The Pakistan State Oil Commerce Essay

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Pakistan state oil is the largest oil marketing company in Pakistan and also among the top 1000 largest company an Asia. Pakistan state oil was setup on December 29th 1976 through the merger of ESSO with Pakistan national oils limited (PNOL) and premium Oil Company limited (POCL.)

PSO is currently the largest oil marketing company (OMC) in Pakistan and is engaged in the storage, distribution and marketing of petroleum product, petro-chemicals, LPG and CNG. The company has the largest market share in motor gasoline and 60% market share in diesel oil. It operates largest retail network(360 outlets) in the country.PSO is committed to begin the preeminent marketer of petroleum product and services to its customer and achieving its goal while maintaining high level of efficiency and profitability.

PSO has reported a strong financial performance. It revenues have grown at a CAGR of 13.8% since 1996.For the fiscal year ended June 2003.PSO generated sales revenue I excess of Rs.169 billion(US$ 2.8) and tax profit of Rs. 2.25 billion(US$ 37.5 million). PSO is the 3rd largest public listed company in Pakistan by equity market capitalization. It is a recipient of Karachi stock exchange top 25 company's award for 17th consecutive years.

PSO is well managed company and is focused to meeting the energy requirements of Pakistan. The company recently embarked upon an extensive program of restructuring and retail outlets, improving its market image through a nation wide initiative to refurnish and rebrand key retail stations and further improving efficiencies by streamlining its structure. It has adapted modem management practices and prepares its strategic business plans regularly. It continuously monitors its performance through annual plans.

Privatization of PSO is also under way, whereby JP Morgan's financial advisory consortium is assisting the government of Pakistan in privatization process. The company is being financially sound , well entrenched in the petroleum product marketing business with sound and efficient track record of performance is expected to receive active response from the prospective buyer.


To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first.


We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers, based on:

Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development

Lowest cost operations and assured access to long-term and cost effective supply sources

Sustained growth in earnings in real terms

Highly ethical, safe environment friendly and socially responsible business practices


We believe that excellence in our core activities emerges from a passion for satisfying our customers' needs in terms of total quality management. Our foremost goal is to retain our corporate leadership.   We endeavor to achieve higher collective and individual goals through team. This is inculcated in the organization through effective communication.  We are an Equal Opportunity Employer attracting and recruiting the finest people from around the country. We value contribution of individuals and teams. Individual contributions are recognized through our reward and recognition program. We uphold our values and Business Ethics principles in every action and decision. Professional and personal honesty, dedication and commitment are the landmarks of our success. Open and transparent business practices are based on ethical values and respect for employees, communities and the environment.   We are committed to continuous improvement, both in New Product and Processes as well as those existing already. We encourage Creative Ideas from all stakeholders. We promote Health, Safety and Environment Culture both internally and externally. We emphasize on Community Development and aspire to make society a better place to live in.


PSO is the market leader in Pakistan's energy sector. It's a public sector company with the government shares of 25%. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow.

Pakistan State Oil is currently engaged in storage, distribution and marketing of various POL products. The company's current market share of 82.3% in the black oil market and 59.4% share in the white oil market, alone speak volumes about its success.

From 1999 to 2008, PSO have undergone radical changes, both internal and external and has emerged as a market leader with a long term vision. The company is the only public sector entity in Pakistan that has been competing effectively with three multinationals (shell, Caltex and Total) which are supported technically by their parent organizations.

PSO have a very organized HR department. They have developed it as their competitive advantage. They have a very large HR department, which is divided into following sub departments.

Training and development

Recruitment and placement

Salary administration

HR board for succession planning

Employee relation

Talent management


Quality candidate is very important for all the organizations. A best candidate is the gem for an organization and where ever he is he will be taken by head hunters. The best candidate is the one who have Knowledge, Skills and Abilities for the job.

Recruitment is very expensive. Its cost goes up to millions. Hence a good candidate is a fortune for the company and the wrong selection can cost millions to the company.


Before recruitment for any post PSO checks if there is any replacement or not. They always prefer there current employees for important managerial jobs. If there is no replacement PSO checks the approved strength of department. It always takes fresh intake of candidates. The candidates are interviewed. PSO takes preview based interviews. The candidates are asked questions which are related to their CV and some other regular structured questions.


The competencies of the candidates are matched with the required standards. A trained panel interviews the call backs. Behavioral based and job based interviews are taken. The selected candidates are then given formal appointment letter. He is made to sign the joining agreement. He is kept on probation period for 1 year after which he is given a permanent job. During this probation period he is trained for the job.

PSO have outsourced the selections tests to IBA. IBA makes the test papers. It's kind of an aptitude test. It includes arithmetic, English and general knowledge necessarily. These tests are checked by IBA as well and the results are given to PSO. They then select the candidates.

These days government has frozen the external recruitment so PSO is doing job rotation and job enrichment for the posts. PSO is taking the advantage of this and is reengineering the HR department. They have planned to do the job evaluation of every job in the upcoming time. The top positions have already been evaluated.


The PSO have a team called "Talent management". This team has the 3 main PSO's business units heads in it.

HR and services

Finance information and technology

Ones with Direct reporting to MD ( SECP )

This team makes decisions for the succession planning. Training orders are given by them as well. They decide who they plan to retain and promote to major jobs.


Training and development increase the knowledge and skills of employees. It increases the quality of work life. This progress train and prepare new workers to perform and achieve its goals. It can increase the skill of decision making and problem solving. Organizations gain synergy effect through training and development. Training and development makes employees more cost effective and task oriented.


The training and development department is playing an important role in training and development of their employees to be at competitive edge and develops its potential employee to enrich their knowledge.PSO also wants to enhance their skills by training them with business related courses available in the corporate sector.

At PSO certain types of training are left up to the employee. The employee assesses his strengths and weaknesses and goes for the required training. For example if he thinks he can't manage time then he will go for the training for time management. A training calendar is given and employees choose which areas they need to improve and go for that training. Training related to business has to be taken by all the employees who are concerned with it.


At PSO Training usually starts from orientation programs to management training .PSO spends millions of rupees to enhance the skills of its management and Non-management employee's through out on the job, off job, and coaching program.


People from different companies of the same industry go the institution for training .PSO also sends their staff for this training. The employees are also sent overseas for technical training.


This training is only given to PSO employees. These training sessions are conducted in the PSO house. Some are compulsory for all the employees like training related to health and safety etc and others are optional for example training on leadership, time management etc.


Training and development also arrange seminars and workshops for their employee. The main purpose of this is to create awareness. Different coaching's are for different levels of job. But the coaching that are regarding health safety and environment are for each and ever employee.

For finance department they arrange seminars with the ICAP. The entire employee in finance department has to complete these seminars. Their attendance is mandatory and if they don't attend these seminars then they have to give some penalty.


Through the performance appraisal, employee's weaknesses and strengths are assumed and formal training is given to them to capitalize their skills and the training period varies from individual to individual.

At PSO employees are motivated through job rotation so the shouldn't get bored with their current jobs and put their skills and abilities in other tasks and at the same time broaden their area of knowledge.


health and safety environment

computer training for integrated resource planning

technical and operational focused inputs

management development


presentation skills

computer based finance

human resource management

team building

labor and corporate laws

supply chain management


Compensation and benefit strategies are ways that organizations can use pay and benefits to recognize and reward employees' contributions to the organization's success.

Some examples are wage and salary administration, incentive pay, insurance, vacation leave administration, retirement plans, profit sharing, and stock plans. In order to gain a better understanding of these programs and how they impact organizations, a comprehensive look at compensation methods and benefit programs is necessary.

A company has many options when it comes to compensation methods. Compensation not only affects the company, but also the employee and future employees. Some compensation packages that a company offers are required by law and others are a benefit to employees.

In addition to compensation and pay, one of the biggest compensation packages a company can offer is employee benefits. Employee benefits are compensation in forms other than cash.

Employee benefits include, but are not limited to, medical insurance, dental insurance, and vision insurance, time off for illness, paid time off, retirement plans, childcare, and tuition reimbursement. Employee benefits not only help with family and personal needs, they also help retain and motivate employees. Furthermore, strong benefit packages can attract new employees that could be beneficial in the company's future success.  


In the past several years, because of hiring freezes and a larger supply of accounting candidates, PSO did not have to raise salaries much to recruit and retain top talent. Now that the economy and job market are gaining steam, however, PSO is once again assessing their compensation and benefits packages more frequently to avoid losing current and prospective employees to other opportunities.

An effective employee incentive program is mandatory for every business in these days of high attrition rates and a serious dearth of talent. Companies spend sizable sums on their retention strategies, which may focus on a combination of ways to inculcate loyalty among employees - compensation, training and career growth being a few.


PSO offers competitive starting salaries and bonuses


The company approved and fund pension scheme for both management and non management employees. The scheme provides pension based on the employees last drawn salaries. Pension are payable for life. The company also operates unfunded gratuity scheme for all its employees.


The company also provides post retirement medical benefits to its employees. PSO's medical policies are considered to be the best in the country. Medical is free for the employees and their families.

Vaccination program for employees: in recognition of the importance of human resource and its health. PSO organization a 'vaccination program' for its employees. PSO inaugurated the program under which the employees were vaccinates against diseases like cholera, typhoid, hepatitis B at the PSO houses dispensary.


The company also operates an approved provident fund scheme for all its employees. Equal contributions are made to the fund by the company and the employees in accordance with fund rules.


Loans are granted for house construction repair or for the purchase of land. Employees can also avail the car loan facility.


Rewards are given on the basis of performance of the employee on monthly and weekly basis. These include the monetary rewards and also the Points for promotion.


The million-liter award ceremony was held at the PSO house. These awards were given to the dealers who crossed the million-liter figure in selling the products of the company. The award had been initiated to recognize and encourage promoting the business and services to their customer.

HAJ-DRAW 2002:

The hajj draw was also held at the PSO house auditorium. Seventeen members were sent to perform hajj.


PSO has a balanced relation with employees because they treat all employees as per policy. Employee relation is based on Employees' Performance. Employees with good characteristics, efficient employees, deserving and hard working employees who give more output and good performance always enjoy good and healthy relation, benefits and rewards with PSO. On the other side inefficient employees, inactive and with bad characteristics and qualities have to suffer with problems, unhealthy and bad relation with PSO. Policy plays a key role.

There has to be a consistent policies, proper policies and strong policies.

Policies should be a cosmetic documents

Policies should not be taken as stationary document

It has to be dynamic, as to be constantly reviewed in terms of what is happening in market place and what modern day's requirements are.

Forcefully implement all policies.

PSO always develop smooth relationships with employees by giving them equal opportunities and benefits.

Always advice managers on ER issues.

Negotiate with unions.


PSO have a diverse work force, in terms of gender, personality, qualities, and communication skills. M Rana Idrees, Senior Executive at PSO said "...But we have to face discrimination factor because it's natural. We can't let it go. It's natural! But the point is that how can we overcome this problem? So the solution to overcome this disease is that…" It is as follows:

Employees should focus on performance, do their best and give more output.

Put the objectivity element in the work instead of subject.

To follow all the companies policies.

Then the management will not be able to discriminate employees.

PSO treat equally to all employees. Deserving candidates get





Power of Decision making

Performance based rewards are offered to all employees on a yearly basis. Increases in salaries of deserving candidates are given. PSO give equal opportunity to all employees to do justice by proving yourself. "The deserving candidates" gets all the "deserving things" so that's a fair treatment, which PSO always give to all employees.


PSO always say that ""WE CARE FOR EMPLOYEES' HEALTH AND SAFETY" and that is our 1st priority which we start from the working environment". At PSO it is ensured that they provide the following to their employees

healthy working environment

Employees' privacy rights.

Security of employees record

Work place safety


In words of PSO senior executive, M Rana Idrees, "It's our priority to ensure the employees are in good shape and health. To physically show that "we care", we have in-house food services with subsidized meals in a cafeteria that can cater all the employees stationed at PSO house."


Employees can enjoy gymnasium facility right in PSO's corporate vicinity, a convenience of walking form your work station to a private gym for a revitalizing workout.


It provides assistance to employees for their mental and physical health as well as for their social activities. Sports and recreational activities are organized through this forum, where employees and their families are encouraged to participate.


Recent Example:

A new employee of PSO met an accident when he was coming to work and broke his leg. PSO bearded all his hospital expenses plus gave him a sick leave rather than firing him. This shows that they care.



Employee working in rural areas should be given the opportunity to visit the head office for training.

It's good that employee can chose which training they want, but some employees may not go for training even though they lack the certain capability. So training should be given on assessments as well.

They should start campus recruiting and give a chance to fresh graduates to work for their organization as currently they only take CA's , engineers and MBA's.


Following are the structured questions that we asked while interviewing at PSO.

1) How you conduct job analysis? Like duties and positions and characteristics of the people to hire?

2) What characteristics you look for in the employee?

3) How duties are determined?

4) How performance standard is set?

5) How you recruit?

6) You forecast the supply of candidate? How you forecast? Computerized data or manual systems and replacement charts?

7) How you do succession planning?

8) You use recruiting agencies? How they help? Are they effective?

9) What do you prefer? More internal recruiting or rehiring or fresh candidates for important jobs?

10) Is company recruiting effective?

11) What characteristics and qualities should an applicant have so you will select him/her?

12) How you placement?

13) Do you have any selection tests? Like general responsibility test (intelligence and inductive reasoning), IQ, specific cognitive abilities (aptitude, virtual comprehension, inductive and deductive), and physical tests.

14) Do you do background investigations and reference checks?

15) How you train employees?

16) What are PSO's employee development practices?

17) What are on the job training?

18) How is unethical behavior taken at PSO?

19) How focused you are on ethics?

20) How you treat employee fairs?

21) What are the grounds of dismissal?

22) How your company layoff's employees?

Importance of HRM



M is an important strategic tool and it can contribute to the development of a sustainable competitive advantage


It is the most important intermediary body between the employee and the organization that works to develop relations advantageous to both


All activities related to non-management employees are handled by the industrial relations division and that of Management employees are handled by the personnel division of the HRM

HR Practices of PSO





Compensation and Benefits


Training and Development

We will focus on Training and Developmentof PSO