Leadership and Global Management: Chevron and Saudi Aramco Case Study

This case study examines the relationship between Chevron and Saudi Aramco, focusing on employee management and leadership practices within a global context. The analysis covers Chevron's position in Saudi Arabia, Saudi Aramco's employee management strategies, and Chevron's challenges in managing its global workforce. The case highlights the importance of cross-cultural understanding and effective preparation for international assignments, using the experience of Peter Martin to illustrate potential pitfalls in diversity management. The study explores lessons learned from cross-cultural encounters and emphasizes the need for clear communication and the avoidance of assumptions in international business settings. The document also provides insights into the impact of cultural differences on employee motivation, compensation, and career development within the organizations. The case underlines the importance of knowledge management for operational efficiency and cost advantages, particularly in a competitive global knowledge-based economy. It further suggests how Peter Martin could have been better prepared for his assignment in Saudi Arabia to improve his leadership skills.

Chevron and Saudi Aramco
(i) Describe the position of Chevron in Saudi Arabia in relation to Saudi Aramco.
Chevron is a major player in Saudi Arabia’s energy market and is the only international
company that has exploration and production operations in Saudi Arabia. These operations
include both retail and marketing. Chevron hires qualified employees on a full-time basis in
Saudi Arabia. Chevron has supported some community projects, for instance, greening projects
to maintain a robust public relation in Saudi Arabia.
(ii) Discuss how Saudi Aramco should manage its local employees globally.
The current profile of Saudi Aramco’s employees comprises approximately 87% Saudi
nationals and only 13% from other countries. The benefits that are provided for the employees
include annual vacation, paid holidays, and retirement plans. Thus, to ensure that employees are
motivated to perform productively, management has earmarked various motivational and
incentive programs that include excellent and competitive compensation, a conducive working
environment, assigning responsibilities that balance work and family and accommodating
personal and professional lifestyle. This would make Chevron be identified as one of the most
productive and prestigious organizations to work for.
Individuals are employed to work in a specified capacity, and each is given his or her defined
responsibility. Based on this, each given employee authority defined in the employment contract
and the necessary resources meant to carry out the duties. Each employee reports to a manager.
The manager reports to a senior manager establishing the chain of command which links the
various employees to the managers of the company.
Saudi Aramco employees are paid very high salaries that are on par with the best paying jobs
in the world. Secondly, each of the employees working in Saudi Arabia has access to various
career development packages that enable people to improve their competency levels once the
company employs them through courses that offer international certification. Saudi Aramco
employees and their families have access to the best medical services with doctors that are
employed from the best universities in the world. Saudi Armco also has positive training and
services for women who are given very encouraging packages like scholarships once they start to
work for Saudi Aramco. These packages make the average employee of the company dedicated

to the work requirements of the company. This is because, with all your needs catered for, an
employee has little to worry about but the task requirements of Saudi Aramco.
(iii) Discuss how Chevron should manage its global employees locally. What does the
story of Peter Martin's experience suggest is wrong in Chevron's diversity
management strategy?
The global scale of its operations, scarcity of skilled workforce, and a highly competitive
commodity-based business makes Chevron highly vulnerable to the external environment. For
Chevron to retain its market leadership in a competitive global knowledge-based economy, it has
to depend on efficient knowledge exchange between its operations groups (customer facing) and
the technology center staff (responsible for technology and support). Therefore, it is essential for
Chevron to actively engage in knowledge management activities to increase operational
efficiencies and overall cost-advantages.
The story of Peter Martin indicates that the problem with Chevron is that it is competing with
other international oil producing companies globally. Also, in a bid to try and manage its local
employees, the company sends managers from other regions who turn out to be inexperienced.
Chevron's challenge has been to manage its international workforce locally.
(iv) How should Peter Martin have been prepared for his new assignment in Saudi
Arabia?
Peter Martin should have first visited Saudi Arabia before taking the job. Spending several
months or even a year in Saudi Arabia would have enlightened him on the culture, dialect, and
way of life of the Saudis. He should then have taken a junior position at the firm and move up
the ladder to a senior post. This way, he would have gained all the necessary experience along
the way to becoming a great manager.
(v) What lessons can we learn from the Peter and Faysal encounter?
If you do not understand what a person said, do not make assumptions. For a great manager, you
have to be curious about what other people are doing and why. Peter wanted to know what
Faysal was listening to but went ahead to assume that he understood what Faysal said to him.