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There is also an increasing need to have a presence in a country, in order to get a concession or a government approval to begin energy exploration. In many cultures, a long relationship must be developed and evidence of staying power must be shown to in order to get business. The lack of presence may affect future bids in a country. As one employee commented, “We’re very good at managing the technical aspects of the exploration busi-
ness —for instance we have led the industry in seismic techniques related to secondary tertiary recovery, but we’re not very good at managing new cultures effectively to obtain entry.” In Amoco’s defense, some manager’s argue that, realistically, Amoco may not know whether it will be in a new country 6 more months or 6 or more years. This uncertainty is dependent on whether a discovery is made, an endeavor that can fail 90 percent of the time. Some managers contend that it makes more sense to use talent from the United States until a discovery is found. Yet a key to developing marketing strength in new markets is to open an office in a country even before a discovery is made. Typically, however, Amoco will not open an office in a new country until after a discovery is made and concessions are given. Because of this policy, Royal Dutch Shell has a 10-month jump on Amoco in Romania, since it was there long before a concession was made. Given the fact that the entitlement and social programs in many countries are very much more costly than in the United States, a counterargument can be made that it does make sense for a U.S. oil company to move slowly when hiring foreign employees. It would be extremely expensive to close a firm and pay off the former workers if no oil were found. Because of these conditions, contract employees are often used heavily in the early stages of development.
Still, many believe that it is not possible for a company the size of Amoco to open as many offices worldwide as larger competitors, such as Royal Dutch Shell or Exxon. Rather, Amoco should focus its efforts on opening offices early in selected countries. Instead of using its technical strengths after a discovery is made to gain business, Amoco should do a better job of making the
world aware of its strength in applying technology well and leverage this capability to get new contracts.
Increasing pressures to hire locals are also being felt from foreign governments. Expectations today have changed. Foreign governments now demand greater employment of local nationals. This can be a problem in countries such as Trinidad, where lifetime employment is the norm. It is very difficult to be a low-cost operator when the biggest part of the costs come early; then, once the oil platforms are built and the growth is underway, the firm is left with a headcount that is not flexible.
An additional pressure stems from worldwide differences in ethics. Amoco values will not permit it to engage in bribing or violating U.S. laws when abroad, even if it is the custom and competitors are doing so. Ethics also affect the extent to which a multinational chooses to use techniques that minimize damage to the environment, even if there are no foreign environmental laws. Firms that are environmentally cautious may face much higher costs than their competitors. Yet some managers believe that Amoco’s ethics could be turned into a competitive advantage to get new business, because many of Amoco’s
environmental approaches are leading edge. In Pakistan, for example, the government would not allow the import of beride, a chemical used in the drilling of wells. Amoco spent an extra quarter million dollars on its wells in lining pits and putting up a dustproof room for the lead, which can be hazardous to the environment, if mixed. Similarly, in Burma, where operations were in a jungle, Amoco cut a very narrow path around the area for the oil well and then reforested. In the United States, where environmental regulations are considered to be the most strict in the world, Amoco strives not only to meet but to exceed envi-ronmnental regulations. As one manager states, “If you spend more now, you’ll save a lot later, because you’ll be ahead of regulatory changes.” Some believe that doing a better job marketing this record will increase global opportunities.
1. What is a global organization?
2. What are the key business pressures driving the globalization of human resource systems?
3. What are some HR practices that would help Amoco Production manage these tensions? ?
For one manager of software projects (based in Los Angeles) who oversees 11 people in a 50-person office based in Dallas, the answer is that telecommuting is very effective, although not without drawbacks. Our manager, a veteran of nine years of telecommuting, is in constant contact with her employees, software technical writers, and quality analysts-testers, through E-mail, with voice mailbox, phone, fax, and, at least once a month, face-to-face visits on site with each employee. One room in her home is fully outfitted as an office, one she can walk away from as a means of separating her personal and professional life. However, she is always connected to those whom she supervises. For example, on a weekend, if an employee has gone in to work, she can answer a question from home by merely walking into her home-based office.