Strategic Management: Professional Development Plan (PDP) Analysis

This assignment is a comprehensive professional development plan (PDP) created by a student, focusing on strategic management principles. It begins with an introduction to PDPs and their importance, followed by a critical reflection on the student's role as a project engineer, including an analysis of ...Read More

Professional Development Plan
Strategic Management
7BE002
Student Name: Pravin Mathew
Student ID: 1820430
1

Declaration
I hereby declare that the submission is entirely my own work. Any material I have used has
been acknowledged and appropriately referenced. I also confirm that I have not allowed
another student to have access to my work and that this work has not been submitted
previously.
Pravin Mathew
Signed
Date
2

TASK-1
A Strategic Professional Development
Portfolio (PDP)
3

Table of Contents
1. Introduction........................................................................................................................................
2. Critical Reflection..............................................................................................................................
2.1. Myself being a 'Project Engineer'.....................................................................................................
2.2. Areas for future development............................................................................................................
3. Personal Action Plan..........................................................................................................................
4. References with Annotation.............................................................................................................10
5. Appendices........................................................................................................................................13
4

1. Introduction
Professional development plan (PDP) is an action plan that contains pre-determined goals and skills that
may be needed to gain competent progress in regards to both personal and professional life (Abbasi
2017). Learning and development programs are practiced across global organisations especially in
multinational firms. It is being practiced to address to and improve the weak or average performing
areas in an individual student, employee or the manager (Abbasi 2017).
PDP provides an opportunity to conduct a self-reflection to be able to know the self-strengths and
weaknesses. A PDP plan, therefore, helps to improve self-weaknesses, which is necessary to become
eligible to apply for desired jobs and sustain it by producing a continuously improved performances. In a
PDP, an individual can integrate both his or her desired industry’s demands and the individual efforts to
gain such opportunities (Baker et al. 2018).
Globalization has impacted organizational values significantly. It has created opportunities to access to a
huge amount of physical, human and financial resources. They started identifying and designing
strategies to ensure that organisational resources are appropriately retained. For an example,
performance appraisal intends to review the employees’ performance (Varlejs 2017).
PDP is a challenging and time-consuming task. On being executed this may face some barriers leading to
the failure of the plan. Failure can be due to the personal incapability to accomplish the plan effectively.
This can also be due to the unavailability of required resources. For a successful execution of a PDP an
individual needs to have the capabilities of a strategic implementer. Notably, not all academic students
or professionals are capable strategic implementers (Rauf et al. 2018). A professional development plan
(PDP) is broadly divided into short, middle and long-term goals. These goals can be redesigned by being
in regular consultation with the managers. Consultation with managers will help know the feasible
areas, which is necessary to actualize the action plan (Rauf et al. 2018). The success of a PDP depends
broadly on the analytical capability of the line managers and their level of support to the employees.
Professional development plans as noticed by many researchers do not last longer. This may be due to a
strong association of the term ‘Personal’ with that of ‘Professional’ (Abbasi 2017).
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Being the Project Engineer for an MNC, I can figure out the benefits PDP has produced for me. PDP has
provided me opportunities to work on my weak areas and improve my professional skills. I am now
feeling motivated to further my professional development plan (PDP). I will use PDP to help myself
attain my ultimate goal to become a project manager. PDP as per my view is an effective tool to reach
closer to the final goal. PDP works well when designed and planned over short, middle and long-term
goals.
2. Critical Reflection
2.1. Myself being a 'Project Engineer'
Being the project engineer in an MNC, I more willingly follow structured framework to develop skills and
expertise. The reason to follow this framework is to have an access to a number of key performance
indicators (KPIs), which help to bring efficiency to the project. One of the examples of KPIs is “Overdue
Project Tasks/Crossed Deadlines”. It helps to track the number of projects under the overdue section. It
also allow calculating the percentage of projects with crossed deadlines.
My scores for chapters (1-13):
Chapter Score
Chapter 1 18
Chapter 2 2:3
Chapter 3 4
Chapter 4 7
Chapter 5 7
Chapter 6 (2-4)
Chapter 7 33 in the left-brain and 5 in the right-brain
Chapter 8 7
Chapter 9 5
Chapter 10 Low for bureaucratic culture
Chapter 11 6
Chapter 12 +2 to -3
Chapter 13 7
6

The score from Chapter 1 suggests that I possess a huge inclination towards the structural frame of
reference. As believed by DuBois et al. (2015), structural framework influences one’s attitude and
perception towards his or her individual and organizational goals. Employees with structural frame of
reference are the asset to the organisations. Moreover, the Chapter suggests that have a machinist
characteristic, which will provide me the formal authority to achieve the goals.
Chapter 2 suggests that I am a Formulator. Formulating a strategy is an art that requires creative
thinking from thinkers on the organisational internal capabilities, its external business environment and
the current market trends.
Chapter 3 suggests that I am good at working in a team; however, I need to improve a bit. The
improvement will help me adapt to the team environment, which is necessary to work with people from
diverse culture. Cultural diversity is increasingly becoming a part of the global firms. It is, therefore,
important to have capabilities to work in teams. DuBois et al. (2015) suggests that working smoothly in
teams is necessary to enrich the individual capabilities as leaders and contribute to the organizational
goals.
Chapter 4 suggests the ideal score for being mindful is scoring below 5. I disagree with the views as
strategic formulator if they are not mindful can never formulate strategies. Indeed, formulation of
strategies require a good understanding of the external business environment and the organizational
capabilities.
Chapter 5 suggests an ideal score 7 or above for a person to have efficiency in ‘Personal Networking’
skills. Since, my score is 7 then according to the views presented in this chapter I possess a good
networking skills. ‘Personal Networking’ as according to Loufrani-Fedida and Missonier (2015) is
required to essentially facilitate and promote sharing of knowledge in between the people who share a
concerned network.
Chapter 6 indicates that I am a good communicator. As observed by Kanki (2019), communication is one
of the fundamentals of organizational practice, which is required more during the kinds of operations
practice such as change management. Chapter 13 suggests that I possess an excellent political skills.
Political skills as observed by Kanki (2019) helps managers deal effectively with the diverse
organizational circumstances.
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I scored 3 in right-brain and 5 in left-brain in Chapter 7. This suggests that my skills are more suitable to
a manufacturing rather than a service organization. I scored 7 for Chapter 8. This means I am good at
setting goals. According to Plant et al. (2016), ‘goal setting skills’ is one of the fundamentals of managers.
Chapter 9 indicates that I am comfortable more working with smaller organizations. However, the views
presented in this chapter is not true. One of the students got ‘0’ for this chapter. According to the
chapter, the student should find him or herself comfortable working with smaller organizations. On the
contrary, the student does not want to work with smaller organizations. The student is an artist and likes
to play drums. The student is not also comfortable with larger organizations.
I got low points for bureaucratic culture for Chapter 10. The scores suggests that I will better perform as
the manager of an organization that follows a bureaucratic culture. The scores also suggest that I have
the ability to serve the managerial position. Chapter 11 indicates that I am very innovative and one of
the first to adapt to the changes. According to DuBois et al. (2015), innovative people create values to
their firm. As opined by Morin et al. (2016), change management process is now a fundamental part of
the contemporary organizations. For Chapter 12, I scored from +2 to -3. This means the intuitive model
of decision-making is my dominant approach. According to Smith and Winterhalder (2017), intuitive
decision-making is based on the individuals’ conscious thought processes acting like the parallel
intelligent systems.
2.2. Areas for future development
(I) Mind and Environment
According to Varlejs (2017), it is important to be mindful to diverse situations to be able to
formulate effective strategies. I will be doing short mindful exercises at work. This will rebalance the
nervous system and hence, the critical thinking capability. I will strictly focus on one task at one time.
This will enhance my concentration level on work. I need to be prepared for stressful situations to
remain motivated in tough situations. Doing projects and closely observing my senior project engineers
on how they remain motivated in tough situation will also help me learn this.
(II) Strategic Implementer
In the opinion of Loufrani-Fedida and Missonier (2015), very few managers do actually succeed
in implementing the strategies. I need to be an expertise in implementing strategies as this is
more preferable a job skills than of a strategic formulator. For this, I will take part in various
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projects and perform well to become eligible for more projects. The more I get explored to
diverse project situation, more I will learn about the art of strategic implementation.
(III) Decision-making
As opined by Smith and Winterhalder (2017), decision-making is one of the traits of leadership.
To improve my decision-making capability I will observe my senior project engineers on what factors
they consider to make a decision. Moreover, when I will be able to be a part of a project as a senior
project engineer this will help me further my decision-making capability.
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3. Personal Action Plan
Short Term Goal 3-6 Months
Action
Personal
Performance
Indicators(PPI
)
Specific challenges Approaches to
overcome challenges
Target
start
Target
end
A certification
course in
Project
Management
Professional
from Project
Management
Institutes (PMI)
Here, I will
get to learn
about the
essential
elements of a
project
Once I am done
with the course I
will feel more
confident to be a
part of the projects
My focus area of
being a part of the
projects would be to
observe techniques
and strategies being
followed to
implement the
strategies
Dec
2019
May
2020
Medium Term Goal 6-18 months
Action
Personal
Performance
Indicators
Specific challenges Approaches to
overcome challenges
Target
start
Target
end
Working as a
Deputy to a
Project
Manager.
This will help
me learn how
to being
mindful with
different
situations.
I will prefer starting
my career from a
reputed
organization.
At my principle
engineer level job I
will take part in
practical tasks to be
able to acquaint with
the real-business
scenario.
May
2020
May
2021
Long Term Goal 18-36 months
Action
Personal
Performance
Indicators
Specific challenges Approaches to
overcome challenges
Target
start
Target
end
Working with
reputed
organizations
and enriching
my job-related
skills.
Opportunity to
learn the
political skills
This will enhance
my experience
being a Project
manager.
This experience will
help me get jobs in
major firms in the
market.
June
2021
Dec 2022
10

4. References with Annotation
1. Abbasi, A.N. (2017). A Suggested Professional Development Plan for Specialist Doctors
Taking Leading Roles in the Establishment of Quality Healthcare.
The article describe a suggested professional development plan for specialist doctors who
take or are encouraged to play leading roles in the establishment of quality healthcare.
2. Baker, J., Chaseling, M., Boyd, W. and Shipway, B. (2018). Teachers’ response to a new
mandatory professional development process: does it make a difference?. Professional
Development in Education, 44(4), pp.570-582.
The article observes the different views of five different teaching staffs from the New
South Wales Department of Education.
3. Brière, S., Proulx, D., Flores, O.N. and Laporte, M. (2015). Competencies of project
managers in international NGOs: Perceptions of practitioners. International Journal of Project
Management, 33(1), pp.116-125.
This study addresses and identifies the competencies of international development project
managers.
4. DuBois, M., Koch, J., Hanlon, J., Nyatuga, B. and Kerr, N. (2015). Leadership Styles of
Effective Project Managers: Techniques and Traits to Lead High Performance Teams.
Journal of Economic Development, Management, IT, Finance & Marketing, 7(1).
The article says that project management is a growing practice.
5. Kanki, B.G. (2019). Communication and crew resource management. In Crew resource
management (pp. 103-137). Academic Press.
The article says that communication is one of those few boundless topics that contain
many meanings.
6. Loufrani-Fedida, S. and Missonier, S. (2015). The project manager cannot be a hero
anymore! Understanding critical competencies in project-based organizations from a
multilevel approach. International Journal of Project Management, 33(6), pp.1220-1235.
The article is focused on broadening the understanding of critical competencies specific
to project-based organisations (PBOs).
7. Morin, A.J., Meyer, J.P., Bélanger, É., Boudrias, J.S., Gagné, M. and Parker, P.D. (2016).
Longitudinal associations between employees’ beliefs about the quality of the change
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management process, affective commitment to change and psychological empowerment.
Human Relations, 69(3), pp.839-867.
The article says that organisational changes are not less than costly ventures.
8. Plant, S.E., Tyson, S.F., Kirk, S. and Parsons, J. (2016). What are the barriers and facilitators
to goal-setting during rehabilitation for stroke and other acquired brain injuries? A systematic
review and meta-synthesis. Clinical rehabilitation, 30(9), pp.921-930.
The study identify the facilitators and barriers to goal-setting.
9. Rauf, P.A., Ali, S.K.S., Aluwi, A. and Noor, N.A.M. (2018). The effect of school culture on
the management of professional development in secondary schools in Malaysia. MOJES:
Malaysian Online Journal of Educational Sciences, 2(3), pp.41-52.
This study addresses to and explores the influence of school culture on how professional
development could be managed in secondary schools in Malaysia.
10. Smith, E.A. and Winterhalder, B. (2017). Natural selection and decision-making: Some
fundamental principles. In Evolutionary ecology and human behavior (pp. 25-60). Routledge.
The article introduces to main theoretical principles that are employed during decision-
making in organisations.
11. Varlejs, J. (2017). Shape your career-design your professional development plan: rationale
and workshop template.
The article says that career advancement to an extent depends on maintaining
competence, which itself depends on a continuous learning.
TOTAL WORD COUNT: 1,997
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5. Appendices
13

14

15

16

17

18

19

20

21

22

23

24

25

TASK-2
Strategic Management Project
26

CONSENT LETTER
To ,
Course Supervisor
University of Wolverhampton
To whomsoever it may concern
This organisation has given the permission to Pravin Mathew, employee of Saipem working as a
Project Engineer, to conduct an assignment related to a topic he has choosen related to Saipem
organisation. During this period Saipem have given permission to use the Company’s properties
while also stick to the terms and conditions. All information provided will be treated strictly as
confidential and purely for academic purpose only.
Your Sincerely,
Name: Pravin Mathew
27

Table of Contents
1. Introduction........................................................................................................................................5
2. Critical Reflection..............................................................................................................................6
2.1. Myself being a 'Project Engineer'.....................................................................................................6
2.2. Areas for future development............................................................................................................9
3. Personal Action Plan..........................................................................................................................9
4. References with Annotation.............................................................................................................10
5. Appendices........................................................................................................................................13
1. Executive Summary.........................................................................................................................30
2. Introduction......................................................................................................................................31
2.1. Introduction to the company...........................................................................................................31
3. Business Case Analysis.....................................................................................................................32
3.1. A lack of strategic guidance in layoffs is affecting the organizational structure.........................32
3.2. Structural Causes.............................................................................................................................33
3.2.1. Delay in New Projects due to Lack of effective coordination between Project Managers
and Field Crew :......................................................................................................................................34
3.2.2. Boost in the level of employee dissatisfaction:.......................................................................34
3.2.3. Poor management of employees’ career growth:..................................................................34
3.2.4. Structural Models:...................................................................................................................35
4. Literature review..............................................................................................................................35
4.1. Organisation Design and Culture...................................................................................................35
4.2. Industry Outlook..............................................................................................................................36
4.3. Key Drivers supporting Saipem’s Layoff Strategy........................................................................37
5. Analysis/ Restructure.......................................................................................................................37
5.1. Design and restructure.....................................................................................................................37
5.1.1. Need for Restructuring............................................................................................................37
5.1.2. Proposed Solution....................................................................................................................38
5.1.3. New Organisational Structure and its Benefits.....................................................................39
5.1.4. Efficiency and Effectiveness of the Structure........................................................................39
6. Conclusion........................................................................................................................................40
7. References with Annotation.............................................................................................................41
8. Appendices........................................................................................................................................44
A.1 Offshore Division: (Current Structure).............................................................................................44
A.2 Horizontal Offshore Structure.........................................................................................................45
A.3 SWOT Analysis.................................................................................................................................47
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A.4 Daft Model......................................................................................................................................48
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1. Executive Summary
This report emphasizes on the importance to have an appropriate organisational design and
structure. The purpose is being served with the help of a case study on “Saipem”, one of the
leading names in the global oil and gas industry. Saipem is a globally renowned name in
providing contracting services for range of oil and gas related services. In this report, the learner
drew knowledge on organisational structure by referring to scholarly articles. In addition, the
learner also referred to SWOT Analysis to identify and provide insight on Saipem’s challenges.
The business case reveals few issues in the Company such as improper coordination between
project managers and the workers, and project managers’ involvement in the projects. The
findings of the analysis conducted in different ways suggest a new structure to Saipem.
‘Functional Structure with Horizontal linkages’ is being identified as the newly suggested
structure. This structure is more suitable to organisations that face challenges from ineffective
internal communication. However, this may complicate the process as employees may have
confusions regarding where to go asking their queries and getting the needed assistance.
Saipem can consider adapting to the structure to be able to resolve the communication gap
between the higher management and workers.
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2. Introduction
2.1. Introduction to the company
Saipem is one of the leading names in the world in providing both onshore and offshore oil &
gas contracting services. The Company has been listed on the Milan Stock Exchange since 1984
(Saipem.com 2019). Saipem began its operations in the ’50s. It was previously a wholly owned
subsidiary of the Eni group. The Company started to operate separately outside of the group in
the early ‘60s. Consequently, the Company widened its customer base by including super majors,
major nationals, majors and many independent oil & gas companies across the globe
(Saipem.com 2019).
The acquisition of Snamprogetti in 2006 was a major achievement for the company (Saipem.com
2019). Snamprogetti is one of the major globally renowned engineering and construction
companies actively engaged in the designing and execution of large onshore projects. In
addition, Snamprogetti also takes care of the treatment of natural gas monetization and
hydrocarbons.
The Company has been able to recognize the importance of human capital’s engagement. This is
evident in its ability to identify the needs of the local people and create areas of jobs to serve the
needs of employment to them. Saipem is one of very few names to have created job
opportunities to the locals by creating world-class facilities in many parts of the world. Countries
such as West Africa, the Middle East and the FSU are few of these countries where Saipem has
boosted the rate of employment to their local workers. While developing the local content and
the fleet, the company had reinforce its project management & engineering capabilities to be able
to cope with the other market trends (Saipem.com 2019).
Long-term Financial Goals:
Saipem has a long-term strategy and forward-looking view in doing business. The view also
highlights its strategy of long-term capital investments. The Company works towards furthering
its profits over 5-year period. Expectedly, the profit margin for the Company should increase by
a close to €1 billion over 5 - year period. The objective is very much feasible considering that
31

Saipem is both strategically capable in dealing with range of distinguished projects and investing
in innovative projects.
Corporate Social Responsibility (CSR) activities:
Saipem’s long-term sustainability objectives is to prevent, manage and mitigate possible
risks. Additionally, sustainability for Saipem means remaining mindful to their responsibility
towards their stakeholders. The Company draws inspiration from the principles of honesty,
transparency, business fairness and integrity. They follow strict international guidelines while
managing their activities (Saipem.com 2019).
3. Business Case Analysis
3.1. A lack of strategic guidance in layoffs is affecting the organizational structure
I work as the department head of the project unit (Offshore drilling) of Saipem. In the ‘Minutes
of Meeting’ I got to hear about an issue, which is affecting the performance of Saipem.
Minutes of Meeting:
 Few projects are under the overdue section of the dashboard
 Few have even crossed their deadlines
 On a broader aspect, an ineffective coordination between the project manager and field
crew is resulting in a delayed flow of information through the network
 This is affecting the Company’s brand image in the market
 Client retention is becoming a challenge
The findings of the minutes of meeting suggest that an ineffective coordination between the
project managers and field crew in my department (Offshore Drilling) is impacting our level of
customer service. Few of the recent projects that we did were not up to the mark. We were
criticised for it as well. For an example, Gazprom, the Russian natural gas exporter had cancelled
a project was to be done with Saipem. The contract amount was $2.6 billion (Nytimes.com
2019). The project was about constructing a pipeline under the Black Sea (Nytimes.com 2019).
32

Gazprom admitted that they were looking for other potential contractors (Nytimes.com 2019).
The fact just questions the quality of service Saipem delivers and also validates the fact being
raised in the minutes of meeting.
A business structure must have teams joined to the networks. This helps to communicate the
clear accountable roles to employees also maintain an exchange of information. On the contrary,
Saipem under its strategic plan for 2016-2019 has been conducting the layoffs (Offshore Energy
Today 2019). This move is part of the company’s savings initiatives. In addition, the Company is
doing it to sharpen its focus on its vision for 2016-19. Under this policy people who are less
productive will no longer have their jobs survived. However, layoffs can serve the purpose only
if unproductive workers are removed. This will require a good observation and analysis of the
performance of each worker before putting them to the layoff list.
There is no such tool that can be used to make decisions based on intuitive analysis of the situation.
Instead, decisions like layoffs are made following the rational model of decision-making (Calabretta,
Gemser and Wijnberg 2017). Hence, workers will mainly be judged based on their project managers’
feedbacks for them. Project managers will hardly blame the deadline miss cases to the unit’s structural
issues. They will stick with the data, which will have instances of missed deadline cases and their
personal observation of each field crew. They will send it to the higher management department. I being
the head of one of the project units (Offshore drilling) in Saipem can feel the challenge. My credibility is
in question now as I have not yet been able to improve things. My years of experience as a project unit
head will be questioned if the unit continues to miss the project deadlines. I, therefore, being the project
unit head recommends a structural modification of the project unit (Offshore drilling). I have to get things
repaired or else I would not be the fittest person for this post.
There are so many instances of incidents occurred due to improper coordination between project
managers and field crew. I can remember one of the incidents when the client was asking for a refund as
the client was not satisfied of the progress. I have to work hard like stretched working hours to ensure
things are conducted appropriately. I could somehow save the project from losing it.
3.2. Structural Causes
Due to a half-measured progress for the layoffs the project unit and so the business is facing
following key challenges directly impacting the Unit’s and so the Company’s structure:
33

3.2.1. Delay in New Projects due to Lack of effective coordination between Project
Managers and Field Crew :
It is being highlighted earlier before in this report that Saipem faces lack of effective
coordination between its project managers and the field crew. A poor coordination as the one
being mentioned is affecting many more thing. Tasks are getting delayed leading to missed
deadlines of the projects. Queries are not being communicated properly. There is limited or less
good use of the technologies available for the communication. This may be due to the negligence
from both the supervisors’ and the crews’ end. Hence, important information or crucial queries
are not communicated in real-time.
If the highlighted issue continues further and that no effective measures are taken to mitigate
this, the vision to achieve €1 billion as the ‘Profit’ over the next five years could be a difficult
task for Saipem.
3.2.2. Boost in the level of employee dissatisfaction:
The rotations of shifts at Saipem are too long. Workers are being laid off without giving them a
proper notification and justification for the same (Jacobs, Yu and Chavez 2016). It appears as if
the job security is low. A low job security can be demotivating for employees. Layoffs may
create a negative market image of the Company as few employees have claimed that they were
not being informed about the layoffs. If this is true then the project managers would not have
communicated the facts appropriately.
3.2.3. Poor management of employees’ career growth:
Saipem faces challenges in form of employees’ disinterest for the Company and job insecurity.
These issues become more severe with poor management of career development at Saipem.
Expats in particular receives poor career development scope in the company. The top and
medium level management also performs not so well. There is no effective coordination between
managers and workers. As a result there is a lack of justified diagnostic of underperforming
workers.
The Company’s decision to go for layoffs has explored the analytic inability of its
medium and top level management. Additionally, there is no step towards mitigating the
communication gap between the project managers and field crew in the offshore drilling
34

department. The management must consider a restructuring of the organisational structure to
promote an effective coordination between the field crew and project managers. The
restructuring will aim to improve the coordination between the project managers and field crew.
Performance review will be made transparent and done on an annual basis. Data analytic
capability will also improve leading to a thorough analysis of employees’ performance.
3.2.4. Structural Models:
SWOT Analysis (Refer Appendix A.3)
On a broader aspect this can be concluded that Saipem has growing opportunities in form of
emerging markets and growing demands for crude oil. However, some potential threats such as
political meetings on environmental issues, global economy and lower profitability can produce
barriers to take the advantage of opportunities. Apart from these threats Saipem faces some
internal challenges, which are affecting its competing capability. SWOT analysis suggests that
the project unit (Offshore drilling) of Saipem faces many issues like poor coordination between
project managers and field crew, and ineffective governance of projects. It further suggests to
change the business structure in the project unit (Offshore drilling) of Saipem to facilitate an
effective coordination between project managers and field crew. Daft model (See Appendix A.4)
clearly highlights the need for an effective coordination and communication between cross-
functional teams. There should be an evident linkage between the vertical and horizontal
departments in the project unit (Offshore drilling) in Saipem.
4. Literature review
4.1. Organisation Design and Culture
According to Burton and Obel (2018), organizational design determines the organization’s
performance and how the people collaborate to each other while working on a project. Burton
and Obel (2018) argue that designing should be forward-looking and scientific-based. As
observed by Lee, Kozlenkova and Palmatier (2015), organisational structure is now a key
variable in marketing model. The trend for structural marketing is growing as this has been found
helpful in achieving the marketing objectives. Structural marketing on the other hand rely much
on organisational structure. An organisational structure must be carefully designed to ensure that
it is compatible with structural marketing.
35

As stated by Naranjo-Valencia, Jiménez-Jiménez and Sanz-Valle (2016), there is a linkage
between organisational culture, innovation and the performance. Innovation as being found by
Naranjo-Valencia, Jiménez-Jiménez and Sanz-Valle (2016) mediates the relationship between
organisational culture and performance.
The three articles such as those mentioned above in this paragraph suggest that organisational
design and culture are now fundamentals to contemporary organisations. According to Denning
(2016), the current unit structure at Saipem needs to become structurally flexible and strategically
advanced to be able to operate efficiently. In addition, the business unit must also be in a position to re-
design its structure. This is needed to be able to achieve its specific goals and become much more
efficient (DAFT BOOK).
To achieve agility in business practice, Saipem needs to fulfil all the factors mentioned as below
(Dikert, Paasivaara and Lessens 2016):
1. ‘Strategy-making’ across the organization should involve the North Star technique as this
encourages the practice of shared purpose and vision, flexible resource allocation, sensing the
opportunities, and actionable strategic guidance
2. The ‘Structure’ should contain the network of empowered teams
3. The ‘Process’ must be capable in making rapid decision and adapting to learning cycles
4. The ‘Business’ should follow the dynamic people model, which ignites the passion
5. The company must be using the next-generation enabled ‘Technology’
Saipem currently uses a hierarchical organisational structure where communication tends to pass
through multi-levels. One single message is reported to so many people. This generally delays
the process. Additionally, people sitting at the top most position in the structure will rely on the
reporting being made by people being at the lower positions of the structure. This report has
already found a lack of effective coordination between project managers and field crew.
4.2. Industry Outlook
Instability, terrorism, nationalization of property, wars, strikes etc. could have an adverse effect
on the oil and gas industry. Environmental treaties will also have a negative impact. Inelastic
demands for oil and gas related products and services will produce a positive effect. Supporting
sustainable human development could be a good strategy (Ahmad et al. 2017). Breakthrough
36

technology in regards to ultra-deep water will remain a factor of competency. Advanced
technology will have a profound impact on the long-term sustainability of the industry.
Sustainable value creation will produce positive impact on the oil and gas companies (Ahmad et
al. 2017). Obligations relating to environmental issues will produce negative effect on the overall
profitability of the business (Ahmad et al. 2017).
4.3. Key Drivers supporting Saipem’s Layoff Strategy
The layoff strategy being adopted by Saipem was in a response to the downturn, which is lasting
longer than what is being initially expected. This has affected market prospects significantly. It
created the needs for a reduction in the entire value of the asset base of Saipem. Saipem claims
that the initiative was being taken to mitigate these challenges. The company had thought of
doing this by adopting a new organisational model. The layoff is a part of the 3-year strategic
plan as adopted by the company. The plan has been adopted to help the subsea contractor retain
its competency against the prolonged challenging conditions of the market. Under this plan
Saipem will create five separate business divisions like offshore construction, onshore
construction, highly valuable engineering services and activities, offshore drilling and onshore
drilling (Maritime Herald 2019).
5. Analysis/ Restructure
5.1. Design and restructure
In this section, the restructuring of Saipem will be discussed.
5.1.1. Need for Restructuring
Need for restructuring becomes a necessity under a range of internal and external circumstances.
The oil and gas industry is explored to a number of external challenges as being found in the
literature review section. In addition to these external challenges Saipem also has many internal
issues. As mentioned earlier in this report that Saipem has coordination issue between its project
managers and field crew. In addition, project managers generally have a very less or negligible
involvement in projects apart from handling the official activities of each project. The below
mentioned points are the reasons behind why Saipem should undergo restructuring (Musyoki and
Wamuyu 2017):
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 Currently Saipem’s vertical or hierarchical structure does not support or encourage cross-
functional coordination at the different hierarchical levels. It causes delays in response
time and decision-making.
 Tall hierarchy up to 7 levels (Refer Appendices A.1) is a huge hurdle resulting in time
consuming processes such as documentation and approval process
 Absence of feasible mode or dotted line reporting between multi-Top level and middle
managers creates the coordination issues
 Lack of communication between the project managers and field crew is huge issue.
 Field crew have lower morale. They feel demotivated due to uninformed layoffs of
workers.
5.1.2. Proposed Solution
The need for restructuring has been identified based on information from above analysis and the
business case analysis. Hence, a new unit organisational structure is proposed (Refer
Appendices A.2). Below are some of its key highlights (Painter et al. 2018):
 Functional Organisational Structure with Horizontal linkages provides freedom and
autonomy to employees. They can communicate to cross-functional teams in complex
circumstances or to share something. This will speed up the rate of communication and
will also facilitate the sharing of knowledge between each team
 The quality of communication will also improve at Saipem. There will be improved
communication between project managers and field crew
 In this kind of organisational structure there will be limited levels of management.
Decision-making will become much more flexible
 The restructured Saipem will see flexible decisions being made at the operations level.
This will also involve workers to some extent. This will improve workers’ morale. When
workers feel valued by working in a company they work harder.
It looks apparent that the ‘Horizontal Structure’ is beneficial to Saipem in many regards. The
structure should supposedly eliminate the issues as faced by Saipem. A detailed list of benefits
can be found in the later section.
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5.1.3. New Organisational Structure and its Benefits
The number of hierarchical levels between the workers and board of directors in Saipem will
reduce. This will result in reduced time span needed to communicate a message. Hence, projects
could then be saved from unnecessary delays leading to enhanced market value of Saipem’s
brand image. Additionally, important messages such as some critical announcements relating to
the projects could be made on time. The level of involvement of project managers will also
improve. Since, Saipem will be creating five separate business divisions under its 3-year
strategic plan, inter organisational communication will be of critical value (Maritime Herald
2019). The Company cannot afford missing on its basics. Indeed, ineffective communication at
the organisational level is a global issue.
5.1.4. Efficiency and Effectiveness of the Structure
Functional structure with Horizontal linkages also called flat. Companies adhering to this
structure have almost no middle managers. This means high-level managers handle or are
responsible for day-to-day tasks. They tend to have usual interaction with front-line employees
and customers. Horizontal structure is more suited to smaller organisations where number of
employees is less and there is no sufficient fund to invest in recruiting middle managers. Despite
these facts the structure is being suggested to Saipem as the company lacks to have an effective
communication between higher staffs and the workers (Ahmad et al. 2017).
It was also being noted that workers’ morale in Saipem is low due to uninformed layoffs.
Layoffs as part of Saipem’s 3-year strategic plan was in a response to external business
challenges. Layoff was identified by Saipem as a strategy to increase its business profitability
(Maritime Herald 2019). The proposed structure would result in increased workers’ morale as
there is less barriers while dealing with the problems. The cost of running such a company is also
low.
Horizontal companies are much difficult to be managed than vertical companies. It is because
there is no clear direction of where to go about to communicate range of issues and information.
This structure is more successful with strong organisational culture like teamwork. On the other
hand, a strong teamwork culture is itself a global challenge. In addition, workers will be less sure
about their contribution in the projects. There will be unclear roles and responsibilities within the
company. In addition, project managers can have frustration from their lack of authority.
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The future will expectedly become more a horizontal organisation as the world globalizes. This
is because customers need their products and services delivered to them in quick times. They
want fast response times. Additionally, they also want better service. Nevertheless, these are two
emerging expectations of customers of their brands at which horizontal organisations excel.
6. Conclusion
To conclude, this can be said that Saipem has been successful with its hierarchical organisational
structure. However, as evidenced from the business case section and a more elaborate analysis of
the issues in the later section, one of the project units (Offshore drilling) of Saipem has a
structural issue. This can be controlled or mitigated if being put to a restructuring process. The
proposed structure would be the “Functional Structure with Horizontal linkages”. This will prove
to be a much better structure for effective internal communication. Moreover, coordination
between the project managers and field crew will also improve. This will lead to effective
coordination between the project managers and field crew. However, the recommended structure
has few limitations. This will encourage a less authoritarian and in fact a more peer-like
relationship with the subordinates.
The above cited challenge can be controlled by constantly looking for a right structure. A
cautious move as advised is required to help the Company achieve its mission and goals. Almost
all the contemporary organizations need to consider restructuring at some point in time to combat
rising challenges that are specific to organizational design and structure.
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7. References with Annotation
1. Ahmad, N.K.W., de Brito, M.P., Rezaei, J. and Tavasszy, L.A. (2017). An integrative
framework for sustainable supply chain management practices in the oil and gas industry.
Journal of Environmental Planning and Management, 60(4), pp.577-601.
The article highlights the internal and external contextual factors impacting the oil and
gas industry. It analyses the impacts more specifically in relation to the SSCM practices.
2. Burton, R.M. and Obel, B. (2018). The science of organizational design: fit between structure
and coordination. Journal of Organization Design, 7(1), p.5.
This article highlights the importance of organisational design. It says that organisational
design determines the performance. According to this article, an organisational design
must specify the fit between the structure and organisational resources.
3. Calabretta, G., Gemser, G. and Wijnberg, N.M. (2017). The interplay between intuition and
rationality in strategic decision making: A paradox perspective. Organization Studies, 38(3-
4), pp.365-401.
The article says that both intuition and rationality affect the decision-making. However,
there is no such framework that could encourage an interplay between intuition and
rationality.
4. Denning, S. (2016). How to make the whole organization “Agile”. Strategy & Leadership,
44(4), pp.10-17.
The article says that to make an organisation agile it is important to change its corporate
culture. This is difficult considering that there will be changes across many business
divisions such as organisational structure.
5. Dikert, K., Paasivaara, M. and Lassenius, C. (2016). Challenges and success factors for
large-scale agile transformations: A systematic literature review. Journal of Systems and
Software, 119, pp.87-108.
The article says that agile methods have now become a necessity for companies looking
to improve their performance. However, transformation to an agile organisation faces a
range of barriers like management support.
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6. Jacobs, M.A., Yu, W. and Chavez, R. (2016). The effect of internal communication and
employee satisfaction on supply chain integration. International Journal of Production
Economics, 171, pp.60-70.
This article highlights that internal communication has positive impact on the employee
satisfaction. It further says that employee satisfaction mediates between internal
integration and internal communication.
7. Lee, J.Y., Kozlenkova, I.V. and Palmatier, R.W. (2015). Structural marketing: Using
organizational structure to achieve marketing objectives. Journal of the Academy of
Marketing Science, 43(1), pp.73-99.
This article describes the importance of structural marketing.
8. Maritime Herald 2019. Saipem cuts another 800 employees from European-based facilities |
Maritime Herald. [online] Maritime Herald. Available at:
http://www.maritimeherald.com/2016/saipem-cuts-another-800-employees-from-european-
based-facilities/ [Accessed 7 Mar. 2019].
9. Musyoki, D. and Wamuyu, F. (2017). Corporate Restructuring and Firm Value: Review of
Evidence. International Journal of Business and Social Science, 8(1).
The article identifies corporate restructuring as a key area in finance, strategic
management and organisational theory.
10. Naranjo-Valencia, J.C., Jiménez-Jiménez, D. and Sanz-Valle, R. (2016). Studying the links
between organizational culture, innovation, and performance in Spanish companies. Revista
Latinoamericana de Psicología, 48(1), pp.30-41.
This article says that innovation is mediator between the organisational culture and
performance.
11. Nytimes.com. 2019. Gazprom Cancels Italian Contractor’s Deal for Black Sea Pipeline.
Retrieved from https://www.nytimes.com/2015/07/10/business/international/gazprom-
saipem-pipeline.html
12. Offshore Energy Today 2019. Saipem to cut capex, focus on core business. New logo
revealed. [online] Offshore Energy Today. Available at:
https://www.offshoreenergytoday.com/saipem-to-cut-capex-focus-on-core-business-new-
logo-revealed/ [Accessed 7 Mar. 2019].
13. Painter, M., Pouryousefi, S., Hibbert, S. and Russon, J.A. (2018). Sharing vocabularies:
Towards horizontal alignment of values-driven business functions. Journal of Business
Ethics, pp.1-15.
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The article identifies that horizontal alignment of multiple value-driven functions is a
challenging task to conduct.
14. Tolonen, A., Harkonen, J., Verkasalo, M. and Haapasalo, H. (2015). Product portfolio
management process over horizontal and vertical portfolios. International Journal of Product
Lifecycle Management, 8(3), pp.189-215.
The principal motive of this article is to design ontologies for the business process
hierarchy.
15. Saipem.com (2019). [online] saipem.com. Available at:
http://www.saipem.com/SAIPEM_en_IT/sottosezione/company/Organisation+Chart.page
[Accessed 8 Mar. 2019].
16. Saipem.com 2019. [online] saipem.com. Available at:
http://www.saipem.com/sites/SAIPEM_en_IT/sottosezione/company/History.page [Accessed
7 Mar. 2019].
17. Saipem.com 2019. [online] saipem.com. Available at:
http://www.saipem.com/sites/SAIPEM_en_IT/area/SUSTAINABILITY-saipem-
sustainability.page [Accessed 7 Mar. 2019].
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Saipem Structure
Director System
Engineering
Public Relation HSE
Department
Field Crew
Project
Manager
Department Head of
Offshore Drilling
HRD
Field Crew
Project
Manager
PR Department
Field Crew
Project
Manager
Project
Controller
Engineering
Inspection
Project
Manager
Contractor
Oil and gas
operation
management
R and D
8. Appendices
A.1 Offshore Division: (Current Structure)
Figure 1: Current Structure
(Source: created by author)
The above figure shows the current structure of Saipem. It resembles more or less to a
hierarchical structure where one level will report to the individual in an upper level. Field crew will
report to their project manager in the offshore drilling department. On the other hand, one project
manager will reach to their field crew at one time. In case they need supports of the other department,
there is no clear and fast way to communicate as evidenced from the structure. Indeed, there is a
communication gap.
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Saipem Structure
Director System
Engineering
Public Relation HSE
Department
Field Crew
Project
Manager
Department Head of
Offshore Drilling
HRD
Field Crew
Project
Manager
PR Department
Field Crew
Project
Controller
Engineering
Inspection
Project
Manager
Contractor
Oil and gas
operation
management
R and D
A.2 Horizontal Offshore Structure
Figure 2: Horizontal Organisational Structure
(Source: created by author)
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The above figure shows some improvement in regards to the coordination between the project
managers and field crew. It shows that project managers from each of the departments will be able to
communicate with the field crew working under a different project manager. Hence, rate of
communication will improve. This will positively impact the coordination between the project managers
and field crew. There will be horizontal communication between each of head of the departments
(HODs). Moreover, all field crew will be reporting to one project manager who reports to the
department heads of the ‘Offshore Drilling Department’. However, this will also require appropriate
strategy making from the management regarding how to facilitate an efficient flow of information
between the project manager and field crew. If needed Saipem should ensure accumulating resources to
boost the coordination. These resources include but not limited to use of technologies such as notifying
information through mails or any other possible mean and implementing strategies like regular meetings
on set meeting agenda.
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A.3 SWOT Analysis
Strengths
 Investments in high profile projects
 Sustaining the earned brand image
 Faces lower barriers of market entry
as it supplies contracting service in
drilling rig, drillship, FPSO operation,
for both onshore and offshore projects
Weaknesses
 Declining profits forced to go for
layoffs
 Lacks the ability to compete with
existing competitors as because of
many reasons such as poor
management standard in the company
 Ineffective governance of projects
 Poor coordination between project
managers and field crew
Opportunities
 Growing population in the Asian-
Pacific region and their expanding
economy will lead to an increased
demand for energy
 New and emerging markets for oil and
gas in form of various global cities
 Growing demand for crude oil will
result in increased demands for oil and
gas contracting services
Threats
 Global recession
 Global political events such as on
Environmental issues
 International Union Strikes
 Increasingly growing competition
 Lower profitability
 Global economy
 Increase in labor costs
Table 1: SWOT Analysis of Saipem
(Source: Ahmad et al. 2017)
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A.4 Daft Model
(a) Organisation:
According to the model, the organisational structure must incorporate effective communication
and coordination between subordinates and the higher management authorities. If
communication, coordination and collaboration can be facilitated, business goals will be easier to
achieve.
(b) Structural Dimensions:
1) Formalization: (Very high)
Saipem and its offshore business division have a very complex hierarchical structure. It is more
like a centralised system of working. This effectively delays the projects, which is more due to
ineffective coordination between project managers and field crew.
2) Specialisation: (Division of Labour is high)
Saipem’s employees get opportunities to gain expertise in different work areas. The company has
highly trained team leads, project managers etc. However, poor organisational communication
and unstructured decisions have disrupted the work culture.
3) Hierarchy of Authority: (Vertical Linkage)
Saipem follows a vertical structure (Refer Appendices A.1). In case of offshore business
division, there is no linkage between the top, middle and lower levels. Hence, there is an urgent
need for a restructuring.
4) Complexity: (Vertical/Horizontal/Spatial is 7:5:1)
The complexity count indicates taller Hierarchy. Power and expertise reside at different levels.
Horizontal level produce cross-functions of different business divisions such as onshore and
offshore drilling. Since, Saipem is within the UAE boundaries, Spatial will be at 1.
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5) Centralization (High)
Saipem follows a centralised approach. Decision-makers are the top level managers. Approval
process for any project is facilitated through the policies and procedure of the Company.
(c) Contingency Factors
1) Size (Large)
Number of employees is approximately 32,000 across its global business.
2) Organisational-Technology (Advanced)
The company deploys advanced technology to manage business requirements. SAP ERP is one
of these. This helps Saipem effectively collaborate with its clients and also manage its supply
chains.
3) Environment:
The company has cut-throat challenges offered by client demands, competitors, supplier pricing
and government regulations such as VAT.
4) Organisations’ goals and Strategy: (Long-term sustainability)
Saipem’s goal is to get as much projects as possible. The company also intends to wrap up these
projects within their deadlines. One of its financial goals is to increase the profits counted over
every five years.
The strategy is to successfully accomplish the projects. The company give values to employee
satisfaction and engagement. However, it has failed on many occasions to live up to these
strategies. It is mainly due to the structure of its offshore divisions. It has resulted in ineffective
coordination between project managers and field crew.
The financial strategy is to maintain a good cash-flow. It is also intended for an effective asset
management. The company looks for profits on a constant basis. These strategies are quiet true
as Saipem is one of the very famous names in the global oil and gas industry.
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5) Culture:
Organisation’s culture despite being good has certain flaws in it such as the one mentioned in
this report. It fails to establish a good coordination between project managers and field crew.
There is a late consideration for a structural change, which should have happened on a regular
basis as per the needs.
TOTAL WORD COUNT: 4,006
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