Transnational Research Associates

A STAKEHOLDER ANALYSIS OF ARAMCO CORPORATION’S 

SOUTHERN AREA PROJECT DEPARTMENT

Art Madsen, M.Ed.

 

Concise Introduction

 

The principal objective of this stakeholder analysis will be to enable Aramco policy-makers to gain a better understanding of the range and variety of stakeholders in their Southern Pipeline Division, also known within the company as the Southern Area Project Department (SAPD), responsible for supervising all Southern Pipeline activity. Illuminated, as well, will be several possible motives some stakeholder units may have in impeding or facilitating proper and timely implementation of a new divisional policy strategy. Stakeholder analysis will additionally allow corporate management to formulate, implement and monitor newly implemented programs in the Southern Pipeline Division’s sector of responsibility. This can be done through employee surveys, studies by engineering and administrative researchers, and through the various intra-corporate networks which track Aramco’s oil pipeline development, budgets, and related activities.


A review of the nature, purpose and structure of a well-designed stakeholder analysis is imperative. This will be a fairly complete review of the key strategic thinking required to conduct a professional analysis of this sort. It will include targeted theoretical thinking tailored to Aramco’s Southern Pipeline strategy. The review will be followed by a concise reiteration of the purpose of Aramco’s Southern Division, the strategic options Divisional Managers have selected vis-a vis their stakeholder groups, and identification of those groups.  In concluding sections of this paper, comparison of an appropriate theoretical stakeholder model with Aramco’s specific Southern Division situation will be offered.  


First Step: Identification of the Southern Division’s Stakeholders


The first step in conducting a Stakeholder Analysis is to identify groups of stakeholders who will be affected by, either directly or indirectly, or will have an effect on the recently designed Southern Pipeline Construction and Operation Strategy (SPCOS). These groups will include planning engineers, geologists, cost accountants, electrical and mechanical technicians, trade union representatives, divisional trainee groups, public relations specialists, pipe fitters, Aramco-affiliated advisors and academics, governmental technocrats, and financial managers. It is recognized that all of these stakeholders can be individuals, departmental units, functional sub-divisional groups, administrative managers, and so forth.  “Dis-aggregating” stakeholder groups into gender-based groupings, operational units, functional teams, and other variables will assist in identifying stakeholder groups who may have otherwise been overlooked.


Step Two: Determination of Influence and Importance


The second step in this stakeholder analysis will be to determine the importance and influence of each stakeholder group, in terms of those who would benefit from proper implementation of the new SPCOS Pipeline Strategy and those who might lose power or influence during and after its adoption.  Indeed, it is crucial to determine which stakeholders are important for formulating and implementing the new pipeline expansion strategy, namely, those for whom the strategy will be important; and those who are influential in determining the strategy. The following diagram (Table 1) can be used to determine the importance and influence of Aramco Southern Pipeline Division stakeholder groups. This will act as a fundamental guide to which groups should be given prominence, and which might be restricted in terms of decision-making, throughout the participatory and implementation process.  The Table applies to only the primary groupings of stakeholders in the Southern Pipeline Division for illustrative purposes.

TABLE I

Influence of Stakeholder

Importance of Aramco Southern Pipeline Strategy Stakeholders

Little Importance

Some Importance

Significant Importance

 

Little or No  Influence

Trade Union Reps,

Pipefitters, Trainees

Public Relations Director

Client Firms

 

Somewhat Influential

Electro-Mechanical Technicians

Advisors and Academics

Private Investors, Gov’t Technocrats

 

Significant Influence

Cost Accountants, Budgetary Planners

 

Sub-Divisional Supervisors

Planning Engineers, Geologists, Financial Mgrs., Oil  Minister

 

Adapted from: Personal ARAMCO Expertise, 2000, E. Schein, 1985, and J. Pfeffer, 1994.

 

In the foregoing diagram’s expanded version, all stakeholders will be categorized and placed in different boxes according to their 1`importance in relation to the Southern Pipeline strategy versus their influence in determining implementation of the strategy, based on the current Divisional experience with participation of these groups.  [Power, incidentally, is an interesting, not to say vital, component of both influence and importance according to Pfeffer (1994)].  Such an analysis will help identify major omissions in participation and will fill gaps previously unnoticed and uncoordinated.  As seen in the working sample in Table 1, above, the trade union representatives, for example, have neither importance nor influence in the overall scheme of this project strategy or in the decisions required to implement it.  With moderate importance, but little influence are people like the Public Relations Director who basically follows instructions rather than gives them.  On the high end of the power spectrum are the oil ministers, geologists and engineers whose importance and influence are considerable.


Once stakeholder groups have been identified and differentiated by influence and importance, additional questions can be asked. For example:


·         Have vulnerable groups been identified?

·         Which groups are currently mobilized and have been active in promoting their interests?

·         Have supporters and opponents of SPCOS been identified?

·         Which groups will benefit from the delivery of the southern pipeline completion strategy and which groups might be adversely impacted? Where are groups located? Are they in Dhahran, in Al-Faw, or in Najran?

 

These inquiries will be supplemented by a more thorough approach in the steps and interpretive analysis to follow.


Step Three: Selecting Representation from Each Southern Division


Stakeholder Group

 

Once these broad stakeholder groups have been identified, as they have been above within the context of the Aramco Southern Pipeline Division, specific representatives of each group should be selected, preferably by the stakeholder group itself.  The selected representative should be capable of active dialogue, contributing the views of his or her Aramco stakeholder membership and sharing the information back with the membership of the group.  Governing rules should be enforced equitably whether or not the stakeholder group has been identified as important, influential or not.


Ideally speaking, when decisions related to implementation of the southern pipeline construction project or overall strategy are to be made, the views of all stakeholder group representatives must be presented concisely and succinctly, with the chairperson mediating impartially.


Step Four: Actual Selection of Southern Pipeline Division Representatives


for Dialogue at the Corporate and Governmental Levels

 

While selecting Divisional participants for consultations within the Corporation as a whole, it is also important to include government officials both at the national and local (southern district) levels, specifically from the Oil Ministry. At the national level, the lead ministry (oil), plus line ministries, should attend all open participation events, and ideally should be present at coordination and working group meetings. Stakeholders within the Southern Division of Aramco, of course, will chair key proceedings and will determine the agenda, which will include all major decisions to be made in implementation of the Southern Pipeline Strategy. However, mechanisms to include representatives from the government, private investors, and client firms must also be devised. Information-sharing or participatory involvement of a member of relevant stakeholder groups should be made possible.  Realistically speaking, the most influential stakeholder groups will be given a disproportionate role in most proceedings, but a semblance (at least) of democratic procedure must be maintained in open sessions. Closed sessions, where most critical decisions will be made, will tend to be autocratic in the ‘traditional corporate sense’, with roughly ‘equally weighted’ participation of the oil minister and the principal stakeholders within Aramco, notably geologists, engineers and financial managers.


Step Five: The Leader-Stakeholder Representative


and Key Priority Questions

 

Selection of a Leader-Stakeholder Representative, who will attempt to reflect the viewpoints of all less influential groups, plus those of the influential groups as well, is a difficult and sensitive task. The ideal process of selection is one which is carried out by an umbrella or apex body (perhaps an ombudsman) or by a corporate steering group with government participation. Once this leader has been selected, he or she can proceed with scheduling of a joint conference, over which he or she will preside, at which critical questions can be formulated.  The aim of the conference will be to elucidate directions for optimizing stakeholder cooperation and minimizing intra-corporate and intra-divisional friction.


The questions below allow the stakeholder negotiation process to be focused on the most appropriate participants -- and their priorities -- whose decisions might best result in success of Aramco’s Southern Pipeline Strategy. More detailed stakeholder-leader and subordinate profiles might be obtained by commissioning a specific analysis from existing Aramco personnel files, academic sources, or from corporate apex / umbrella organizations. Within the ranks of Aramco’s Southern Pipeline Division, there is a wide range of highly emotional issues being discussed by certain stakeholders. Matters such as wages, benefits, working hours and hierarchical chain-of-command disputes are among the subjects being discussed at the lower-levels of the Southern Division. Several questions for attempting to assess Aramco Southern Division Stakeholder Priorities and Issues, at all levels of authority, are presented in Table 2:

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Table II

 Key Questions for

Assessing Individual Aramco Stakeholder Groups
and Their Priorities

 

1.       What are the activities in which your Southern Pipeline Division stakeholder sub-unit seems to be engaged?

 

2.       Is the sub-unit’s area of specialty one of the major priority areas of the Southern Pipeline Project?

 

3.       At what levels do these actions take place and to what extent are they coordinated with other Departments within the Southern Division and/or with government activities?

 

4.       What sub-organizations exist within your stakeholder group? Do these organizations coordinate at other corporate level? Is your network far-reaching either within the Division or outside of it? Are mechanisms for sharing information within your group or with other divisional entities in place?

 

5.       What expertise do Aramco stakeholders have in specific planning, construction or financing sectors? Could they be involved in implementing or monitoring progress on the Southern Pipeline Project, particularly in terms of delivering services or information as appropriate?

 

6.      How do your stakeholder group and other divisional personnel or ministerial personnel work together and in what specific areas?

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[Source: Derived from personal insight and selected readings in the field, notably Clarke & Monkhouse, 1994.]

 

Answers to some or all these questions will shed light on the types of dynamics routinely found among employees and supervisors within the Southern Division.  By applying findings to the SPCOS Pipeline Strategy itself, the points of opposition mainly capable of impeding progress can be identified and eliminated.  The Stakeholder Analysis process is, on the surface, democratic in appearance, but is intended to ultimately protect the vital interests of the corporation and the client, keeping in mind financial and fiscal parameters imposed by the Oil Ministry, in this instance.


The Southern Division’s Strategic and Theoretical Approach to

Stakeholder Diversity

 

        To implement ideas acceptable to the most influential stakeholders, the SPCOS project manager must have a thorough knowledge not only of ideas to be presented but of the full range of stakeholders, and have a well-planned communication network, plus the support of key stakeholders. He must also select a theoretical model to suit his division’s purposes.  In this case it would seem to be a cross between the Shein Corporate Culture paradigm and the concepts of stakeholder power and influence advanced, for example, by Pfeffer (1994). 


       However, SPCOS project managers must first analyze the potential benefits and risks of their ideas should they be implemented. Such an analysis enforces confidence in their idea and helps them identify the stakeholders or people that would be most directly affected by these changes (Mitroff, 1983). They must also determine who among those stakeholders is the main decision-maker because support from this person would influence the other stakeholders. The active supporters, perhaps under the guidance of the Leader-Stakeholder referred to earlier, can also be called upon to form a "stakeholder support network" and help appropriate managers persuade the non-supporters, ostensibly the trade union contingent and reluctant cost accountants or certain planners.  A one-on-one communication strategy must be employed by the manager to the stakeholders who are difficult to persuade. Steps for accomplishing this should include: having a clear goal; knowing the non-supporter's objective; understanding the objections; and persuading the non-supporter to compromise. This is basic common-sense management derived from the field of mediation and conciliation.


            Keeping the foregoing in mind, let us examine Aramco’s Southern Pipeline Division, and its key stakeholders (see Table I), within the context of its SPCOS strategic expansion project.  The corporation has been mandated by the Saudi Crown to expand oil production capacity by more than 45% in the next three years.  Doing so requires the construction of several thousand kilometers of pipeline linking oil wells in the South of the Kingdom to refining and export facilities in the North, East and Southwest. Aramco employs several thousand persons working in a culturally diverse, professionally demanding, and often highly charged atmosphere in a number of geographic locations.  The Southern Pipeline Division has been in operation for over two years and Aramco has drawn employees from other locations to fill vacancies at all levels. 


            The stakeholder groupings indicated on Table I have evolved over this period of time.  Far more than those portrayed have also emerged, namely those centered on special interests, or those broken-down along the lines of gender (secretaries, receptionists and clerical personnel, for example) or those who are narrowly focused on specific issues, e.g. petro-chemical researchers, scheduling engineers, or topographers.  Single-status employees, as opposed to married workers, have also made their demands heard. 


            How can Project Management, answerable to Aramco-Dhahran, reconcile these factionalized interest-groups?  Some stakeholder theorists, such as Schein (1985) have postulated that there must be a guiding corporate culture or philosophical context in which values, beliefs, and certain assumptions are operative. In Deal and Kennedy (1982) similar aspects of corporate culture are discussed at length.  In the case of Aramco’s Southern Division, these values and principles must be applied to achieve relative harmony in a situation, portrayed paradigmatically below, that is actually highly complex.  On Table III, which replies in part to the crucial questions posed in Steps 2 and 5 of the Stakeholder Analysis process, six major individuals who represent a cross-section of key stakeholder-positions are shown along with Aramco personnel rankings (1 to 20) and their obviously conflicting stakeholder stances.

Table III

Name, Title,

Aramco Rank

Identified Stakeholder

Unit

Vested Interest, Stance or Position

Ben-Rahman, Geologist, 18.

Professional Scientific Grouping

Impractical, Unrealistic Geological Expectations are set for SPCOS.

Al-Salah, Labor Coordinator, 11.

Manpower Force

Labor is perennially underpaid and may embark on an industrial action.

Darak, Financial Manager, 17.

Financial Planners and Administrative Unit

Costs must be contained. SPCOS is severely under-budgeted.

Rachid, Sub-Division Mgr, 15.

Electro-Mechanical Grouping

A higher percentage of project costs needs to be assigned to our needs.

Fushia, Admin. Secretary, 13.

Gender-Based Clerical Unit

We are generally happy, but request less work per employee.

Barka, Planning Engineer, 19.

Theoretical and Conceptual Design Grouping

Underlying flaws in the strategic plan exist; new design required.

Source: Personal Knowledge and On-Site Southern Pipeline Division Analysis, 2000.


Questions phrased in the preceding sections of this analysis essentially yielded positions and attitudes approximating those reflected on Table III above. The individuals whose (modified) names appear on this chart are those selected by their respective stakeholder constituencies.  Interaction of these employees, whether in the professional performance of their duties, merely socially, or under the stress of stakeholder mediation proceedings can, and will, tangibly influence the success, failure or modification of the SPCOS initiative.  The same types of interpersonal dynamics occurred on the Eurotunnel project (GIC Text Illustration 5.6), on construction of the Healthy City Projects now underway in Chittagong and Cox's Bazar in Bangladesh (Burton, 1999), and recur within other Divisions of Aramco periodically. 


Analyzed from the perspective of key stakeholder representatives portrayed above, it can be seen that the financial and administrative grouping is in direct conflict with the manpower unit, but that the engineering group is in basic agreement with the scientific group insofar as project scientific and conceptual shortcomings are concerned.


The other conflicting patterns are comparatively minor, with the clerical unit (lacking in influence) and the electro-mechanical group asking for comparatively minor concessions when contrasted with the major obstacles created by other pairs of stakeholder groups. Their relatively superficial demands are paralleled in Althea Andrew’s brief stakeholder analysis of Map Librarian manpower needs at the University of North Carolina (2000).


If we compare these tentative results with Shein’s corporate strategic model, it appears as if the Schein strategy of attempting to ensure overall harmony through unified ‘value and belief systems’ might not be sufficient to resolve some of the entrenched stakeholder positions in the Southern Pipeline Division. However, the foregoing stakeholder analysis, if professionally completed along the lines specified in the first portion of this report, based on the thinking of Clarke and Monkhouse (1994) or Pfeffer (1994), could result in unearthing new discoveries among the major SPCOS players and stakeholders whose interests conflict to varying degrees.  In fact, by overlaying the Influence and Importance Diagram (Table I) with the Stakeholder Identification paradigm shown above (Table III) and asking the Right Questions (Table II), it is possible to reveal most or all of the complex interpersonal dynamics that motivate and underlie stakeholder conflict or harmony.  In the case of Aramco’s Southern Pipeline Division, and its supervisory entity, SAPD, there seems to be room for compromise and understanding even in the presence of considerable intra-divisional competition.

REFERENCES

Andrew, A. “Stakeholder Analysis:Management of Information Agencies”, Course Syllabus, University of North Carolina, Chapel Hill, 2000. http://www.ils.unc.edu/~andra/inls131port3.html
 
Babiuch, W. and Farhar, B. “Stakeholder Analysis Methodologies Conference: American Sociological Association”, National Renewable Energy Laboratory, Washington, D.C., 1993.

 

Burton, S. “Evaluation of Healthy City Projects: Stakeholder Analysis of Two Projects in Bangladesh”, Environment and Urbanization, South Bank University, London, U.K., April 1999, 41-52.

 

Clark, T. and Monkhouse, E. Rethinking the Company, Pitman, London, U.K., 1994.

 

Deal, T. and Kennedy, A. Corporate Cultures: The Rites and Rituals of Corporate Life, Addison-Wesley, Reading, Mass., 1982.
 
Mitroff, I. Stakeholders of the Organizational Mind, Jossey-Bass, London, 1983.

 

Pfeffer, J. Managing with Power: Power and Influence in Organizations, McGraw-Hill, New York, 1994.

 

Schein, E.  Organisation Culture and Leadership, Jossey-Bass, London, 1985.

 

 

 

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