The author of this report has become familiar with the local Chevron office in the past. The company is a large international energy producer that primarily engages in oil and gas production. However, while its central office oversees the operations of the foreign branches, it allows them to maintain a significant degree of autonomy to maintain flexibility. As such, the local office is suitable for investigation as a mostly isolated environment where organizational processes take place. The objective of this report is to analyze the local Chevron branch using the Nadler-Tushman congruence model. To that end, it will categorize the key components, evaluate the business’s strategy, identify potential issues, and identify aspects that the author does not understand adequately as well as the resources required to remedy this weakness.
The Nadler-Tuchman model is an expansion of the systems theory approach that introduces additional factors to improve the practicality of the method. According to Anderson (2016), there are four critical and interrelated elements in it: “task, individual, formal organizational arrangements, and informal organization” (p. 79). The principal task is to maintain extraction rates that meet the demand without overproduction. To that end, the company needs to evaluate the need for oil and gas in the market as well as its current production capacity, expanding or contracting it as required. To that end, market analysts, various specialized engineers, and drilling staff are key individuals, and Chevron relies on their skills. So far, the company has been able to achieve the outputs that it requires, producing enough oil to meet its needs without overcrowding storage spaces.
Formally, the company’s office uses a hierarchical system, where the top management receives objectives from the headquarters and meets them by developing strategies and tasking leaders at lower levels with implementing them. Every team will have a leader that is rigidly defined by their seniority, usually a project manager or another variety of leading jobs. However, informally, these leaders tend to understand their strengths and weaknesses and defer to the person with the expertise that is most suitable for the task. The top management understands this tendency and tacitly approves of it, valuing the flexibility that it offers. As a result, the internal environment is goal-oriented but generally friendly to employees who perform to expectations. The external environment, as with the oil and gas industry in general, is volatile due to price fluctuations and factors such as environmental concerns.
Chevron has adapted its strategy to the changes in its environmental inputs, which are characterized by increased pressure to improve sustainability and diminishing availability of resources. However, its formal organization has not changed significantly over time, as the business’s work to change the current hierarchical system is progressing slowly. With that said, the informal organization has shifted to the one described above in response to the challenges presented by the new environment. The key tasks for the company have been adjusted to account for the slower increases and demand and the different external stakeholder priorities. As such, some of the key staff roles, such as those of an environmental specialist, have gained prominence. The prior key staff is isll essential to the operation of the company, but their workloads are lower than they were previously.
The interactions between the various aspects of the transformation process have also changed to accommodate the adjustments in organizational strategy. The changes in the key tasks demanded new competencies, which were filled by additional key staff such as environmental specialists. These new staffers then took on a more prominent role in teams because of the importance of their contribution, partially displacing traditional hierarchy-based leaders. As a result, the informal structure of the company underwent a partial change to better fir new needs. Seeing the success of this new approach, Chevron started attempting to adjust its formal structure to enable easier usage, though the effort is progressing slowly. Regardless, the interactions have succeeded in changing the organization’s outputs to match its new needs. In the future, the progressing adaptation will likely read to additional improvements in the alignment between the organization’s strategy and its resources.
Organizational Output Issues
Overall, Chevron’s individual output appears to be adequate, with its workers being competent at their jobs and able to deliver the required results consistently. The job positions at the organization are well-defined and require specific sets of skills, which the people who currently hold these positions have. As such, a worker can be reasonably expected to complete a given task within a realistic time frame and contribute significantly to team performance. However, at the group level, the mismatch between the informal and formal structures leads to a variety of issues associated with the overall functioning of the organization. While teams may subvert the established seniority practices, communication has to follow predetermined channels, which partially impedes their functioning. However, this issue will likely be addressed with time, as measures to do so are already taking place as part of the overall reorganization.
At the organizational level, Chevron’s outputs have some significant problems, particularly concerning long-term sustainability. The falling oil prices, which have recently reached a negative value for a short period, are indicative of market volatility with which companies such as Chevron struggle to cope. The external environment is changing rapidly, and the organization’s agility is too low to enable it to deal with the issues effectively. Large businesses may have the resources necessary to overcome short-term difficulties, but they will likely suffer in a prolonged crisis. As such, Chevron should improve the flexibility of its model by accelerating the development of its new formal framework. The company should improve its ability to identify opportunities and threats and respond to them swiftly and efficiently. To that end, it requires a robust understanding of the overall context in which the company operates.
Resources for Improved Understanding
The author currently struggles to understand Chevron’s environment because of its high complexity and unpredictability. The oil and gas industry is heavily entangled in the world’s economy, affecting it significantly and vice versa. As a result, seemingly unrelated phenomena can have immediate and significant effects on their performance that can be challenging to predict or address. Meanwhile, broader macro-level considerations also exist and change the landscape in which Chevron operates over time. They can be both slow, such as the gradual change in public awareness regarding environmental concerns, and relatively quick, such as political actions by major oil-producing nations. To achieve a high level of efficiency and success, the company’s specialists will have to navigate this complicated landscape. To that end, the author will attempt to identify resources that can help them understand the situation.
To address the issues of complex environments such as those that surround many multinational organizations, scholars worldwide have attempted to develop appropriate models. Hughes (2018) describes Dawson’s model of environment evaluation, which incorporates an analysis of the past, present, and future internal and external environments. Such an analysis would be more complicated than in the case of PESTLE but enable a higher accuracy, which is critical in sensitive contexts such as that described above. However, it would require access to a considerable amount of information, which is currently not available to the author. If they were to assist the company with an analysis of its environment, they would request past evaluations and future projections of its internal circumstances as well as market analyses and forecasts. With these resources, they would be able to achieve a high-quality assessment using contemporary models.
Chevron’s resources are generally adequate to achieve its current goals, as they have partially adapted to the new environment. However, the author has found a mismatch between the formal and informal structures of the local Chevron branch. The latter have adjsadjustedincorporate flexible team leadership structures and reflect the increased importance of environmental staff. However, the formal structure is struggling to adapt because of its low agility, though it has acknowledged some of the changes tacitly. As a result, while the company has some issues on the group output level, they are not significant. Its organizational output is more problematic because of the complexity of its external environment, which the author struggles to understand. Models such as that by Dawson may be beneficial to the understanding of the circumstances that surround oil and gas companies and Chevron, specifically.
- Anderson, D. L. (2016). Organization development: The process of leading organizational change (4th ed.). Thousand Oaks, CA: SAGE Publications.
- Hughes, M. (2018). Managing and leading organizational change. New York, NY: Routledge.