[pic] Agenda The Context 1. The firm’s domestic and international environment 2. A functional analysis of the firm General policy 1. Study of the objectives, strategy, global policy 2. Analysis of the firm’s governance 3. Analysis of the management style and organizational culture, Critical analysis 1. An assessment of the organization 2. Analysis of the results and measurement of the managerial team performance the last five years About “Upstream business segment” |Oil and gas production |Proved oil and gas reserves |Proved reserves by region (in Mboe) | (en kboe/d) |(in Mboe) | | |[pic] |[pic] |[pic] | About “Downstream” business sector: |Refined product sales and Trading |Refining capacity at December 31 |Refinery throughput (in kb/d) | |(in kb/d) |(in kb/d) | | [pic] |[pic] |[pic] | About “Chemicals” Business sector: |Non-group sales in 2009 (€ billion) |Sales by region in 2009 (%) |Adjusted net operating income in 2009 | | | |(€ million) | |[pic] |[pic] |[pic] |
I. Analysis of Total’s short term and long term objectives A. Meeting the demand for energy One of Total’s principal objectives is to be able to meet future energy demands that are quickly growing more and more each year. This demand grows as former third
Meeting an ever growing demand is made even more difficult given the environmental context that we are now living in today. Environmental challenges such as damage to the ozone layer and global warming are becoming issues of greater conflict and therefore the challenge of addressing the world’s energy become ever more difficult. On the whole, Total is a group that is geared towards long term objectives of 10 or 20 years. This is because it is important to take into account what the energy situation will be at this time.
Total hopes to be able to address shortage of energy suppliers for a twenty year time period by researching new ways of exploiting fossil fuel sources. The group, however, realizes that it cannot address the demand by just utilizing oil and gas alone. In order to fully address the need for energy it will be necessary to exploit other sources such as solar energy, wind power and hydroelectric power. B. The preservation of the environment Yet another crucial objective of Total is to research and discover new technologies that will help address the reoccurring and ongoing problems that the environment is now facing.
More concretely this means inventing a new energy model that uses a mixture of both fossil fuels and low-carbon energy sources. The other aspect of environment conservation that Total hopes to improve in the next 20 years is diminishing the harmful impact on the environment and the ecosystem of the countries where they exploit. The main aim of Total is to conduct research about the different areas that they exploit in order to gain a better grasp about their ecosystems.
Once Total understands these different ecosystems that can then best discover ways in which they can best address environmental problems. Concerning water usage in the areas that are directly affected by Total, the group has put in place since 2007 an objective of trying to limit their water consumption in order to allow for more access to consumption in households. Air quality is also an important concern of Total. Total’s goal is to maintain high standards of air quality in the surrounding areas of their factories.
This means limiting certain atmospheric emissions such as sulfur dioxide, nitrogen oxides and volatile organic components. The group aims to cut the emission of greenhouse gases from their factories by 15% from 2008 to 2015. C. The protection of people’s health and security Total realizes that much of the production and exploitation that they carry out effects the lives and the well being of the people that either work for them or live near their factories. It is therefore, as of 2009, their objective to address issues concerning the protection of people’s health and security.
The objectives concerning this issue are two-teared; on the one hand they are concerned with the health of people that work for their company, the people that live nearby their plants, and the people that come into contact with the materials produced by their factories, and on the other hand they hope to improve safety of workers on Total sites. Between 2010 and 2013, Total hopes to diminish on-site work accidents by 25%. In order to accomplish this Total has set up what they call “Golden Rules” in order to inform and make workers aware of dangers on the work field.
Unifying and standardizing technical procedures is also another way Total hopes to diminish technical risks. Best practices are yet another way in which Total hopes to diminish at work injuries. This consists in reporting any abnormal situations and then recording them in a more formal way so that it can then be incorporated into Total’s safety culture. [pic] The improved health objective is divided into four divisions: occupational health, health and environment, health and products, and finally individual and community health.
Concerning occupational health, Total’s aim is to implement a preventive health care policy in order to avoid illness and accidents at the work place. Annual surveys are conducted to assess trends in diseases amongst workers; these surveys are then analyzed in order to draw up plans to best prevent such diseases. The aim of the division Health and Environment of Total’s health objective is to decrease and manage the effects and impacts their factories have on workers and habitants of the surrounding areas of the factories.
Total has realized that not only is reducing atmospheric emission and liquid effluents better for the environment but is also crucial to improving people that live near a Total factory health and well-being. The group principal aims are to curb green house gases that escape into the air, to improve the quality of water that is discharged from their installations and to remediate certain sites. The Health and Products division’s objectives are to reduce and assess the harmful impact of certain chemicals that could affect people that come into contact with them.
Concerning the individual and community health division two main objectives were put in place. The first objective is the prevention and education of infectious diseases such as AIDS and malaria, diseases which rampantly effect people in certain areas that Total commonly exploits. The second objective is directed more towards improving problems that are more recurrent in developed nations such as substance abuse, and obesity cardiovascular disease. D. The goal of incorporating more fair-trade practices
One of the main goals of Total for their future is to leave as little of a footprint in the areas in which they exploit. This footprint consists of many things including everything from a carbon footprint to an economic or social footprint. Total seeks to help the regions where they have factories by developing their economic system. In order to obtain this level of development in such areas of the world they hope to improve the relationship and communication between locals and their own workers. With a better level of communication Total can better identify local people’s problems.
They can also better organizing projects by being able to better allot the roles of each actor. The first step that Total took in combating for fair-trade was coming in to terms of the level of destruction that they are causing. They realized that the areas that they exploit often are areas that are very poor and disadvantaged. They have recognized this and have now made it their objective to make others aware of this problem. An objective of having more communication with the locals is very important for Total but this objective also comes hand in hand with the ability to evolve their practices.
An objective that Total hopes to accomplish is to give to communities in their neighboring areas tools that will help them to construct and organize their development on their own. In this way the communities will not be dependent on Total and they can build themselves up independently and autonomously. E. The objective of establishing ethical activities Establishing sound ethical activities is a crucial objective for Total because as a large organization it is their responsibility to set the example in the areas in which Total is located.
These ethical activities include fighting against corruption and fraud, maintaining fair competition practices, the promoting of financial transparency, and finally respecting people of all walks of life. Total works in areas of the world where the risk of corruption and fraud is very high. About one-fourth of the areas where they have set up factories are areas in which this is the case. F. Employee loyalty It is especially important that Total invests its time and effort in their human resource planning.
The managers have realized that this is very important because it is thanks to a good team of workers that their company will be able to advance into the future. In the future projects will become more complex and the magnitude of the environmental changes will be ever more considerable. These new dilemmas require higher levels of anticipation and reaction, which means a need for a team of efficient workers. . [pic] In the table above we can see the breakdown of the nationalities of the different Total workers. We can see a multitude of different nationalities from the four corners of the world.
This clearly shows the group’s initiative to have workers with different and varying backgrounds. Through this mix of cultures, Total hopes to achieve more diversity of ideas and therefore make the company have a more international mindset. The human resources team of the group is currently working on several projects to work out issues such as renewing the incoming generations of workers, attracting talents from all over the world by using the experience of senior workers, creating new employment possibilities, and finally proposing fair and attractive salaries and work onditions. In order to best accomplish these different ambitions it is necessary to reinforce the mobility and the motivation of workers. In this way the group can be sure that their strategy and goals are best carried down to their workers. The table below shows the varying objectives that Total has made for the repartition of their workers. We can see a real difference between the objectives that were made in 2008 and 2010. In 2008 their objective for the percentage of women and international workers were significantly lower than the objectives that were made for 2010.
Total is leading the fight against employment discrimination based on sex, age, race, and origin. A plan of action that is led by operational managers and recruiters has also been set up in order to fight against employment discrimination based on handicaps. | | Internationaux | | Femmes | | | |Cadres | [pic] |[pic] | Main observations: o 35% of the shareholders are based in France and 69% from Europe. o According to Total, the number of French individual Total Shareholders is estimated at approximately 540,000. o Shares that belong or belonged to the employees of the company compose 4% of the whole number of shares. Also employees are represented by one director at the board of directors, who’s currently Mr. Claude Clement since May 2010. Several entities are sharing the governance of the company:
The board of directors: members of the board of directors are appointed for a three year term by shareholders. The directors define the strategy of the company and are the main channel of communication between Total and its shareholders. The board of directors chooses its Chairman who’s currently Christophe de Marjorie and also the CEO, role also assumed by Christophe de Marjorie. (Cf. appendix for the complete list). The audit committee: its responsibility consists of assisting the board of directors by overseeing internal control efficiency and ensuring quality of information communicated to the shareholders.
The compensation committee: this committee aims to ensure independence when defining compensation of Executive Committee members, the CEO and Chairman of the Board of Directors. They make propositions after an assessment of their results. The Nominating and the governance committee: this committee aims to advice the board of directors in defining potential directors and chairman. They also oversee the Company’s Corporate Governance rules and its implementation. A functional analysis of the firm [pic] Organization chart. March 1st, 2011. (Larger version in the appendix)
As one of largest France’s companies with nearly 100. 000 employees and operations in about 130 countries, Total is in a very challenging situation to ensure that, within the company, every function be well connected and efficiently coordinating their actions. In addition, even if present in more than 130 countries, Total remains a company from a Latin background. This aspect brings with it a cultural profile of traditional bureaucracy. Hierarchical structures, power and authority are high. Hofstede classified France as a country with relatives high Power Distance Index and high Uncertainly Avoidance Index. [pic]
First of all, Total set up three Business segments which are Upstream, Downstream, and Chemicals. Then, it created centralized corporate functions which are Finance, Legal, Ethics, Insurance, Strategy and risk assessment, Human Resources, Corporate Communications. To ensure effective achievement of strategy objectives in its three different Business Sectors, the Executive Committee is helped by a Management Committee. [pic] Members of the Executive Committee. From left to right: Patrick de La Chevardiere, Michel Benezit, Christophe de Margerie, Francois Cornelis, Jean-Jacques Guilbaud, Yves-Louis Darricarrere.
The management Comitee is composed of members from the holding, but also from the three different Business sectors Upstream, Downstream, and Chemicals. Also, in 2010, Christophe de Marjorie set up what he has called the G60, composed of 60 executive members, aiming to develop thinking on how to improve the organization in its environment. He explained in an interview with Pierre Terzian, a specialist of energy, journalist and also lecturer: “the East-West balance of power has shifted, the concept of OECD versus non-OECD countries is no longer the same, and the focus on the environment has sparked broad awareness.
In this new world, we have to work differently. The Management Committee is no longer adequate as the sole communication conduit between the Executive Committee and all the other senior executives, much less the rest of Total. ” Assessment of the organization: o Specialization: The Company has centralized some functions such as Finance, Human Resources… but organized mainly its structure on Business Sectors which are themselves organized between Strategic Business Units and regions. [pic] o Formalization: Total is a company with very high index of formalization.
Processes are very clear and well defined. There exists many charters within the company. With high level of Uncertainly Avoidance index (France: 86), and in such big company with nearly 100. 000 employees, Total imposed vey high level of formalization and bureaucracy. o Coordination: coordination in Total is designed on a pyramidal style. From a Latin background, the company is based on hierarchy even if more and more it develops an Anglo-Saxon approach with under this pyramidal style of relationship, the use of project groups fostering collaboration to achieve objectives.
Appendix: Members of the Board of Directors of Total S. A. since May 21, 2010 (official website content): o Christophe de Margerie, Chairman and Chief Executive Officer o Thierry Desmarest, Honorary Chairman o Patrick Artus o Patricia Barbizet o Daniel Bouton o Gunnar Brock o Claude Clement o Bertrand Collomb o Paul Desmarais Jr. o Bertrand Jacquillat o Anne Lauvergeon o Lord Levene of Portsoken o Claude Mandil o Michel Pebereau o Thierry de Rudder The Executive Committee (COMEX composition at December 31, 2009) (Official website content) Christophe de Margerie, Chairman of the COMEX (and Chairman and Chief Executive Officer of Total). o Francois Cornelis, Vice-Chairman of the COMEX, President of Chemicals. o Michel Benezit, President of Refining & Marketing. o Yves-Louis Darricarrere, President of Exploration & Production. o Jean-Jacques Guilbaud, Chief Administrative Officer. o Patrick de La Chevardiere, Chief Financial Officer. The Management Committee (CODIR composition as of January 4, 2011) (official website content).
Holding: Rene Chappaz, Yves-Marie Dalibard, Peter Herbel, Jean-Marc Jaubert, Manoelle Lepoutre, Jean-Francois Minster, Jean-Jacques Mosconi, Francois Viaud. Upstream: Marc Blaizot, Philippe Boisseau, Arnaud Breuillac, Michel Hourcard, Jacques Marraud des Grottes, Patrick Pouyanne. Downstream: Pierre Barbe, Alain Champeaux, Eric de Menten, Bertrand Deroubaix, Andre Tricoire. Chemicals: Francoise Leroy, Jacques Maigne, Bernard Pinatel. Organization chart[pic] ———————– Chemicals Downstream Upstream Executive committee and management Committee