Organization Culture & McKinsey 7S Framework
Organizational culture, which refers to the behaviour and values that contribute to the unique psychological and social environment of an organization, is an important to concept to enhance organizational efficiency. This organizational efficiency and effectiveness is also augmented by the novel concept of McKinsey’s 7s Model that improves organization’s internal aspects. Shell, British Petroleum and Exxon are important player in the oil and gas industry but all have a unique organizational culture and all have different organizational culture.
Culture & Ways of Managing the Compensation System
Exxon as an American company has much stricter on racial or sexual harassment plus the level of job security is low in comparison with companies like British Petroleum. The human resource department in Exxon is much involved in all people related issues which have a lower intensity in British Petroleum.
The culture can be defined as customs, social behaviours, and ideas of specific people. It also refers to the particular group’s characteristics, which is reflected by their cuisine, religion, music, social habits and arts (Coll, 2012). The compensation is managed by finding out the desired objectives and goals of the company and these desired goals are compared with the performance, which gives us an idea about compensation system.
Mission Statements, Charles Handy & Organizational Culture
The mission of Exxon is based on achieving profitability, while the core mission of British Petroleum is based on responsibly progression thorough innovation. Mission Statement is a brief summary of values and aims of an organization, individual and company. Charles Handy has described organizational culture by dividing it into three types of culture. The first kind of culture is called the power culture (Bantz, 1993). This culture is a kind of web and it reflects responsibilities to family owners rather than experience that help against expertise. The second kind of cultural organization is called role culture, which is portrayed by bureaucracy. This looks like an organizational system, which is more like a paper culture. The third type of organizational culture is task culture. This is the most efficient of all, where organizations are heavily involved in development activities and extensive research (Tompkins & Cheney, 1985).
Culture Web & Innovation Culture
Exxon culture is highly influenced by progressive innovation. Culture Web is a metaphorical description to the culture, which expounds it as a system of interconnected mechanism in which the people survive. Innovation of culture refers to the changes and new things introduced in the culture (Eisenberg & Riley, 2001).
Ways to Identify Organizational Culture
Identification of culture can be done by evaluating the mission statement and it can also be further identified through evaluating the reactions of the management on critical situations. The human activity in the organization is controlled by the compensation and appreciation model.
Dish Network, Dillard, RadioShack and Hertz are some of the companies that have bad corporate culture. Many of the employees of these organization expounds it by highlighting the reason of long working hours, no or few vacations, lack of appreciation, non-cooperative higher management and so on and so forth.
Culture Web
It is a metaphorical description to the culture, which expounds it as a system of interconnected mechanism in which the people survive.
Different Aspects of Culture
Customs, social behaviours, and ideas of specific people are few important aspects of culture, overconfidence, excessive optimism, turning a blind eye to warning signal and choosing high risk to avoid having to accept unfavourable outcomes, which is contrary in the case of Exxon.
Different Aspects of Culture Effects
The culture is much responsible to the way people behave in an organization and the company form the corporate strategy. The customs and the education that a person acquires in a culture highly influence his decisions throughout the years of his life (Geertz, 1973).
Valdir Health & Safety Issues, Reporting Incidents, Mitzbergy Emergent Strategy, and Culture Clutch
According to Valdir’s Health and Safety issues it argues that employees should not be involved in tasks that is hazardous to their health and perhaps could danger their lives. If such incidents happen in the company, it must be communicated with clarity and it should ensure that it does not create any panic. According to Mitzberg Emergent Strategy, it expounds that the strategy must be developed and upgraded based on the changing times. As the literature and various researches suggest, British Petroleum has a bit of bureaucratic environment, which is contrary in the case of Exxon. Bureaucratic environment is also sometimes responsible for culture clutch.
McKinsey 7 S Model/Framework
Shell’s 7 S Model consists of a corporate style which is comparatively more autocratic than Exxon, which transformed after the 1989 Alaska Oil Spill. The skills set at Exxon focuses more on improved discipline technical innovation and focus to attention. In 1980s, the management model McKinsey 7S Framework was developed by consultants Robert H. Waterman, Jr. and Tom Peters. It is imminent for the organizations, in order to be successful, to have a strong understanding of organization’s internal aspects and how the work can be done with more efficiency and effectiveness. The 7S model includes strategy, structure, systems, shared values, skills, style, and staff. In order to evaluate the monitor changes occur in the internal organization, this model is considered as an effective tool. These seven elements are required for the organization to perform well (Martin, 2002). This model helps in understanding how organizational elements are related to each other and what is the impact of chances can be taken into consideration. This model investigates those needs that must be realigned to ameliorate organizational performance during different types of changes like new processes, mergers, restructuring, leadership change etc.
Hard & Soft Elements
According to the 7S model, there are two types of elements. First includes soft skills and the other is known as hard skills. The hard elements include strategy, structure and systems, however, the soft elements include shared values, skills, style, and staff. The core value of Exxon Mobil is to maintain safety and health at workplace. The core value is to make incident free working environment. The company’s mission is not to hurt anybody, not in plant sites but also in offices and wheels. The company has strong shared values like high ethical standards, maintaining workplace diversity, focuses on technological leadership in order to maximize efficiency, interlinked between business discipline and corporate citizenship.
The company is still facing some safety issues. It is facing numerous safety issues in the business operations as well. There were various labours that got injured during work, although the extensive efforts have been made by Exxon for resolving these safety issues as this is its core value but still the company is not fully successful. Leadership style, and stuff corporate culture are another stand for elements (Peters & Waterman, 1982).
Valdez’ Health and Safety Comparison with BP
The oil spills of Valdez and Bp affect negatively on the mental and physical health on the nearby residents. The residents suffered from psychological stress, economic loss, and family health concerns.
Share Values/Discipline/Technology
Exxon is practicing high ethical standards in business operations; the company is adapting advance technologies for maximizing efficiency. The company corporate citizenship is related to business discipline (Stahl, 2008). On the other hand, BP has built strong foundations for making business operations more valuable, trusted and safer. BP values depict shared understanding between employees and organizations goals.
Clear Vision/Direction
Exxon has clear vision as it aims to focuses on attaining high financial and operating outcomes along with maintaining high business operations standards. The employees and stakeholders are aligned with the company’s vision.
Stuff Culture including Senior Executives
Exxon has stuff culture and it is quite difficult to introduce some new products in the company. The corporate culture is driven from top to down, that is the reason, the seniors show rigid behaviour when it comes to add new infrastructure decision in the organization.
Autocratic Leader and Exxon Valdez 1989
The Exxon Company’s leaders are autocratic. The Exxon Valdez Oil Alaska oil spill incident happened in Prince William Sound Alaska. This caused immediate death of wildlife and decreased in tourism, and trading. The strategy did not focused on health and safety measures, and technological advancement was not made, that resulted in this mishap. The corporate culture was not aligned with the company’s goal and employees skills were not utilized in the right direction (Coll 2012, 10).
Conclusion
Exxon as an American company has much stricter on racial or sexual harassment plus the level of job security is low in comparison with companies like British Petroleum.
The mission of Exxon is based on achieving profitability, while the core mission of British Petroleum is based on responsibly progression thorough innovation. Mission Statement is
Shell’s 7 S Model consists of a corporate style which is comparatively more autocratic than Exxon, which transformed after the 1989 Alaska Oil Spill. The skills set at Exxon focuses more on improved discipline technical innovation and focus to attention. In a nutshell, it can be concluded that organizational culture is a vital aspect to enhance the organizational effectiveness and to align its organizational goals with employee’s personal goals. The MacKinsey’s7S model that includes strategy, structure, systems, shared values, skills, style, and staff, must be studied and improved for organizations to perform well.
References
Bantz, C. R. (1993). Understanding organizations: Interpreting organizational communication cultures with a case study by Gerald Pepper. Columbia: University of South Carolina Press.
Coll, S. (2012). Private empire: ExxonMobil and American power. New York: Penguin Press. Pp. 10-20
Eisenberg, E. M., & Riley, P. (2001). Organizationalculture. In F. M. Jablin, ed. , & L. L. Putnam (Eds.), The new handbook of organizational communication (pp. pp. 291–322). Thousand Oaks, CA: Sage.
Geertz, C. (1973). The interpretation of cultures. New York: Basic Books.
Martin, J. (2002). Organizationalculture: Mapping the terrain. Thousand Oaks, CA: Sage.
Peters, T. J., & Waterman, R. H. (1982). In search of excellence. New York: Harper & Row.
Stahl, R. G. (2008). Valuation of ecological resources: integration of ecology and socioeconomics in environmental decision making : from the Society of Environmental Toxicology and Chemistry workshop on Valuation of Ecological Resources: Integration of Ecological Risk Assess. Pensacola (FL): SETAC ;. Pp. 18-25
Tompkins, P. K., & Cheney, G. (1985). Communication and unobtrusive control in contemporary organizations. In R. D. McPhee, ed. , & P. K. Tompkins (Eds.), Organizational communication: Traditional themes and new directions (pp. pp. 179–210). Beverly Hills: Sage.
