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Human Resource Management
R EPORT ON HR P RACTICES I N
C HEVRON P AKISTAN L IMITED
(F ORMALLY K NOWN AS C HEVRON O IL P AKISTAN L IMITED )

(Term Project)
Submitted to:
Mr. Murtaza M. Ilyas

Submitted by:

Subayyal Ahmed Khan (13206)


Amara
Shahrukh
Sanam
Sandhiya Kumari

Date: 30th April 2011


Human resource Management
MBA (E)
Iqra University

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LETTER OF AUTHORIZATION

Dear Reader,

As students of MBA, we have been authorized by Mr. Murtaza M. Ilyas to make


this report on “Human Resource Practices of Chevron Pakistan Limited”.

This has been a learning experience for our team. The exercise was suggested by
our teacher as a way to help us discover the compensation and recruitment
policies practicing in many business organizations but in this case particularly
relevant to the lubricant industry.

Sincerely,
Subayyal Ahmed Khan
Amara
Shahrukh
Sanam
Sandhiya Kumari

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Human Resource Management
LETTER OF TRANSMITTAL

Mr. Murtaza M.Ilyas


Iqra University
Karachi.

Dear Mr. Ilyas,

As a requirement for the Human Resource Management course offered in the


MBA program we were required by you, to conduct a survey on Human Resource
Practices, Compensation and Recruitment Policies of Chevron Pakistan Limited.

You will see from the following report that during our meeting with a cross section
of employees working in Chevron we discovered and observed some of
questionable practices at the organization.

We appreciate having this assignment and if you require any additional information
in interpreting this report, please contact us.

Sincerely,

Subayyal Ahmed Khan


Amara
Shahrukh
Sanam
Sandhiya Kumari

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LETTER OF ACKNOWLEDGEMENT

Dear Reader:

We would like to offer our thanks to the Human Resources Department of


Chevron Pakistan Limited, for the time and patience in talking to us, answering
our questions and generally being helpful in providing us an in-depth view of their
organization.

In particular we are indebted to Ms. Elizabeth Fernandas, Asst. Human


Resources Manager for providing us the necessary information.

We owe our gratitude to Mr. Murtaza M. Ilyas for his guidance and encouragement
throughout the duration of this course. We are also grateful to our institute for the
patronage and support we received.

Sincerely,

Subayyal Ahmed Khan


Amara
Shahrukh
Sanam
Sandhiya Kumari

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Table of Content

EXECUTIVE SUMMARY..........................................................................................8

CHEVRON’S MISSION ................................................................................................9


COMPANY’SBCKGROUND.....................................................................................9
CHEVRON’S ARRIVAL IN PAKISTAN.......................................................10

RECRUITEMENT.....................................................................................................11
NO ADVERTISEMENTS POLICY.............................................................11
DATABASE....................................................................................................12
INDUSTRY SOURCES.................................................................................12
LOWER LEVEL POSITIONS.....................................................................12
INTERNAL POSTING..................................................................................14
FIRST PREFERENCE TO INTERNAL CANDIDATES..........................14
TRACK RECORD OF EXISTING EMPLOYEES....................................15
INVESTMENT IN THE EMPLOYEE........................................................15
PURPOSE.......................................................................................................16
MANGER’S CONSENT................................................................................16
MOTIVATION FOR EMPLOYEES...........................................................16
SELECTION...................................................................................................17
EXCOM...........................................................................................................17
UNIT MANAGERS........................................................................................17
INTERVIEWING SKILLS...........................................................................18
THE CURRENT SYSTEM...........................................................................18

ORIENTATION.........................................................................................................19
CHARACTERISTICS OF CHEVRON ‘S ORIENTAION PROGRAM.....19
BENEFITS OF THE ORIENTATION PROGRAM..................................20
EMPLOYEE PLACEMENT.........................................................................20
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PERFORMANCE APPRAISAL...............................................................................22
OBJECTIVE APPRAISALS.........................................................................23
PERFORMANCE ALIGNMENT WORKSHOPS.....................................23
CONTINUOUS FEEDBACK........................................................................23
CONTROL OF RATER BIASES IN APPRAISAL REPORT..................24
HALO EFFECT AND PERSONAL PREJUDICE.....................................24
ERROR OF CENTRAL TENDENCY.........................................................24
RECENCY EFFECT.....................................................................................25
APPRASIAL FORM......................................................................................25
BUSINESS UNIT /DEPARTMENT OBJECTIVES.......................25
INDIVIDUAL OBJECTIVES...........................................................26
FEEDBACK TRACKING.........................................................................................28
EMPLOYEE COMMENTS......................................................................................28
SUPERVISOR’S COMMENTS................................................................................29
SUMMARY.................................................................................................................29
TIMING JUSTIFIED.................................................................................................30
POINTS SYSTEM......................................................................................................30

COMPENSATION.....................................................................................................31
PAY FOR PERFORMANCE........................................................................33
MERIT INCREASES.....................................................................................34
PROMOTIONAL INCREASES...................................................................35
SURVEYS.......................................................................................................35
WICR...............................................................................................................36
GENERAL SUMMARY................................................................................37

TURNOVER...................................................................................................38

REFERENCES...........................................................................................................40

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EXECUTIVE SUMMARY
This report focuses on the human resource practices,
recruitment policies, overall compensation system, the
problem of turnover and the stiff competition that Chevron
faces today. Recently Chevron has globally restructured the
organization along functional lines and in line with this global
strategy, also had to restructure. This resulted in the laying
off of around 7 % of the total employees from all levels.

The whole oil industry including Chevron went into turmoil


during the global crisis and as a response the Company
initiated the restructuring process in order to cut costs. This
economic challenge posed the most significant threat to
Chevron’s operations.

Recruitment at Chevron is usually done without any public


advertisements. Internal candidates are given preference as
first the vacancy is offered to through the internal job
postings program. Selection after the restructuring process is
influenced by the unit managers.

The company conducts a 4 day orientation program for the


employees before placing them in their specific departments.
For the purpose of appraisal a new more objective and goal
based system is being initiated. The goals will be set by the
employee in consultation with the manager and the
employees will be assessed only on those set goals.

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The company pays competitive salaries to its employees and
rewards contribution from the employees. COPL’s
compensation philosophy is ‘Pay for Performance’.
In the late 1980s Chevron believed in excessive hiring but
now the process has become a more selective one in order to
cut extra costs being incurred and increase efficiency.

CHEVRON PAKISTAN LIMITED

CHEVRON’S MISSION:

Providing Energy for Human Progress

COMPANY’S BACKGROUND:
Chevron is one of the world's largest integrated energy
companies with subsidiaries that conduct business worldwide.
Chevron explores for, produces and transports crude oil and
natural gas; refines, markets and distributes transportation
fuels and other energy products; manufactures and sells
petrochemical products; generates power and produces
geothermal energy; provides energy efficiency solutions; and
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develops the energy resources of the future, including
biofuels and other renewables. Chevron is based in San
Ramon, Calif. More information about Chevron is available at
www.chevron.com.

In 2007, Chevron produced 2.62 million barrels of oil-


equivalent per day. About 70 percent of that volume occurred
outside the United States and in more than 20 different
countries. Chevron had a global refining capacity of more than
2 million barrels of oil per day at the end of 2007. Our
marketing network supports more than 25,000 retail outlets
on six continents. We have invested in 13 power-generating
facilities in the United States and Asia.

Our diverse and highly skilled global workforce consists of


more than 62,000 employees. As a company and as
individuals, we take great pride in contributing to the
communities where we live and work. We also care deeply
about the environment and are proud of the many ways in
which our employees work to safeguard it.

CHEVRON’S ARRIVAL IN PAKISTAN (History):


Chevron Pakistan Limited (formerly known as Caltex Oil
Pakistan Limited) is a part of Chevron Corporation (earlier
known as ChevronTexaco Corporation), a leader in the global
integrated energy business. Chevron is the fifth-largest

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integrated energy company in the world. Headquartered in
San Ramon, California, and conducting business in
approximately 180 countries, this highly competitive
corporation is engaged in every aspect of the oil and natural
gas industry, including exploration and production; refining,
marketing and transportation; chemicals manufacturing and
sales; and power generation.

With a diverse and highly skilled global work force of more


than 59,000 employees, Chevron and its people take great
pride in a commitment to community partnerships, social
responsibility and environmental excellence.
Chevron Pakistan Limited has operated in the sub-continent
since 1938 and apart from the main oil storage facility at
Karachi, has 10 Depots throughout the country, which
includes three inland terminals in Rawalpindi, Machike and
Shikarpur.

The company’s Retail network consists of 598 outlets located


throughout the country as well as a wide spread distributor
network catering to the demands of the Industrial, as well as
the Agricultural sectors. Chevron installed its first CNG facility
at its Company managed retail outlet at Islamabad.
Subsequently, more CNG facilities have been added to the
network in Karachi and Lahore increasing the number of CNG
refueling facilities to 66 nationwide. In addition, Chevron has
also established three CNG conversion kit centers.

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Chevron Pakistan was the first oil marketing company to
introduce many modern concepts in the industry in Pakistan.
A hallmark of its technical advantage in the industry is its
state-of-the art computerized lubricating oil blending plant,
which has been set up and commissioned at the West Wharf
Terminal, Karachi. Chevron was the first in modernizing its
retail outlets, installing electronic dispensers and
implementing Customer Service Systems. It was the first oil
marketing company to launch CNG station in Islamabad in
1998. Its modern testing laboratory fully equipped with the
latest equipment coupled with fully documented procedures
was the first ISO 9000 accredited Oil Testing Facility in the
country. It is also the first oil marketing company to acquire
ISO 14001:2004 International Environmental Management
System for its West Wharf Laboratory and West Wharf Lube
Blending Plant . Chevron is the pioneer in establishing
Convenience Stores and introducing co-branded Cards in the
market.

Recently, Chevron Pakistan received three awards in


recognition of its world-class Health, Environment and Safety
Standards. Chevron Pakistan Lubricant Blending Plant was
adjudged to be the recipient of the ChevronTexaco Global
Lubricants (CTGL) Safety Excellence Award while Chevron
Pakistan Marketing won the coveted ChevronTexaco “Zero Is
Attainable” Award. Zero is Attainable is a corporate HES
annual award programme, that recognises organisations with

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exceptional Operational Excellence performance during a
calendar year. This is yet another acknowledgement of
Chevron Pakistan’s exceptional performance and commitment
towards Health, Environment and Safety (HES) in all aspects
of its operations. Moreover Chevron Pakistan’ Keamari
Terminal received “The Most Admired Terminal” award for the
year 2004 in the worldwide Chevron system.

In the refueling of International Airlines at Quaid-e-Azam


International Airport, Karachi, Chevron became the first
company in the country to have its refueling facility,
accredited with ISO 9000 standards.

Chevron Pakistan took the lead in renovating, revamping and


modernizing its Retail network bringing the standards in line
with its International image in order to provide quality
products ad services to their valued customers.
The company has undertaken and sponsored numerous
environmental projects and had made generous donations to
the various campaigns launched over the years, living up to
its reputation as a responsible corporate citizen.

Chevron has greatly increased the level of its investment in


Pakistan over the last decade. The most recent major
investment has been in the acquisition and further
development of the LPG Business of Sui Southern Gas
Company limited (SSGCL) as well as acquiring 11% equity in
the White Oil Pipeline.

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Chevron Pakistan is known as a responsible corporate citizen
– by following the local laws and customs and maintaining a
long-standing emphasis on safety and health for its
employees, customers and other stakeholders. As an equal
opportunity employer, Chevron is proud of having women
employed in key management positions across different
departments. With 98% of its employees worldwide being
local nationals, Chevron is a part of the community it serves.

Caltex Brand
The Caltex Star stands for quality. The Caltex Star stands for
value. The Caltex Star stands for service.
But most importantly, the Caltex Star
symbolizes our commitment to treat
you, our customers as individuals and
not as numbers. In everything we do,
from our advertising, to our products and
services, to our staff and so much more,
we always focus on building relationships with you.
Our brand is designed to renew your drive and keep you on
the go. Though we know that we are just but a small part of
your lives, we prefer to keep it that way. So that you can stay
focused and determined to reach your goal. We provide the
little refills that you need so you can focus on getting on with
the bigger things in your lives. At the core this means fuels
and other energy products, certainly, but it also means
supplying food, beverages and other every day supplies and
services, freeing you to focus on the things that really matter.
The Caltex brand is the embodiment of everything we strive
to accomplish. It becomes our promise to all whose lives we
touch. When you see the Caltex brand, it acts as an
endorsement of quality. This is because the Caltex brand tells
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you that we are professional, well established, customer
focused and socially responsible.
To become the brand of choice, we rely
on our creed of quality, professionalism,
service and efficiency. This creed dictates
that you come first and that you must
receive ultimate worth and value through
fast and polite service, modern,
professionally managed facilities, and
high quality products. You can count on
Caltex for unique and compelling product and service
offerings, for consistent delivery on brand promises and
continuous productive and distinctive value for you.
To ensure that we are doing the most to help you enhance
your own performance, Caltex will continue to explore all
partnerships that will enable us to better deliver on our brand
promise, to support your efforts to reach your goals.

Community Partnerships
Chevron Providing "Energy for Learning"

As a global energy company having ‘Partnership’ as one of its


core values, Chevron is committed to the communities in our
areas of operation. Chevron’s Policy, Government & Public
Affairs Unit has the responsibility of engaging communities to
ensure their well-being and is operating globally under a
unified, concerted strategy for raising the level of under-
privileged sections of the society. Education is one of the
many fields where we are helping young children to gain a
solid foundation for a better and bright future.
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Chevron Pakistan plans to spend a major portion of its
community-engagement budget on providing quality
education and basic necessities to the under-privileged
segments of our society.

As part of this global strategy, ‘Energy for Learning’, Chevron


Pakistan has collaborated with The Citizens Foundation. TCF is
a professionally managed, non-profit organization set up in
1995 by a group of highly-educated and motivated citizens
concerned with the unsatisfactory state of education in
Pakistan. It is now one of Pakistan's leading organizations in
the field of formal education. As of 2009 TCF has established
600 purpose-built school units nationwide with an enrollment
of 90,000 students. TCF encourages female enrollment and
boasts of a 50% female ratio in almost every campus. TCF has
a full Female Faculty of 4,150 members and also has a
dedicated Teacher Training Center in Karachi for the ongoing
training of its faculty. It provides logistical support to all its
teachers. Over 6,000 jobs have been created in communities
in which TCF operates.

TCF’s aim is to remove barriers of class and privilege and to


make the citizens of Pakistan Agents of Positive Change.
Apart from following the regular curriculum, the focus is on
the character building of students to equip them with high
moral values and confidence.

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To achieve their goals, TCF is constantly surveying education-
deprived locations in Pakistan to extend its network. Each new
location is appraised through an extensive land survey,
assessment of population, income level, number and standard
of existing schools in the area, demand for new school units,
availability of an accessible site to build a school, qualified
teachers in the area and a number of other criteria.

The partnership between Chevron and TCF is a natural ‘fit’


because both the organizations have similar values based on
integrity, trust, diversity and a passion for excellence. It has
been launched with Chevron Pakistan adopting 2 campuses
which entails bearing all the operating expenses, an amount
of over US $ 26,000. One of the campuses is in the Mauripur
area of Karachi and the other near Bara Kahu in the suburbs
of Islamabad.

At the cheque handing-over ceremony held at the corporate


headquarter of Chevron Pakistan, attended by Mr. Nadeem
Jafarey, Country Representative Chevron Pakistan and Mr.
Assad Ayub, CEO & President of The Citizens Foundation, Mr.
Jafarey reiterated the company’s resolve to play an important
part in meeting its social responsibility. He lauded the roles of
Syed Amjad Shabbir, Manager PGPA, Chevron Pakistan and
Ms. Asma Khan, Vice President, TCF Islamabad, who have
been instrumental in establishing the partnership. He also
highlighted the other initiatives taken by the company in the
field of education, especially the partnership with the Institute
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of Business Administration, Karachi in helping meet its
ambitious plans.

RECRUITEMENT

Recruitment is the process of finding and attracting capable


applicants for employment. The process or the Human
Resource cycle begins when new recruits are sought by the
organization. The organizations ability to attract a good pool
of qualified candidates is essential for finding good candidates
to do the job at hand.

In the backdrop of tightening labor markets, the recruitment


process needs to be handled with great care. Even in times
when employment rate is soaring during the current
recessions, qualified applicants can be difficult to find and
retain. In such times a proactive approach is required of the
human resource department.

The personnel department at Chevron recognizes the


importance of a good recruitment policy for remaining an
effective and competitive organization. However keeping in
view the particular situation in the country, the personnel
department has adjusted its recruitment policies accordingly.

The Caltex brand, as well as all its associated products and


services are owned and operated by Chevron Corporation, a

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company with a reputation for solid business results, strong
ethics and incredible employees, everywhere they operate.

They recognize corporate social responsibility as a


cornerstone of future success. There approach is rooted in
their core values, The Chevron Way, in which they commit to
conducting business in a socially responsible and ethical
manner, respecting the law, supporting universal human
rights, protecting the environment and benefiting the
communities where they work.

They take advantage of technology to meet the challenges of


the energy industry. Whether you’re developing new refining
processes, working on global information infrastructure or
simply sending email to colleagues, you’ll have access to the
latest tools and technology.

At the company, you’ll find people with a variety of


backgrounds, experiences, styles, cultures, skills and
competencies. And, they welcome you to share your unique
background and insights with them. Their goal is to be
recognized by their employees, customers, shareholders,
industry peers and the governments in countries where they
operate, as a company that values diversity and leverages it
for business success. To reach this goal, they are continuing
to build an open, inclusive work environment where all of their
employees can realize their potential.

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They believe that diversity will help us succeed as a global
business. They prize people who can work effectively with
others from all walks of life and who feel free to contribute
their best. At a global level, they support universal human
rights and work to improve the quality of life in the countries
where they operate.

Within Chevron, operating companies and departments have


strategies to build a diverse workforce. Have proactive
recruiting and outreach programs, diversity councils,
employee networks, personnel development committees,
training, discussion groups and developmental assignments
for employees.

They have operations and employees in more than 180


countries. You may want to travel and work in different
locations around the world. Or, you may want to stay and
grow in one location. Whatever your path, as part of Chevron,
your career will have a global impact.

NO ADVERTISEMENTS POLICY:

The personnel department has a policy of not giving


advertisements. The reason, being that hiring without giving
advertisements helps the organization in selecting employees
without any pressure from external or internal sources. In this
way the impartiality is maintained and the best applicant can
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be selected. However this obviously has a disadvantage when
considering the fact that the possible pool of applicants for
the particular job is reduced, thus reducing the quality of the
selection process. Chevron’s Human Resource Service Unit
(HRSU) considers that the right person is found through this
process. Since no pressure can be applied by anyone this
helps the company in getting the right person without the job.

DATABASE:

The company maintains a database of all applicants it can


identify .This is usually made by people who came to drop in
their resumes directly to the organization. Also all the
internees about who the company has the information are
kept by the Human Resource Service Unit. This potential pool
of applicants is considered enough by the personnel
department and therefore the organization does not pursue
the policy of giving advertisements. As far as MBA s are
concerned for the purpose of hiring fresh graduates the
graduate directory of the MBAs is a good potential source of
applicants. Apart from this the applicants that hand in their
resume is yet another source of interested applicants from
whom the organization chooses.

INDUSTRY SOURCES:

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If the above sources are not able to fulfil a position then one
method that is commonly used is the use of industry sources
and personal contacts to find the right candidate. The senior
managers or the personnel department may use their own
contacts to find a potential candidate for a particular position
that might open up.

LOWER LEVEL POSITIONS:

Chevron follows the above recruitment policies for managerial


and clerical positions. However; for worker level positions,
Chevron follows a totally different policy. According to the
policy for labor level positions, Chevron prefers and actively
hire the children of personnel that retire. In this way this is a
very strong incentive for the workers to contribute positively
for the organization. Also since not only theirs but the jobs of
at least one of their child is guaranteed, their commitment
with the organization is usually higher.

A database of such employees is not required for there is


seldom need to hire from outside sources as the number of
existing employees is adequate. Also the turnover in such
lower level jobs is also very low. As employees retire or pass
away, their children are hired. Thus a pool of applicants is
available who require a lesser background check as their

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parents had worked for the organization. Thus applicants
have more credible background and more commitment for the
organization.

This is a unique method being followed at Chevron. Through


this method not only does the organization have a ready pool
of applicants ready but also does not have to incur the
expenses for recruiting and selecting employees from outside.
Thus through these policies the organization is able to resist
any pressure that many political as well company personnel
may use to induct people of their choice. As the positions may
try to use much significance it may happen that people of
positions may try to use influence in the absence of such clear
policies of hiring the children of existing employees. Thus in
this way the organization has reduced pool of potential
applicants but is able to hire without any outside or any
internal interference and at much lower cost. Also a pool of
applicants with at least a minimum amount of credibility is
obtained and as the positions require a very low level of skills
these policies do not affect the performance of the job at
hand.

This unique technique is used successfully in many other


MNCs and local organizations. Also this goes a step further as
compared to the Japanese style of management which
provides lifetime employment to their employees. In this
particular technique of recruitment not only life time
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employment is being offered but also employment for the
children is being provided once they retire. In this way their
financial security is in a way guaranteed even after retirement

However; this method is applied only for workers level staff.


However; the position offered varies with the qualifications of
the person and the type of job available. If a person is
qualified for a particular job but a job for his level is not
available then he is temporary offered a job in the other
department. For example a Chevron employee passed away
and his child who had education relevant in the computer and
IT profession .He was offered a job in the computer section of
the order and dispatch section of the West Wharf Lubricants
and Blending Plant. Thus in this way Chevron fulfills its
commitment to its employees.

INTERNAL POSTING:

Internal posting is the process by which internal openings are


offered to internal candidates. In Chevron for the purpose of
internal communication over the Local Area Network (LAN) a
ccmail system is used .Through this system internal opening

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is offered to the existing internal candidates. Then through
system of self nominations or on the recommendations of the
unit manager’s employees who are interested in the posted
opening send in their applications to the Human Resource
Service Unit.

FIRST PREFERENCE TO INTERNAL CANDIDATES:

Chevron offers the openings to the internal candidates. There


is a strong preference in Chevron for external candidates. By
offering the position to internal candidates’ employees who
are presently unhappy or want an exposure in a different area
or whose believe their career has become stagnant may shift
their job. Through this unhappy employees may shift their
jobs. This way the process acts as a motivator and shaper of
the careers of individuals.

By first offering the openings to the current employees the


company escapes itself from the position in which the internal
morale will fall if external candidates are preferred over them.
Thus this again offers the current employees the opportunity
to further their growth and show interest in the development
of their own careers.

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Through this policy of first offering the openings to the
internal candidates’ human resource departments can lower
the overall cost of salaries for the organization. This because
external hiring and recruitment process entails a lot of cost to
the organization .and in such difficult times when economy is
passing through a recessionary period the human resource
department must ensure processes which aim to minimize the
costs of salaries to the organization. As the long term salaries
and benefit structure of new hiring can be quite costly the
organization prefers to hire from the existing pool of
applicants rather then going for the external candidates and
committing the organization to longer term costs. Even if the
organization hires the candidates on contract basis the costs
associated with the new hiring can be exorbitant.

TRACK RECORD OF EXISTING EMPLOYEES:

The human resource department of the organization knows


the existing pool of applicants working for the company; these
personnel have already been working with the company for a
certain number of years. Therefore, the organization can
expect a certain minimum amount of commitment from
them .If there is a need to train them further and make some
investments in their skills before they can be transferred from

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one departments to the other, the organization will be ready
to do so.

INVESTMENT IN THE EMPLOYEE:

If the opening is such that the applying candidate has a


certain level of skills that are applicable to the new the job the
applicant may be accepted. However; this will entail a certain
amount of investment from the organization. Even if a more
appropriate candidate can be found from outside, the
organization will prefer the internal candidate for the job. This
is because it acts as an incentive for motivating the
employees in achieving their careers objectives.

Keeping this concept in mind the company is willing to make


an investment in the existing employees even if they have
some amount or a certain minimum amount of relevant skills
with them. But if the employee doesn’t have even the bare
minimum amount of relevant skills then the employee will not
be considered for the particular post.

This is because hiring from outside even on contract basis


entails a certain amount of cost this cost in most cases would
be higher than the partial training of the internal candidates
who are already comfortable with the particular culture of the

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organization. Therefore, the performance of such an
employee who makes a well decided career move of shifting
from one department to a department of interest to him
would be expected to outperform most of the external
candidates.

Although it is possible that the investment made in the


employee may end up helping the competition, however; this
is a risk that Chevron doesn’t hesitate on taking. Also since
the candidate has been working for a certain number of years
in the company he is already aware of the organizational
culture he/she doesn’t take so much time in adapting to the
new departmental culture. Therefore, the organization prefers
in investing in the existing candidates rather then investing in
the outside candidates or hiring from outside to fill vacancies
which can be filled with some amount of investment in the
internal candidates.

PURPOSE:

The purpose of internal job posting is to encourage employees


to seek promotions and transfers that help the human
resource department fill internal openings and meet personal
objectives of employees. Although at Chevron almost all the

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job openings are posted, however; senior management and
top staff positions may be filled through external recruiting.

MANGER’S CONSENT:

In the case of internal postings the consent of the concerned


manager whose department the employee is leaving is
essential if the employee is indispensable for the department
then the transfer of such an employee would render the
current department with essential deficiency .Therefore, in
such cases the consent of the current manager is essential. If
the current manager doesn’t release the employee then
chances are that such an employee would not be considered
for the internal openings.

MOTIVATION FOR EMPLOYEES:

Internal postings help in keeping the work force motivated


.This may also help in reducing the turnover of employees as
employees who are not satisfied with their present careers or
who are now fed up or bored with their jobs are provided an
opportunity to switch their jobs. Thus, in the case of those
employees who are not happy with their current positions

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they are provided an opportunity to switch from one job to
another.

This process helps in keeping the workforce motivated and


those employees who are not in a very motivated state they
are provided an opportunity to shift these jobs and try their
luck in a separate field that interests them. It is also possible
that the person had taken up a job in a different department
than that of particular aptitude or interest to the employee.
For example, an entry level employee with an interest in
treasury joins the Internal Audit Service Unit. However; after
working there for 2 to 3 years an opening comes up in that
particular field of treasury. Since the employee already had a
particular interest in this field this provides him an
opportunity to finally work in a department where ha has
greater aptitude and interest. In this way the employee is
more capable of working to his full potential as he is doing
work which he enjoys doing. Thus, in this way the employee’s
motivational level rises as he is finally doing what interests
him.

SELECTION:

Selection is the series of steps taken to select an applicant


from the pool of applicants available to the company. At

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Chevron there are two main pools of applicants one internal
and one external.

EXCOM:

Previously Chevron was a company with a highly centralized


decision making. At that time the EXCOM (Executive
Committee) used to make officer level selections for the
company. EXCOM comprises of directors and senior managers
of the company .Unit managers didn’t have major roles in the
selection process although it was they who have to work with
the employees.

UNIT MANAGERS:

Recognizing that the involvement of the unit managers is vital


to the success of the new employee and due to the
restructuring process the corporate culture is being changed
to include unit managers who will play a significant role in the
selection process.

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INTERVIEWING SKILLS:

For this purpose a training program of the managers has been


initiated to teach them, the skill of interviewing and assessing
candidates. This would be helpful to the managers in the
selection of the employees.

THE CURRENT SYSTEM:

Chevron believes that employees at all levels need to possess


leadership skills. There is no fixed recruitment cycle. On
receiving requests from the relevant managers does the HR
department arrange for interviews?

The resumes are screened on the basis of the requirements of


the concerned manager, the qualification etc. required. After
which the concerned manager and then finally the director
and the country manager are consulted.

Chevron considers GPA to be a high indicator of an


individual’s qualifications and competency for the jobs.

The format of the interviews is unstructured at present,


however; the company is working towards a predetermined
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set of questions which will help in determining and identifying
whether the individuals have the required competencies and
at the same time providing the interviewer with necessary
training required to probe into areas of particular interest
through a set of on the spot queries during the interview.

There are no personality or aptitude tests conducted except


for secretaries where tests for short hand and typing etc. are
conducted because there is no reliability of the normally
carried out personality and aptitude tests.

ORIENTATION

Orientation is the process through which the new employees


are introduced to the company. The Human Resource
department makes efforts to help integrate newcomers into
the organization and enable socialization to take place.
Through this the new employees get acquainted with the
company’s culture. It is by this process of orientation that the
employees find out the company’s culture, the rules and
regulations and other important dos and don’ts of the
organization.

The orientation programs are particularly effective ways of


helping the new employees in their socialization process.
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Individuals that join the organization have a strong desire to
get to know the organization’s culture and they attempt to
internalize the way things are done in the organization.

The organizational values, beliefs and traditions are slowly


absorbed as a person is exposed to orientation training and
the peer group. Eventually the newcomer becomes more fully
integrated into the organization after which their performance
and productivity start to reach the optimum level. For the
performance of an employee to reach the optimum level
he/she should be comfortable with the organizations culture
and ways of doing things.

CHARACTERISTICS OF CHEVRON ‘S ORIENTAION


PROGRAM:

The salient characteristics are:

• Orientation at Chevron is a three to four day program.

• The employees are given a detailed interactive lecture on


the over all structure of the organization.

• The workers are shown around the facilities of Chevron.

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• The facilities that are shown around are the Kemari
terminal and the West Wharf Lubricants Blending Plant.

• The workers are given a detailed overview of the facilities


by the respective terminal managers.

• At the end of the orientation program the new workers are


then introduced to each of the department heads who then
brief each employee about the functions of his/her
department.

• This process gives the employee a good over view of the


organization.

• Once the employee has a good overview of the


organization they are better able to identify their work with
the organization’s overall work and strategies.

BENEFITS OF THE ORIENTATION PROGRAM:

• The employees are able to identify themselves with the


organization.

• Once the employees break in to the organization’s culture


then they are able to give their best.

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• Once the workers get over their anxiety and become
familiar with the organization they are able to perform well.

• With lesser anxiety the new comers will learn their duties
better.

EMPLOYEE PLACEMENT:

In Chevron employee placement is also done by internal job


posting which is done by email that provides employees
opportunity to make moves at furthering their careers.
Internal posting is the process by which internal openings are
offered to internal candidates. Through the system of self
nominations employees who are interested in the posting
openings send in their applications to the human resource
service unit.

Chevron offers the openings first to the internal candidates,


the position is never offered to an external candidate as long
as there is an internal candidate available.
If the opening is such that the applying candidate has even a
certain level of skills that are applicable to the new job the
applicant may be accepted, however; this will entail a certain
amount of investment from the organization.

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The purpose of internal job posting is that it helps in
encouraging employees to seek promotions and transfers that
help the human resource department fill internal openings.

In the case of internal posting the consent of the concerned


manager whose department the employee is leaving in
essential, .if the employee is indispensable for the department
then the transfer would render the current department with
an essential deficiency. Internal postings help in keeping the
workforce motivated .This may also help in reducing the
turnover of employees as employees who are not satisfied
with their present careers .Thus in the case of those
employees who are not happy they are given a choice to
switch.

This process thus helps in keeping the work force motivated


and those employees who are not really motivated they are
given a chance to rotate and try their luck in those fields that
interests them.

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PERFORMANCE APPRAISAL

Performance appraisal is the process by which the


organizations evaluate individual job performance. Through
this process the organizations, the supervisors and the
employees benefit as it gives feedback to each of them
regarding the performance of the individual. These help in
contributing to the overall success of the organization.
Performance appraisals concern the employees’ performance
and accountability. In the competitive environment
companies need high performance from the employees.
Employees at Chevron need feedback on their performance as
a guide to future behaviour. Specific and timely feedback
helps the employees in planning for their careers, training,
and development decisions, pay increases and other
important decisions. The Human Resource department at
Chevron uses the information gathered to evaluate the
success of other functions such as training and development,
recruitment, selection, orientation and other HR activities.

Although informal and ongoing appraisals on a day to day


basis are necessary for smooth operation these are

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insufficient for the needs of a professional organization such
as Chevron.

Previously appraisal at Chevron was done from one year after


the joining date of the employee, for e.g. if some employee
was hired in June then his appraisal would be done every June
similarly if another group was hired in April then their
appraisal would be done every April. This system caused a lot
of workload, as the Human Resource would the whole year
round be working on appraisals. From this year onwards the
appraisals would be done at the same time every year for all
employees. Irrespective of the joining date appraisals will be
done in January.

OBJECTIVE APPRAISALS:

From this year the human resource department has


introduced a fully objective goal oriented appraisal system.

PERFORMANCE ALIGNMENT WORKSHOPS:

To help the managers in setting objective and quantitative


goals for the employees the company is holding
‘PERFORMANCE ALIGNMENT WORKSHOPS’. This is
intended to be a one time activity. Some refresher courses
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may be held next year. Through this system Chevron intends
that only quantitative and measurable objectives be set for
the organization.

CONTINUOUS FEEDBACK:

Chevron from this year is introducing a new appraisal form.


Usually what happens to most appraisals and goal-based
systems is that goals are set in the beginning of the year and
come up only at the end of the year.

To deal with this problem a section of the form to be filled is


the feedback tracking section. In this section the manager and
the subordinate are required to sit at least quarterly and
discuss the goals that were set at the beginning of the year.
To have a control over this process the manager and the
subordinate are required to write the particular feedback
received along with the date the feedback was received on.

The main purpose of doing this is to ensure that the goals that
were set by the subordinate and the manager should not just
lie in the drawer but should play an active role in the
performance of the individual and the department. The goals
that are decided and the feedback of the employee help in
achieving the set goals.

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CONTROL OF RATER BIASES IN APPRAISAL
REPORT

HALO EFFECT AND PERSONAL PREJUDICE:

Chevron takes particular care to ensure that the personal


biases of the managers and the halo effect do not influence
their appraisal system. Employees are provided a place and
opportunity to give their comments. There have been cases
when the employees have complained against their managers
about discrimination. But in this new system the objectives of
the employees are jointly decided. Even if the worker has
some different personal opinions about the employee, that
doesn’t appear on the appraisal form.

ERROR OF CENTRAL TENDENCY:

Error of central tendency refers to the tendency of the


manager to give almost everyone the same central marks. To
reduce this error, the option whereby the manager would

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have available ratings such as Excellent Very good, Poor,
Satisfactory are limited. The focus is on whether the
employee’s performance was in line with set goals i.e., the
employees either exceeded the set goals, met the goals or
was not able to meet the goals .This will reduce the error of
central tendency and will enable the real employee
performance to come up on the appraisal sheet.

This process will ensure that the correct results come out
.Therefore both the manager and employee will have to set
their goals keeping this aspect in mind. This will improve the
appraisal process and provide results on the basis of which
the employees will be judged.

RECENCY EFFECT:

When the appraisal is being done at the end of the year


ratings are affected by the employee’s most recent actions.
Recent actions are more likely to affect the appraisal system,
however; the feedback tracking system being used by
Chevron would help in reducing this effect. This is possible if
the feedback system is properly used by the managers and
the employees. Timely feedback would be given to the
employees from time to time. Therefore, when the final
appraisal is done at the end of the year both the managers
and the employees know what was written in the report. This

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feedback tracking system reduces the recency effect as the
manager and the employees continually keep track with the
goals they themselves set for the department and the
individual employee. Thus the quarterly feedback system
keeps the goals in view of the department and the employees.

APPRASIAL FORM:

A-BUSINESS UNIT /DEPARTMENT OBJECTIVES

This business unit/department section contains:

• Department objectives that are set by the department


managers in consultation with the higher level managers.
These are set in line with the overall corporate and
company objectives.

• Measure of performance is set keeping in view the type of


objectives and the type of department. The training in this
regard and the methods will be taught to the managers in
the performance alignment workshops being held with the
purpose of training the managers.

• The target is then set for the department. This is the same
for all the employees keeping in view the objectives set for

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the department. The purpose of having this in the
performance appraisal of each employee is to make sure
that each employee is aware of the targets set for the
department. What happens because of this is that the
employees become aware of the overall target that their
department has to achieve. Through this mechanism they
come to know of the importance of their own and other’s
contribution towards the overall success of the
organization.

• The result is then measured keeping in view the objectives


set in the beginning and using the measure of performance
to compare each of the department objectives and the
result that has been achieved. This result then indicates
whether the department as a whole has failed to achieve
any of the mentioned goals in the objective column.

B- INDIVIDUAL OBJECTIVES

The individual objectives are also divided into the same above
mentioned columns with some more additional columns:

• The individual objective of the employee is set by the


manager in consultation with the employee. This system is
quite similar to the management by objectives concept in
which the employees themselves set the objectives. As the
employees are involved in setting the objectives therefore
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they are more committed to the process, this self-
commitment to the goals is usually more than in the case
where the individual’s goals are set by someone else.
Therefore, through the introduction of this system the
individual goals become a source of motivation and the
individual will strive harder to achieve goals that he/she
himself set.

• A measure of each type of objective is then decided. Here


the experience and the new training mechanism will come
in handy. The manager will establish a measure of
performance to which both the employee and the manager
will agree. The performance alignment workshops will come
in handy here for the manager and as well as the company.

• The target for the employee is set by the employee and the
manager. In this phase the participation of the employee is
crucial to the success of the process. It is here that the
employee sets his/ her own targets in consultation with his/
her manager. Through this mechanism the employee is
even more motivated to achieve his/ her goals as he/she
was personally involved in the decision making process.
This area provides an opportunity to the employee to get
involved in his/her own appraisal system. Now the
employee will only be appraised for performance targets to
which he/she had already agreed to. Therefore, the level of
his motivation should naturally be higher than the case
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where his performance targets were defined by others.
Targets set by others may be considered as unachievable
by the employee and therefore the employee would himself
not work hard from the very beginning. Thus this system of
setting of targets and goals has an advantage from day one
as compared to the system whereby the goals are set by
someone else.

• The 4th column refers to the extent to which the employees’


goals are aligned to the overall department objectives. This
also refers to how much this particular objective is
important for the department to achieve its own goals .For
e.g. one goal set for the internal audit employees could be
to get professional certification from the Institute of
Internal Auditors, however; this may not have any direct
significance to the achievement of the goals of the
department.

• Similarly, some other goal may be vital to the success of


the department. These goals which are vital for the
department will also carry more significance for the
department as compared to personal development goals
such as education etc. However; this doesn’t mean that
other goals be left unmet and are not important. Chevron is
of the view that although such goals do not carry a very
direct significance to the current year’s performance, they
are vital to the long term performance of the department.
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• The 5th column is the result column .To reduces the error of
central tendency there are only 3 options available for the
manager .either the employee hasn’t achieved the targets
he has achieved the targets, or he has exceeded the target.
There is no other option available to him. Here the manager
writes in qualitative terms the performance and the nature
of the performance of the employees.

• The 6th column is the rating column. Rating is only between


one to three:

 If the value assigned is 1 that means the target has not


been achieved
 If the value is 2 that means the target has been achieved
 If the value assigned 3 also means that the target has
been achieved

FEEDBACK TRACKING:

This section tracks the feedback that has been received by


the employee during the year. The purpose is that the
employee keeps on receiving the feedback over the years.
Chevron from this year is introducing a new appraisal form.
Usually what happens to most appraisals and objectives is
that the goals are set towards the beginning of the year and

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surface at the year end. To deal with this problem a section of
the form to be filled is the ‘Feedback Tracking Section’.

In this section the manager and the subordinate are required


to sit at least quarterly and discuss the goals that were set. To
have a control over this process the manager and the
subordinate are required to write the particular feedback
received along with the date the feedback is received .The
main purpose of doing this is to ensure that the goals that
were set by the subordinate and the manager should not just
lie in the drawer of the table but should play an active role in
the performance of the individual and the department. This
will enable the firm in achieving the overall strategic business
and corporate goals.

EMPLOYEE COMMENTS:

This section gives the employees a chance to give as many


comments as they want to; this is a very positive aspect. The
contribution of the valuable comments of the employee forms
an integral part of the appraisal system. Here the employee
can comment on anyone, even give reasons as to what were
the causes for the employees not reaching their goals. Thus
this increases the motivation and performance of the
employee.

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This area also provides the candidate the chance to voice any
concerns that he or she might have regarding the appraisal
system. There have been cases where the employees were of
view that they have been unfairly treated by their respective
managers.

Chevron looks at such allegations seriously. If and when such


concerned is voiced an investigation is immediately launched
to verify the allegation or disapprove it. Steps are taken to
alleviate the concern of the employee as such an unpleasant
situation is harmful to the morale of the employee as well as
other employees as the working conditions of the department
are affected.

SUPERVISOR’S COMMENTS:

The concerned supervisor is then asked to provide qualitative


description of the employee’s performance. Here the manager
can write in detail what he/ she couldn’t discuss in the
objective section. The human resource department is aware
of the fact that appraisal which is such a qualitative area can’t
be fully covered in the objective section alone with a rating of
1, 2, 3. Although the objective section caries the most weight,

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the importance of the qualitative comments cannot be
downplayed.

Here the manager can write topics and issues regarding the
employee’s performance which could not be discussed in the
area above. For e.g. if the employee during the year round
not only completed his/her own target but also helped out the
manager and other employees in an extraordinary way it
couldn’t have been discussed in the above areas. Therefore,
this area provides a chance to discuss the important issues
which have not been covered in the objective area of the
appraisal form.

SUMMARY:

Here the concerned manager indicates whether the


employee’s performance was acceptable or not during the
period reviewed and the manager is also required to justify
his or her own comments. This is the area upon which the
final decisions are to be taken such as the increment in the
pay, promotion, transfer or any other HR decision. The
manager also has to justify his claims regarding each
employee.

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Similarly if the manager is of the opinion that the employee
has failed to meet his/her targets then the employee will have
to refer to the goals to prove his statements. As the appraisal
form is prepared before the candidate and the employee
knows what is being written this does create a sort of hurdle
for the manager to be open about the bad performance of the
employee.

TIMING JUSTIFIED:

The Human Resource department justified its timing of the


appraisal with the increments etc. The appraisal has to be
done every year in December and the changes are to be
implemented immediately after that in January. The
justification provided was that when a person’s appraisal is
done he/she expects and wants to be rewarded as soon as
possible after the appraisal is done. However; if he is not
rewarded immediately and his increments come six months
after that then he will not be able to associate his reward with
his performance the company seeks to complete this process
as soon as possible.
One disadvantage with this system which was identified was
that if the appraisal and the rewards are done simultaneously
then the manager wouldn’t be able to give their fair
contribution to the appraisal report. Thus to correct this bias

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that may develop the managers and the employees are
expected to remain objective and the main focus of attention
should be the objectives that have been set.

To remove this flaw from the process the main emphasis of


the appraisal process is on the quantitative and easily
measurable objectives. This helps remove some of the effect
of the timing which the appraisal process may have on the
managers. Usually managers and their subordinates become
good friends which may affect on the neutrality of the
process. To prevent this, the process focuses mainly on the
quantitative aspects of the process.

POINTS SYSTEM:

Point system is that upon which the final decisions are taken.
This is a classified document that can’t be shown to the
employees and therefore wasn’t disclosed to us. It is here
where the real decisions regarding the employee performance
and the increments etc. is taken. As this is not shown to the
employees therefore the managers can make such
evaluations which don’t come up in the appraisal form, but
form a part of the overall rating of the employee. However; if
there is a great variation between the appraisal form and the
points being given to the employee then the manager may be

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asked to justify this. If the employees were fully aware of this,
then their main focus would be only on items which matter to
the points system while ignoring other factors.

COMPENSATION

Chevron’s compensation mission is to pay


salaries which reward each employee in
proportion to the value of his/her services
according to established salary levels which
compare favorably with rates paid by
competitive employers.

• If pay is low, we cannot keep good performers


or attract highly qualified new employees.

• If pay is too high, our fixed costs will escalate,


we will not be able to keep our goods and
services at a competitive level and we will
become a less financially solid company.

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Compensation management’s objective is to ensure internal
equity i.e. the jobs with more responsibility are paid more.
Similarly, there should be external equity, i.e. the jobs should
at least pay what they are worth outside the organization.
Chevron agrees that compensation should be high enough to
attract good applicants and also be at least enough so as to
retain the good employees the firm has.

If the compensation package is not competitive, then the first


ones to leave the organization are usually internal and
external equity among the workers.

The HR department believes in having competitive starting


salaries to some extent, also if the organization usually pays
the same to all starting salaries i.e. those having the same
level of schooling.

This strategy, however; may vary with how badly the


company is need of the applicant. Also if the applicant has
some extra skills or he has some more experience as
compared to the other fresh graduates, he may also be
compensated for the extra skills and education as well as the
experience that he brings to the company.

Another reason for which a new candidate may be paid


significantly higher than other candidates could be that his
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particular profession may be highly demanded in the market.
Also the candidate may bring some particular experience
which the he knows is highly needed by the organization.
Therefore in such a case the company may be willing to pay
him more.

For example, when implementing the SAP program, the SAP


certified professionals were needed desperately by the
company, however; Pakistan was lacking in good
professionals with this type of qualification. In this case the
candidate hired got more than he would have had under
normal circumstances.

The company being an MNC provides salaries that are


consistent and competitive with what the market offers.
Increments, however; are dependent on a variety of factors
such as the employee performance, and the present relative
worth of his job, his authority and area of responsibility if
promotion or transfer occurs.

Every position in the company has a defined range of salary


that can be payable. The exact position of the person on that
range depends on various factors such as:

• Education level
• Experience of the individual either with the company or
previous experience in any other firm
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• Worth of the job
• Performance of the individual will help him climb to the top
of the range
• Demand of the particular skill in the job market

These factors determine the particular wage rate that is too


paid for each worker.

PAY FOR PERFORMANCE:

The concept of ‘Pay for Performance’, which is Chevron’s


compensation philosophy is the recognition and reward of
productivity. This idea is designed to encourage initiative and
long term performance.

Performance is measured by comparing an employee’s day-


to-day performance and results against the performance plan
the employee and his/her supervisor agree to at the start of
the performance cycle.

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Performance plans include:

• A selected set of factors that describe the manner in which


basic activities of the job are performed.

• Relevance indicator that designate each factor as critical or


important to an employee’s particular job.

• Standards that define the level of performance expected in


each of the selected factor areas.

• Objectives that set measurable goals for the employee to


achieve.

The performance planning process and on going progress


discussions should help insure that the employee and his/her
supervisor have a shared understanding of performance
expectations for the employee’s job and the employee has a
good idea of how he/she is doing. With an ongoing dialogue
during the performance cycle, the performance review
discussions conducted at the end of the cycle should contain
no surprises.

The overall performance rating, which is discussed during the


performance review, provides an overall summary of how well
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the employee’s actual performance compares to the
expectations established in his/her performance plan.

The performance rating categories are:

Exceptional (E)
Very Good (VG)
Good (G)
Meets Minimum Requirements (MM)
Does Not Meet Requirements (DR)

The overall rating is determined by combining the individual


factor ratings and the rating for the attainment of goals and
objectives as agreed to in the performance appraisal meeting.
In determining an employee’s rating, designated as “critical”
in a performance plan. Other considerations that may also
affect performance ratings are the difficulty of the assignment
and overall contribution to the group.

Performance is recognized in salary actions in two ways:

• Merit increases, which recognize sustained performance on


the job.

• Promotional increases, which reward an employee’s


assumption of greater responsibilities.

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MERIT INCREASES:

Employees have their performance reviewed annually. Merit


increases are awarded at twelve month intervals for
employees whose salaries are at or below the full job value,
the time interval between increases will be extended.

Salary increases are not automatic – they must be earned.


When an increase is given, the employee’s salary moves to a
higher level within the salary class. The amount of the
increase is dependent upon:

• The employee’s current position in the salary range


• The employee’s performance rating
• The relative competitiveness of the final salary
• The size of the salary budget available for merit
adjustments

The merit budget represents a balance between what would


like to pay, what the external market place is paying, and
what the Company can afford to pay employees. The size of
the budget is influenced by many factors, both internal and
external. These include present and anticipated rate of
inflation, competitive influences, and the current and
expected profitability of the company.

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Fully qualified employees with proven job performance who
are paid below the full job vale will, over time, progress to the
full job value in their particular salary classes. Increases for
such employees are likely to be higher in percentage terms
that for employees who are currently paid above the full job
value.

PROMOTIONAL INCREASES:

When an employee is promoted the new job should be in a


higher salary class with a higher salary range. The employee’s
future salary action is considered in relation to the new salary
range. Promotional increases may be given at any time but
should generally not occur within six months of the
employee’s most recent increase.

SURVEYS:

Chevron for job evaluation purposes hires the services of a


third party, ‘Fergusons’. It conducts surveys regarding the
prevailing salary levels in the market place. The salary range
is a band from the minimum to the mid-point. Salary scale is
based on this very compensation survey.
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When it comes to determining the various salary levels the
experience does not come into play at the junior level as it
does at the senior level.

The process of conducting the survey involves identifying the


salary levels and other fringe benefits (such as house rent
allowance, bonus etc.) of the company and providing the
relevant data to survey consultants (Fergusons in this case).
This involves filling in a questionnaire by Chevron. This data in
turn is combined with that provided by other firms so as to
develop competitive tables.

One important consideration for the company is to see where


it is from the mid point. The company considers the scale
from the minimum to the mid point. If a worker or employee is
highly skilled then the pay is more towards the mid point so
as to retain the talent.

Chevron also conducts internal surveys with respect to job


evaluation at all levels through the American based ‘Hay
Group’. The group has a reputation of consistency and
possesses tremendous knowledge and experience in the field.
The company benchmarks positions and allocates points for
each of these jobs known as ‘Hay Points’. Broad banding
allows in determining the salary levels. The banding is
confidential and is an indicator of the internal equity. The Hay
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Group uses the regression model in the survey which takes
about two months to complete.

Since a huge number of MNCs and other renowned firms


follow the Hay Point System the data may be compared for
the determination of the external equity to some extent.

WICR:

Chevron has an incentive program related to the company’s


earnings, however; there is no concept of stock-sharing for
Chevron is a private limited company. Chevron has a
recognition program known as WICR (Work Improvement Cost
Reduction). All employees below the L2 manager level are
eligible to participate in this program.

The process and eligibility criterion for the program


encompasses the following:

• Employees suggest improvements within/ outside their own


departments
• Joint decisions are not eligible
• Implementation steps should be clearly outline
• WICR committee will evaluate all the suggestion pouring in

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The evaluation will be based on the following criteria:

• Suggestions should be practical and aligned with COPL


policies
• Volume of cost reduction/ revenue generation to be
considered
• Implementation time frame for the suggestions should be
short (1-6 months)
• Continuity of cost saving/ revenue generation versus one
time benefit will be preferable

GENERAL SUMMARY:

The contractors and union workers are offered ‘Merit Based


Pay’. Inflation which has been a very regular phenomenon in
our economy does somewhat affect the compensation
policies, however; not directly but simply because the whole
market is being affected.

Chevron awards bonuses to its workers on the basis of


improved performance which is connected to STRIVE
(Strategic Incentive for Value Enhancement) that is
revised annually. It also grants house rent allowances, offers
medical plans and provides various such facilities to its

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employees. Also there exists worker’s compensation in case
of injury on the job.

Chevron also recognizes the services of its employees; in


particular it has a long service award which is given to
employees for every five years that they complete with the
company. There is also a ‘Quarter Century Club’ which
gives plaques, memorabilia etc. to its employees on the
completion of 25 grand years with COPL.

TURNOVER:

In the late 1980s Chevron was seriously lacking good middle


managers. The top executives did not take the responsibility
of grooming the lower level managers nor were there any
training and development programs in place with this regard
that left a vacuum in the company. To address this rather
serious issue Chevron adopted an adhoc approach and
started hiring MBAs in particular, in huge numbers. These
people as a result took the job rather lightly and treated their
job at Chevron as a launch pad to their careers while always
being on a lookout for better jobs. This created an image of
Chevron being the savior of all those who could not afford a
job elsewhere. However; now Chevron has become rather
particular about its hiring policies.

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During Mr. George Mahan’s tenure as the GM Chevron had a
hiring policy whereby it hired people irrespective of whether
there were vacancies in the Company or not. Special place
was created for these candidates in the company. Chevron
then believed in having a talent pool even if it meant that
there was excessive hiring, and though a lot of people left the
company the turnover was never a major concern.

In 1998 the Chevron Head Office was shifted to Islamabad due


to security concerns in Karachi on orders from the Dallas
Head Office. This, however; proved to be a big mistake and on
the basis of cost-benefit analysis Chevron soon decided to
reverse its decision. Operating an additional (regional) office
at Karachi was proving to be expensive plus the travel and
communication costs were too high and since a lot of the
employees working within Karachi were unwilling to part with
their families and work at Islamabad finding the right people
in Islamabad, a completely new territory was a major
problem. A lot of jobs had to be cut down on at Karachi office
therefore there was a reduction of about 70 employees who
were retrenched. Also there were many resignations that
were handed in by the employees. This loss of employees who
were well adjusted to Chevron’s corporate culture is deeply
regretted by the current Chevron management.

This year Chevron under went restructuring, which resulted in


further reduction of the Chevron employees. The current
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management has brought down the number of employees
(managers, contract and non-contract workers) from 500 plus
to 472, for the unnecessary number of employees was
resulting in inefficiencies and excessive administrative costs.
During the last year very limited hiring has been done at
Chevron.
Shell Pakistan Limited is Chevron Pakistan Limited’s biggest
competitor and Shell over the past few years has earned the
reputation of attracting a large share of the market labor
force due to attractive starting salaries that it offers to
potential candidates. This, however; quite surprisingly has not
spelled out disastrous consequences for Chevron though it
would be unfair to deny that it has had some unpleasant
implications.

Chevron claims to match Shell’s huge starting pay with rapid


promotions, pay increases and an excellent working
environment which ensures the personal development of
employees. Chevron also has an open-door policy whereby it
encourages the participation and suggestions of all its
employees. The salaries at higher levels of both companies
are, however; quite identical. Also Chevron being a smaller
company compared to Shell is able to give ample recognition
to all its employees which are a great motivating factor. Even
those employees that left Chevron for Shell are of the opinion
that the environment at Chevron is free of any politics and
bureaucracy and the managers are followers of ‘Theory Y’
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rather than ‘Theory X’ style of management, a practice not
common in a lot of local companies.

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Bibliography:

 www.Chevron.com

 Human Resource and Personnel Management


by William b. Werther, Jr. Keith Davis

 Practical experience and meeting employees


and asking them their views towards the
compensation policies and recruitment process
in Chevron.

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