At a Glance
After a client undertook a project with Renoir to improve its organisation’s efficiencies, the following results were achieved:
- Annual savings of over $8,000,000 with one-off severance costs of $4,000,000
- New simplified structures, allowing the organisation to respond to business needs
- Standardised grading systems
- Best people in well-engineered positions with improved career opportunities
- A return on Investment (ROI) of 15:1
Background
This integrated oil company is one of the top petroleum and petrochemicals groups in the world, with operations in more than 100 countries. Their mature assets in Southeast Asia were inherited arising out of a merger in the late 1990s. Their production facilities cover some 470 production strings, 170 platforms and over 40 processing and service facilities.
The Challenge
The company’s assets are in a natural state of decline. This decline will have a major impact on the dynamics of the business unless lifting costs fall in parallel with declining output. Renoir Consulting was invited to undertake a survey of the onshore organisation in order to understand how efficiencies could be improved.
The survey concluded that there were many areas that could be improved, and which would lead to significant cost efficiencies. Problems were categorised into four areas as follows:
- Structures: The duplication of roles and certain positions were not related to workloads
- Management systems: Few internal growth or customer measures, with standard systems poorly implemented
- Processes: A lack of initiatives, non-value additions in many steps with many duplications of tasks
- People: Managers were unable to confront inefficiencies and there was a lack of skills development to close the gap.
By impacting these areas, the survey identified that a minimum of $4 million per annum in savings was possible. Renoir committed to delivering these savings and was subsequently invited to support the client in delivering these improvements.
What We Did
The project’s main objective was to reduce labour costs by $4 million and deliver a new business structure that would improve the flexibility of the organisation to meet the future needs of the client.
The project was subsequently split up into five key areas, namely Legal, Strategic, HR, Transformation and Communication. Renoir’s role was to provide the coordinating link between all teams, ensuring focus on the delivery of benefits, while the consultants provided their own industry-wide expertise.
The driving force underpinning the achievement of results was the Transformation Team, consisting of 6 client team members and 2 Renoir consultants. This team reviewed all activities being undertaken onshore, assessed them for ‘fit for purpose’ and then translated this into simplified structures and processes. The leaders of the respective teams were fully involved in the decision-making process to ensure their full support.
Part of the project required development of a selection process to ensure required skills were retained and that selection was undertaken in a fair and legal way. A comprehensive communication strategy and plan was executed to ensure that all staff were fully informed.
Another part of the project saw development of a new grading structure that reflected the needs of each position, rather than the attributes of the individual. This also ensured that staff reductions were even across the grades.
This was a ‘top down, bottom up’ approach, to eliminate the risk of developing a non-functioning organisation.
The Results
Renoir provided critical support in ensuring that business imperatives were met, whilst ensuring the changes were implemented in a systematic and sensitive manner. Today, the company’s Indonesian onshore organisation is much better positioned to meet future challenges.
“The project was a great success and has delivered significant reductions in year-on-year costs; Renoir’s approach allowed us to manage this sensitive initiative in a focused and timely manner. They helped us meet the challenges of the future.”
Senior Manager, Offshore Operations
Ensure organisational efficiency with clearly defined roles.
