Case Study: Analyzing Organizational Behaviour at Petronas

This case study delves into the organizational behaviour of Petronas, a major oil and gas company, examining the challenges it faced related to recruitment policies and subsequent human resource management issues. The analysis highlights the impact of poor recruitment on employee satisfaction, leading to significant terminations and financial decline. The study applies various organizational behaviour concepts and models, including individual differences, perception, motivated behaviour, and the desire for involvement, to understand the root causes of the problems. It emphasizes the importance of employee motivation, human dignity, and mutuality of interests. The report concludes with recommendations for Petronas to improve its HRM practices, enhance employee engagement, and ensure organizational success through strategic approaches to employee management and improved recruitment and retention policies.

Running head: ORGANIZATIONAL BEHAVIOUR
Organizational Behaviour: Petronas
Name of the Student
Name of the University
Author’s Note:

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Table of Contents
1. Introduction............................................................................................................................2
2. Discussion..............................................................................................................................2
2.1 Brief Description of the Case Scenario of Petronas.........................................................2
2.2 Issue Faced by Petronas...................................................................................................3
2.3 Concepts, Models and Theories of Organizational Behaviour relevant for the Issue......4
3. Conclusion..............................................................................................................................7
4. Recommendations for Petronas..............................................................................................8
References................................................................................................................................10

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1. Introduction
OB or organizational behaviour refers to the proper understanding of human
behaviour in specific corporate settings, interface within the organization and human
behaviour. It is required to evaluate the activity and performance of individuals and helps in
the determination of its effect over job structure, communication, leadership, achievements
and motivation (Noe et al. 2017). OB is responsible for initiating a significant procedure to
recruit, select and induct employees in a company so that better effectiveness is gained. It is
essential and vital to provide benefits and motivate the employees by maintaining subsequent
relations with the staff (Mondy and Martocchio 2016). This following report outlines a brief
discussion on the issue of recruitment policies, faced by Petronas with proper concepts,
models and theories of OB and suitable recommendations for the problem.
2. Discussion
2.1 Brief Description of the Case Scenario of Petronas
Petronas or Petroliam Nasional Berhad is a significant ONG organization in Malaysia,
which was found in the year of 1974. The Malaysian government entirely owns it, and the
corporation is vested with different resources. It is also delegated with the significant duty of
development and adding of different values to the resource (Petronas Global. 2019). The
organization has grown to be an integrated international ONGC that has been doing business
in thirty-five countries throughout the world. The major products of Petronas include
petrochemicals, natural gases and petroleum and the services include shipping services and
filling station.
More than 48000 employees are working in this famous oil and gas company, and
they had been doing business successfully for several years. The entire group is eventually
engaged in a broad spectrum of different petroleum activity like oil production, gas

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processing, downstream oil refining and many more. Apart from the customers, the
employees are also satisfied with their jobs (Petronas Global. 2019). However, recently they
have faced an issue related to recruitment and selection policy, and as a result, few HRM
issues are being faced by them. These human resource management issues are needed to be
eradicated on time, so that employee satisfaction is prevailed eventually and without any type
of problem or complexity.
2.2 Issue Faced by Petronas
The organization of Petronas has been doing business for more than 45 years and have
tried to ensure that they can provide maximum productivity and satisfaction to both
customers and employees. Due to this poor recruitment and selection policy, they had to
terminate almost 1000 employees from their organization. As a result, significant issues
related to people management and employee dissatisfaction was observed in the company
(Petronas set to terminate 1000 jobs. 2016). Management of employees is referred to as one
of the most vital and significant requirements in an organization. It is needed to ensure that
the respective organizational employees are highly motivated and encouraged effectively, and
hence better productivity is gained without much complexity.
The organizational approach towards employee management was not appropriate, and
it created a significant issue for Petronas to achieve business efficiency, sustainability and
resilience in the challenging time for this oil and gas industry. It was needed to implement a
new strategic approach for understanding the operating model of the business and maintain
deliberate and sequential measures towards better navigation of the company via major
external environments (Petronas set to terminate 1000 jobs. 2016). The main reason for such
issue was that Petronas had recorded a revenue of RM248 billion in the year of 2016, which
was around 25% decline as compared to the similar period in the year of 2014. Several
employees were terminated as they were unable to provide products as per expectation, and

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the organization was facing losses to a high level. They were majorly affected by the
prolonged volatility in prices of oil and gas.
2.3 Concepts, Models and Theories of Organizational Behaviour relevant for the Issue
Organizational behaviour is the subsequent study of different methods that individuals
act in groups (Bratton and Gold 2017). The various principles of organizational behaviour are
being applied primarily in few attempts for doing businesses in operating more efficiently.
The concepts of OB help in the improvement of job performances, incrementing job
satisfaction, and promotion of innovation as well as the encouragement of leadership. Each of
these actions comprises of its own recommended activities like recognition of groups,
modification of compensation structures, and even changing methodologies for performance
evaluations (Cascio 2015). The respective environment of the organization is referred to as
less important than different social factors.
The cultural components of the company like class, gender roles and race eventually
affect the overall productivity and group building skills. Cognition and decision making skills
are well covered through organizational behaviour (DeCenzo, Robbins and Verhulst 2016). A
subsequent change in the markets and environments are being considered on top priority to
ensure that significant effectiveness is gained under every circumstance. The respective
power of social networks and the individual market is being influenced under every possible
aspect. The overall culture of the business is being understood adequately. The various
theories of OB help in informing real-world evaluation as well as the management of
different groups of people (Sparrow, Brewster and Chung 2016). Leadership and authority
eventually operate interdependently in the respective workplace. The most significant
methods the elements are being utilized and exhibited, as agreed on the rules and guidelines
of the workplace to run a cohesive business.

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The issue of Petronas could be understood with different concepts of organizational
behaviour and these concepts are as follows:
i) Individual Differences: This is the first and the foremost concept and model of
organizational behaviour that is required to understand the HRM issue of Petronas (Jackson,
Schuler and Jiang 2014). Every employee is different, and hence it is required to understand
the needs and requirements of them for ensuring that better effectiveness and efficiency is
gained in the respective business. It helps in understanding individual characteristics, which
matter for understanding employee behaviours at the workplace.
ii) Perception: The second significant concept or model of organizational behaviour
that is required to understand the HRM issue of Petronas is perception (Anderson, Fontinha
and Robson 2019). Different perceptions of people are also required to be understood by
organizational management. It is the significant procedure, through which staff can organize
and interpret his or her impressions for providing subsequent meaning to the organizational
environment and hence it eventually influences the behaviour at the workplace (Fundamental
Concepts of OB. 2019). As Petronas did not have suitable policies for employee retention and
recruitment and selection, they were unable to understand the perceptions of employees and
more than 1000 employees were being terminated from the organization.
iii) Motivated Behaviour: It is essential to ensure that the staff are highly motivated
for working in the organization (Storey 2014). Moreover, periodical feedback should also be
undertaken from the employees to learn about the fact that whether they are motivated or not.
According to OB, every employee should be motivated enough to provide a better quality of
work in the organization. As suitable employee retention policies were not present in the
company of Petronas, the employees were not motivated, and issues related to HRM and
people management initiated in the business (Purce 2014). As a result, around 1000

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employees lost their jobs. The organizational management was unable to deal with the
prolonged expense of oil and gas and hence to maintain a balance between organizational
expenses and resources so that the entire process of decision making becomes much easier in
the business. Hence, mutual benefit is obtained without much complexity (Brewster et al.
2016). Employee motivation is required for enriching the overall work quality and the path
towards fulfilment of need is termed as the best option for enhancement of work quality.
iv) The desire for Involvement: The next significant concept of OB required in this
case study of Petronas is the desire for involvement. Every organizational member is actively
seeking subsequent opportunities for working on getting involved in the decision-making
issues (Tyson 2014). The chance of sharing the point of views of different employees and
staff should be considered as well, and Petronas should have provided them with the
opportunity of expressing their opinions, suggestions and ideas for the process of decision
making. The employees were unable to get involved with the organization completely, and
hence they got terminated, and the company could not take up any action for preserving
them.
v) Value of the Person: This is yet another vital and significant concept of
organizational behaviour required in this case study of Petronas. According to OB, the
employees should be treated with respect, dignity and employment status, to ensure that
better effectiveness and efficiency is gained in terms of productivity from the staff (Albrecht
et al. 2015). When the employees would get respect and dignity, it is evident that they would
give better productivity and the organization would not have to raise a concern about
prolonged expenses of oil and gas.
vi) Human Dignity: Another important concept of OB that should be considered for
the case scenario of Petronas is human dignity. It is a philosophical concept, which confirms

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that people are needed to be treated differently from the other factors of productivity (Berman
et al. 2019). It recognizes employees in such a manner that they want to be treated with
respect and should also be treated similarly.
vii) Mutuality of Interests: Another significant and vital concept of OB that should be
considered for the case scenario of Petronas is a mutuality of interests (Wilton 2016). The
specific statement is representing that companies require employees for their benefits and
also for ensuring that maximum advantages are being gained without much complexity. As
they do not have policies for human resource management, there is a high chance that
mutuality of interests for the employees and organizational management would not match and
the employees would not be managed properly. Proper cooperation would be included from
all the staff in the most effective manner (Fundamental Concepts of OB. 2019). The
organizational issues related to people management and lack of recruitment and selection
policies in Petronas did not allow them in matching their mutuality of interests completely.
As cooperation was absent, there were several terminations in the organization.
viii) Holistic Concept: The next important and noteworthy concept of OB that should
be considered for the case scenario of Petronas would be holistic. This particular concept
helps in the interpretation of the relationship between people and organization regarding the
entire social system (DeCenzo, Robbins and Verhulst 2016). Petronas did not consider
people's behaviour, and hence they were affected to a high level.
3. Conclusion
Therefore, a conclusion can be drawn that it is needed to maintain a strategic
approach towards effective management of employees in a specific company, in such a
manner they are quite helpful for this business to obtain competitive benefits. This particular
approach is being designed for expansion of the employee performances in the service of the

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strategic objective of an employer. Organizational success is observed with this particular
aspect, and it is being done through continuous evaluation. In spite of having such distinct
benefits, it is being observed often that employees remain dissatisfied with the existing
policies and procedures of the company. The above-provided report has properly described
the HRM issue in Petronas with relevant concepts and models of OB ad suitable
recommendations.
4. Recommendations for Petronas
HRM is required as it primarily concerns about people management within
organizations and also focuses on systems as well as policies. The departments of HR are
majorly responsible for overseeing the designing of subsequent employee benefit,
recruitment, performance appraisals, recruitment, reward management and many more. One
of the most important and significant parts of HRM is organizational behaviour that is needed
to be taken into consideration. The internal and external perspectives of an organization are
well understood with the help of organizational behaviour. The three levels of organizational
behaviour for any specific company are the individual, the group and the entire organization.
Suitable recommendations for Petronas to deal with the issues associated with HRM are as
follows:
i) Setting Measurable Objectives: The first suggestion for Petronas regarding their
issue of human resource management and people management would be setting out
measurable objectives. The setting of specified goals and objectives for every employee or
staff is extremely vital for the respective organization. Hence, the entire procedure of
recruitment and selection of employees would be done easily and promptly and without any
type of complexity. As a result, major advantages would be gained in the business, and
existing issues would have been resolved completely.

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ii) Engaging Different Policies for Recruitment and Selection: The next significant
and noteworthy recommendation for Petronas regarding their issue of human resource
management and people management would be engaging various distinct policies and
procedures for the processes of recruitment and selection. Petronas lacks appropriate policies
for these two processes, and as a result, it would be easier for the entire organization to
eradicate the issues properly. These policies for recruitment and selection would also be
helpful for the employees to make them understand about the current status of the workplace
and how to provide maximum effectiveness and productivity in work.
iii) Engaging New Team for Recruitment and Selection: An entirely new team for
recruitment and selection should be included in the organization of Petronas, who would be
responsible for maintaining the status of the HRM department in the most effective manner.
The new candidates would get an insight into the processes of the company so that they can
provide proper productivity in the most effective manner.

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