INDUSTRY INSIGHT

Accelerating performance in the GCC petrochemical industry

Forces of change and increased uncertainty in the ever-competitive petrochemical industry in the gulf make mobilizing, executing and transforming with agility an imperative prerogative for sustenance and growth

The chemical industry in the Arabian Gulf today finds itself at an ambiguous juncture, with substantial market disruptions such as the shale gas revolution in the US and China’s investment in coal/methanol to olefins (CTO/MTO) impacting capacity. At the same time, digital innovations such as artificial intelligence and cloud computing are allowing for possibilities of stronger efficiencies in analytics and information access. In this environment the need for targeted and considered action is imperative for remaining competitive, continually creating value for stakeholders and driving revenue growth.

Heidrick & Consulting’s global research indicates that organizational success requires acceleration, i.e. reducing time to value by building and changing momentum more quickly than the competition through Mobilizing, Executing, and Transforming with Agility (META). In 2017, the consultancy shared its Organization Accelerator Questionnaire (OAQ) to 13 member organizations of the Gulf Petrochemicals and Chemicals Association (GPCA) covering 213 executives to understand their META. META is viewed through five categories of acceleration and examines 13 drive factors (Refer to Figure 1 for the acceleration categories and drive factors).

The findings revealed several strengths and impediments to META for the participating organizations[i]. As seen in Figure 1, overall the companies analyzed are at the ‘advancing’ level of acceleration, albeit at the lower end of the scale.

Figure 1: Acceleration profile – A heat map of the 13 drive factors for the gulf chemical industry

[i] Participating organizations are: Saudi Aramco, Borouge, EQUATE, Farabi, ADNOC Fertilizers, GPIC, NATPET, QAFCO, SABIC, Sahara, Saudi Chevron, Sipchem, and Tasnee.

When viewing the ‘META’ framework, ‘mobilize’ (68%) is the area that emerges the strongest. Within this aspect ‘clarity’ and ‘customer first’ are stand-out drive factors and fall within the range of ‘accelerating’. This reflects a strong sense of purpose and focus in the participating organizations as well as orientation to create value and drive service excellence for customers. On the other hand, ‘execute’ (50%) is the area that requires most attention. Specifically within ‘execute’, the low ‘winning capabilities’ score (‘derailing’, 37%) indicates that focus should be placed on attracting, managing and developing talent more effectively. Building a value proposition to attract the right talent and placing the best people in critical roles emerge as key focus areas.

Delving one layer deeper, the 13 drive factors in our study were further analyzed for the participating organizations through 39 energizers (Refer to Figure 2 for the 39 energizers). While the study captured data from the lens of both the organization and the individual, for the purpose of this analysis, the organizational lens has been used.

Figure 2: Acceleration profile – A heat map of the 39 energizers

“Building customized talent management infrastructures to attract, retain, develop and engage the ‘right’ talent is critical for developing the organizational capability to deal with external challenges.”

The findings indicate a high level of clarity surrounding the fundamental ‘purpose’ (90%, ‘accelerating’). ‘Purpose’ refers to connectedness and a shared sense of meaning and is crucial to creating a corporate culture of integrity which drives business success. This coupled with ‘winning teams’ (74%, ‘accelerating’) illustrates a shared sense of mission, teamwork and camaraderie. On the other hand, ‘rewarding impact’ (38%, ‘derailing’) emerges as an area of improvement. As such, not enough attention is placed on knowing the people or what they exactly do. This along with ‘developing others’ (45%, ‘lagging’) indicates an imperative to focus on building leadership capabilities. Furthermore, ‘ideas adoption’ (38%, ‘derailing’) and ‘straight talking’ (39%, ‘derailing’) are two other areas that require more focus. These findings in tandem indicate that employees should feel comfortable speaking up and sharing their ideas without the fear of being reprimanded. Acting on these themes will provide a distinct advantage to organizations in the industry moving forwards, particularly given the changing external environment.

In conclusion, the findings from this research lead to two key recommendations for organizations in the chemical and petrochemical industry in the region:

  1. Nimble and fearless adoption of ideas

Producers in this region must be proactive about adopting new ways of doing things given the current shifts in the external environment. Giving individuals across levels the freedom to discuss obstacles and suggest ways of improvement can lead to a variety of new ideas and innovation.

By successfully building the capability to communicate and receive difficult messages, manage conflicts, challenge the existing ways of doing things and speaking up without fear of reprimand; organizations can be more nimble in responding to the rapidly changing external environment.

  1. Attracting and managing talent

Chemical and petrochemical companies in the GCC have been known to have a shortage of both qualified graduates and experienced candidates in the workforce. Talent is a key enabler for organizations in today’s Volatile, Uncertain, Complex and Ambiguous (VUCA) world.

Building customized talent management infrastructures to attract, retain, develop and engage the ‘right’ talent is critical for developing the organizational capability to deal with external challenges. This, coupled with accelerating their leadership capabilities, will enable organizations to proactively prepare for the future.