. ANALYSIS OF TRAINING AND DEVELOPMENT AT PSO 65 7.1 Responsibilities Related To Training 65

7.2 Training and Development on Need Assessment 66

7.3 Training Types at PSO 66



8. RESEARCH FINDINGS 68 8.1 The Questionnaire 68

8.2 Summary of Findings 86

9. CONCLUSION AND RECOMMENDATIONS 88 9.1 Conclusion 88

9.2 Recommendations 90

BIBLIOGRAPHY 92

APPENDIX 93




1. INTRODUCTION

1.1 Introduction

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.

The research had tried to study the HR practices that are being practiced

by the PSO and area of main focus is the practices of employee training and

development.

We have 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.

1.2 Purpose of Study

The purpose of this research is to explore various HR practices and

procedures adopted by the successful organization PSO and how they can

contribute to the development of a sustainable competitive advantage.

1.3 Research Objectives

The objective of the research, which is the Impact of HR practices on

PSO, their importance and the effects that they have on employee development.

This research also makes recommendation for PSO. The idea behind this study

is also to understand the various training methods that have been used by PSO

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as a measure to improve their productivity and performance for the overall

organization.

1.4 Research Methodology

In order to conduct the research work a number of research methods are

used which includes intensive web search, interviews, and visits at PSO

(Pakistan State Oil). The research also seeks to analyze the training methods

that have today become prevalent in a reputable organization PSO and the

impact that they have had on employee development through out the

organization. For this purpose the following research methodologies are followed:

Primary data

o Questionnaires, Interviews

Secondary data

o Libraries, Articles, Research material, Internet, Financial

Magazines.

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2. LITERATURE REVIEW

2.1 Human Resource Management

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.

The most important HRM practices are :

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)

2.2 Recruitment and Selection

The Recruitment and Selection process promotes successful hiring

decisions that can truly impact the success of a department or faculty.

The selection of a candidate with the right combination of education, work

experience, , and creativity will not only increase the quality and stability of the

workforce, it will also play a large role in bringing management strategies and

planning to fruition. Important steps of the process are:

Initiating The Recruitment Process

In initiating the recruitment process following matters should be

considered:

Clarification of the scope and skill sets required to successfully

perform the duties of the position

Review of the Job Fact Sheet or Position Description to ensure

that the skills and abilities required coincide with the current

expectations of the position. If they do not, then a position

evaluation should be undertaken.

Review of the compensation available to the position (i.e. salary

and benefit plans, etc.)

Analysis of the impact that the hiring will have on the budget.

Screening Applicants

Managing The Applications

The following steps should be completed when screening the

applications, both for organizational:

Record the names of all applicants who submitted

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applications/resumes

Specify the short-list criteria

Record All Short-Listed Applicants Selecting the Interview Panel

Research shows that the panel or team interviewing approach

produces more reliable results than does any other type of

interviewing process.

A panel of 2-4 interviewers is usually recommended, composed of a

variety of direct and indirect members. Consideration might be given to

including a group made up of some of the following:

Direct supervisor of the position

Departmental Personnel Administrator

Vacating incumbent

Subject matter expert from another department

Senior co-worker that interacts closely with the position

Interview Scheduling And The Interview Environment

Schedule the interviews within as short a time frame as

possible. Allow approximately 10-15 minutes between

interviews to record your evaluation.

Arrange for interview space where there will be no interruptions.

Configure the furniture in the interview room in a way that will

enhance dialogue and interaction, such as at a round table.

Making The Selection Decision

Candidate Evaluation

Each member of the selection committee should carefully review

each candidate’s resume, any notes made during the interviews, and the

completed Candidate Rating forms, to determine which of the candidates

should proceed to the next step of the Selection process, where reference

interviews are conducted.

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Discussion should be held about each candidates’ qualifications in

regard to:

Education

Experience

Knowledge and Technical skills

Problem-solving abilities

Oral and written communication skills

Personal Effectiveness

Evidence of Team working abilities

These factors should be considered against not only the position

requirements, but its environment as well.

Once the panel has completed its discussion a member should be

chosen to conduct the reference interviews on the candidates most likely to

be offered the position.

Reference Checking

A reference check is an essential tool in the employment selection

process — be it a new appointment, or a transfer or promotion within the

organization. It provides the opportunity to verify and gain information in

addition to that received directly from the applicant.

2.3 Training and Development

Training involves an expert working with learners to transfer to them

certain areas of knowledge or skills to improve in their current jobs. Development

is a broad, ongoing multi-faceted set of activities (training activities among them)

to bring someone or an organization up to another threshold of performance,

often to perform some job or new role in the future.

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Training And Development Goals

The types of training and development goals identified will depend on

the personal and organizational objectives identified through the strategic

planning process and the agreed appraisal procedure. In any event the goals

shall, as a minimum standard, take account of the following:

The Mission

The Values

The strategic objectives of the company

Equal Opportunities Policy

Requirements for core competencies

Continuing personal and professional development

Requirements for professional and vocational qualifications in

further education

Requirements for professional, vocational and workplace

updating

Requirements for organizational change

The operational objectives of the schools / faculties /

departments / units

Operational performance requirements

Personal performance requirements

Team performance requirements

Self assessment and action planning

Types Of Training And Development Support

The following facilities should be provided to the staff:

All employees shall have access to the staff development

program. They shall also have the full opportunity to attend

courses and conferences to develop their professional expertise

relevant to the fulfillment of the requirements of their job. The

induction procedures shall be fully integrated into the training

and development program for new employees.

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The agreed Appraisal Scheme shall be applied equally to all

employees.

All employees shall be given opportunities to attend meetings to

the fulfillment for the requirements of their job, e.g. team

meeting and course development meetings.

Managers shall endeavor to arrange such meetings at times,

which are mutually convenient to all employees..

There should be clear procedures whereby employees may

apply for training and development opportunities, and are given

clear reasons for the acceptance or rejection of their

applications

Workplace Learning

For the work place training following points should be kept in

consideration:

All employees shall be encouraged to learn regularly and

rigorously from their workplace activities and share their

learning experiences and outcomes with their peers.

Mentoring of new, existing employees and job changers is

recognized as a valuable means of achieving shared workplace

experience and promoting excellence in the workplace.

Values

The implementation of these guidelines should seek to

encourage an organizational culture in which learning thrives.

Both sides recognize that high quality and appropriate training

opportunities support the achievement of the colleges’ strategic

objectives and empower employees to achieve high standards.

Typical Reasons For Employee Training And Development

Training and development can be initiated for a variety of reasons for

an employee or group of employees, e.g.

When a performance appraisal indicates performance

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improvement is needed

To "benchmark" the status of improvement so far in a

performance improvement effort

As part of an overall professional development program

As part of succession planning to help an employee be eligible

for a planned change in role in the organization

To "pilot", or test, the operation of a new performance

management system

To train about a specific topic

Typical Topics Of Employee Training

1. Communications

The increasing diversity of today's workforce brings a wide variety of

languages and customs.

2. Computer Skills

Computer skills are becoming a necessity for conducting administrative

and office tasks.

3. Customer Service

Increased competition in today's global marketplace makes it critical

that employees understand and meet the needs of customers.

4. Diversity

Diversity training usually includes explanation about how people have

different perspectives and views, and includes techniques to value diversity

5. Ethics

Today's society has increasing expectations about corporate social

responsibility. Also, today's diverse workforce brings a wide variety of values

and morals to the workplace.

6. Human Relations

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The increased stresses of today's workplace can include

misunderstandings and conflict. Training can people to get along in the

workplace.

7. Quality Initiatives

Initiatives such as Total Quality Management, Quality Circles,

benchmarking, etc., require basic training about quality concepts, guidelines

and standards for quality, etc

8. Safety

Safety training is critical where working with heavy equipment ,

hazardous chemicals, repetitive activities, etc., but can also be useful with

practical advice for avoiding assaults, etc.

9. Sexual Harassment

Sexual harassment training usually includes careful description of the

organization's policies about sexual harassment, especially about what are

inappropriate behaviors.

General Benefits From Employee Training And Development

These reasons include:

1. Increased job satisfaction and morale among employees

2. Increased employee motivation

3. Increased efficiencies in processes, resulting in financial gain

4. Increased capacity to adopt new technologies and methods

5. Increased innovation in strategies and products

6. Reduced employee turnover

7. Enhanced company image, e.g., conducting ethics training (not a

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good reason for ethics training!)

8. Risk management, e.g., training about sexual harassment,

diversity training.

2.4 Local Literature on Training and Development

In terms of local literature, I have found certain articles regarding the

training and employee skill development techniques from the Internet and from

different sources

For instance an article was available regarding the health and safety and

environment training that was provided to employees. It claimed that Health

Safety and Environment (HSE) Department conducted a Fire fighting and

emergency response training session at MCB Tower's Auditorium on 13 October

2005, which was attended by floor coordinators and staff of security department.

Training was imparted to 37 employees. Anas Hammad Sr. Executive HSE & QA

delivered the presentation and describes the concept of fire and fire triangle,

types of fire and use of fire fighting equipments. He also briefed on the regarding

importance of emergency response system and types of emergencies.

Another article, concerning local literature, also published in October

2005, spoke of Lotus Smart Suite training that was being undertaken by PSO in

an attempt to develop the skills of their employees regarding computers and

software programs that have become an essential skill that any employee should

posses. It spoke of the training that was given to 300 employees and also said

that plans were being taken to expand the training for employees working at up

country locations

In addition, an article regarding WOW training for employees, so that the

petrol station attendants could learn more in terms of customer courtesies. It

talked about T&OD staff continuing their input at Karachi, Lahore and

Rawalpindi/Islamabad. In October the training teams concentrated on other

divisions in N.W.F.P, Central and Southern Punjab as well as Interior Sindh. The

names of trainers were also provided in this article. Trainers included Aftab

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Mirani,Ghulam Haider Marri, Kamal Magsi , Javed Bashir, Sikander Rind, Nazir

Sheikh, Zahid Memon, Aijaz Qazi, Mohammad Tahir and Fazal-e-Mansoor.

By looking at the summary of these articles, an idea can be gained on the

different and diverse types of training that are being undertaken by PSO

Amongst the other local literature sources that I have used are the

material provided to me by the management of PSO and any additional

information I could gather by the newspaper and magazines that provided any

sort of information regarding the topic I am researching on.

2.5 Foreign Literature on Training and Development

The greatest source to me of foreign literature was the Internet. I was able

to gather immense information regarding technical training and employee skill

development not only at PSO but what actually occurs in general around the

world. This helped increase my comprehension of the topic much more vastly.

An article on the Internet published on May 1st 2005, spoke of why

creating formal employee skill development and technical training strategies is

essential for continual success of one’s business. It spoke of the investment in

training that should be made not only in monetary terms but rather talking in non-

monetary terms. Business owners frequently send their people to training

courses that seem right and sound good without knowing what to expect in

return. But without measurable results, it's almost impossible to view training as

anything more than an expense

Through this article I was able to compare the mistakes that management

make when they don’t properly attempt to understand the purpose of training and

whether PSO is actually making the same mistakes or not.

Similarly, in another article, it said:

“"We are entering a world where the old rules no longer apply." The

opening quote in the bestseller Rising Sun by Michael Crichton ( 1992) sums up

how rapidly the future is changing and becoming unpredictable. In response to

12



calls for changes in the way training has traditionally been done, many have

responded by calling for redefining the mission of training, renaming training (i.e.,

witness the recent movement to referring to training and development

professionals as "performance consultants"-- Robinson & Robinson 1995), and

even firing or getting rid of in-house training altogether because it is not cost

effective (see Furnham 1997 for a more detailed discussion of this last point). In

short, the pressure is on for trainers and training functions to reinvent,

reengineer, revitalize, remake, and improve what they do (Shandler 1996).”

Therefore, by looking at this piece of information present in this foreign

article, I was able to comprehend more and improve the quality of my study.

Such articles not only helped me in my study and research but also generally,

proliferated my knowledge of technical training and employee skill development

today.

Other sources of foreign literature, were books, such as “ Human

Resource Management” by Gary Dessler, “Human Resource Mangement” by

David A. Decenzo & Stephen P. Robbins, “An Integrated Approach to Business

Studies” by Bruce R. Jewell, and “Business Studies” by Dave Hall

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3. PAKISTAN STATE OIL

3.1 Introduction

What Is PSO?

PSO is engaged in the storage. Distribution, and Marketing of

Petroleum Products, Petrochemicals. LPG and CNG. It is continuing to

expand its physical and marketing resources to meet the requirements of the

country.

Central Background Information

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.

Chronology Of Events Leading To The Formation Of Pakistan State Oil Co. Ltd

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.

Company Overview

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

14



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.

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,

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 customer’s can

lodge their queries and suggestions about various PSO

products and services.

Strong Financial Performance

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

15



market capitalization, and a recipient of the Karachi Stock Exchange Top 25

Companies Award for 17 consecutive years.

Market Share

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 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.

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.

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 programme 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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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.

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%

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:

Castrol (UK) Blending and marketing of lubricants in Pakistan.

Air Total (France) Technical and commercial agreements in

Aviation Sciences and technology.

Exxon chemicals (Singapore) Petro-chemicals business and

technology.

Financial Highlights Of The Year

An all-time record sales of Rs. 170 billion, up by 26% over the

previous year.

An all-time record gross profit of Rs. 6.4 billion, 12.4% up over

the previous year.

Earned Rs. 2.25 billion as profit after tax and declared 100%

cash dividends to share holders despite the impact of VVS and

other adjustments made.

Received KSE Top performing company award for the 17th

consecutive year.

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A record 185 new Vision retail outlets commissioned, bringing

the total to 295.

The first oil company to provide Internet facility at retail outlets,

150 installed while 450 under implementations.

The first oil company to provide “Price Display Unit” on

monoliths and pylon signs.

Launched an innovative service “Mobile Quick Oil Change Unit

for undertaking oil change at customer’s doorsteps.

Successfully took over the important fuel oil effective from July

1, 2001 and HSD effective January 1, 2001 form Government of

Pakistan.

Objectives Of PSO

The company is focused on efficiently meeting the energy

requirements of Pakistan. Through its customer satisfaction it is consistently

seeking to improve quality of product.

Giving Momentum to the Nation

Energizing Industrial Institution

Ensuring Customer Satisfaction

Meeting New Business Challenges

Giving Momentum To The Nation

Meeting the fuel and energy needs of the people of Pakistan and the

country’s vital institutions setting the highest standards in customer care

offering and maintaining maximum quality control of products and services.

Creating an atmosphere of trust and coordinated teamwork that

enables sustains peak performance. Operating as the lowest cost supplier

with assured access to long-term suppliers, even in the utmost areas of the

country.

Undertaking initiatives that have an impact on the lives of people in a

constructive manner. Fulfilling the responsibility as a national institution by

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making a dynamic contribution to society and helping to build a progressive

Pakistan.

Energizing Industrial Institution

Throughout the 26 years of its existence, PSO has been a company

that has merged sound business sense with its national obligations. Taking

immense pride in being “Pakistan State Oil”, PSO has always been there for

national causes and commitments. Be it uninterrupted operation of electricity

turbines of WAPDA and KESC or the supply of staggering quantities of fuel oil

to HUBCO and other IPPs, PSO meets the majority of the country’s fuel oil

requirements.

By ensuring timely supply of petroleum products to the nations

defense forces, from the Northern Mountain ranges to the shores of Gawader.

PSO makes sure that the nation’s defense is never compromised for want of

fuel.

PSO’s Aviation stations at all the major airports of the country

continues to facilitate domestic and international air travel, its Bunker fuel

facilities fill up ocean liners of many a nation while its efforts to provide fuel in

the mountains of Saindak have earned wide recognition.

PSO’s commitment to national development is reflected by its nearly

three decades of operation. The nation can be confident the PSO shall

continue to honor the commitment in the future too.

Ensuring Customer Satisfaction

PSO believes in providing its customers diverse services based upon

innovation caring and the progressive vision PSO have for the future. Some

295 new vision outlets for providing highest quality services to the customers

have been established all over the country.

As a manifestation of its commitment to the adoption of modern

technology at its retail outlets PSO has introduces Internet facilities at 150

outlets. Also PSO is providing modern means of communication to its dealers.

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While Quick Oil Lube Vans provide customers oil change facility at their

doorsteps. Some 12 mobile quality-testing units ensure top of the line quality

of products at retail outlets with recent expansion in its product line of

lubricants.

PSO is now in position to serve the requirements of a broader base of

customers. Expanding the range of services at its outlets PSO has set up

Easy Payment Centers in collaboration with Citibank at selected retail outlets

in Karachi. At these centers the customers can pay their utility bills at any

time of the day avoiding the hassles of long queues.

Meeting New Business Challenges

As the first Oil Company to import HSD PSO has enhanced its

handling facilities at Zulfiqarabad Oil Terminal Port Qasim. This new

arrangement for HSD handling has not only relieved Karachi from noise and

environmental pollution but also reduced the traffic congestion of POL tankers

at Keamari.

In past few years Moges is being rapidly replaced by Compressed

Natural Gas (CNG) as fuel for a variety of vehicles. To cater to the demands

of this growing segment 30 PSO stations are now providing this facility while

40 more CNG stations are stages of developed new lubricant specifically

developed for CNG being introduced.

The company recently embarked upon a extensive program of

restructuring rationalizing its network of retail outlets improving its marketing

image through a nation-wide initiative to re-band key retail stations and further

increase efficiencies by streamlining its organizational structure.

Organizational Culture

Organization culture is a system of shared meaning with in an

organization that determines in large degree how employees act.

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Importance Of Culture In PSO

According to the opinion of the PSO’s sales officer PSO is a sales

oriented company. Strong culture is a symbol of more profit more earning and

sense of responsibility. It is also a monument of well-disciplined enterprises in

which every organ of that organization is well concerned with the ultimate

objective of the organization. As it’s a fundamental truth that every individual

from worker to Top manager is aware of his rights privileges responsibilities

and outcome of efforts being invested.

Six Dimensions Of Culture

1. Innovation And Risk Taking

According to our survey what we have found is that employees are not

much encouraged to be innovative and take risks.

2. Attention To Detail

According to our survey employees have given importance.

3. Outcome Orientation

The manager’s focuses on both results or outcomes and the

techniques needed to achieve those outcomes.

4. People Orientation

Management decisions do not take into consideration the effect of

outcomes on people within the organization. They have made their

employees a central part of their culture.

5. Team Orientation

They emphasize on team orientation i.e. work activities are organized

around them.

6. Stability

PSO is maintaining the status in contrast to growth

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Planning At PSO

Planning: a process that involves defining the organization objectives

or goals and developing an overall strategy for achieving those goals and

developing a complete hierarchy of plans to integrate and coordinate

activities.

Short Term Plan

Short- term Investments: investments in unquoted shares all

stated at the lower of cost or break up value.

Short-term Loans and Finances: the company has short-term

liabilities of Rs.5525 million from various bands at mark-up rates

from 33-38 paisa to Rs. 1000/day net of prompt payment

rebates. These arrangements are general for a period of 12

months and are receivable subject to payment of repurchase

price by specified dates. These facilities are secured by way of

charge against hypothecation of company’s stock of petroleum

products and trade debts.

Long Term Plan

Investments: the company follows the “cost methods” of accounting

for long term investments. The carrying amount is reduced to recognize a

decline other than temporary in the value of investments.

Long Term Deposits

Include Rs.15 million which are interest based against dealership for an

initial period of 10 years. The rate of interest ranges from 7-13% per annum and

are expected to be renewed on maturity.

Represent interest free deposits from contractors against the

transportation of petroleum products and are refundable on the cancellation of

contract.

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3.2 Vision and Mission

Vision

“To excel in delivering value to customers as an innovative and

dynamic energy company that gets to the future first.”

Mission Statement

“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 a team in an environment, which recognizes and

rewards performance, innovative and creativity, and provides for

personal growth and development.

Lowest cost operations and assured access to long-term and

cost effective supply sources.

Sustained growth in earning in real term.

Highly ethical, safe, environment friendly and socially

responsible business practices.”

3.3 Corporate Planning

PSO is striving to add value to its business by introducing modern efficient

and innovative business practices to boost corporate performance. Benefits of

this value will be given to shareholders and the employees of the company.

Corporate planning is about competitive advantage; at this most

challenging juncture in PSO’s history the focus is on forward thinking of on

cutting edge issues. Staffed with professionals having a diverse background in

business engineering and computer technology and international experience CP

is endeavoring to prepare PSO for the challenges ahead to ensure its

sustainable corporate leadership in future based on the best industrial practices.

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The development of a financial model that resulted in the company’s first

in depth study on product wise and business wise profitability as well as the

establishment of an effective procedural framework for capital budgeting mark

the first year of the corporate planning activity in PSO. This has led to

classification of authority and criterion for investment decisions efficient project

appraisal based on computer modeling and effective monitoring of the status

results of investments undertaken. These systems have been adopted by the

company for periodic review of corporate performance through management

committee meetings.

Contingency Factors In Planning Level On Organization

Outstanding performance of company was recorded by the board of

management and noted by the secretary petroleum during his recent visit. It

was because employees worked hard delivered efforts and produced results.

During the last six months unnecessary expenses had been curtailed to a

great extent; operations improved depot losses cut down and cartage fleet

upgraded.

Degree Of Environmental Uncertainty

PSO was in an intense competition mode. Market conditions in the

last six months were very difficult with the decline of consumption of POL

products. International oil prices dropping and fixed margins the results were

affected.

It was amazing that despite of the challenging industrial environment

the company not only maintained sound financial health but also was

pressing hard with all its major investment plans. The strategic initiative

undertaken by PSO is helpful to company to free the challenges impending

deregulation..

Organizational Structure & Design

The organizations formal framework by job tasks is divided in groups

but is coordinated. The basis on which jobs are grouped in order to

accomplish organizational goals is functional departmentalization.

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3.4 Brand Management and Communication Department

Branding is the reputation and the image of a company, which is conveyed

via names logos, acts packaging and word of mouth. Corporate branding used to

focus on logo and name but today it has a broader meaning.

The need for branding arises when consumers expect more than a good

product at a fair price. They seek service experiences that compliment their life

styles and brands that align with their personal aspirations. And that’s exactly

what company try to convey to target market.

VM&C department at PSO follows the following two approaches:

1. Expanding the depth and breath of brand awareness by improving

brand recognition of consumers during purchase or consumption

settings.

2. Improving the strength favor ability and uniqueness of brand

associations making up the brand image. The above goals are

achieved primarily through:

Corporate Advertising

Sales Promotion Campaign

Sponsorships

Customer Service Department

PSO has recently set up a dedicated service department that is major

step towards company’s overall objective of becoming a customer-oriented

company.

Located at the company’s head office in Karachi the CSD is the first point of

contact for the customers on day to day concerns and provides centralized

customer service across Pakistan

Trained and professional staff attends to and solves the customers

concerns and complaints quickly and effectively.

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Public Affairs/Public Relations Department (PRD)

The major function of the PRD is to ensure the projection of the

company’s image as the country’s premier public sector organization and

conscientious citizens. This is achieved by highlighting positive stories about

the company in the media.

Other functions of the department include event media management

speech writing and keeping Managing Director and the company hierarchy

informed. The department also tackles press queries and sets up interviews

of the Managing Director with the media. It also coordinates with the brand

management and other departments in the planning of events press

conferences workshops seminars etc.

The department is also involved in giving banners and tackling adds

requests not related to advertisements campaign. The department personnel

are also involved in the preparation of the annual report and writing of articles.

Chain Of Command

It is an unbroken line of authority that extends from the upper levels

of the organization to the lowest levels and defines who reports to whom.

As PSO follows traditional objective setting decision are made totally

by the top management. The authority is given to the managers to give orders

and employees are bound to follow them. It is the responsibility of the

employees to perform those duties assigned to them.

Unity Of Command

On PSO the unity of command hoes in the following sequence:

Chairman

Managing Director

7 General Managers

Divisional managers

1 sale Executive

8-12 Sales officers

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Managing Director is answerable to the Chairman. MD has 7 general

managers working under him. Every G.M has 8 DMs working under him.

Every DM has a Sales executive and under him there are 8-12 sales officers.

Centralization

PSO is a highly centralized company i.e. decision-making is

concentrated in the upper levels of the organization. The Top management

makes the company’s key decisions with little or no input from the lower level

employees. PSO is more centralized because the environment is stable

company is large and lower level managers are not as capable or

experienced at making decisions as upper level managers.

Company Analysis

Operations

To improve turnaround time for railway tank wagons and reduce

transportation costs to GOP, tank wagon filling facility at Pipri Marshaling

Yard was commissioned.

Company introducing/replacing in phases own tank lorry fleet for

supply of products to retail outlets in urban areas.

On line computerized management information system established

for retrieval of information at up-country depots/head office, complete

networking presently in hand. Health & safety policy document prepared &

circulated within the organization Environment Policy developed. ISO

certification for Blending Plant Korangi and Central Laboratory at Kemari,

Karachi, accomplished.

Infrastructure Development

Additional pipeline linking OP-3 to the PSO Terminal at Keamri for

discharge of deficit cargo.

Development and construction of Aviation handling facilities at Sihala

Terminal

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Modernization of Chakpirana Depot.

Addition of storage at Jag lot Depot.

3.5 PSO’s Physical Resources

Transport

PSO Railway Wagons 1120

Tank Lorries under PSO Control 13,400

(Karachi & Upcountry)

Blending Plants

PSO Owned 4

Affiliates 5

Contracted 1

Tando Alam Oil Complex

Tando Alam is located in Hyderabad district of Sindh Province.

Hyderabad is the nearest city about 21 KM away from the location. First

exploratory well i.e. Tando Alam Well No.1 was drilled and completed in May

1984 as an oil producer brought on regular production in October 1984.

Tando Alam Oil Complex comprises of Tando Alam, Lashari, Sono,

Pasakhi, Thora, Tando Allah Yar, Buzdar North, and Missan & Daru field.

Current production from Tando Alam Oil Complex is 12,000 BPD of oil.

BOBI Development Project

BOBI is located in Sanghar District of Sindh Province, situated 85 KM

north east of Hyderabad and 25 KM south of Sanghar. The field was

discovered by OGDCL in 1989.

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In order to appraise the field, OGDCL drilled six (06) wells, out of

which 05 are completed as producers.

The development project of Bobi field includes, drilling of two (02)

development wells, installation of surface gathering facilities, oil and gas

separation facilities, condensate stabilization unit, LPG extraction plant and

gas recycling system at Bobi field. The Project is expected to be on stream by

June 2003. Upon completion, the following products are expected to be

yielded:

Condensate - 2800 BBL/Day

LPG - 125 Ton/Day

Gas - 10 MMCFD (gas to be re-injected)

Kunnar Oil Field Project

The Kunnar Field is located in Hyderabad District of Sindh Province,

situated 24 KM south east of Hyderabad. The field development included the

installation of surface gathering facilities, oil & gas separation systems,

condensate stabilization system, LPG extraction plants and gas recycling

system for Kunnar Field.

The plant was commissioned in September 2000 and is presently

producing 3275 BPD of condensate 15 to 16 M. Tones/day of LPG and

residue gas of 2.50 MMSCFD is being reinjected into the reservoir for

pressure maintenance.

Qadirpur Joint Venture Project

Qadirpur Gas Field, the 3rd largest in the country was discovered in

1990. It is located in the central Indus basin, south of Kandkot and Sui Gas

Fields. The Development and production lease area (389 Sq. Km) is crossed

by River Indus in East-West direction. Oil and Gas Development Limited

(OGDCL), Premier Exploration Pakistan Limited (PEPL), Burmah Oil

Netherlands Exploration (BONE) and Pakistan Petroleum Limited (PPL)

29



jointly hold the D&P Lease with the following interests OGDCL (Operator)

75.0%, PEPL 9.5%, BONE (bp) 8.5%, PPL 7.0%.

Fourteen wells have been connected through the gas gathering

system and put on regular production. Drilling of more wells has been

planned, which will entail improved recovery.

Qaduroyr Exoabsuib Orihect

Presently the field is supplying 380 385 MMSCFD gas to M/s SNGPL,

which include 100 MMSCFD of dehydrated and 50 MMSCFD raw gas. After

the Phase-II capacity enhancement, the facility will deliver 400 MMSCFD

processed sale gas by mid 2003, in addition to 100 MMSCFD dehydrated and

50 MMSCFD raw gas. Provision has been made in the Capacity

Enhancement Scheme for further expansion of facilities to increase annual

average treated sales gas from 400 to 500 MMSCFD.

3.6 Social Welfare Activities

In addition to exploration and development activities in the Sindh

Province, OGDCL is already extending medical care, drinking water, and

schooling facilities to the locals. In recent years, Health, Safety, Environment

(HSC) has emerged as one of the major themes of corporate governance at

PSO. Realizing the importance of healthy and safe work practices, a

comprehensive HSE policy has been devised and the HSC manual and

procedures updated.

According to this policy no new vision outlet can be commissioned

before a comprehensive HSE audit. Likewise, HSC audits are being

conducted at all installations and depots, followed by necessary corrective

action. In order to increase awareness, HSC awareness sessions are

frequently organized for all employees throughout the organization. Financial

performance for the fiscal year ended June 30, 2003, despite the revenue

drop ad a record provision of approx RS 2 billion made for taxes (an increase

of approx Rs 800 million) PSO earned an all-time record profit before tax of

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Rs. 5.1 billion, up by 49% while profit after tax rose to Rs.3.2 billion

registering a growth of 42% over prior year period.

The profit increase is primarily due to innovative marketing strategies,

organizational restructuring, product mix revamping of internal system with

improved productivity along with the partial impact of enhanced margins

during the last quarter.

Accordingly the board of management approved a final dividend

comprising 80% cash (Rs. 8/share) and 20% bonus shares for FY-2003.

Combined with the earlier two interim cash dividend of Rs. 5 per share the

total amounts to Rs.13 per share resulting in the highest-level cash payout of

Rs. 1.86 billion to shareholders of the company.

In terms of sales PSO ranked 520th among Asia’s 1,00 largest

companies in the year 2001, according to a survey conducted by the Asia

week

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4. HR PRACTICES AT PSO

4.1 Human Resource Management

What Is Human Resource Management?

Human resource management is staffing an organization with

competent, high performing employees who are capable of sustaining their

performance level over a long period of time.

Importance Of Human Resource Management

HRM is an important strategic tool and it can contribute to the

development of a sustainable competitive advantage.

It is the most important intermediary body between the employee and

the organization that works to develop relations advantageous to both. All

activities related to nonmanagement employees are handled by the industrial

relations division and that of Management employees are handled by the

personnel division of the HRM.

Human Resource Management Of PSO

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

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policy has been devised and the HSE manuals and procedures finalized.

According to this policy, no new vision outlet can be 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.

4.2 Recruitment

Recruitment is the process of locating identifying and attracting capable

applicants. Sources of recruitment for PSO are as follows.

Internal search

Advertisement

Employee referrals

Public employment agencies etc.

PSO’s Recruitment Process

The purpose of requirement is to induct quality personnel for all the

vacant position (the right person for the right job)

When there is a vacancy of PSO a large numbers of applications are

received. Mainly, through the advertisement in the newspapers or through the

referrals of current employees. The employees screen the applicants.

Because the recommenders know both the job and the person being

recommended they tend to refer applicants who are well qualified for the

position.

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4.3 Derecruitment

De-recruitment is a technique for reducing the labor. According to PSO’s

policies if the employee has done something wrong or Hanky Panky then the

company uses the option of firing as a mean of de-recruitment. This seldom

happens unless someone has broken the rules of the company. Sometimes

employees are also transferred.

PSO recently used another method of de-recruitment. They used the

Golden handshake scheme and voluntary separation schemes.

4.4 Selection

Selection is the process of screening job applicants to ensure that most

appropriate candidates are hired. In PSO they select an employee on the basis

of his qualifications. Different selection devices are used to choose the best

suitable candidate for the job.

Selection Devices

Number of selection devices is used to accept and reject applications.

These are stated below:

CV’s : As all organizations requires a form on which the applicant fills

in his name, address and telephone number and a comprehensive personal

history profile detailing the person’s activities, skills and accomplishments.

Some relevant biographical data and facts that can be verified are also

required.

Written Test: When a candidate applies for a job at PSO he has to give

a written test. It is an intelligence, aptitude and ability test. First IBA used to

conduct these tests for PSO.

Interview: Interview is the most important and reliable method of

determining the personal abilities of the applicant by PSO. They get to know

about the interpersonal skills of the candidate.

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Physical examination: After an applicant has been selected after the

interview, he is physically examined. For jobs with certain requirements, the

physical examination has some validity. After the applicant is selected and the

management of PSO is sure of their decision that this person is suitable for

the job, he has to undergo a training process of one year.

4.5 Orientation

Orientation is the introduction of a new employee to the job and the

organization. Every new employee that has been hired in PSO is given an

orientation to familiarize with the company’s functions, policies, employees and

programs. The type of training would be an individual or group basis depending

upon the number of participants

4.6 Compensation and Benefits

PSO offers competitive starting salaries and bonuses. The individual

contribution in reward.

Pensions and gratuity the company operates approved and fund pension

scheme for both management and non-management employees. The scheme

provides pension based on the employees last drawn salaries. Pensions are

payable for life. The company also operates un-funded gratuity scheme for all its

employees.

Medical

The company also provides post retirement medical benefits to its

employees. PSO’s Medical policies are considered to be the best in the

country. Medical is free for the employees and their families.

Vaccination program for employees: in recognition of the importance

of human resource and its health, PSO organization a ‘vaccination program’

for its employees. PSO inaugurated the program under which the employees

were vaccinates against diseases like Cholera, Typhoid, Hepatitis B at the

PSO houses dispensary.

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Provident Fund

The company also operates an approved provident fund scheme for

all its employees. Equal contributions are made to the fund by the company

and the employees in accordance with fund rules.

Loans

Loans are granted for house construction repair or for the purchase of

land. Employees can also avail the car loan facility.

Rewards

Rewards are given on the basis of performance of the employee on

Monthly and weekly basis. These include the monetary rewards and also the

Points for promotion.

Million Liter Awards

The million-liter award ceremony was held at the PSO house. These

awards were given to the dealers who crossed the one million-liter figure in

selling the products of the company. the award had been initiated to

recognize and encourage to promote the business and services to their

customer.

Awards were also given to the divisional managers and sales officers

showing outstanding performances in their respective field.

Hajj Draw-2002

The Hajj draw was also held at the PSO house auditorium.

Seventeen members were sent to perform Hajj.

4.7 Appraisals

Performance evaluation takes place annually for the purpose of annual

increments. The appraisal also assists human resource in the career

development of an employee.

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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.

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.

Leadership Style

According to Sales Officer head office Rawalpindi, on the leadership

style grid, PSO would score a (9,1) meaning that they implement ‘Produce or

Perish’ leadership style. Implementing their leadership styles they maximize

their revenues.

PSO is a market-oriented company. Employees for them are just a

means to an end making profit. Almost all employees are dispensable which

leads to low morale and decreased productivity since people feel that they

can be laid off any time. They don’t have that much loyalty for the company.

4.8 Decesion 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.

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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.

Decision-Making Styles

Analytical Style: (Long Run)

As PSO is sales oriented company and it has many competitors like

Shell, Caltex etc. So they have to consider more alternatives after making a

decision. The managers in this condition have the ability to cope with unique

situation.

Directive Style

In short run, the decision making are more in directive style i.e.

managers made fast and logical decisions. The manager is the focal point in

the organization and he is appropriate authority to a problem arise by his

observation or reflected by someone else from the organization.

4.9 Motivation

Motivation Tools Used By PSO Are As Follows:

C-Stores/Business Centers

C-stores are 24-hour convenience stores (branded “Shop Stop”) that

are a major tool in enhancing the image of the PSO retail outlet. It is one step

towards achieving the stop shop to attract motorists. The business centers

are a specialized environment where they provide Internet, fax and phone

facilities. Photocopying facilities are also available. Further at selected

locations they have also provided the Citibank easy payment centers, where

one can pay utility bills and credit card payments.

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Internet Facilities At Retail Outlets

PSO has provided 300 Internet kiosks that contain branded P.C. and

a printer. A further 300 kiosks will be provided by June 30,2002. This is a

pioneering effort by PSO that is aimed to supplement the government efforts

to spread IT in the country. These Kiosks have been given to the new vision

retail outlets regardless weather they have business centers or not.

Million Liter Award Distribution Ceremonies

The million liters awards had been initiated to recognize and

encourage the cooperation made by dealers to promote the business and

service to their customers.

Hajj Draw

The Hajj draw 2002 was held at PSO house auditorium in which 17

members were sent perform Hajj. The aim of the draw was to assure the

workers to service its members with full dedication.

Health Safety And Environment

PSO is maintaining a strong focus on HSE, which is the foremost

corporate objective of the company. HSE audits are being conducted at

installations and depots, followed by necessary corrective actions. In order to

increase HSE training program have been organized for all employees of the

organization.

Community Welfare

In its constant strive to be a good corporate citizen PSO has

contributed to several causes like scholarships fore serving students,

donations to CPLC for combating terrorism and donations to environmental

institutions.

Financial Assistance

Financial assistance is provided to employees Not only they are

provided with financial assistance but loans are also granted for house

construction.

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Special Allowances For Minorities

Special allowances are given to members belonging to minorities.

Confirmation

After the satisfactory completion of their probation period, the

employee is confirmed in his position.

4.10 Controlling

The process of monitoring activities that they are being accomplished as

planned and correcting any significant deviations.

In the controlling process actual performance is compared with the

standard performance. At PSO the standard performance is compared with the

performance of Shell. And the total revenues, market share, sales and profits are

measured.

This is done to have a total outlook of both the companies and helps in

deciding who is leading and which of the two organizations is in profit, so that

incase of any deviations, it can be corrected to improve the profit, sales,

revenues and market share.

Types Of Control

Market Control uses external market mechanisms such as price,

competition and related market share to establish standards used in system.

Typically used by organizations where products or services are clearly

specified and distinct and who face considerable market place competition.

PSO is in direct, cut threat competition with shell. PSO surveys the

external; market taking into consideration the progress of Shell, because it is

its major competitor. It uses Shell’s progress to compare for markets control.

40



5. TRAINING AND DEVELOPMENT AT PSO

PSO has well defined selection procedures. These procedures include

paper and pencil test, an interview with the top manager alone and then the

panel interview.

The selection process starts with the application form. Which are required

to be filled and delivered to PSO before a due date. Then the applicants are

required to give a written test; the candidates that clear the written test are further

considered for the interview either with a panel or with a respective manager. If a

candidate clears this interview he or she is appointed.

5.1 Training

Training Policy

Training and development is a continues process and it is designed

to bring about a change in the attitude of the employees with respect to the

job they are doing, the people around them and techniques and skills which

they can use. It is also to make them more conscious of their responsibilities

and how to perform them well. Therefore all training is planned and

coordinated in a systematic manner by the company.

On The Job Training

It is well regarded that the best place for effective learning is on the

job i.e. the employee learning the job by doing it under instruction by his

superior. Since managers are, if not trained instructors the department

provides training the job instruction methods through practice of supervision

course. During the training the trainees are sent to the different departments

of the organization in order to expose and familiarize them to the business

environment of the entire organization. The training period for different

employees varies according to the nature of the job they likely to handle. The

different periods for different trainees are listed below:

Engineering Trainee will take 18 months on training.

41



MBAs will take 6 months on training.

BBAs Training lasts for 8 to 12 months.

Electrical and Mechanical Technicians will take 8 months on

training.

During the training the performance appraisal for each trainee is

made after each quarterly. After completion of the training a performance

review is made and if the performance is satisfactory then the trainee is

appointed as permanent employee.

Training Employees

In order to keep its employees at par with the technological and

business development PSO arranges for the adequate training of its

employees. The different modes adopted by PSO include:

Sending employees abroad

Arranging for the training of the employees at home, as and when

need arises

One such case is the training of employees to use SAP application

for data automation.

5.2 SAP

SAP is the leading Enterprise Information and Management Package

worldwide. Use of this package makes it possible to track and manage, in real-

time, sales, production, finance accounting and human resources in an

Organization.

5.3 HR Module

The HR module enables to effectively manage information about the

people in their organization, and to integrate that information with other SAP

modules and external systems. From the Organization Management perspective,

42



companies can model a business hierarchy, the relationships of employees to

various business units and the reporting structure among employees.

The Personnel Administration (PA) sub-module helps employers to track

employee master data, work schedules, salary and benefits information.

Current Personnel Development (PD) functionality focuses on employees'

skills, qualifications and career plans. Finally, the Time Evaluation and Payroll

sub-modules process attendance and absences, gross salary and tax

calculations, and payments to employees and third-party vendors.

The number of companies using SAP R/3's Human Resource (HR)

module has increased dramatically in the last few years, with many clients adding

HR to their live suite of modules, or even choosing HR as an initial or standalone

implementation.

What Makes SAP Different?

Traditional computer information systems used by many businesses

today have been developed to accomplish some specific tasks and provide

reports and analysis of events that have already taken place. Examples are

accounting general ledger systems.

Occasionally, some systems operate in a "real-time" mode that is,

have up to date information in them and can be used to actually control

events. A typical company has many separate systems to manage different

process like production, sales and accounting. Each of these systems has its

own databases and seldom passes information to other systems in a timely

manner.

SAP takes a different approach. There is only one information system

and database in an organization, in which all applications access common

data. Real events in the business initiate transactions. Accounting is done

automatically by events in sales and production. Sales can see when

products can be delivered. Production schedules are driven by sales. The

whole system is designed to be real-time and not historical. SAP structure

43



embodies what are considered the "best business practices". A company

implementing SAP adapts it operations, achieves its efficiencies and power

rapidly.

The process of adapting procedures to the SAP model involves

"Business Process Reengineering" which is a logical analysis of the events

and relationships that exist in an enterprise's operations.

44



45



These operations consistent with the overall integration of SAP R/3,

the HR module shares information with other modules, such as Financial

Accounting (FI), Controlling (CO), Production Planning and Business

Workflow. The Payroll processes use Accounts

Payable functions to print checks, manage payment and bank

information, and process payments to tax authorities and other third-party

vendors. Payroll results are also posted to General Ledger accounts for use

in periodic income and expense reporting. For management accounting,

information regarding employment costs can be transferred to Cost Centers

with in the CO module. Employees can be assigned to Work Centers, which

are used in conjunction with Production Planning. Assigned positions and

reporting relationships from PD are used in Business Workflow to route

purchase requisitions and other documents for approval. HR works with

external systems either through certified interfaces with SAP partner

products, or custom developed interfaces to customer defined systems.

Functional Modules

R/3's applications are modules. They can be used either alone or

combined with other solutions. The integration capability of these applications

increases the benefits derived for any company.

Human Resources

HR provides solutions planning and managing company's human

resources, using integrated applications that cover all personnel management

tasks and help simplify and speed the process.

PM (Personnel Management): PM is a complete solution for personnel

administration, recruitment management, travel management,

benefits administration and salary administration.

OM (Organizational Management): OM assists in maintaining an

accurate picture of organization's structure, no matter how fast it

46



changes. It is systematic and forward planning tool that considers

the final effects of all personnel events thus it's complete solution

for personnel cost planning.

PA (Payroll Accounting): PA addresses payroll functions from a global

point-of-view and gives the capability to centralize payroll

processing or decentralize the data based on country or legal

entities.

TM (Time Management ): TM is integrated with payroll accounting,

controlling, production planning, plant maintenance, project system,

external services and shift planning. It provides with a variety of

standard reports that will assist in tracking and analyzing employee

time with completeness and accuracy.

PD (Personnel Development): PD assists with planning, monitoring,

and analyzing scheduled seminars, training courses, and business

events, registration and booking, price determination and invoicing.

Logistics

Logistics comprises all processes involved in purchasing, materials

management, manufacturing, warehousing, quality management, plant

maintenance, service management and sales and distribution. All applications

access a shared consistent database, supported by production data

management.

SD (Sales & Distribution): SD actively supports sales and

distribution activities with outstanding functions for pricing,

prompt order processing, and on-time delivery, interactive

variant configuration, and a direct interface to profitability

analysis and production.

PP: (Production Planning and Control): PP provides comprehensive

process for all types of manufacturing: from repetitive, make-to-

order, and assemble-to-order production, through process, lot

47



and make-to-stock manufacturing, to integrated supply chain

management with functions extended MRP || and electronic

kanban, plus optional interfaces to PDC, process control

systems, CAD and PDM.

PS (Project System): PS coordinates and controls all phases of a

project, in direct cooperation with Purchasing and Controlling,

from quotation to design and approval, to resource management

and cost settlement.

MM (Materials Management): MM optimizes all purchasing

processes with workflow-driven processing functions, enables

automated supplier evaluation, lowers procurement and

warehousing costs with accurate inventory and warehouse

management, and integrates invoice verification.

QM (Quality Management): QM monitors, captures, and manages

all processes relevant to quality assurance along the entire

supply chain, coordinates inspection processing, initiates

corrective measures, and integrates laboratory information

systems.

PM (Plant Maintenance): PM provides planning, control, and

processing of scheduled maintenance, inspection, damage-

related maintenance, and service management to ensure

availability of operational systems, including plants and

equipment delivered to customers.

SM (Service Management): SM provides highly integrated customer

service functionality to compete in today's global markets.

PDM (Product Data Management): PDM supports in creating and

managing product data throughout the product life cycle.

48



SAP HR

HR module of SAP is the current need of every big organization

which Siemens provide and currently the are implementing in various

companies of Pakistan like Pakistan

Petroleum Limited (PPL), ICI Pakistan, PSO and even the Pakistan

government department like AGPR and other financial institutions are

implementing SAP to automate their systems and managing their Human

Resource with it by the funding of world bank.

The primary goal of SAP HR module is to provide managers and HR

professionals to manage the people information effectively and to use in the

benefit of both the employer and the employee.

The future of SAP's HR module looks promising for both customers

and implementers. Internet technologies will provide SAP customers’ new

tools to include employees in maintaining their own data, and increase

management's ability to quickly report on critical employee information.

Developing solutions for companies with extensive expatriate assignments

will improve the way businesses manage and pay international employees.

These factors, along with emerging rapid implementation tools will make SAP

an ever-stronger choice among HR management systems.

SAP HR module is an effective tool to handle and accommodate

following organizational elements,

Organizational Elements

Client

Company code

Personnel area is used exclusively in HR and is unique within a

client. Each personnel area must be assigned a company code.

Personnel sub area

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Scope Of Pre-Employment Training

The aim of pre-employment training policy of PSO is to provide

opportunities of hand-on professional training in real job environment to the

prospective employees of the Company. Graduates of various disciplines are

inducted for 6 to 12 months on-the-job business administration/technical

training.

The selected personnel are trained on-the-job under the direct

supervision of senior employees (Trainee Father / Mentor) so as to build their

competency to the required levels.

The training is objectively programmed, guided and monitored

through a feedback system towards assessing trainees’ actual performance &

potential with regard to the requirements of foreseen vacant positions.

The staffing needs of the company are met generally from the pool of

trainees who complete their training successfully and are found suitable for

the available job opportunities.

Procedure

In order to assist in providing a systematic method of training and

integrating the trainees in PSO following forms are used:

Plan For Training

The Trainee Father completes the Training Plan and gives it to the

trainee in the first week of joining the company. The trainee father keeps a

copy and a second copy is sent to the Human Resources department through

the respective Manager.

Report Of Feedback

The trainee is required to report on the quarterly trainee feedback

form to report about his/her training during each quarter. HR sends this form

to the trainee at the end of each quarter. The trainee fills the form and returns

directly to HR.

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Progress Report

Trainees’ progress report form is sent to the trainee father at the end

of each quarter. The trainee father fills the form and returns to HR through the

respective Manager.

Training Appraisal

Upon completion of training a final appraisal is required by the

respective managers to communicate whether to confirm, extend or terminate

the training. Employees at PSO are undoubtedly considered their greatest

assets, so they place great importance on nurturing their own ‘home grown’

talent by helping people at all levels in the company to develop their skills and

capabilities, and to pursue their full potential. Employees with management

potential are encouraged to take part in the company’s management learning

program, which provides an excellent forum for personal and team

development as well as networking and knowledge exchange with peers from

other businesses

Continuing education is an important part of any career; PSO provide

an extensive curriculum of interpersonal, management and technical training.

Human Resources/Educational Services is their partner in total employee

development. Human Resources can provide the solutions and introduce you

to the tools and resources you need to successfully manage your career.

Continuous Learning

Sales Training

Trainer Consultation

Trainer Certification

Basic Skills Training

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Sales Training

Providing customers (internal employees & external customers) with

the most effective learning processes is the mission of the Sales Training

Team. This curriculum is suited for everyone-- from those who are new to

sales to seasoned senior account executives.

Trainer Consultation

With proper planning and guidance, participants are assured of

receiving the right training, in the right place and at the right time.

Trainer Certification

Through Trainer Certification, educating employees can be cost

effective, flexible and convenient.

Basic Skill Training

Basic Skills Training provides courses increase their general

knowledge and enhance their skills. It includes the customer services on the

petrol pump which includes:

Check the meter of the car

Greet the customer

To take keys from the driver

5.4 Development

Personnel Development

The company regards employees as its greatest asset. Therefore, it

is of particular importance that the right applicant is employed for the job. The

correct procedures for engagement and selection must be clearly understood

by both Line Management and Human Resources.

The company will recruit, train and promote staff on the basis of their

ability, according to relevant legislation and company policies and request.

Competencies describe what is needed for each employee to perform his or her

52



job successfully regarding the expected knowledge, experience and capabilities.

Competency Model

The Competency Model defines the competencies that are required

by PSO in various positions as the requirement of a competency varies from

one job to another. The form to be used in this connection is Training Needs

Analysis.

The PSO Competency model forms the basis for assessing the

training needs of the whole organization. It is the responsibility of heads of all

organizational units to take account of hat specific knowledge and skills the

jobs involve, what the individuals already possess, and what gaps in such

knowledge and skill levels, training can fill. Guided by business

targets/departmental objectives and evaluating employees on their existing

capabilities, with the help of the Training Needs Analysis document, the

training needs of each individual are determined.

Infrastructure Development

Additional pipeline linking OP-3 to the PSO Terminal at Keamri for

discharge of deficit cargo. Development and construction of Aviation handling

facilities at Sihala Terminal include:

Modernization of Chakpirana Depot.

Addition of storage at Jag lot Depot.

5.5 Relationship with Society

Collaborations With Educational Institutions

PSO Building Technologies is committed to excellence in education.

Their comprehensive solutions help employee provide ideal environments for

learning, and their guaranteed, performance-based funding options make

improvements possible. But they don’t stop there. They sponsor educational

programs, award over $1 million in scholarships and provide internships to

help students explore career opportunities. Their “Best Total Solution”

53



approach assures a complete and customized solution that meets the needs

of each customer. And through Building Education™, they not only meet all of

their facility needs …they can help their students succeed.

The mission of Building Education™ is to enhance learning by

assisting educational institutions in preparing students for successful futures.

Through innovative, customized programs, students and schools can share in

the Wealth of Siemens’ resources and capitalize on Siemens’ expertise in

business and engineering fields. Based on parallel goals of student

achievement and workforce development, Building Education™ partnerships

are helping both schools and PSO realize greater success.

Health Development And Environment Development

At PSO, HSE award is given to those which are considered as the

HSE Men of the Month. There is HSE department which conduct the training

course at Korangi. Senior Executives HSE trains the staff in:

Firefighting

Incident reporting and investigation

Root cause analysis

Work permit system

Housekeeping inspection

Performance management

Safety talk

Other best practices in HSE

5.6 Social Welfare Activities

In addition to exploration and development activities in the Sindh Province,

OGDCL is already extending medical care, drinking water, and schooling

facilities to the locals.

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In recent years, Health, Safety, Environment (HSC) has emerged as one

of the major themes of corporate governance at PSO. Realizing the importance

of healthy and safe work practices, a comprehensive HSE policy has been

devised and the HSC manual and procedures updated. According to this policy

no new vision outlet can be commissioned before a comprehensive HSE audit.

Likewise, HSC audits are being conducted at all installations and depots,

followed by necessary corrective action. In order to increase awareness, HSC

awareness sessions are frequently organized for all employees throughout the

organization. Financial performance for the fiscal year ended June 30, 202,

despite the revenue drop ad a record provision of approx RS 2 billion made for

taxes (an increase of approx Rs. 800 million) PSO earned an all-time record

profit before tax of Rs. 5.1 billion, up by 49% while profit after tax rose to Rs.3.2

billion registering a growth of 42% over prior year period.

The profit increase is primarily due to innovative marketing strategies,

organizational restructuring, product mix revamping of internal system with

improved productivity along with the partial impact of enhanced margins during

the last quarter.

Accordingly the board of management approved a final dividend

comprising 80% cash (Rs. 8/share) and 20% bonus shares for FY-2002.

Combined with the earlier two interim cash dividend of Rs. 5 per share the total

amounts to Rs.13 per share resulting in the highest-level cash payout of Rs. 1.86

billion to shareholders of the company.

Not only that the company has emerged as one of the country largest

taxpayers in the corporate sector. PSO’s business operations have helped collect

over the years Rs 340 billion in duties and taxes on behalf of the government.

In terms of sales PSO ranked 520th among Asia’s 1,00 largest companies

in the year 2001, according to a survey conducted by the Asia week.

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Community Welfare

In its constant strive to be a good corporate citizen PSO has

contributed to several causes like scholarships fore serving students,

donations to CPLC for combating terrorism and donations to environmental

institutions.

5..7 Analysis Of Project

The first function of the human resource planning for any company is

recruitment and selection. For the long term profitability and success of the

company the recruitment policy has to be aligned with the strategic internal

growth of the company. The purpose of this work instruction is to set

standards guidelines for the recruitments process of permanent, contract and

trainees within PSO. Training and development at PSO helps in:

Assist in identifying hiring requirements

Source and identify qualified candidates for vacant positions

Perform initial screening interviews

Refer qualified candidates to the higher manager for final selection

Extend offers of employment to ensure consistency in process

Develop, implement and/or administer employee orientation

programs

Provide outplacement services (training etc.)

Training And Development

Instruction provided to stimulate change. Its focus is short-term and

directed solely at furnishing knowledge or skills that employees need to carry

out their present work duties efficiently and effectively. Training to encompass

change competence as per the vulnerable environment of the refinery

requires continuous modification.

As compared to the training and development of Shell, PSO training

programs are more effective in achieving their corporate level goals.

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A written document at PSO that out identifies the needs, describes

the strategy for addressing those needs and includes:

1. A needs assessment;

2. A plan that states goals and objectives, and methods for

achieving them;

3. A statement regarding funding necessary to implement the plan.

Training Plans regarding the periodic trainings at regular intervals

play a facilitation role for the employees. Sustainability of the training plan is

identified by the regularity of different dimension programs.

At PSO each department should designate a person to assist in

implementing its training and development programs and to serve as contact

with Human Resource Department for the coordination of training services.

At Shell, the department or the line manager should develop a

biennial training plan to include: (even for the regular training programs)

a. A training needs assessment;

b. An action plan showing goals, objectives, and methods by which

the plan can be achieved; and

c. Funding needed to implement the plan.

57



6. ANALYSIS OF HR PRACTICES

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.

6.1 Comparison of HRM Practices at PSO and SHELL

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 Considers A

Strong Focus On Their Development A Value Added And Worthwhile Investment.

HRM Practices At PSO

HR Planning

Recruiting

Selection

Training and Development

Compensation

Performance Management

Employee Relations

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Company’s performance

6.2 Comparison of HR Practices with SHELL Planning

Planning is a process that involves defining the organization objectives or

goals and developing an overall strategy for achieving those goals and

developing a complete hierarchy of plans to integrate and coordinate activities.

Short Term And Long Term Objectives

The basic aims and objectives set by the management of PSO

Pakistan as compared to Shell with regard to the human resource

management are as follows.

PSO main objective is to hire a work force that that suits the

needs of the organization where as at Shell they emphasize

more on the encouragement work force through rewards and

bonuses.

PSO emphasize on making the hiring and recruiting process

transparent and standardize, so that only needed personnel is

hired whereas at Shell they maintain the required work force

through a system of hiring and retiring.

To take care of the diversity in order to obey social obligations

of the organization and maintain the harmony among the

diverse employees is emphasized by both PSO and Shell.

6.3 Recruitment

Comparison Of PSO’s And SHELL Recruitment Process

When there is a vacancy of PSO a large numbers of applications are

received. Mainly, through the advertisement in the newspapers or through the

referrals of current employees. The employees screen the applicants.

Because the recommenders know both the job and the person being

recommended they tend to refer applicants who are well qualified for the

position. The prefer graduates from NUST, FAST and BAHRIA universities.

59



At Shell the requisition must be signed as per signature mandate.

The requisition must reach Human Resources in time to conduct a proper

talent search.

This may include:

Internal check of database for suitable applications

Advertising within the company

Advertising in suitable newspapers

Advertising in suitable universities

Derecruitment Policy

Derecruitment is a technique for reducing the labor. According to

PSO’s policies if the employee has done something wrong or Hanky Panky

then the company uses the option of firing as a mean of derecruitment.

Sometimes employees are also transferred.

PSO recently used another method of derecruitment. They used the

Golden handshake scheme and voluntary separation schemes.

6.4 Selection

Selection is the process of screening job applicants to ensure that most

appropriate candidates are hired. In PSO they select an employee on the basis

of his qualifications.

Different selection devices are used to choose the best suitable candidate

for the job. Number of selection devices at PSO is used to accept and reject

applications. These are stated below:

CV’s

Written Test

Interview

Physical examination

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After the applicant is selected and the management of PSO is sure of their

decision that this person is suitable for the job, he has to undergo a training

process of one year. AT Shell the selection process includes:

Hiring decision Step 5

Medical Evaluation Step 4

Realistic job previews Step 3

Supervisory Interview Step 2

Employee Test Step 1

6.5 Employee Training Methods and Development

When it comes to training and development PSO gives on the job training.

They believe that the employee tends to learn a wide variety of jobs and a wider

perspective on the organizational activities.

6.6 Compensations and Benefits:

PSO offers competitive starting salaries and bonuses. The individual

contribution in reward.

Pensions and gratuity: the company operates approved and fund pension

scheme for both management and non-management employees. The scheme

provides pension based on the employees last drawn salaries. Pensions are

payable for life. The company also operates un-funded gratuity scheme for all its

employees.

Medical

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Provident fund

Loans

Rewards

Appraisals

Policies

Million Liter awards

6.7 Performance Management

PSO is more oriented toward maximizing revenues. There is more

concern for production as compared to concern for employees.

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.

According to Mr. Raja Faisal, Sales Officer head office Rawalpindi, on the

leadership style grid, PSO would score a (9,1) meaning that they implement

‘Produce or Perish’ leadership style. Implementing their leadership styles they

maximize their revenues.

PSO is a market-oriented company; they have very little concern for

people. Employees for them are just a means to an end making profit. Almost all

employees are dispensable which leads to low morale and decreased

productivity since people feel that they can be laid off any time. They don’t have

that much loyalty for the company.

6.8 Employee Relations

Employee relations at both PSO and Shell are maintained. In the offices

and at the petrol stations employees are provided with clean and effective

environment so that the objectives of carrying out the business could be met.

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When the employee relations are good there is no possibility that your

performance level goes down. So at both Shell and PSO the employee relation is

quite good. For this the tools are:

Staff meetings

Bulletin boards

Suggestion box

Procedure for handling complaints

6.9 Company’s Performance

Global conditions have an immense effect on any large organization. The

previous year has experienced some drastic global changes. The attacks on

WTC, which the Americans called, the “War of Terror” has taken its toll on all the

industries and markets of the world. Most affected has been the aviation industry

which is one of the PSO’s major clients. As previously mentioned PSO provides

fuel to our national airlines, which operate to and from Pakistan. As the number

of people traveling by air has considerably decreased which in turn has

decreased the demand of fuel by airlines. This has indeed come as a major blow

to PSO.

Because of the recent middle-east crisis between Israel and Palestine,

which led to a half oil supply from Iraq, the global price of crude oil has increased

considerably. When fighting in Afghanistan was at its peak, oil freighters were

hesitant of coming towards this side of Arabian Peninsula because of the fear of

being hit by a cruise missile fired by fighter jets taking off from naval ships

docked there.

This incident decreased the amount of oil coming in to Pakistan and is the

source of rise in oil prices. PSO was very much affected by this. The demands of

fuel especially patrol in Pakistanis rather elastic.

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6.10 Future of PSO As Compared with Its Competitors

Looking at the overall retail industry prior to 1990 the three OMC, Caltex,

Shell (PBS) and PSO were providing similar level of shabby products and

services to the consumers because of which neither could they be distinguished

nor did the consumer had any choice. They all had unattractive looking service

stations with similar Meehan real dispensers and were selling lubes in tins. Three

companies in Rickety Cartage Contractors Tank Truck arranged product delivery

to their outlets. Then in 1990 Caltex started improving its retail stations, providing

electronic, dispensers steam wash feasibility, well-illuminated canopies,

uniformed attendants as well as high quality lubricants. Shell also embarked its

retail visual image project in 1994 and started implementing their international

RNI design on its retail network in 1997 Caltex launched their new retail image

programs to further enhance its retail modernization on new revised lines and in

more vibrant colors

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7. ANALYSIS OF TRAINING AND DEVELOPMENT AT PSO

7.1 Responsibilities Related To Training

Training coordinator at PSO shall provide, within reasonable

resources, employee training necessary to assist the agency in

achieving its mission and accomplishing its goals.

Departments then should send a copy of their training plan to HR

head to be used for the sharing of training information and

resources.

On the Job Training assessment and implementation is the

responsibility of the department’s training coordinator. They should

provide, at a minimum, on-the-job training or work-related

instruction that prepares employees to perform their current jobs

(includes: instruction necessary to accommodate technological

changes, and new employee orientation).

The individual Employee Development Plans for employees are

mandatory as a part of the Employee Work Profile at PSO, which

should be updated bi-annually. The plan includes personal learning

goals, learning steps and resource needs.

Regular professional training is conducted through conferences,

conventions, seminars and workshops that are aimed at enhancing

and/or increasing the work skills and/or abilities. This kind of

training can include any dimension ranging from the regular

trainings regarding safety and environment hazards. Work

methodologies, personal skill development and organizational

focus.

The time that an employee spends at an approved training program during

normal work hours shall be considered as part of the employee's normal work

65



hours and shall not be charged to his or her accumulated leave or considered

leave without pay.

Training records and maintenance have to be kept by the

coordinator where the records should be maintained following the

three years after the completion of the training. Training records

should include, at a minimum:

a) Participant's age, race, and gender;

b) Course identification and dates of training;

7.2 Training and Development on Need Assessment

On the Job training

Conference

Development Assignment

In-house

College course

Associations (apprenticeships)

Mentoring

Special Designated Courses

7.3 Training Types at PSO

In order to main the sustainability of the workforce following many types of

trainings are conducted.

New Technology and methods

Personal Skills Development

Organizational Development

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Emergency Training

Environment and Safety Trainings

One- and two-day open enrollment workshops

Certification Programs

Project Related Training

Cross Functional Training

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8. RESEARCH FINDINGS

8.1 The Questionnaire

The questionnaire that I formulated consisted of a total of nine questions

centering on the technical training and employee skill development methods

adapted at PSO to the satisfaction of employees. Amongst the nine questions

two of the questions were open-ended questions so that the employee could

provide his/ her views and opinions enabling me to get a much better response

and gain more information.

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Question # 1:Question # 1:

Are you satisfied with the current training and employee development

methods at PSO?

(a)Yes

(b)No

Result From PSO

Yes No

Respondents 38 18

Percentage 68% 32%

Interpretation:

As it can be observed from the answers to this question majority of

the employees in the organization at PSO are satisfied with the current

training and employee development methods. It is quite apparent that PSO is

a very successful organization and well known when it comes to capable and

effective workforce. The answer to this question further shows that the

training methods that have been adopted at PSO are to the satisfaction of

majority of the employees, that is 68%.

However, the 32% of employees that seem dissatisfied cannot be

ignored. From the statistics it can be observed that some of the respondents

69



answered in negative to this question. Therefore, PSO should not be

completely confident when it comes to its training and employee development

procedures. It should hence look into this matter as well.

This question shows that even though majority of the workforce at

PSO are satisfied, a number of dissatisfied employees still exist. The reason

that I asked this question was to determine that whether the management

views and employee views actually support each other or contradict each

other, when it comes to satisfaction of current training and employee

development procedures adopted.

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Do you believe that significant gains in your productivity have been made

as a result of training?

(a) Yes

(b) No

Result From PSO

Yes No

Respondents 40 16

Percentage 71% 29%

Interpretation:

As is apparent here as well that majority of the employees believe

that their productivity has increased as a result of the of the training methods

adopted at PSO. A large percentage, that is, 71% claim to have experienced

productivity gains in their work.

During my interview with the Mr. Waqar Ahmed Khan, he also

claimed that training at PSO of the employees has resulted in productivity

gains. However, 29% of the employees were of the opposite opinion. The

believed that no significant gains in productivity had resulted from training. By

looking at this figure it is apparent that the views of management and

71



employees do contradict, but majority of the workforce views do coincide with

management.

This question was asked in order to ascertain whether the employee

feels that productivity gains are being made or not. Simply asking the

question to the management may have resulted in a much different answer

than what has now been discovered.

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If no, what improvements do you think should be made?

Result From PSO

Interpretation:

For this question I won’t be using any charts to show the answers of

employees. Here an open-ended question was formulated to acquire a wider

number of answers and not inhibit the employee to a set of options. The

reason for asking this question was to discover the diverse range of opinions

that employees at PSO have.

This question was also asked to provide leverage to the previous two

questions and determine the reasons that employees have. The 29% of

employees who believed that no significant gains in productivity had been

made and the 32% of the employees that were not satisfied with the training

and employee development methods at PSO gave a number of opinions in

terms of improvements that should be made.

Many of the employees thought that more expedient planning in

terms of training procedures and proper management assessment of the

training needs should be adopted. Employees wanted dedicated

professionals to constantly try to determine the needs of training in

employees. In my interview with the management, they had claimed that the

procedure of training and its planning were very efficient but on seeing the

employees answers this suggested otherwise.

Similarly, employees also claimed that training and employee

development methods and procedures should be continuously updated in

order to remain effective in the competing world.

In addition it was also suggested that training and employee

development methods should focus more on the practical goals of the

organization. This was a very strange answer, as usually employees want to

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develop themselves and their skills so that they have potential for growth. But

in this answer employees wanted training to be only job specific and

organization specific.

Amongst the other answers given employees wanted PSO to send

them abroad for training and training and employee development methods

should be more focused on financial and strategic planning.

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How often do you think that training and employee development

procedures should be implemented?

(a) Whenever necessary

(b) Twice a year

(c) All the time

(d) Other

Result From PSO

(a) Whenever

necessary

(b) Twice a

year

(c) All the time (d) Other

Respondents 14 28 14 0

Percentages 25% 50% 25% 0%

Interpretation:

As it can be observed from this question majority of the employees at

PSO, that is, 50% believed that training and employee development procedures

should be implemented twice a year. Percentages in terms of the answers to,

part (a) whenever necessary, and part (c) All the time were the same, being 14%

each.

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Surprisingly majority of the employees wished only to go through

such training and employee development procedures only twice a year. On

discovering this, I went and asked some of the employees on why they had

chosen this option, the answer was that they did not wish to spend a lot of

their time in one year focusing only on training but rather also wanted to be

more involved in their work and at times training and employee development

methods divert the employee away from this. However there were some

employees who wished to go through training and employee development all

the time and others who thought that they should go through it only when

necessary. The percentage of such employees was an equal 14% each.

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You acquired training as a result of,

(a) Your request for training

(b) As a necessary implementation made by management

(c) Performance appraisal showed the requirement for training

(d) You fulfilled certain criteria on the basis of which training and employee

development was given.

Result From PSO

(a) Your

request for

training

(b) Necessary

implementatio

n made by

management

(c)

Performance

appraisal

(d) On fulfilling

certain criteria



Interpretation:

I asked this question to see, on what basis did majority of the

employees get training. As it is evident from the statistics and the figure that

77



75% of the respondents underwent training because it was a necessary

implementation made by the management.

Here the answer does coincide with the management answers, that

majority of the employees at PSO acquire training as a result of the

implementation made by the management. However, the other answers

should not be ignored, that is 11% of the employees got training because they

had made a request to get training of a specific type. Although at PSO all

employees do undergo training, sometimes employees feel the need to get

some type of training and employee development method, and for this

purpose, they themselves request for the training and if management

approves than the employee does undergo the requested training.

The other11% of the employees actually underwent training because

their performance appraisals showed that they lacked the capabilities and

technical skills necessary for the job. For this purpose, that is 11% of

employees at PSO were trained because they had to improve their technical

skills and abilities.

Only 3% of the employees had acquired training as a result of

fulfilling certain criteria. Although this does occur in PSO that sometimes on

reaching a certain target or working in the organization for a certain period of

time an employee will be given training or undergo an employee development

course to improve potential as a reward.

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Which method of training and employee development do you think is the

best at PSO and why?

Result From PSO

Interpretation:

Once again as this is an open-ended question I won’t be presenting

the findings in the form of a chart. I kept this question open ended in order to

give employees the option of choosing any type of training and employee

development from amongst the many forms as well as provide reasons to

why the consider such training and development method the best.

There were two basic types of trainings that were found the most in

the answers. Firstly, many employees believed that orientation training was

the best. The reason that they gave for this answer was that it is only in this

training that a detailed description of the job, the organization and the

responsibilities of the of the employees are elaborated on, and the employee

is given a feel for the organization.

The second type of training and development method that the

employees found the best was the training needs analysis. The reason

given for this method was that it is done both with the employees and with the

superiors, and hence results in training the helps achieve a desired situation

much more quickly and efficiently as possible. Although one point that I

noticed here was that, even though many of the employees believed this

method to be the best, training needs analysis is not exactly a method of

training or employee development rather it is the way in which the need is

determined.

Amongst the other training and employee development methods

mentioned were Health and safety and environment, which is necessary for

all employees at all levels to undergo, the reason for this that as given by the

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employees was that is helps prepare an individual for any sort of emergency

situation and how to respond under different emergency situations.

Other methods favored by employees were WOW training; telephone

courtesy, job rotation (as it increases diversity), in-house trainings (saves

time) and technical skills training (helps improve job specific performance).

80




The main advantage of training and employee development that you see

is,

(a) Opportunity for career development

(b) Increase in your market value

(c) Improved productivity and motivation to work

(d) Other

Result From PSO

(a)

Opportunity

for career

development

(b) Increase in

your market

value

(c) Improved

productivity and

motivation to work

(d) Other



Interpretation:

For this question I discovered that majority of the employees at PSO,

that is 54% regarded the opportunity for career development as the main

advantage of training and employee development, although many employees

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had ticked on two options together, which were both option (a) opportunity for

career development, and option (c) improved productivity and motivation to

work.

36% of the respondents believed that improved productivity and

motivation to work was more of an advantage. However only a mere 7%

regarded increase in the market value as an advantage of training and

employee development. This shows that only a few employees are actually

focused on developing their careers outside PSO, because it is only this 7%

that regard training and employee development to be a benefit in terms of

increasing one’s market value and therefore creating a demand for oneself in

the market.

3% of the employees gave other answers, such as the benefit gained

in the form of increased learning and personal development that of the

individual.

82




Once you had received the training, what method of evaluation for the

effect of training and its success did management use?

(a) Informal discussion

(b) Questionnaire

(c) Performance appraisal

(d) No specific method was used

(e) Other

Result From PSO

(a) Informal

discussion

(b)

Questionnai

re

(c)

Performanc

e appraisal

(d) No

specific

method

was used

(e) Other

Responden

ts

10 26 12 8 0

Percentage

s

18% 46% 22% 14% 0%

Interpretation:

In this question it can be observed that the responses of the

employees are very much spread out, although the highest response to the

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question is 46% for part (b) Questionnaire. Majority of the employees

received a questionnaire after training had been administered to evaluate its

success and effectiveness.

However, many employees claimed to have undergone performance

appraisal by the management in order to evaluate the training and effect that

it had on the employee’s performance. The percentage of such employees

was 22%.

18% of the employees had an informal discussion with the

management in order to evaluate the success of training that had been

administered. However, 14% of the employees claimed that the management

used no specific method of evaluation. This shows that the employees at

PSO faced different methods of training evaluation by the management and

no standard method was adopted. This can be a major factor in why

employees may have been dissatisfied by training because until and unless

management does not adopt an expedient and standard method of evaluating

the training and development method there is no way that employees

satisfaction with it can be judged.

84




Were you given a questionnaire before the training was given to you and

then after training as well?

(a) Yes, a questionnaire was given only before training

(b) Yes, a questionnaire was given only after training

(c) A questionnaire was given both before and after training

(d) No questionnaire was given

Result From PSO

(a) Yes, a

questionnaire

was given

only before

training

(b) Yes, a

questionnaire

was given

only after

training

(c) A

questionnaire

was given

both before

and after

training

(d) No

questionnaire

was given



85



Interpretation:

In this question it can be observed, that employees gave very diverse

and different answers, even though this should not be the case.

The reason that I have included this question in my questionnaire is

to determine whether employees are actually asked about training and to see

whether management of PSO wishes to see potential changes in the

responses of employees before and after they have received the training.

Majority of the employees, that is 46% claimed that a questionnaire

was given to them only after undergoing training. This method may not be as

effective as giving a questionnaire both before and after training as better

judgments can be made. 18% of the employees had received a questionnaire

both before and after training but 21% claimed that no questionnaire was

given to them. 14% of the respondents claimed that a questionnaire was

given only before training.

8.2 Summary of Findings

1 Majority of the employees are satisfied with the existing technical

training and employee skill development methods at PSO while

only 32% claim to be dissatisfied at PSO.

2 Most employees believe that significant gains in productivity have

been made as a result of the training and development programs.

3 In terms of the improvements that employees thought at PSO

should be made the major improvement that they suggested was

that the training should be more planned.

4 50% of the employees at PSO thought that training should be

implemented twice a year. There were no employees that thought

that training should not be implemented at all, while .

5 Majority of the employees have acquired training as a necessary

implementation made by the management at place.

6 Orientation, training needs analysis and health safety and

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environment training are considered to be the best by the

employees of PSO

7 In terms of the main advantage of technical training and employee

skill development that employees see, it is the opportunities for

career development, that majority of the employees believe to be

the main advantage at the organizations.

8 Questionnaire is the main method of evaluation of training being

used by the management of PSO when it comes to actually seeing

whether the training was effective or not.

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9. CONCLUSION AND RECOMMENDATIONS

9.1 Conclusion

To culminate, a brief review of my findings is portrayed. As it is evident the

management of PSO and the employees have tended to give different answers

to the same questions. But it also particularly clear that the there are many

issues on which both employees and the management answers coincide.

From the perspective of the management, they believe that PSO has very

effective and up to mark training and employee development methods. This is

very true as is quite apparent that PSO is one of the many organizations today in

Pakistan that is so well known for its contribution to the development of

employees and giving eminence to creating the awareness of such procedures

today. There exist many organizations where the importance of the workforce

and its satisfaction is still ignored. But PSO has taken immense measures to help

train and develop its workforce in all respects and this is one of the main reasons

why so many people today want to be a part of it.

From the perspective of the employees as well, it can be seen that a major

proportion of the employees are satisfied with what PSO are doing with its

workforce. It is always impossible to achieve a level of complete perfection and

therefore there will always exist certain dissatisfied workers in any organization,

saying that the whole workforce is satisfied would be unjust. Similarly majority of

the workers are keen on receiving training at least twice a year and on the basis

of when it is necessary and required to help improve their own potential, skills

and opportunity for career development.

The questionnaire given to the employees has immensely helped improve

comprehension in terms of how employees think and perceive in reality how they

evaluate their organizations in terms of their training ,development and

enhancement of procedures and programs being offered time to time.

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

88



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 their.

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

89



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.

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”.

9.2 Recommendations

After conducting this thorough research I was more clearly able to

comprehend the topic and the measures of technical training and employee skill

development becoming prevalent today. By looking at the answers by the

employees and workforce in the questionnaire given, a number of

recommendations that I feel can be given are as follows;

1 Firstly, I believe that there should be some training programs for employees

specifically for dealing with change. In the contemporary world, and with a

process of globalization occurring, it is impossible for any employee to be

secluded in the workplace. All employees should be willing to adapt to

change and not feel threatened by it, as usually is the case. Therefore special

training programs should exist that help curtail the fear of change and sow

roots of confidence in the employee. This training should help all employees

understand the long- and short-term impact of change on their roles and

responsibilities in the workplace. As far as I was able to discover no specific

program existed for dealing with change.

90



2 More emphasis should be given to team development and employees

should be made to work in teams more often. PSO should place a higher

emphasis on developing teams and creating assignments involving

teamwork, although it does so, the extent of teams is still low. As it is

apparent that today to remain competitive, an organization needs to have

a cooperative workforce that is willing to work collectively to achieve goals,

teamwork and team building is therefore very important.

3 With regard to the above recommendation given, I believe that PSO

should start team performance appraisals as well. Generally speaking, all

organizations not only in Pakistan but also around the world have

individual performance appraisals, but very few actually have team

performance appraisals. Today more and more organizations are

restructuring themselves around teams and so as of this reason it is also

right to say that team appraisals should also be used

4 Another recommendation that I would like to give is that the management

of PSO should try to make sure that when it is implementing training it

should first give out questionnaire before training is given and then after

the training is given. This will give the management of PSO a much better

idea of whether the training was successful and whether it led to

significant gains in productivity and knowledge.

6 In addition, the superiors at PSO, should constantly and on a regular basis

take the opinion of employees on how to keep on improving their methods

and procedures, because the more employees feel involved the more

likely they are going to be satisfied. As I was told that management did

keep an open system of communication, greater encouragement still

should be given to the employees to give suggestions.

91



BIBLIOGRAPHY

Book References

Mc GJRW- HILL ,Human resource management ,International 4th Edition, December 2001,

Chapters

1.Human Resource Environment, Page # 51

6.Selection And Placement, page # 216

7. Training, page # 248

9. Employee Development, page # 374

Articles

http://www.highbeam.com/doc/1G1-18261630.html

http://findarticles.com/p/articles/mi_hb092/is_n12_v26/ai_n28665870/

www.jung.com

Internet Search

www.psocl.com

www.google.com

Persons Interviewed

Waqar Ahmed Khan SahibGeneral Manager HRKARACHI

Yaqoob SuttarExecutive DirectorPSO, KARACHI

Magazine PSO

92

http://www.psocl.com/

http://www.jung.com/

http://findarticles.com/p/articles/mi_hb092/is_n12_v26/ai_n28665870/

http://www.highbeam.com/doc/1G1-18261630.html



APPENDIX


Are you satisfied with the current training and employee development methods at

PSO?

(a) Yes

(b) No


Do you believe that significant gains in your productivity have been made as a

result of training?

(a) Yes

(b) No


If no, what improvements do you think should be made?


How often do you think that training and employee development procedures

should be implemented?

(a) Whenever necessary

(b) Twice a year

(c) All the time

(d) Other

93




You acquired training as a result of,

(a) Your request for training

(b) As a necessary implementation made by management

(c) Performance appraisal showed the requirement for training

(d) You fulfilled certain criteria on the basis of which training and employee

development was given.


Which method of training and employee development do you think is the best at

PSO and why?


The main advantage of training and employee development that you see is,

(a) Opportunity for career development

(b) Increase in your market value

(c) Improved productivity and motivation to work

(d) Other


Once you had received the training, what method of evaluation for the effect of

training and its success did management use?

(a) Informal discussion

94



(b) Questionnaire

(c) Performance appraisal

(d) No specific method was used

(e) Other


Were you given a questionnaire before the training was given to you and then

after training as well?

(a) Yes, a questionnaire was given only before training

(b) Yes, a questionnaire was given only after training

(c) A questionnaire was given both before and after training

(d) No questionnaire was given

95

hr process and impact of training and development on employee’s performance at pso

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