The Oil and Gas Industry Challenges in the Global Industry Research Paper Example

Chapter 1: Introduction

1.1 Background of the study

The Oil and Gas industry face increasingly daily technical challenges such as diminishing reserves, limited discoveries and competition from renewable energy sources. This trend has seen central operations shifting to locations in remote areas such as the polar circles, deserts, and offshore platforms. In solving these issues, the industry has had to rely on a multicultural workforce. The professionals working in the oil and gas companies usually have a wide array of varying technical and soft skills that progressively relate to cultural diversity, and therefore there is a need to optimize the interaction between social groups and the management of cross-cultural teams.

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The complex projects spread across the Arctic region and the offshore regions (Nava, & Rivolta, 2013) is an excellent example to demonstrate that as activity in the industry increases, more production of oil and gas resources is shifting to unconventional areas, hence complicating the processes, including that of recruiting human capital.

In addition, the schedule for production is constricted with one company reporting that more than 90% of its oil discoveries between 2009 and 2011 would be operational within eight years (Nava, & Rivolta, 2013). At the same time, most companies manage multiple projects concurrently. Such complexities require strategic frameworks to control costs, labor, and manage stakeholders' relations throughout the project.

The success of the Oil and Gas business just like in other sectors, depends mainly on the effective and efficient use of integrated resources. According to Weijermars (Weijermars, 2007), the practical application of technology, processes and the people connected to smart workflows creates the primary value of a company. In the workflow, people bring in the skills, competence, and passion that add value to products using technology and processes (Weijermars, 2007). Technology provides the tools and innovation for procedures designed to change the property of objects and systems. It is through a workflow that people link with the technology and processes through a sequence of related actions. Therefore, the importance of people as a factor of production within the current Oil and Gas operations cannot be underrated.

The global Oil and Gas business is very dynamic. Speed characterizes the industry when it comes to gaining new prospects, discovering new possibilities and deciding on cost optimization aspects (Weijermars & De Jong, 2008). Due to the nature of the business and multiplicity of the activities, workforce cooperation and communication is key to success. However, professionals representing diverse cultural identities often run the industry within a multicultural setting (Weijermars & De Jong, 2008), thus, it becomes essential to identify the common pitfalls of multicultural contexts that are unique to the Oil and Gas industry that affect interpersonal relations and organizational management systems with the intention of addressing these pitfalls and making specific recommendations.

In recent times, the impact of cultural diversity on business efficiency has increased dramatically due to the effects of globalization. Al Rodhan defines globalization as widening, deepening and speeding up of interconnectedness in social, cultural, financial, spiritual and criminal aspects of life across the world (Overland, 2016). Kaul (2012) contends that globalization does create a global culture that amalgamates identities bringing homogenous cultures on the one side and eroding other cultural values and personalities on the other hand. Globalization has led to cultural antagonisms as people with different cultures draw together, and those with similar cultural identities tend to separate (Wang, 2007). While on one side, the processes disrupt traditional identities it also fosters homogeneity. There is a level of homogenization in social relationships regarding how businesses run and people relate (Wang, 2007). The Oil and Gas sector is not unfamiliar of the effects of globalization. The industry has witnessed so many forms of diversities coming together that it raises the question of what structures, and systems can hold and support the diversity.

People are increasingly getting concerned about their culture uniqueness within the globalized era. The sense of self and community based on local values, rules, and practices to which one conforms refers to cultural identity (Wang, 2007). Deng (2005) notes cultural identity in an organization setting answers questions such as "Who am I? Where are we going? What do we have?" People tend to defend their identities since they construct them through their cultures. Culture is the collective programming of the mind distinguishing people and groups (Hofstede and Hofstede, 2005). Thus, there is a need to organize and regulate cultural experiences in multicultural contexts. A multi-cultural team exhibit differences in ideology, language, belief systems, status, values, skills, and motivation. Managing such variations requires cultural sensitivity defined as a set of skills that enables one to learn and understand people who come from a different cultural background (Frost & Walker, 2007). Modern managers in today's work setting must not only understand cultural differences but also embrace them in building and leading cohesive groups.

1.2 Research gaps, hypothesis and aims

1.2.1 Existing gaps

Global companies within the oil and gas industry have a big task of integrating their knowledge across varying teams who have different cultural experience (Hofstede & Hofstede, 2005). These companies hire staff from different nationalities, workers who have served under different company cultures, and those from different age groups, gender and competencies. Therefore, multi-cultural context poses significant problems to communication and organizational learning.

Some barriers arise in interpersonal communication and relations within the multi-cultural environment. to begin with, there are experiential technical gaps commonly occurring due to the intergenerational cultural differences (Weijermars & De Jong, 2008). In the interaction between old and junior workers, the receiver and the sender may not share similar language, vocabulary or symbols. Therefore, there is a need to integrate their knowledge base continuously to bridge the gap in interaction. The difference may require the creation of professional communities for practice and mentorship.

Big corporations dominate oil and Gas sector, and that leads to organizational gaps. Often in the big corporations, the chain of command is long. The bureaucracy affects the communication systems due to large numbers of receivers who require concise and consistency in messaging (Weijermars & De Jong, 2008). Besides, all employees at multiple organizational levels must understand strategic goals though they operate at different conceptual capabilities. This complexity compounds the challenge of having many professionals from different cultures and specializations. As a result, mutual effort is required to bridge the interaction gap by expanding inter-disciplinary knowledge and communication processes.

The difference in customs and belief systems also interferes with mutual understanding. The cultural gaps hinder the ability of the work teams to cooperate and limit their levels of trust. More so, managing cross-cultural staff means increasing task of handling people's prejudices, traditions, goals, egos, feelings, and different opinions (Weijermars & De Jong, 2008). The difference not only undermines mutual understanding but also affects organization learning since people who view others as different may be unwilling to share their knowledge and skills. Ordinarily, the variation in the feelings, prejudices, and habits emanate from cultural identities. Therefore, it becomes essential to develop strategies for enhancing emotional intelligence and building shared organizational culture.

Lastly, the oil and gas industry provides an interesting context for studying cross-cultural challenges in the workforce. Ideally, the sector is one of the most influential politically and economically; it is lucrative, essential for the world economy, and global in operation. Pirog (2012) notes that three oil and gas enterprises were among the top five companies listed in the Fortune 500. In 2016, the top five most significant companies in the industry made about $1.4 trillion in total revenue (Visual Capitalist 2017). Despite the critical role the industry plays, few studies exist that examine the cross-cultural challenges of the workers in this industry. Workplace innovations can have a far-reaching impact on the industry and the economy since the sector is a large-scale employer.

1.2.2 Research questions and hypothesis

The research process for this dissertation process is focused on seeking answers to the following questions:

1. What are the cross-cultural challenges of a multicultural workforce in the oil and gas industry?

2. What frameworks can be developed to enhance team diversity and increase workforce performance in the industry?

3. What is the role of management in aligning the different cultures of their staff?

The following hypothesis explains the above research questions:

Hypothesis 1: Cross-cultural challenges will have a significant positive correlation with the integration of team diversity and this will have a positive effect on the performance and enterprise of the industry.

Hypothesis 2: Strategic human resource frameworks will have a significant positive correlation with the integration of team diversity, and this will have a positive effect on the moral and performance of the workforce.

Hypothesis 3: Effective management of multicultural workforce will have a significant positive correlation with the alignment of different cultures, and this will have a positive effect on the industry performance and sustainability.

1.2.3 Research aims

Many Oil and Gas companies struggle to align the different cultures of their staff as the industry is considered one of the few particular sectors where their central operations are located in remote area...