Leadership performance in global financial crisis

Schlumberger (SLB) is a multinational corporation which engages the oil and gas industries. The organization provides the reservoir technology to oil companies throughout their drilling, processing and general production process. The company has been welcomed in more than 80 countries across the globe, and its employability status surpasses 100,000 people from the various countries where they operate. The oil and gas industry is one that requires a high level of innovativeness like the one SLB has managed.

The company was founded Schlumberger and Conrad in the 1920s. It has its main offices in London, Houston, and Paris and at The Hague. 

The following core values also lead the organization:

1. Technology; SLB believes that the oil and gas industry requires heavy investment in technology to provide quality services and to maintain a competitive edge.  
2. People; SLB believes that the people are a necessary asset to the organization as organizations thrive on their efforts. As such, the organization is committed to ensuring that people excel in any environment, customer services and safety is the highest concentration of the organization.
3. Profits; SLB plans for the future as a prospect where the organization should have independence of growth and action and therefore it is determined to realize superior profits.

Intentions of the Paper

The executive wings of organizations acts in various ways to sail through stressing financial times. Multiple factors such as government regulations also affect their performance. This paper will critically analyze SLB a strong focus being placed on the actions that the management of the organization strategically used to overcome the 2007 global financial crisis (Hampton, 2017). 

Organizations approach financial crises in various ways that are inclusive of; 

• Prevention; It is the focus that a company can make to avoid making losses and ensuring that the risks it faces are lesser than those of its competitors. 
• Promotion; An aggressive approach to provide more benefits such as discounts to customers or heavy advertising than that used by competitors (www.slb.com). 
• Pragmatism; It is one of the most vibrant approaches that organizations use that involves combined strategies which vigilantly defend the organization from falling apart. It is an intertwined use of offensive and defensive approaches. 
• Progressive approach; The optimum blending of defensive and offensive tactics to help the organization sail through the recession.  

At this juncture costs are issues that threaten the growth of the corporation and therefore, measures to reduce them have to be set in place. The most applicable measures are; 

• Calling off all development and research activities that the organization previously engaged in.
• Reducing the costs used in marketing the organization.
• Reducing training and staff development costs.
• Reduced hiring and consequent workforce reduction. 

Though normal corporations use these approaches, most of which seem applicable and logical, they are measures that could affect the delivery of a company and could make business not sustainable for the organization amidst a recession (www.slb.com). Having a different approach, SLB did not utilize any of the above measures as they took the financial crisis as an opportunity to strengthen the organization rather than to break it apart. 

Results and Discussion 

To maintain the progressiveness of SLB, the management is very keen on managing financial issues and recessions positively. To manage the recession, the executive arm of SLB observed and analyzed certain issues that culminated to the following resolutions: 

1. Innovation:

The management of the company carries the notion that innovation is not just blend in stability. It is rather built in the face of difficulties and a recession is such an ideal time to be innovative (Team, 2015).  The organization made a hefty focus on innovation based on the needs of the customers and not based on cost. 

Three intertwined questions in view of innovation were outstanding; 

i. The best ways to increase product range and make use of the recession to improve their service delivery as well as that of products. 

ii. Best approaches to increase customer range through innovative marketing procedures.

iii. How to follow up and keep a check of changes in customer wants during the recession in the view of how to find the change in their demands and how to fulfill them (“Engineering Innovation | Schlumberger”, 2019). 

The executive noted the following challenges which needed adequate redress;

a) To prevent the loss of loyal customers who had taken a long time to find. They were a super threat to competitors. 

b) Developing a balanced assortment that could reach more customers who were as equally affected by the recession. 

c) Develop an ability to estimate surfacing needs of the clients and enhance responses. 

As opposed to the other companies that cut on research and development procedures, the organization engaged more research and development. They still made super profits due to the innovation brought in by research which caused them to establish research centers in Cambridge, USA, and England, in Moscow, Russia, in Calgary, Canada in Dhahran, Saudi Arabia and also in Stavanger, Norway. 

Two of their most outstanding innovations are; 

1. They brought up a measurement range of fluid reservoir range where the Insitu Density sensor was used.

2. They introduced integrated simulation approaches for multistage fracturing and completion services.

B. Acquisitions

 Having had the economic ability to thrive amidst the recession, SLB could buy some of its suppliers and start-up companies in its areas of operation (Crego, 2018). The recession was an excellent investment opportunity for them because of low valuations.  Listed below are some of the acquisitions:

a) Metacarta for Oil and Distribution Rights: an agreement that gave the company search rights for all content in oil and gas. It came with a topographical advantage. 

b) SLB in November 2001, purchased the Eastern Echo.  

c) Purchase of Staag Imaging a US-based company concentration in technology and seismic data processing. The company was also largely concentrative on the Full Waveform Inversion (FWI) technology. 

d)  Acquisition of Extreme Engineering Inc. a Canada based organization the supplier of MWD systems. 

e) The 2009 acquisition of Techsia SA shares a supplier of Petro-physical software.

C. Employee Layoffs

Just like their colleagues, the management of SLB encountered widespread employee layoffs which sent almost 5000 employees packing. Reduction in demand and little room for revival are some of the reasons that the organization cited. The following problems were identified with headcount reductions which included;

i) Weakened motivation among workers.

ii) Decreased input towards duties among surviving employees. 

iii) Increased insecurity among the remaining employees. 

iv) Increased fatigue, reduced creativity and aversion of risk among surviving employees. 

Upon observing the risks, the organization sent off the workers with respect and layoff advance letters which ensured that there was a minimum effect on delivery (Team, 2015). Also, the organization sent off more of the support workers than those involved in actual operations. 

Conclusion and Summary

SLB is among the leading oil and gas providers in the world. It is the largest company in the world being larger than two of its immediate competitors. It attributes its success to innovation, investment in the human factor and adequate use of technology. 

It is an organization that progressively faces hard times the reason that it stood out in the recession and still maintains competence and infinite resources.

Instead of cutting on the development and research costs like competitors, SLB gave research and development which were pillars of innovativeness that enabled the company to continually engage existing and new customers and also make further acquisitions.

The advancements that SLB made amidst the recession strengthened the company and ensured that it retained its position. The organization still holds the approaches and has stably ensured its achievement of profits since the recession.  

References

Crego, J. A. (2018). Supplement to “Why Does Public News Augment Information Asymmetries?”.

Engineering Innovation | Schlumberger. (2019). Retrieved from https://www.slb.com/news/inside_news/2017/2017_05_02_eandp_awards.aspx

Hampton, L. (2017). The next oil major? Service firm Schlumberger’s big bet on production. Retrieved from https://www.reuters.com/article/us-schlumberger-oil-production-insight/the-next-oil-major-service-firm-schlumbergers-big-bet-on-production-idUSKCN1BJ0EI

Team, T. (2015). Schlumberger To Remain Resilient In 3Q Driven By Its Transformation Program. Retrieved from https://www.forbes.com/sites/greatspeculations/2015/10/13/schlumberger-to-remain-resilient-in-3q-driven-by-its-transformation-program/#44c67308125c

www.slb.com.