Motivation at Norsk Petroleum

7 July 2016

Norsk Petroleum is a leading gas and oil exploration company based in Oslo, Norway. It employs 2564 people, and its business operations comprise the exploration, production and marketing of crude oil, natural gas and natural gas liquids. In 2007 most of its business was conducted in Norway and Canada, although its interests included ventures in West Africa, Australia, the Gulf of Mexico and Venezuela. When Usa Bohm, the human resources director for Norsk Petroleum, read an email message from Elizabeth Pedersen she knew she had another urgent issue to deal with that week.

Elizabeth Pedersen was a petroleum engineer who had the task of deciding how to extract the oil once it had been found by geologists, and extraction had been estimated to be viable by the company’s team of geophysicists. Elizabeth had requested a meeting with Usa for the next day, but she did not say what the purpose was. Usa suspected that Elizabeth was intending to tender her resignation. Usa’s problem was not new, or unique to Norsk Petroleum.

Motivation at Norsk Petroleum Essay Example

In the previous five years, the major oil companies such as Amoco, Bp, Exxon and Shell had accelerated their oil exploration and extraction operations. With the expansion of exploration and extraction in Iraq, following the US and British military intervention, many small independent gas and oil companies had also entered the market or stepped up their operations. After graduating from university, the ‘knowledge workers’ of the industry – geologists, geophysicists and petroleum engineers – need at least three years’ field experience before they become fully qualified and valued professionals.

There was a shortage of, and an urgent need for, qualified professionals. Many small companies had resorted to using executive recruitment agencies or ‘head hunters’. In the previous 12 months, 18 (15 per cent) of the Norsk Petroleum scientists had resigned after receiving offers from rival companies. As Usa was pondering what she would do about the loss of petroleum engineers, and specifically what she would say to Elizabeth Pedersen, there was a knock on her office door.

Gottfred Eng, manager of computer services, walked into the office and asked her to sign an advertising request form; for an ad for a replacement for Ola Rennemo, a computer technician. ‘Why is he leaving? ‘ Usa asked. ‘His new company is closer to home and it will reduce his travel to work time’, Gottfred replied. ‘Ask him to come and see me on Friday before he leaves. I would like to conduct an exit interview with him’. The meeting with Elizabeth Pedersen took place the next day.

It began with comments on the weather, her daughter who had recently married, and brief discussion about the progress on the latest drilling project. Then Elizabeth made a flawless statement: ‘Usa, I’m really grateful for all the support the company has given; the work has been challenging but I’m leaving Norsk to take up a new position at Petrowest’. Anticipating the next question, she continued, ‘It’s a small, independent company which has won a major contract to explore off the Newfoundland Coast in Canada. I’m excited by the job.

And I’ll have greater responsibility for managing two three-person teams of petroleum engineers, and negotiating contracts with the suppliers’. Usa mulled over on the words ‘small, independent company~ Unlike large companies such as Norsk Petroleum, where petroleum engineers focused on specialized tasks related to their knowledge, the small exploration companies required their engineers to take on wider projects and managerial responsibilities, negotiate with customers and suppliers, and work on capital projects.

Usa knew from labour market surveys that Elizabeth was already well paid, but she offered a 5 per cent increase in her salary, additional stock options and a company car. She also pointed out that the company’s share values had been steadily increasing despite a sluggish stock market. Elizabeth said she would consider the new pay package, saying she needed ‘to sleep on it: ‘Let me ask you this, Elizabeth; Usa added. ‘Are you unhappy with your supervisor, or are you having problems with your team members?

‘ Elizabeth replied that her team leader and other team members were fine. The meeting ended with Elizabeth promising to consider the improved compensation package. On Friday morning that week Usa conducted an exit interview with the technician Ola Rennemo. After enquiring about his wife, who was expecting a baby, and their new home, she asked, ‘Why are you leaving the company? Your performance appraisal has been consistently excellent and I believe you would have a bright future if you chose to stay with Norsk Petroleum’.

‘To be closer to my family’ Rennemo responded. Usa was aware that thousands of large, medium and small technology businesses across the country were trying to recruit and keep high-tech talent such as Ola. She was also aware that in line with the company’s stated policy on being a ‘learning organization’ she had agreed to pay for his technical upgrade courses, and a team leadership course held at the local college. She knew she had to stop, or at least slow down, the haemorrhage of talent from the company.

She also knew from reading Ola’s latest appraisal report that he was ambitious, so she tried what she considered an innovative approach to the problem: professional development. ‘If the company paid the tuition for a diploma in management, would you stay? ‘ ‘Thanks, but it’s too late. I’m committed to the new job’ Ola replied. At 4 o’clock that afternoon, Usa received Elizabeth Pedersen’s letter of resignation. On Monday morning, she would be calling a meeting of departmental managers to garner ideas for recruiting and keeping their petroleum engineers and their high-tech support staff.

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