Chevron or CALTEX Report

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Human Resource Management

REPORT ON HR PRACTICES IN

CHEVRON PAKISTAN LIMITED (FORMALLY KNOWN AS CHEVRON OIL PAKISTAN LIMITED)

(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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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

PERFORMANCE APPRAISAL...............................................................................22

OBJECTIVE APPRAISALS.........................................................................23- 6 –

___________________________________________________________Human Resource Management

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;

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manufactures and sells petrochemical products; generates

power and produces geothermal energy; provides energy

efficiency solutions; and 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

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known as ChevronTexaco Corporation), a leader in the global

integrated energy business. Chevron is the fifth-largest

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

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CNG refueling facilities to 66 nationwide. In addition,

Chevron has also established three CNG conversion kit

centers.

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 - 12 –


Pakistan Marketing won the coveted ChevronTexaco “Zero Is

Attainable” Award. Zero is Attainable is a corporate HES

annual award programme, that recognises organisations with

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

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development of the LPG Business of Sui Southern Gas

Company limited (SSGCL) as well as acquiring 11% equity in

the White Oil Pipeline.

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 BrandThe 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

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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 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

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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.

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.

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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.

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,

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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 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.

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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

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 - 19 –


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.

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.

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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 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

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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:

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

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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

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 - 23 –


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

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.

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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 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

- 25 –___________________________________________________________


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.

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.

- 26 –___________________________________________________________


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 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

- 27 –___________________________________________________________


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 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.

- 28 –___________________________________________________________


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 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:

- 29 –___________________________________________________________


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 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.- 30 –


SELECTION:

Selection is the series of steps taken to select an applicant

from the pool of applicants available to the company. At

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

- 31 –___________________________________________________________


to include unit managers who will play a significant role in

the selection process.

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.- 32 –


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

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.

- 33 –___________________________________________________________


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.

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:

- 34 –___________________________________________________________


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.

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.

- 35 –___________________________________________________________


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.

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.

- 36 –___________________________________________________________


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.

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 - 37 –


given a chance to rotate and try their luck in those fields that

interests them.

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, - 38 –


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

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.

- 39 –___________________________________________________________


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

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

- 40 –___________________________________________________________


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.

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

- 41 –___________________________________________________________


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

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:

- 42 –___________________________________________________________


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

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.

- 43 –___________________________________________________________


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

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.- 44 –


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

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.- 45 –


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

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 - 46 –


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.

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 - 47 –


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

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.

- 48 –___________________________________________________________


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.

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.

- 49 –___________________________________________________________


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, 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.

- 50 –___________________________________________________________


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.

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

- 51 –___________________________________________________________


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

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:

- 52 –___________________________________________________________


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 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

- 53 –___________________________________________________________


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.

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.

- 54 –___________________________________________________________


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

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.

- 55 –___________________________________________________________


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

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.

- 56 –___________________________________________________________


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.

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.

- 57 –___________________________________________________________


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 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)

- 58 –___________________________________________________________


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.

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

- 59 –___________________________________________________________


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.

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:

- 60 –___________________________________________________________


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.

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

- 61 –___________________________________________________________


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 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:

- 62 –___________________________________________________________


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

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

- 63 –___________________________________________________________


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

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

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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.

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.

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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

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.

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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’

rather than ‘Theory X’ style of management, a practice not

common in a lot of local companies.

- 67 –___________________________________________________________


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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