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Introduction: Unit 24: Understanding and Leading Change
Transformation is a key activity that organisations implement in the business process to survive. Some organisation moves forward to implement changes and some are compelled to agree with transformation requirements in the business process to sustain in the business market. The change process involves developing differentiation in different parameters of the organisation as per requirements. Different types of drivers and forces act on the transformation process and are involved in developing the effectiveness of the supply chain process of the company. International standards focus on four drivers society, economy, technology and environment to deliver a positive impact on business performance.
The economic parameter includes trade and uncertainty and suggests issues and opportunities in conveying long-term advantages in the business process. Digital technology contributes to the development of productivity, supply activities and revenue generation of the organisation. These drivers affect daily activities, scheduling, restricting of hierarchy process, development of performance, capturing objectives and short-term and long-term goals of the organisation.
This report includes the identification of issues, the change process and the impact of change on the strategy and decision-making activities of the organisation. This also delivers the impact of change on leadership, individuals and team behaviour in the organisation. This study includes decreasing of effects of change by applying appropriate models in the business process. This report selects Shell Global a UK-based MNC to discuss issues and requirements of change in the business process. This report aims to deliver a suitable transformation process to continue the sustainable development of the organisation.
Objective
The objective of this assessment is to analyse a comparative study on drivers of change in business and its impact on the organisation. To do that this assessment has used several examples. In addition, this study is focused on how leadership and employee behaviours can affect the change in the organisation. A detailed understanding of forces or elements that impact the decision-making process has also been analysed. For all these issues justified, recommendations also have been provided that make this study effective.
Overview of the Organisation
Shell Global Private Limited is a UK-based multinational organisation that delivers oil and gas products to different countries around the world. This global energy and petrochemical organisation continue business with over 80000 employees in the world and is expanding business in more than 70 countries in the world. This company utilises advanced technology and innovative approaches to continue internationalisation activities and sustainable development. This company shows expertise in the production, refining exploration and marketing of oil and natural gas and continues the production and marketing of chemicals in the business process (Shell.com, 2023). This follows cleaner energy solutions by considering the living standard of people in the world. This organisation invests in renewable energy sources such as solar and wind to develop power and consider low-carbon emissions in the transportation process by introducing the charging activity of electric vehicles. Low-carbon fuels also include hydrogen and biofuels to decrease carbon emissions and develop sustainability.
Data shows that this organisation completed the selling of liquefied natural gas (LNG) of approximately 66 million tonnes in 2022. A total of 8 oil refineries involve in the oil and chemical gas production process of this business and produce approximately 2.86 million barrels of oil in a day. The financial performance of this business showed a large value as this captured a total revenue of approximately $381,314 million and an income of approximately $42,309 million in 2022. This also invested $1075 million in R&D activity in 2022. This organisation contributes largely to sustainability as this invests $182 million in voluntary social investment in the world. Approximately $92 million out of total investment considered in 2022 and captures a GDP of less than $15000 per person per year. This company considers four factors generating stakeholder value, capturing net zero emission, respecting nature and powering lives in its sustainability index. This considers short-term goals of tackling issues of social, economic and environment by 2030 and a target to achieve net zero carbon emission by 2050 (Shell.com, 2023). However, this organisation faced issues during and after the COVID-19 pandemic due to facing loss in financial part.
This faced a $20 billion loss due to the COVID crisis in business assets. This oil company faced a slump in market prices of oil and gas and faced a loss of approximately $19.9 billion in aspects of $15.3 billion in profit in the previous year. This occurred due to decreasing in oil prices in the entire world as the price was set at $20 per barrel as compared to the oil price of $75 per barrel in 2019 (Theguardian.com, 2023). In addition, the shortage of workers also included issues in the completion of business activities during the pandemic period and restrictions in the external processes created issues in the overall business activities of the organisation. In addition, the impact on people's health and livelihoods due to the pandemic affects the business activities of this organisation. The life loss of approximately 20 employees in Shell due to the pandemic had a large negative impact on the business process (Reports.shell.com, 2023). However, this continues strategic implementation to develop business performance and sustainability of the organisation.
SWOT Analysis
Strength
Weakness
? A quality brand value and well-known brand (Magar and Faustino,2019)
? Effective production and distribution line
? Expansion of the business market in more than 70 countries in the world(Shell.com, 2023)
? Less investment in technology(Magyar and Faustino,2019)
? Carbon emission in business products and process
? Large cost requirements in continuing the entire business process
? Violation of corruption law in 2007
Opportunity
Threat
? Consideration of renewable energy sources such as wind and solar
? consideration of low-carbon fuels such as befouls and hydrogen
? Investment in charging electric vehicles
? Sustainable energy approach in products and services
? Investment of approximately $182 million in sustainable development(Shell.com, 2023)
? Rules and Restrictions in fossil fuel utilisation
? Development of taxes on fossil fuel
? Large market competitors available such as Bp PLC, Rosneft Oil Co, Exxon Mobil Corp, Chevron Corp and China Petroleum and Chemical Corp (Globaldata.com, 2023)
? Supply chain disruptions and decrease in oil prices due to the Covid-19 pandemic
? 71% decrement in earnings in 2020 (Economictimes.indiatimes.com, 2023)
? Profit decrease of approximately $9.45 billion in 2022 (Bousso and Nasrallah, 2023)
Table 1: SWOT analysis of Shell Global
The above-mentioned table shows a SWOT analysis of Shell Global plc and shows a list of strengths, weaknesses, opportunities and threats in aspects of business performance. Effective products and distribution process supports this business in capturing large business markets by delivering required products to the specific location within time. This quality business activity supports expanding business in more than 70 countries in the world. This large expansion of business markets contributes to generating large revenue as this business captured revenue of approximately $381,314 million in 2022. The consideration of people factors supports completing business with quality and impacts customer satisfaction and revenue generation of the organisation. The commitment towards sustainability involves continuing business to achieve the long-term development goals of the organisation. This company considers renewable energy sources such as wind and solar in aspects of developing energy. This also involves continuing low-carbon fuels such as biofuels and hydrogen to achieve a decrease in carbon emissions in the business process. Another quality approach of this industry is an investment in the electricity concept as this includes charging electric vehicles to attract people to purchase electric vehicles and support in developing the sustainability of the country.
This organisation also invested approximately $182 million to continue sustainable development by introducing technology and approaches in the business process. This company focuses on a short-term target of 2030 to tackle issues of social, economic and environmental parameters of the business. In addition, this organisation follows a target of net zero carbon emissions by 2050 to achieve the long-term sustainability goals of the organisation. These considerations and approaches support developing opportunities to continue transformation in the business process. However, a list of issues is also present in the business process as this company does not consider large technology implementation as per the standards of the business and carbon emissions are also present in the business process. The negative impact on this business occurred due to the breaching of the corruption act in 2007 and the reputation of this organisation was affected due to this. For example, the Nigerian government launched a complaint due to the presence of corruption in the business process and delivered large issues in continuing business in the country. A large decrement in earnings occurred in 2020 as Shell faced approximately a 71% decrement in its earnings and this was declared as the lowest earning in a year since 2000 (Economictimes.indiatimes.com, 2023). This occurs due to the COVID-19 pandemic is a large barrier present in the entire external business process of the organisation.
The government includes rules and restrictions in continuing the fossil fuel manufacturing and utilisation process. Therefore, breaching those rules and restrictions can interrupt the entire products and services of the organisation. A large number of competitors such as BP PLC, Rosneft Oil Co, Exxon Mobil Corp, Chevron Corp and China Petroleum and Chemical Corp are available in the global business market and these competitors segment profit parameters by capturing customer zones in their business process. In addition, this company faced a large issue during the Covid-19 pandemic as the transportation district continued in almost every country. This organisation faced a loss of approximately $20 billion as compared to revenue in 2019. This occurred after removing transportation barriers from the international business processes due to decreasing in fuel prices in the global market. The labour shortage issue was also present after the pandemic period and decreased the development process of the entire business. A total of 20 employees lost their lives due to the pandemic which created a large issue in the business process of this organisation. Development tax rates in oil and gas products harm the outcomes of the organisation. This shrinkage of the overall revenue of the business and the continuation of the slump in fuel price develop issues for this organisation. This organisation faced a lower profit of approximately $9.45 billion due to less efficiency present in the refining and gas trading activity of the organisation (Bousso and Nasrallah, 2023).
Impact of Change and the Effects on Strategy and Process of Organisation
The organisational change includes shifting business activities from one state to another by focusing development of performance in the business process. This change process considers the development of the process and schedule of business activities, developing systematic processes and restructuring hierarchical involvement and activities in the organisation. This change process also involves developing beliefs, assumptions and values of the organisation. This development can deliver the introduction of strategy processes that can continue in the new business process to achieve long-term development in the organisation. Change can occur in different aspects as developmental change involves transforming business processes to develop processes of the entire business activities. According to change in the organisation, leaders can adopt different types of leadership, which are autocratic democratic, transformational and transactional (Cortellazzo et al. 2019). Autocratic leadership is when only one person has a say in the organisation, democratic leadership supports the opinion of employees, and transaction leadership is when leaders believe in a rewards and punishment system where employees get rewards for good work and punishment for bad work. On the other hand, leaders encourage and inspire employees to innovative work in transformational leadership. The transitional change focuses on influencing performance through shifting activities and developing the efficiency of the business process. Transformational change has significant changes in processes and systems and considers competitive strategy in the organisation.
According toNicolaet al.(2020), the COVID-19 pandemic delivered a negative impact on the primary, secondary and tertiary sectors of the country. Agriculture a type of primary sector faced a drop in prices of approximately 20% due to the pandemic. People considered panic buying during that period due to the limited availability of agricultural products in the business market. The petroleum and oil industry faced a price drop rate during the pandemic period. For example, Brent Crude faced decreasing in product price of approximately 24% as the price decreased from $34 to $25.70 per barrel. Carbon dividends are considered an effective approach in terms of achieving the same oil price by adding a tax of approximately 50 Euro per tonne of CO2 for households in the UK. The manufacturing industry also faced decreasing in production and supply chain activities in the business process. For example, the chemical industry faced a decrement of 1.2% in production activities during this pandemic period. The tertiary sector such as the education sector faced barriers to continuing the traditional learning process and decreased overall revenue of this industry. In addition, the GDP of the country was affected due to this debasement in different sectors of the country. Chancellor Rishi Sunak declared 330 billion Euros in the loan process to facilitate financial parameters to the people in the UK. In addition, 20 billion euros is also issued to support businesses in the country (Nicolaet al.2020). This country includes a Coronavirus job retention scheme, deferring income tax and VAT payments, granting funding to businesses and loan schemes for organisations such as up to 5 million Euro loans for SMEs in the country.
According to Chunget al.(2020), the COVID-19 pandemic involved transforming business processes from traditional office patterns to online patterns in organisations. The organisations considered work-from-home activity to maintain the pandemic guidelines and continue business activities during these difficult periods. The employees can get support in spending time with their family and the organisation can complete possible online activities of the organisation. A flexible working environment supports both males and females in completing both personal and professional activities in their residing location. This change management process has short-term and long-term effects in the short term it improves the communication process, increases productivity, and the teamwork of employees gets better. The decision-making of the organisation also gets better. In addition, the long-term effects of the organisation increased revenue, ROI and profit margin of the organisation.
As opined byLemberet al.(2019), the oil and gas industry after the pandemic is processing very quickly. like other industries, this industry is also evolving through technological changes. 20222- 23 this year this industry has had some trends in digital technology. That is the Internet of things, this technology is mainly used in this sector for production, to ensure work safety and working in remote areas gets easy to wish the help of this technology. The Internet of Things helps to collect data that can be used to identify faulty equipment, maintenance costs and visibility get better. Artificial intelligence and data science use of all this technology has been increased in the oil and gas industry. AI helps to solve complex problems downstream and upstream of the business.
Therefore, the decision-making process also gets easy. An organisation can discover and implement new exploration ideas in the sector which increases the ROI of the organisation. Big data and analytics, this industry and organisation that works in this sector generate a large volume of data. Big data helps the business in analysing production ad performance data. Working safely and production optimization also get easy. All this technology has impacted this sector, in the decision-making process and most of the time it is impacting the industry in a good way. Before all this technology decision was made based on prediction however now all decisions get taken after analysing company data and the result is pretty accurate. That is the reason profit margin and decision-making have been mostly accurate s as the profit margin.
Figure 1: Technologies used in the oil and gas sector in 2020
Change management has become another important thing like Shell plc UK-based oil and gas organisation BG Group also has adopted change management. This organisation has focused on technological advancement. This organisation has replaced its SAP human resources management with could HR services. One of the main reasons for this is that this technology helps to provide service to employees, who are working in a far country. This HR service enables the company to offer online training and employee appraisal programmes. This technology can help over 6000 employees who are working in over 20 countries (Forbes, 2022). This new technology is highly integrated and without thinking of the place every employee of this organisation can gain benefit. With this change objective of the BG group is improving data integrity and security. Accessing HR data analytics in real-time and Implementing technology can evolve best practices in HR.
The change affects leadership, individual and team behaviour
The transformation considers the organisation developing competitiveness and this process transforms the behaviour of employees in the organisation. The organization considers sustainability in business processes to achieve effectiveness and competitiveness in the global business market. For example, Shell Global plc considers renewable energy sources, charging facilities for electric vehicles and utilisation of low carbon fuels to decrease net zero carbon emission of the organisation.
According to Ponting (2020), the creation of people-centric purposes and employee well-being consideration through OI can transform entire business activities and behaviours of employees in the organisation. An organisational identity (OI) includes characterised identity such as the central, enduring and distinctive identity of the organisation. This transformation can support in daily activities of employees and positive impact on business performance through interacting with people on daily basis. Therefore, this transformation in practices can shift behaviours and activities of leaders, employees and entire teams to achieve the targets of the organisations. The new OI considers people-centric purposes to deliver well-being for front-line workers of the organisation. This transformation includes different leadership properties through conceptualizing and processing the business. The digital transformation in the business process through including digital technologies contributes to developing the information flow processes and relationships with different stakeholders. This process can develop the openness of employees, teams and leaders to achieve quality performance in the organization.
All these approaches have helped Shell plc to bring change in the organisation to understand that the McKinsey 7s model can be used.
Figure 2: McKinsey 7s model
Elements
Description
Hard elements
strategy
? Strategic direction for Shell plc is structured hat increases the communication process.
? The strategy of this organisation is to guide employees and stakeholders to achieve goals for the organisation (Demir et al. 2019).
structure
? This organisation has a flatter hierarchy that is progressive.
? Inter-departmental coordination is high in this organisation.
system
? The system of this organisation is well-structured and they have all departments to solve all kinds of problems.
? Monitoring process and continuous improvement, feedback system also have been installed in this organisation.
Soft elements
shared values
? Core values of this organisation are to stay creative and supportive of employees.
? The corporate culture of Shell plc promotes diversity and inclusive culture.
style
? This organisation has an autocratic leadership style, so directive from the top set strategy and priorities for business growth
staff
? Shell plc has a sufficient number of employees in its operation. Different employees get hired for different jobs.
? Dispute having a sufficient number of employees and structure, autocratic style of leadership is a gap in this organisation.
skill
? Human resource management of Shell plc is efficient therefore skill management is effective in this organisation.
? Employee skill and experience are competitive advantages for Shell plc.
The impact of the change was minimized and the application of appropriate models
The selected organization has many negative sides that degrade the growth of the organization resulting in loss of the finance. Changes that bring the organization to a sustainable future have many negative impacts that have to be reduced. Positive organizational changes lead to an increase in commitment to the organization and negative changes in an organization lead to a decrease in commitment to the organization (Hamletet al.2021). The gap in communication in the hierarchy and some parts of the team observed reflected the negative impact of the organization. Effective communication skills need to be fostered inside the company whereby the workers and the designators take an active part in communication. Communication ensures trust and transparency between the organization and the stakeholders and fosters the fast development of the company in the economic sector. Leadership plays a key role among the team members in any part of the organization. Inappropriate leaders can slow down the rate of completion of the task resulting bad reputation for the company given their consumers. With the change of management system leadership style also changed therefore trait theory helps to understand that people develop some qualities and traits that make them better and help to adjust them to the current environment in the organisation (Vasilescu and M. 2019). This theory most of the time helps to understand specific personality and behavioural characteristics. For example, traits like self-confidence, and courage are linked to being great a leader.
Shell has to look over their team leaders possess the qualities of a leader such as energy, honesty, trustworthiness, authenticity, and self-awareness and that helps the organization to grow in future. An increased workforce from different regions may give rise to a cultural impact on the organization and bring cultural differences among the employees George et al. 2020). The workers are advised to undergo a training program that helps them to recognize the different cultures of their colleagues and develops respect for them. Well-being impact is an important concern to the organization due to the cultural differences that developed and it can reduce by fostering respect and values for the tradition of the employees irrespective of any place and religion.
Personal impact is the initial impact that the employee feelsafter the change is imposed in the organization. This impact brings anger and depression in the faces of the individual workers and this minimized in case the senior executives about the reason behind such changes the proper notification (Adonis, 2020). Regular training programs organized by the company help to improve the skills and knowledge of the individuals yet some workers get frustrated due to such successive training organized monthly.
There are different management models context in the literature used for changes in the process smoothly. Lewin's change management model is one of the finest models that work on three criteria in empowering successful change in the organization by eliminating the odds are unfreeze, change and freeze (Harrison et al.2021). This model was applied to the employees asking about their satisfaction with the job. Responses of the employees were recorded and the majority were found dissatisfied with the benefits and rewards due to overloaded work. The organization had decided to satisfy the workers by increasing their salaries and perks as requested by the employees. So, Lewin's management model was used to implement the perks and salaries of the employees to foster a calm environment in the organization. ADKAR model is the special model that helps to resist the effects of changes for the good cause of the organization. ADKAR stands for awareness, desire, knowledge, ability and reinforcement and these five components need to apply to eliminate the negative impacts of the changes that occur in the organization.
Awareness is realizing the stakeholders that such implementation helps the company to foster growth in their finance and increase its network of marketing (Jaaronet al.2022). Desire refers to the need for change in the role of the company that must be understandable to the workers. Innovation using modern information technology tools plays a big role in the rising market. Proper knowledge of the new technology features needs to be known to the old members of the team of innovation. Theoretical knowledge does not mean that the individual can apply it for practical purposes and so proper training features need to be provided to the workers about the use of new technology tools to enhance their ability to perform. Reinforcement refers to the improvement in the changes enforced for better productivity in the firm. The organization needs to look upon areas where changes do not occur successfully and that leads to demotivation of staff increasing their anxiety and depression. Working from home is the modern change, although it may be much change does not work well in the organization due to communication gap between the employees. With the change of some variables environmental also gets changed, contingency theory helps to understand that. This theory helps to understand that for all situations one type of leadership is no perfect fit (Dinibutun and S.R. 2020). According to the situation, the leadership style needs to be changed. Leadership is not just about qualities however a potential leader needs to have the right balance of behaviours, needs and context. Adjusting behaviours according to the situation is important.
Theoretical framework
In this assessment two types of leadership have been discussed trait theory of leadership and contingency theory. Trait theory states that according to the environment leaders and employees must adjust themselves. On the other hand, Contingency theory states that based on the situation leadership style must be changed. Changing leadership style according to the situation can help to handle the situation in a better way.
Conclusion and Recommendations
Conclusion
Transformation is an important factor for organisations to continue business development by overcoming different issues in the business process. The Covid-19 pandemic delivered a large negative impact on every organisation in the world. Shell Global plc also faced a list of issues during that period and implemented strategies and approaches such as protecting colleagues, supporting customers, and communities and developing collaboration and relationships with people and partners to decrease negative impact and continue the development process of the organisation. This report identifies a list of the positive and negative parameters that can occur due to the change process of the organisation. However, the implementation of quality approaches and strategies can decrease negative impact and continue long-term advantages in the business process. In addition, this report wants to deliver future scope for further development of the research.
Recommendations
Managing organization changes and maintaining them is more important than implementing them. In order to do this understanding, the change process is important. After implementing this change flow-through and monitoring is recommended. After the change management is implemented, there should be a special team who will be responsible for monitors.
The training and development opportunities need to continue during the implementation transformation to aware people of the change process and develop the skills of employees to continue their daily activities in the organisation. Along with training and development understanding the forces of change is needed. To effectively manage change importance of the change must be understood first. Therefore, the reasons for driving changes, internal and external both reasons should be evaluated. That can help to manage those concerns.
Communication with employees and guiding them until they are not well acquainted with the change is effective to manage the environment of the organisation. No matter what the problem however communication is the most powerful tool that can help the organisation to cope with change. Employees are the ones who mostly have to adjust themselves to the change therefore thinking of the impact on them and listening to their problems improves the work environment.
This can be recommended that collaboration with different organisations and the development of relationships between stakeholders can deliver effective support in completing activities and continuing the sustainable development of the organisation.
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