http://www.psopk.

com

ASSIGNMENT

Module: Leadership and Change Management

Course: PGD in Business Management (ABP Level 7)

Institute: Essex College of Management and IT

Submitted to: Fayyaz Qureshi

Submitted By: Muhammad Imran Khan

Jan, 2011

Table of Contents

Page 1
Title Pages
Statement of Originality 3
Acknowledgement 4
Executive Summary 5
Introduction 6
PSO Gradually 8
Board of Management in PSO 11
Awards & Accolades 12
PSO Network 13
Leadership 14
Theories of Leadership 16
Leadership Style in PSO 18
Reasons for Change 19
Cause-Effect Diagram 20
Change in Organization in General 21
Different Types of Changes 22
Transformation Strategy of PSO 24
Change Models 25
Intervention Strategy Model ( ISM ) 26
Intervention Strategy in PSO 27
Top Down Approach 28
Resistance to Change 29
Stakeholders 30
Benefits of Using Stakeholder-based Approach 31

Page 2
Change Process Implementation & Change Agent Role 32
Conclusions 33
References 34

STATEMENT OF ORIGINALITY

I hereby certify that iam the sole author of this assignment and that no part of
this assignment has been published or submitted for publication.

I certify that, to the best of my knowledge, my assignment does not consist of

any other material from the work of other people.

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I declare that this is a true copy of my assignment, including any final revisions
and this assignment has not been submitted for a higher degree to any other
University or Institution.

Thank You

Muhammad Imran Khan

Student PGD Level 7

Essex College of Management & IT

ACKNOWLEDGMENT

I Muhammad Imran Khan, sincerely thankful to my GOD and all those people
who have been gave me any kind of assistance in the making of this assignment.

I thanks to all my college management who’s trained teachers gave me

conceptual understanding, which made my job more easy. I also thanks to my

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friends who gave me strength and confidence to complete the assignment
without any difficulty.

Muhammad Imran Khan

Student PGD Level 7

Essex College of Management & IT

Executive Summary

In competitive business environment, every successful business process needs

changes according to the environment. Manual to automatic, computerized
system, networking expansion etc. however every process need change. This
report shows the change management of Pakistan State Oil. This assignment
explains why Pakistan State Oil losses its share in the market and why its
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competitors have high share rates. There are some internal as well as some
external factors because which are the main causes. Suitable model and cause
effect diagram is used for its analysis.

For this purpose, it needs to introduce change within the organization. This
report shows all the details to implement change in Pakistan State Oil for its
future leadership.

INTRODUCTION

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974,
when on January 1st; the government took over and merged Pakistan National
Oil PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company
Limited (POCL).

Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation
(PSDC) came into existence. PSDC was then renamed as State Oil Company

Page 6
Limited (SOCL) on August 23rd 1976.Following that the ESSO undertakings
were purchased on 25th September 1976 and control was vested in SOCL. The
end of that year (30th December 1976) saw the merger of the Premier Oil
Company Limited, giving way to Pakistan State Oil (PSO).

After PSO, s inception, the corporate culture underwent a comprehensive

renewal program which was fully implemented in 2004. This program over the
years included the revamping of the Organizational architecture, rationalization
of staff, employee empowerment and transparency in decision making through
cross functional teams. The new corporate renewal program has divided the
company’s major operations into independent activities supported by legal,
financial, informative and other services. In order to reinforce and monitor this
structural change, related check and balances have been established by
incorporating monitoring and control systems. Human Resource Development
became one of the main priorities on the company’s agenda under this corporate
reform.

It is due to this effective implementation of corporate reform and consistent

application of the best industrial practices and business development strategies,
that PSO has able to maintain its market leadership in highly competitive
business environment.

PSO is the market leader in Pakistan’s energy sector. The company has the
largest network of retail outlets to serve the automotive sector and is the major
fuel supplier to aviation, railways, power projects, arm forces and agriculture
sector. PSO also provides Jet Fuel to refuelling facilities at 9 Airports in
Pakistan and ship fuel at 3 ports. The company takes pride in continuing the
tradition of excellence and is fully committed to meet the energy needs of today
and rising challenges of tomorrow.

Pakistan State Oil is the largest oil marketing company in the country, is
currently engaged in storage, distribution, and marketing of various POL
products. The current market share of PSO is 82.3% in the black oil market and
59. 4% share in the white oil market, alone speaks volumes about its success.

PSO Major Highlights-FY 2009

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PSO sold 7 million tons of furnace oil- the highest in the last 8 years.

Efficiency managed supply to the power sector despite the liquidity crises.

PSO improved approximately 90% of the country’s POL imports- 3.4 million
tons of HSD and 5 million tons of FO.

Helped in the revenue collection of more than Rs. 161 billion to the GOP
(Sales Tax: 97 billion, taxes: 1.4 billion, PDL: 61 billion).

Extended support to various charitable organizations in the health and

education sector including contribution for the rehabilitation of IDPs due to the
Swat operation.

Source: http://www.psopk.com/about_us/history.php Visited: january8,

2011time 20:03

PSO Gradually

January 1, 1974:

The federal government took over the management of PNO (Pakistan National
Oil) and DPL (Dawood Petroleum Limited), renamed into POCL (Premier Oil
Company Limited) under marketing of Petroleum Products (Federal Control
Act, 1974).

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June 6, 1974:

The government incorporates ‘’Petroleum Storage Development Corporation’’

PSDC.

August 23, 1976:

PSCDC renamed to State Oil Company Limited (SOCL).

September 15, 1976:

The government purchase ESSO undertakings, vests their control in SOCL.

December 30, 1976:

The Government merges PNO and POCL (State Oil Company Limited) and
renames it Pakistan State Oil Company Limited (PSO).

In 1999:

The new vision program is launched with the new logo of PSO.

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Source: http://www.psopk.com/about_us/history.php Visited: january8,
2011time 20:03

Vision:

To excel in delivering value to customers as an innovative and dynamic energy

company that gets to the future first.

Mission:

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

team in an environment, which recognizes and rewards performance,
innovation and creativity, and provides for personal growth and
development.

• Lowest cost operation and assured access to long-term and cost effective
supply sources.

• Sustained growth in earnings in real terms.

• Highly ethical, safe environment friendly and socially responsible

business practices.

Values:

Excellence: We believe that excellence in our core activities emerges from a

passion for satisfying our customer’s needs in terms of total quality
management. Our foremost goal is to retain our corporate leadership.

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Cohesiveness: We endeavour to achieve higher collective and individual
goals through teams. This is inculcated in the organization through effective
communication.

Respect: We are an equal opportunity Employer attracting and recruiting the

finest people from around the country. We value contribution of the
individuals and teams. Individual contributions are recognizes through our
reward and recognition program.

Integrity: We upload our values and business Ethics principles in every

action and decision. Professional and personal honesty, dedication and
commitment are the landmark of our successes Open and transparent
business practices are based on ethical values and respect for employees,
communities and the environment.

Innovation: We are committed to continue improvement, both in new

product and processes as well as those existing already. We encourage
Creative ideas from all stakeholders.

Corporate Responsibilities: We promote Health, Safety and Environment

culture both internally and externally. We emphasize on Community
Development and aspire to make society a better place to live in.

Source: http://www.psopk.com/about_us/vision_mission_values.php
Visited: january8, 2011time 20:13

Board of Management

Mr. Irfan K. Qureshi

Managing Director

Mr. Nazim F. Haji

Chairman

Mr. Sabar Hussain

Member

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Mr. Mahmood Akthar

Member

Mr. Pervaiz A. Khan

Member

Mr. Hammayun Jogezai

Member

Dr. Abid Qaiyum Suleri

Member

Source: http://www.psopk.com/about_us/board_management.php Visited:

january8, 2011time 20:18

Awards & Accolades

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Source: www.psopk.com/about_us/our_network.php Visited: january8,
2011time 20:45

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 PSO Network

Source: www.psopk.com/about_us/our_network.php Visited: january8,

2011time 20:55

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 Leadership

Leadership is the art of appealing a group of peoples to act towards achieving a

common goal or a person in any group who possesses the mixture of skills and
qualities that makes other peoples to follow his or her direction.

Types of Leadership Style:

Source: http://www.bized.co.uk Visited: january9, 2011time 10:14

Autocratic:

This type of leaders makes decisions without anyone’s reference that’s why
there is a high degree of need on the leader in autocratic leadership. Can create
de-motivation and separation of staff, may be valuable in some types of
business where decisions need to be made quickly. This type of leader
sometimes force and threats to achieve the goals.

Democratic:

In democratic style everyone have equal opportunities to vote, both leader and
the followers. Processes of discussion taken before finalizing any decision.
Leader takes decision and seeks to persuade others that the decision is correct. It
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may help motivation and involvement and workers feel ownership of the firm
and its ideas. In democratic ideas and experiences are shared and improved
within the business. Decision making can delay sometimes in order to take
some time for motivation.

Laissez-Faire:

The leadership responsibilities are shared by all and can be very useful in
business where creative ideas are important. It’s highly motivated, as people
have control over there working life and can make co-ordination and decision
making time-consuming and lacking in overall direction. It relies on good team
work and interpersonal relations.

Paternalistic:

In this style leader acts as a ‘father figure’ and paternalistic leader makes
decision but may consult. Always believes in need to support the staff.

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 Theories of Leadership

Source: http://www.bized.co.uk Visited: january9, 2011time 10:14

There are many leadership theories to understand the concept of leadership.

Below are enlisted leadership theories and their short definitions to understand:

Great man theory

Leaders are born not made.

Trait Theory

Leaders have inherited qualities.

Behavioural Theories

Leaders can be made rather than they are born. This theory believes that what
leaders actual do.

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Participative Leadership

This type of Leadership actually involves other people to make the decisions for
the particular task to make any decision. This style of leadership avoids the
autocratic style. In this type of leadership decision making is more appropriate.
Most of the organisations adopt this style.

Situational Leadership

In this theory leaders always lead according to the situation. Leaders motivate
the subordinates by different methods.

Contingency Leadership

According this theory leadership style may change accord to the different
situations. One style may not be effective in other situation.

Transactional Leadership

This style of leadership clearly states the rewards of the subordinates.

Punishments are not stated but they are understood to create a formal discipline
within the organisations.

Transformational Leadership

This type of leadership style puts passion and energy into everything. They
develop a vision, sell a vision, finding the way forwards and leading the charge.

Source:www.changingminds.org/disciplines/leadership/theories/leadership/lead
ershiptheories.htm Visited: january9, 2011time 13:14

Leadership Style in PSO

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We have briefly discussed about the different types of leadership theories cited
above. That gives the initiative what type of leadership can adopt by the
organization. If we analyze the whole scenario of Pakistan State Oil, it’s clear
the Leadership style in PSO is Transformational.
Pakistan State Oil is an enormous organization and its Petrol Pumps, display
centers, Stores and maintenance departments are in all cities of Pakistan.

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Reasons for Change
Following are the major reasons for the change in PSO, internal and external
Reason is given below:
Internal Problems:
• Pakistan State Oil losing their market shares which decrease its
profitability, change was necessary for increasing the profitability.
• To Increase the efficiency of the employees.
• Old and the new employees feel dedicated towards the work.
• Proper training sessions for increasing the quality and efficiency of the
products.
• Lake of quality professionals.
• Company losing its market share due to decline products quality and bad
customer services.

External Problems:
• Political interference.
• New competitors in the market.
• Quick product replacement in the market.

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 Cause-and-Effect Diagram
Cause-and –effect Diagram is a tool that helps to identify, sort and display
possible causes of a specific problem. It graphically illustrates the relationship
between a given outcome and all the factors that influence the outcome. This
diagram is also called ‘‘Ishikawa diagram’’ because it was invented by Kaoru
Ishikawa or a ‘‘fishbone diagram’’ because it’s just look like fish.
Cause-and-Effect Diagram identifies the possible root causes, the basic reasons
for a specific effect or problem.
Source:http://www.balancedscorecard.org/Portals/0/PDF/c-ediag.pdf Visited:
january9, 2011time 17:01

Cause and effect/fish bone diagram of PSO

Competitors Political
Gaining high market Unprofessional
Generate good share hiring
quality products Interference PSO loosing
market shares

Less efficiency of
employees Decline product
Create stress by
quality
employee unions No product
replacement

Employees Products

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 Change in organizations in General

Change is one of the few things that is constant. In the business world, only
those people succeed who change to the changing situations. They sniff out a
little change in the environment and change dramatically to exploit the changing
situation to their advantage.

Change is good. Changing for good is better. Changing the approach to reach
the goals is the best. Changing the way we do things positively can reduce the
time and the cost of doing things. In business sense, a change for good increases
the productivity and reduces the wastage and cost of producing a good or a
service.

The types of changes that generally take place in an organization are

• Strategic changes
• Technological changes
• Structural changes
• Changing the attitudes and behaviours of personnel

Strategic changes refer to the change in the organizational vision, mission, the
objectives and the strategy adapted to achieve those objectives.

Technological changes refer to the change in the technology being

implemented in the production or in the services being offered. As the
technology is always evolving, companies have to implement newer
technologies as new technologies reduce the cost of production and increase the
profitability as it will result in higher rate of production.

Structural changes are the changes to the structure of an organization. This

change can be both internal as well as external to the organization. Internally,
structural change will include changing the overall way in which the activities
are done, which can include the change in the processes or departments, the way
they function, merging two or more departments into one department., etc.
Changing the attitudes and behaviours of personnel are the changes that are
needed to be made for the purpose of changing the attitude, increasing the
employees’ awareness about the organization, etc. With the advent of new
technologies, the personnel need to learn new things in order to keep up with
the rest of the industry.

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Different Types of Changes

Different kinds of change require different strategies and plans to effectively

gain employee engagement and acceptance of change. The three types of
change that occur most frequently in organizations are developmental,
transitional and transformational.
Developmental Change
Developmental change occurs when a company makes an improvement to their
current business. If a company decided to improve their processes, methods or
performance standards this would be considered developmental change.
Companies are continually processing developmental change to some degree in
order to stay competitive. This type of change should cause little stress to
current employees as long as the rationale for the new process is clearly
conveyed and the employees are educated on the new techniques. When major
change such as the decision to close a division, if the company attempted to
implement developmental change as the first step in streamlining the business,
employees may be more likely to accept the change. The employees could see
that the company attempted different strategies before determining that closing
the division was the only option.

Transitional
Transitional change is more intrusive than developmental change as it replaces
existing processes or procedures with something that is completely new to the
company. The period when the old process is being dismantled and the new
process is being implemented is called the transitional phase. A corporate
reorganization, merger, acquisition, creating new products or services, and
implementing new technology are examples of transitional change. Transitional
change may not require a significant shift in culture or behaviour but it is more
challenging to implement than developmental change. The future of the
organization is unknown when the transformation begins which can add a level
or discomfort to employees.

Transformational Change
Transformational change occurs after the transition period. Transformational
change may involve both developmental and transitional change. It is common
for transitional and transformation change to occur in tandem. When companies
are faced with the emergence of radically different technologies, significant
changes in supply and demand, unexpected competition, lack of revenue or
other major shifts in how they do business, developmental or transitional change
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may not offer the company the solution they need to stay competitive. Instead of
methodically implementing new processes, the company may be forces to
drastically transform themselves.

http://www.suite101.com/content/types-of-change-a28594 Visited date:

January 6, 2011, time 22:55

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 Transformation Strategy of PSO
Pakistan State Oil needs some changes at the management level. The first step
for PSO is to recruit some professionals and experts from the market with
attractive packages and benefits. The ministry of petroleum and natural
resources must have two restructured PSO, s board of management and select
the highly professionals.The Human Resource committee, the audit committee,
and the finance committee must review both policy and execution of new
proposal.
Before launching new strategy they must have to refine the vision, mission and
both long and short term objectives
Vision:
To do extremely well in delivering value to customers as an inventive and
dynamic energy company that gets to the future first.
Mission:
Committed to supply the highest quality petroleum product and services to the
customers based and sustained growth in earning in real terms and high, ethical,
environment friendly and safe business practices. Lowest cost operations and
assured access to long term and cost effective supply sources. Pakistan State Oil
management must successfully communicate its vision to all employees.
Objectives:
Pakistan State Oil have to focus on future direction as an energy solution as non
fuel retail. The main objectives are as under;
• Organization of non-fuel retail.
• Market leadership in all key products.
• Establishment of Pakistan State Oil as a brand of choice.
• Consumption of all accessible resources.

Change Models

Page 25
Following are some change models listed below:

• Kurt Lewin change model.

• Richard Beckhard 1969.

• Marshak 2004.

• K.Thurley 1979.

• Bridges 1991.

• The 4 D process of appreciative inquiry.

• The Kuebler Ross model of change.

• John Kotters change model.

• The change journey (HUMAP).

• Cyclical process frame work (CFAN).

• Theory U (Otto Sharmer).

• Intervention System Model ( ISM)

From above mentioned change models, most appropriate change model for PSO
is Intervention System Model

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 Intervention Strategy Model to Implement Change
‘‘The intervention strategy model (ISM) is based on the premise that messy
change situation may be effectively manage through the application of system
thinking’’ (Ackoff, 1999). This model is based on the traditional investigation
techniques associated with operation and system management.
Intervention Strategy
An Intervention strategy is the technical methodology for successful intervening
in the working processes of the original system. Ultimate result should be a
stable environment, which in incorporates the desired change. After doing the
analysis if Pakistan State Oil intervention strategy, it seems and fit to some
extent in intervention system model (ISM). There are three basic approaches in
Intervention system model.
• Definition Phase:
We define our strategy of change, nature, impacts and formulization in this
phase. In this phase identification of the problems is the major part. In case of
Pakistan State Oil first we scanned and analyzed the whole system and indentify
problems they are facing and then formulized the suitable change strategy.
• Evaluation Phase
In phase involved in generation of options and the solution to the problems.
There are wide ranges of techniques available for option generation, for
example brainstorming, Delphi, interview, desk research etc. In the case of
Pakistan State Oil there is no clear picture about the option generation, but there
are solutions for the problems like restructuring, empowerment and
development of employees etc.
• Implementation Phase:
This phase is a practical phase of our intervention strategy, our objectives are
clear, options selected and review and the system is defined. We need a sound
strategy for introducing the change to the system. There are three
implementation strategies available:
1. Pilot Studies: In pilot studies assumptions and procedure can be tested to
review the change. Future acceptance of the implemented change will
increase but it delays full implementation process. Pakistan State Oil is
not adopted this strategy.
2. Parallel Running: It is slow phase out old system, as the new becomes
more reliable and understood. So this strategy is really not suitable for
PSO.

Page 27
3. Big Bang: This strategy maximizes the speed of the change but I t also
generate maximum resistance to the change. So, this is the suitable
strategy for PSO to adopt.

Intervention Strategy in PSO

Phases PSO
Definition Phase Identify the problems both internal
and external
Evaluation Phase Find Solution to the problems. For
example reformation, employees
growth
Intervention Phase Big bang strategy. For example
reforming, experts recruiting.
Parallel strategy. For example
empowerment and development of
employees etc.

Page 28
 Top down approach
The change in any organization can be introduce by ‘‘top down or bottom up
approach’’ (according to Ston 1998). When the decisions taken by top
management and try to implement in organization, its faster one but sometimes
they have to face more resistance. Top down approach dominates the mind of
positional leader.
In the case of PSO they totally have to ignore the lower level as well as the
middle management.

Page 29
 Resistance to Change
During the change process, the management will have to face many difficulties.
It’s possible that middle managers also resist against the change. Sometimes any
talk of change created negative vibrations among the old guards. Obviously
sometimes the employees have to spend more time and concentration during the
change, but the leader must have to explain them about the rewards, overtimes
etc.
In PSO there is also a labour union which always create hurdles when the
change is implement from top to bottom, sometimes they stop working and
resist stopping the change.

Page 30
Stakeholders
Stakeholder is a grouping of people or a person with an importance in the
achievement of business. The major stakeholders in Pakistan state Oil are
customers, share holders, competitors, society, directors, government and
employees.

Customers

Sharehold Employees
ers

Governme
Competito
rs
Stakeholder nt
s

Directors
Society

These stakeholders have direct effect on the growth of the organization and are
directly or indirectly involved with the organization.
These interested parties can usually be grouped into the category like
international donors, national political, security agencies, public civil society,
consumers and labour ministry.

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 Benefits of using stakeholder-based approach
• You can use the options of the most powerful stakeholders to shape your
projects at an early stage. Not only does it make more likely that they
will support you. Their input can also improve the quality of project.
• Gaining support from powerful stakeholders can help you to win more
resources- this makes it more likely that your projects will be successful.
• By communicating with stakeholders early and frequently, you can
ensure that they can fully understand what you are doing and understand
the benefits of your project- this means they can support you actively
when necessary.
• You can anticipate what people’s reaction to your project may be, and
build into your plan the actions that will win people’s support.

Analysis of Stakeholders:
The first step in stakeholder’s analysis is to identify who your stake holders
are. The next step is to work out there power, influence and interest, so you
can know who you should focus on. The final step is to develop a good
understanding of the most important stakeholders so that you know how
they are likely to respond, and so that you can work out how to win their
support.

Source: http://www.mindtools.com/pages/article/newPPM_07.htm Visited date:

January 4, 2011, time 22:55

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 Change Process Implementation and Change Agent Role
First of all I have to communicate the idea within the organization and have to
high light the long run benefits of the appropriate change. Then I have to
explain that PSO can maintain its market leadership in highly competitive
business environment with the help of this change by removing the internal and
external problems as discussed above by using ISM model.
Next step is to hand over the project to the authorities who are professionals
with extra ordinary skills. After that we have to negotiate with the authorities
and convince them for the implementing of change.
In case of PSO overall transformation policy is suitable and the authorities must
have to focus on customer services, more check on transparency and
accountability, improve brand image, more focus on training and development
of employee, and improve profitability and introduction of new vision outlets.
If there is any conflict occurs among the team members, we must have to clear
it. After the completion of project we must have to give rewards to the team
members. For a successful change process we must have to reduce the stress
among the team members because change process seems like extra work for the
team members. This needs to be having good time management. There should
be a specific time frame for the project completion and we divide the project
into different modules. External technical expertise need to be involve to train
and reduce stress among the team members.

Assessment of work and team members must be done and whole the
implementation must be monitored. After implementation of change, benefits of
new additional technology must be highlighted internally through seminars and
externally through media. A comparison of previous system and additional new
system must be shown to all the stake holders especially .We must have to
arrange seminars and distribute rewards to the team members for their success.

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 Conclusions
This report reveals that change apparently seems like a difficult task but if
systematically implement it with the help of theoretical and practical
approaches, it is a n easy process. It introduces new eras within the
organization. In the beginning the stakeholders and some employee’s resists, as
it’s the nature of human beings but when they managed assigned with reduced
stress and reward, any type of change can be easily implemented.

References

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http://www.psopk.com/about_us/history.php Visited: january8, 2011time 20:03

http://www.psopk.com/about_us/history.php Visited: january8, 2011time 20:13

http://www.psopk.com/about_us/vision_mission_values.phpVisited: january8,
2011time 20:03

Randolph E. Schwering, School of Management, Rockhurst University, Kansas

city, Missouri, U.S.A

http://www.psopk.com/about_us/board_management.php Visited: january8,

2011time 20:18

www.psopk.com/about_us/our_network.php Visited: january8, 2011time 20:45

www.psopk.com/about_us/our_network.php Visited: january8, 2011time 20:55

http://www.bized.co.uk www.psopk.com/about_us/our_network.php Visited:

january9, 2011time 10:14

www.changingminds.org/disciplines/leadership/theories/leadership/leadershipth
eories.htm Visited: january9, 2011time 13:14

http://www.balancedscorecard.org/Portals/0/PDF/c-ediag.pdf Visited: january9,

2011time 17:01

http://www.suite101.com/content/types-of-change-a28594
Visited date: January 6, 2011, time 22:55

http://www.mindtools.com/pages/article/newPPM_07.htm Visited date: January

4, 2011, time 22:55

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