Commercial side of oil tanker shipping industry

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The industry chosen for my assignment is the commercial side of oil tanker shipping industry, which is regarded as the vital marine link in the global energy supply chain. "A Supply Chain is a global network of organizations that cooperates to improve the flows of material and information between suppliers and customers at the lowest cost and highest speed" (Govil & Proth, 2001)Pg.7.

There is a great diversity of skills & background observed in this industry, ranging from investment bankers to ex-seafarers & some companies are still family owned, whereas some fortune 500 public companies. Although, this industry is fairly matured in the western countries, but in Asia it's yet considered to be in the incipiency stages. "A matured industry, by definition, is characterized by the fact that current markets are no longer growing and capacity is in excess. Thus, seeking new markets, that is enlarging the number of clients for existing services, could be a way to increase the company turnover and exploit the capacity not fully used." (Lumpkin & Katz, 2009)Pg.49.

Details of Organisation & Element of strategic HRM

Model of the particular company chosen for demonstrating the concept of strategic Human resource management & effectiveness, is for such an oil tanker commercial outfit, having its headquarters at United States of America & subsidiary offices, in London & Singapore. The manager of human resource department is obviously based out of New York & Human resource machinery of the subsidiary offices, is aided by H.R. officer for each London & Singapore office.

The Core proficiency & qualification of all HR department members is in academic area of Human resource, with vast experience as dedicated practitioners in the shipping tanker industry, for implementation of strategic HRM.

Peter & IIan have very appropriately define strategic human resource management as, "SHRM is a competency-based approach to the management of personnel focused on the development of durable, imperfectly, imitable and non tradable people resources. Developing resources with such characteristics is the key to sustainable competitive advantage (Barney, 1991), particularly because the people are the key "competence carriers" of organisations (Prahlad & Hamel, pg.87)

Peter & Ian further state, "That both HR Practitioners & researchers have embraced this strategic approach to HRM is beyond dispute."


Human resource strategy: formulation, implementation, and impact

Advanced topics in organizational behavior


Peter Bamberger, Ilan Meshoulam




SAGE, 2000



1.2. Details of the Organisation Business

Since the organization being discussed is the commercial interface for a pool of oil tankers, hence it is considered as a service provider to various ship owners & investors, who join their pools. Relationships with customers or users for such oil tanker pools, in conclusion is said to be the fundamental business value of this organization. The greatest emphasis in short is laid on networking, long term strategic relationships, knowledge application, quality operations, strong ethics, IT innovation, etc. "Any business activity should be reducible to a fundamental business proposition based on creating value for customers in economically viable ways". (Ulrich, 1997)Pg. 246.

1.3. Analysis of the Industry

Oil tanker Shipping is a highly specialized industry in terms of skills, relationships & the real growth of this industry has took place in the early part of the 21st century, with increasing of reliance of oil on development, for the emerging markets. The early part of this century has been described as the most profitable times for ship building industry, due to larger new build orders being placed by various ship owners. Hence, with the steady increase in the fleet size of modern oil tankers, the shortage of proficient work force has been critical issue.

To do a quick recap on the analysis of this industry, we will utilise "Porters five forces model" -

The risk of entry by potential competitors - The factor of new competition evolving is fairly high, hence to maintain a place in the industry the organization has to constantly be innovative & dynamic.

The intensity of rivalry among established companies within an industry - The rivalry among the competitors is gradually becoming more visible than before, since this is the time fleet sizes of oil tankers can be drastically be increased due to several new buildings being introduced.

The bargaining power of buyers - Is gradually improving as new competitors are also evolving & offering for dynamic services, than establish players of the industry.

The bargaining power of suppliers - This force remains constant as with the growth of industry, many new suppliers are establishing & fighting for market share.

The closeness of substitutes to an industry's products - This force remains negligible as long as establish industry players, continue to maintain there standards. However, the threat cannot be totally ruled out.


Strategic management: an integrated approach


Charles W. L. Hill, Gareth R. Jones




Houghton Mifflin, 2007


1.4. Intended Objectives of the Report

During the course of my report, I will be highlighting the tenants of the recruitment process & methods of interviewing, the training process of the new hires, cross office interpersonal relationship building strategy, monitoring performance of the various commercial teams, goal setting for the commercial team, training of trainers i.e. managers and supervisors being introduced to human resource management strategies, global strategy & communication skills, culture bridging, re-location process of employees to an international offices,etc. as the effective strategic H.R.M. tools of this organization.

2.0. Outline of Organisation Structure & Responsibilty

In this part of the report, a brief overview of the Organisation structure will be presented along with process of allocating responsibilties of the business unit

2.1. Structure of the Organisation

The structure of this Organization has five main tiers or groups, for every commercial team. Every commercial team, is demarcated based on the type of oil tankers they manage. They are five commercial teams altogether & there is negligible overlapping between them, except at the operations level, at times.

Having said that, the five tiers of every commercial team would be projects, chartering, operations, accounts & bunkers. Every commercial team has one manger each for project, chartering, operations, accounts & bunkers, who separately report to their respective general managers of the company.

The general managers, directly report to the President & Vice-President. In addition, There are anciallary departments which are common to all commerical teams such as, claims & disbursement, Risk management, Human Resource, IT development, Freight & research group, Derivates group. Each of the anciallary departments, have an assigned department head, who also reports to the President & Vice President. "Small firms are assumed to have a simple structure, characterised by low levels of formalization and specialisation and high levels of centralisation" (Kok & Kok, 2003) Pg. 35.

2.2. Deputing Responsibilty

Area of responsibility for each respective team member is allocated basis the area the oil tanker is trading in referred frequently as the business unit & also area of competence, for that particular team member. The respective team head will allocate the incharge in either of the three offices for the respective business unit, depending on time zone or work load levels. As lambert, Sandoval & Hylander jave correctly pointed out," it is of vital importance that all parties [ in a consultee centered consultation] are aware of and acccept the differrence between a professional person's area of competence and area of responsibility. This implies that the solution of work problem is not considered to be within the consultant's area of responsibility just because it is within his or her area of competence. " (Lambert, Sandoval, & Hylander, 2004) Pg. 74.


3.0. Recrutiment

As stated earlier, the HR element of this industry is under constant pressure due to extensive growth of the industry in recent times. In this part, we will discuss details of recruitment processing & execution.

3.1. Recruitment Methodology for the Organisation

With the consistent growth of the tanker fleet & the organization, appropriate sourcing of human resources has been a constant endeavor. This is identified by the manager of the respective commercial team or the ancillary department head through the quarterly management reviews, relayed to the H.R. department after due approval of the executive committee.

Management Reviews in the context of this organization defined as, status of "team target" achieved set by the executive committee in the beginning of the annual year & measurement of KPIs such as safety, punctuality, operations management, working hours of the commercial team, etc.

Business target or setting goals for a commerical team in context to this organization, is calcullated on the basis; volume of oil shipped per annum x freight achieved per Us$/Cubic.. "Goal setting can increase the impact of self management intervention. Goals should be set by the individual, focused on specific behaviour, set high yet achievable and include tracking of progress (Geller,2001). The techniques of self-monitoring, feedback, and goal setting may fall short if implemented separately but will generally be effective if combined into a complete self-management program." (Hickman & National Research Council (U.S.). Transportation Research Board, 2007)Pg.19.

Hence, if the team manager finds it difficult to achive the goals as set or as benchmarked, then this indicates a time for change. Mostly in times of business growth, such changes are realted to induction of new employees.

Since the goals are set on basis of per annum, hence quarterly reviews are a good tool to indicate any possible variations in the target & oppurtunity to take timely action.

3.2. Recruitment Process

In view of the task & activities for which the candidate is sought, recuritment parameters are set which include but are not limited to relevant experince, languages spoken, technical comprehension of pooling business, etc or in short "select the right people in the first place".

HR department vets through resumes & basis teleconversations, furnishes suitable candidates to the manager of the concerned commercial team. Considered candidates who have been short listed through the first screening, are then subjected to a round of a structured interview along with HR department & the concerned manager.Structured interviews, induce job related questions, Job related interviews & stress interviews are a part of this process. "In a structured interview the researcher asks a predetermined set of questions, using the same wording and order of questions as specified in the interview schedule. An interview schedule is a written list of questions, open-ended or close-ended, prepared for use by an interviewer in a person-to-person interaction (this may be face-to-face, by telephone or by other electronic media). Note that an interview schedule is a research tool/instrument for collecting data, whereas interviewing is a method of data collection. One of the main advantages of structured interview is that it provides uniform information, which ensures the comparability of data. Structured interview requires fewer interviewing skills than does unstructured interviewing." (Kumar, 2005)Pg. 126.

The final round of selection consists of an informal interview with all the involved managers of the team, the key members & concerned ancillary department heads. This informal session enables the team determine the adaptability aptitude, gives an opportunity for the new recruit to negate any phobia, puts the prospective candidate in the comfort zone, etc. This is also an effective way to coordinate personality mapping of the prospective candidate. Personality mapping is gradually becoming a definitive study in the field of HR & good instrument in the field of strategic human resource management, "Parallel to brain mapping, advances in molecular biology and genetics during the past decade have made it possible to identify the common variations ion genes that are related to personality traits".(John, Robins, & Pervin, 2008)Pg. 311.

This informal session, gives the chance to evaluate the adaptability aptitude of the interviewee closely, which according to Parr has been stated as, " the ability to "turn on a dime", to change the direction on short notice, it is crucial to a managers success and to his organisation's survivability, especially in global competitive world…certain individuals have a greater facility for adapting to change than others…[and are called] "survivors". Their inherent flexibility in the face of continuous sometimes tumultuous change identifies them as having the adaptable aptitude."(Parr, 2009)Pg. 59.

3.3. Sincerity & Honesty in the recruitment process

As a part of SHRM of the organization, transparency to a prospective employee during the recruitment process is considered a vital point, for long term success of the organization.

"It is best for the company and the employee when ther are engaged in forging a psychological contract with each other that may be unwrittten but is no less binding than a legal contract. It is an implicit contract between the individual and the organisation that spoecifies what each expects to give and receive froim the other in a relationship. When expectations match, then there is a good chance that both the parties will be happy with the situation." (Branham, 2001) Pg. 100.

In view of, future job satisfaction for the employee & high productivity for the organisation in the long term, the human resource dept. puts in special efforts in collabaration with respective co-workers to prepare a prospective employee, what he or she can expect.

3.4. New Employee Orientation & Making them feel welcomed

When a new recruit is inducted in the organization, then the HR department in consultation with respective team managers coordinates an orientation checklist for the candidate. Every checklist has a target time for completion by the respective team managers, including ancillary department heads. The checklist also involves, travelling overseas of the candidate & working with other team members, in that international office. This acts as a casual introduction for the new employee, promotes harmonization of international office, bridges cultural diversity, etc. "Additionally as a company we feel that higher retention rates are achieved through effective orientations."

Orientation Checklist - Some organizations assign co-workers or peers to serve as buddies or mentors as part of the new employees' orientation. This is proven very effective way of making the new employee adapt, socialize & reduce stress.

An orientation checklist can be used to identify what the new employee needs on an immediate basis, to get started.

Such a checklist is generally prepared by the HR department & systematically improved with changes in the organisation.






Cengage Learning, 2007


0324542755, 9780324542752

Pg 278

4.0. Appraisal & Performance Monitoring System

Monitoring quality & performance of the human resource for an organization, plays a crucial role in realizing the business strategy of the organization.

4.1. Appraisal for team members -

a. Every team member is subjected to a bi-annual open ended review, by the respective manager. Annual review for certain team members whose performance are being monitored closely for different reasons, will also be simultaneously be carried out by the respective general managers.

b. The open ended review is based on a structured format. This format not only measures the performance standard of the employee by means of Key performance indicators, but also brushes on important issues such as empathy, team spirit, visibility, value addition, etc.

c. The review will not only discuss the strengths & weakness of the employee, but also identify where the employee requires additional training.

d. The employee also gets an opportunity to highlight which areas does he requires more support from his team & if any grievances.

e. All employee reviews are scrutinized by the HR department, who may generate a follow up report to address any critical issues, if applicable.

4.2. Appraisal of Managers -

This again is bi-annual & carried out by respective general managers. Annual review for certain managers whose performance are being monitored closely for different reasons, will also be simultaneously be carried out by executive committee. Such cases are rare, but however there is a protocol in place in case they arise.

a. Management by objectives -

Managers are expected to manage human resource strategically basis objectives & business strategy of the company.

This forms a very crucial part of managers performance appraisal.

b. Managers rated basis time & effort allocated to "Four Managerial Activities"

This theory may be conventional, but is still very closely followed in the appraisal system of managers.

Traditional Management - Decision Making, Planning, and Controlling

Managers in an oil tanker company are expected to depute & monitor progress. Hence, at times who are over involved directly in this management aspect they are reminded through the performance system

Human Resource Management - Motivating, Disciplining, Managing Conflict, Staffing, and Training.

Mangers are expected to take steps to encourage motivation of the team members, in order to increase productivity & higher retention rate.

Discipline & conflict is a rare issue for an organisation, where the employees are highly motivated.

Co-Networking - Socializing, Politicking, and Interacting With Outsiders

Oil tanker company's thrive & prosper due to strategically networking relationships. Managers are expected to dedicate considerable time to developing new business relationships for the organisation & improve business image.

Communication - Exchanging Routine Information and Processing Paperwork

For a global company, communication of managers & interpersonal skill of managers is critical development, for effective organisation coordination.

5.0. Training

Accidents due to lack of knowledge or human error, has costed this industry billions of dollars as established by following incidents -

- Amoco Cadiz incident off the coast of france in year 1978, with a potential claim of about $1.6 Billion

- Exxon Valdez disaster in 1989 off coast of Alsaka, has costed exxon about 2.2 billion dollars till date & still many claims are bieng debated in court

- Prestige disaster in 2002 off the cost of Spain, costed industry 6.2 billions & still under dispute

SHRM address such issues by providing the best possible traing to its employees. Some of the training programs & methods of training, will be analysed in this part of the report.

a. Management Trainee Program & internships -

SHRM of the organisation encourages internship programs, in various offices. The organisation is registered with various maritime universties around the globe & whenever an appropriate oppurtunity arises, an intern is inducted for limited time frame.

Some successfull interns, subsequent to completion of their studies are directly inducted by the organisation where it is realized that the candiadate has the potential & appitude. This program is called the "management trainee program". This involves on the job training for upto three years & consistent performance reveiw.

b. Seminars & conferences

Employees are encoraged to particpate in such events by allowing them to attend such events on organization time & expense.

As per company policy, all company particpants have to upload their reports on the company work website. This is method of information sharing & encoraging fresh industry pretaining information is all promulgated to all employees.

c. Web based records accessible to all human resource of the organization

The organization utilises I.T. tools to ensure that all employees may be able to reveiw case studies, extra-ordinary business activities, lessons learnts, incident reports, etc.

This information availability increases the awareness levels of the employees of the organization.

d. Study Leave

To encorage employees to upgrade their skills & pursue highter studies, the company has a policy of study leave for a period upto 6 months after every 3 years.

6.0. Rewarding & Succession Planning

6.1. Profit Sharing

Employees with exceptional performace & achievemnts are kept motivated by offering them a share in the company profits.

In order to avoid any misunderstanding, the company has devised a internal method to calcllate stake of employee in profit sharing or bonus structure.

This way of rewarding methodolgy, is several benefits such as -

a. Keeps the employees motivated

b. Increase productivity

c. Encourages an atmospherse of healthy competitiion

d. Increases innovation & transformation to better business styles

6.2. Succession Planning

SHRM policy of the company had a partial view on this issue, that the leaders are created & not made, until a few years ago. But over the last few years, a new school of thought has arisen in the organization that " successful leaders could be moulded in an organisation, to suit the business strategy for it".

This above change in thought process has been a primary factor for giving emphasis to succession planning in the organisation.

A few issues of succession planning that the SHRM address & are prepare have been discussed, in the following paragraphs.

Key Issues -

a. Managers feel that undeserving candidates are filling positions

b. Employees precieve that successor makes the position due to networking rather then capability

c. High Potential Employees may be lost

d. Lack of candidates a t certain levels

e. High potential employees may become bottle necked & frustated. Need to move them horizontally, to keep them occupied.

f. High potential employees may not be willing to move to other locations

Respective Solutions -

a. Systematic reviews can keep them assured

b. Familiriaze that disgrunted employees wit hthe review process & satisfy them by establishing that their are no loopholes.

c. A systematic development & retention program

d. Fast track internally or buy talent from outside

e. Give a better dimension to horizontal movment by communication

f. Have very comprehensive & beneficial re-loction plans

(Train the Trainer/Vol 3: Training Programs, 2001)Pg.77.

7.0. Maintaining Human resource

7.1. Safety & Health

SHRM in order to encourage a feeling of agility, enthusiasm & good health in the organisation, uses following tools -

a. Free annual health compulsory review for all employees

b. Provides health club membership to all its employees

c. Encourages mangers to play golf, in order to coordinate business meetings in a healthy way

d. Arranges guest speakers to come & address the employees. Such guest speakers are health specialist or coaches in "Art of Living".

7.2. Labour Relations

SHRM encourages weekly staff meetings & interaction with management.

7.3. Information sharing

Company journal is published on a monthly basis, which contains all relevant information & developments of the organisation.

8.0. Organizational Effectiveness

8.1. Strengths

a. The appraisal system of the organization encourages measurement of HR performance basis parameters such as motivation, abilities, interest, personality, attitude, etc.

b. Equal opportunity employer hence have seventeen 17 different nationalities, employed with the organisation. Language familiarity helps overcome business barriers. Long term SHRM goals, always lays emphasis on maintaining this organisation strength.

c. The organization structure focuses on the commercial groups by pools (groups handling specialized category of tankers) versus by function.

 This improves communication and information flow within each team/department thus leading to better decision making and performance, while at the same time ensuring the right people are in the right places and empowered to make decisions. 

d. Profit Sharing is a very strong SHRM technique, which has greatly improved the organizational effectiveness over the years.

8.2. Weakness

a. There is scope of the HR performance system to get distorted by personality clashes & subsequent creeping in of halo effect.

"Halo effect -Occurs When a Supervisor's rating of a Subordinate on One Trait Biases the Rating of That Person on Other Traits"

b. Succession planning was addressed rather late by SHRM.

c. Managers of some commercial teams are based out of the United States of America hence with time zone difference, a weakness in management control system.

d. Recruitment process very lengthy & hence right talent may not be achieved most of the times, due to time constraints versus goal achievement.

9.0. Recommendations & directional strategies -

9.1. Company's Strategy Plan & de-centralisation of decision making to regional offices

a. Strategy plan to encompass the Human resources first & then business strategy to evolve around it.

b. For faster decisions & better performance, decision making to be empowered to micro levels

9.2. Emphasis on appraisal & performance management

a. New Tools to be provided to HR Department such as -

- Psychometric analysis

- Stress Test

b. Health factor

Health to be a parameter for senior management positions.

9.3. Team Building

More Emphasis on team Building

10.0. Conclusion

a. The SHRM of the organisation is rather conventional , needs new approach.

b. Team Leaders under a lot of pressure.

c. Recruitment process requires external assistance.

11.0 Literature Review

12.0. Bibliography