Leadership and Management of Change - PETRONAS Malaysia
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MGT 70904
Leadership and Management
Of Change
Individual Assignment
Lecturer:
Mr Chin Tuck Piew
MASTER IN MANAGEMENT
FARAH LEE (ID: 0326650)
Semester Period: October 2016 – December 2016
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Table of Content
Title Page No.
1. PETRONAS – Corporate Background 3
2. Analysis of Leadership Practices and Development in PETRONAS 4
2A. Organizational Philosophy, Culture and Values Impacting Leadership Style 4
2B. Examples of Leadership Excellence 5
2B (i). Tan Sri Hassan Marican 5
2B (ii). Tan Sri Shamsul Azhar Abbas 6
2B (iii). Datuk Wan Zulkiflee Wan Ariffin 7
2C. Development and Succession of Leaders 8
2D. PETRONAS Leadership Learning and Development Framework 9
3. Management of Change in Current Socio-economic Environment 12
3A. Business Restructuring 12
3B. Employee Retention and Motivation 13
4. Power and Politics: Influences and Conflicts From Internal and
External Environment 14
4A. Internal Environment (Within Departments) 14
4B. External Environment 15
4B (i). Government and Contractors 15
4B (ii). Malaysian and International Stakeholders: The Public 15
REFERENCES 17
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1. PETRONAS – Corporate Background
PETRONAS is the acronym for Petroliam National Berhad. It is an incorporated public organization
and has three listed subsidiaries with Bursa Malaysia: PETRONAS Gas Bhd, PETRONAS
Chemicals Group Bhd, PETRONAS Dagangan Bhd. PETRONAS was incorporated on 17 August
1974, and is owned and controlled by the government of Malaysia. Currently, PETRONAS has
operations in over 50 countries. As of Jan 2016, PETRONAS has 51,000 employees working in
Malaysia and across the world.
PETRONAS’ upstream business explores, develops, produces and monetises oil and gas resources
both domestically and internationally. Encompassing activities such as Exploration, Development &
Production, LNG Trading & Marketing, LNG Assets and Malaysia Petroleum Management, it is a
fully integrated business across the oil and gas value chain with a broad portfolio of resources and
‘play types’ (groups of oil fields or prospects) in 22 countries. PETRONAS’ capability and track
record of successful onshore and offshore developments in oil and gas, have earned reputable
operatorship in many ventures across the world.
PETRONAS’ downstream business plays a strategic role in enhancing the value of Malaysia’s oil
and gas resources, through integrated supply chain and sales distribution operations. The diverse
downstream activities include oil refining, gas processing and liquefaction, gas transmission pipeline
operations, petrochemical manufacturing and marketing, property investment, shipping, marketing
of liquefied natural gas, marketing and distribution of petroleum products, and trading. Furthermore,
PETRONAS has operated overseas service station in South Africa, Sudan, Thailand and Indonesia.
The growth of PETRONAS can be divided into several phases. During the early ‘formative’ years in
the 1970s, PETRONAS played the role of managing the nation’s oil and gas resource through the
Production Sharing Contract (PSC) in exploration and production. In the 1980s, PETRONAS moved
into the ‘developmental’ phase where it began playing the role of project manager/operator in the
context of an integrated oil and gas company. It was in the 1990s that PETRONAS began venturing
into overseas operations in what represents the ‘globalization’ phase of the organization. In the
2000s, PETRONAS started to become a ‘global player’ and after 42 years since its formation, more
than 30 per cent of its revenue comes from overseas operations.
PETRONAS has been on the ‘Fortune Global 500’ list for 20 years (since 1996) and been dubbed
one of the “New Seven Sisters” (oil companies), a term originally coined by Italian businessmen
Enrico Mattei, to refer to the likes of ExxonMobil, Chevron, BP and Royal Dutch Shell. In 2014,
PETRONAS was positioned as the world’s sixth most profitable ‘Fortune Global 500’ company in
the oil and gas sector. As of 2016, PETRONAS is ranked at No.125 in the ‘Fortune Global 500’ list.
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2. Analysis of Leadership Practices and Development in PETRONAS
2 A. Organizational Philosophy, Culture and Values Impacting Leadership Style
Presented below is PETRONAS’ corporate vision, mission and shared values:
The shared values stated are central to the code of conduct for PETRONAS’ employees. Here,
being loyal means regardless of employees’ nationality (including overseas operations), they are to
protect PETRONAS’ interests. Cohesiveness is the ability to work as a team and to have a win-win
situation for PETRONAS. Professionalism is reflected in employees’ conduct, being respectful and
consistent. Finally, PETRONAS places emphasis on integrity. For instance, there is the practice of
no-gift policy (means PETRONAS employees are not to accept gifts from clients /business partners).
PETRONAS also has a cornerstone motto “Performance and Delivery” which supports the
company’s aspirations in building a high performing culture and workforce in the organisation.
PETRONAS practices a culture that emphasizes mainly on being people-oriented. This derives from
the core tenets of Malaysian society, in maintaining group harmony and kinship, being respectful
and obedient towards elders and those of senior positions. Particularly amongst the Malay ethnic
group whom predominantly constitutes PETRONAS’ management and employee workforce, in
terms of expressed reverence and humility towards seniors being viewed as ‘father figures’ (referent
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power-based), ‘family’ like work relations, as well as the spirit of mutual help (‘gotong royong’) within
the same community, that stems from the days of the agricultural-based villages. This kind of
community-centred collective spirit, naturally translates to PETRONAS’ wide array of involvement
and initiatives in Corporate Social Responsibility programmes, as well as volunteering activities
nationwide to remedy, improve particular social issues and needs.
The above highlighted values subsequently cultivates ‘spiritual leadership’, an emerging concept
within management schools, of recognizing the values, attitudes, and behaviours promoted or
obligated by one’s belief and religion and how it affects the outcome of positive human health,
psychological well-being, life satisfaction, organizational commitment and productivity, sustainability
and financial performance. According to Fry (2003), spiritual leadership taps into the fundamental
needs of both leader and follower for spiritual survival so they become more organizationally
committed and productive.
In general, spiritual leadership involves the application of spiritual values and principles to the
workplace. A spiritual leader understands the importance of employees finding meaning in their
work and demonstrates a genuine concern for the "whole" person, not just the employee. The
spiritual leader also strives for a workplace that is truly a community, consisting of people with
shared traditions, values, and beliefs.
Spirituality in leadership implies that the focus will be less on formal position power and more on
people; less on conformity and more on transformation and diversity; and less on controlling and
more on partnership, collaboration, and inspiration. The modern workplace is not just a place where
people work, but a place where they form friendships, socialize, and attempt to find a sense of
fulfilment.
2 B. Examples of Leadership Excellence
Below are exemplary insights into the leadership and contributions of PETRONAS’ last three
Presidents cum Group CEOs:
2 B (i). Tan Sri Hassan Marican
He played the key role in transforming PETRONAS into what it is today - the only Malaysian
company in the Fortune 500 list and the most profitable national oil company in the Asian region, as
well as being highly reputable worldwide, operational standards and performance wise on par with
the current “supermajors” group of ExxonMobil, Chevron, BP and Royal Dutch Shell.
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Trained as an accountant, Tan Sri Marican was described by analysts as forthright and a strong
advocate for strict fiscal discipline. He stressed the importance of teamwork, and he insisted that
PETRONAS employees meet high standards of integrity and professionalism.
Until the late 1980s, PETRONAS focused primarily on regulating Malaysia's domestic resources,
and it was only with the arrival of Tan Sri Marican, along with then-Chairman the late Tun Azizan
Zainul Abidin, that the company pursued a more aggressive global strategy.
Consistent with then-Malaysian Prime Minister Mahathir Mohamed's stance that his government
served as an advocate for under-developed countries, PETRONAS under the late Tun Azizan and
Tan Sri Marican, sought partnerships in countries that other petroleum companies avoided or were
restricted from investing in. In 1997 PETRONAS teamed with Chinese partners to turn Sudan into
an oil exporter, which occurred in less than two years. Despite a U.S. embargo, PETRONAS
partnered with a French company and launched a successful operation in Iran. PETRONAS was
one of the first companies to invest in post-apartheid South Africa, purchasing a 30 percent stake
in Engen, its largest oil-refining company.
For Tan Sri Marican, PETRONAS’ partnership strategy worked well, because the company sought
associations with those who shared the PETRONAS philosophy and work ethic and in which
PETRONAS was treated as an equal. Similarly, partnering countries were increasingly attracted to
PETRONAS because of its nation-building experience, both in Malaysia and elsewhere.
Tan Sri Marican refused to take credit for PETRONAS’ success and insisted that its
accomplishments were "based on solid teamwork" (New Straits Times , May 9, 2003). He further
explained that PETRONAS insisted on "commitment, professionalism, integrity and honesty" from
its workers, which ensured "that things are done in a proper and professional way." To effectively
manage PETRONAS’ global concerns, he spent half of each year visiting the company's sites
around the world.
2 B (ii). Tan Sri Shamsul Azhar Abbas
Taking over PETRONAS’ reins from Tan Sri Marican in 2010, he was noted for fearlessly defending
professionalism and independence in strategic decision management. In a June 2014 interview with
Malaysia’s The Edge Weekly publication, Tan Sri Shamsul mentioned his fight for PETRONAS’
autonomy and guarding the national oil company’s interests in the face of numerous political
pressure. He initiated the adoption of the open bidding method when offering oil and gas job
contracts, to bring down costs for PETRONAS. He refused to bow to political pressure to give job
contracts to unproven businessmen, nor be held ransom by greedy well-connected contractors.
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Tan Sri Shamsul had also irked the government and many UMNO members, by capping the
dividend paid to the federal government at 30% of PETRONAS’ net profit from 2013 onwards. His
rationale, was to safeguard PETRONAS’ business growth capability. “If we remain static and all our
production is depleting … in 13 years’ time we might as well close shop.” In the issue of facing
grievances from politically-connected business owners when job contracts were no longer
automatically allocated, Tan Sri Shamsul held firm to practicing meritocracy. He disregard the
sentiment of being a fellow Malay, which is used by some quarters as justification for unconditional
assistance based on ‘clanships’. The long-ingrained support to business collaborations by handouts
or ‘spoon-feeding’, created the entitled mentality prevalent in many Bumiputera-owned government-
supported businesses.
Some notably revelling viewpoints from Tan Sri Shamsul:
“We take pride in telling the whole world, telling the whole of Malaysia, that we are a Fortune 500
company, but do we behave like one? … This is what the fighting is all about, trying to give ourselves
some independence, so that at the end of the day, we are measured in terms of our performance,
delivery and results, and not having anyone intervening and telling us what we have to do and that
we have to give handouts to all.”
“In the Petroleum Development Act, it is very clear – oil and gas belong to all Malaysians. It doesn’t
say oil and gas belong to the Bumiputeras … and we are the custodians.”
2 B (iii). Datuk Wan Zulkiflee Wan Ariffin
Datuk Wan Zulkiflee has been with PETRONAS since 1983, and had been ear-marked as a
successor to PETRONAS’ top position since 2010. He believes in longer-term change management
aspects, in developing cutting-edge technology and a quantum change in PETRONAS’ cultural
beliefs to be a high-performance company, by inculcating a sense of belonging, taking ownership
and sharing successes.
“Going forward, technology will play a different role in the company. PETRONAS will commit to
investing in technology irrespective of the crude oil price,” Its major capital commitments in the next
few years include the RM 60 billion project to build a refinery and integrated petrochemical hub in
Pengerang, Johor, and the completion of the second floating liquefied natural gas (FLNG) vessel.
The FLNG is a purpose-built vessel with the latest technology that allows for the gas to be processed
offshore. Hence, small fields that were uneconomical previously can now be developed.
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Upon succeeding Tan Sri Shamsul in March 2015, he focused on six strategies to reshape
PETRONAS, himself being equipped with experience in both the upstream and downstream
operations.
Three of the strategies were short-term measures to cope with the current changing environment of
oil price fall. They were to maximise cash-generation activities, focus on delivering projects such as
the massive development in Pengerang within cost, and reduce operating cost by the simplification
of operations. By merely collaborating with the production sharing contract partners, PETRONAS
has reduced cost by RM 3.4 billion over one year.
On changing the cultural beliefs of PETRONAS, Datuk Wan Zulkiflee says that the employees have
been told to first look at how they interact with each other when they come to office. Among the
initiatives that PETRONAS has launched as part of its efforts to change the culture, is to nurture
trust among staff that it is “safe” to criticise the company. He mentioned under the programme called
“Tell Me”, a lot of e-mail feedback are being received. “About 55% of the staff are below the age of
35 (as of 2016) and we have been engaging at all levels,” he adds.
2 C. Development and Succession of Leaders
PETRONAS’ appointed top management personnel, almost always have long-time association with
the company in serving its various operation businesses. For example, Tan Sri Shamsul had served
in PETRONAS since 1974, in various capacities and key positions including that of Vice President
of Oil Business, Vice President Petrochemicals, Vice President Exploration (Upstream) and Vice
President Maritime and Logistics.
PETRONAS has been investing heavily in human capital development through training, education
and leadership development. This has ensured a continued pipeline of the talents needed to sustain
and grow the business. With its brand essence of ‘Energy Receive, Energy Return’ extended to
places where it does business, with education being the major thrust, PETRONAS believes in the
philosophy of building its ‘own timber’ of talent resource wherever it operates (capability
development). In other words, the organization prefers to develop its own experts rather than rely
on outsiders.
Employees joining PETRONAS early on were given structured and continuous education in various
areas. The business success of PETRONAS today can be attributed to its relentless pursuit in
developing its own human capital through extensive learning and development efforts.
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Testimony to the commitment towards learning and development, PETRONAS launched the
PETRONAS Leadership Centre (PLC) in 2011: a 40-hectare institute of learning in the vicinity of the
government administration centre of Putrajaya. Originating from humble beginnings as a training
department in 1979, the institute was incorporated in 1992 as the PETRONAS Management
Training Sdn Bhd, a wholly owned subsidiary of PETRONAS. The facility has over 40 training
classrooms and over 110 accommodation rooms. PLC offers learning programmes to address both
leadership and functional skills development with a clientele comprising both the PETRONAS Group
of Companies and the industry in general. On average, more than 20,000 PETRONAS employees
attend various learning programmes in PLC annually.
The PLC also feature facilitation conducted by PETRONAS’ senior management personnel – known
as Leaders Develop Leaders (LDL) sessions. This is for participants who are about to embark on
managerial positions.
As of 2016, 55% of PETRONAS’ total workforce are below 35 years old. PETRONAS succession
management philosophy make sure that potential candidates identified to assume higher position,
to have adequate first hand exposure on expected situation that comes with a particular future role.
For top management positions (e.g. Vice President), PETRONAS ensures at least two to three
successors are already identified.
2 D. PETRONAS Leadership Learning and Development Framework
For PETRONAS, leaders are developed through the 70:20:10 learning principle. This formula, which
is a result of research conducted by Michael Lombardo, Robert Eichinger and Morgan McCall or the
Centre for Creative Learning (CCL) (Lombardo and Eichinger, 2000), dictates that for leaders to be
developed, approximately 70% of the learning is in the doing (learning by experience),
approximately 20% of the learning is through receiving feedback from more experienced personnel,
e.g. coaches and mentors (learning from others), and finally about 10% of development and learning
is from attending formal education, e.g. seminars, classes and training programmes (learning in
formal learning environments).
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The PETRONAS Leadership Centre plays the role of providing the 10% learning among leaders in
the PETRONAS Group. For this purpose, the Learning and Development Framework was
developed and implemented throughout the corporation.
The above framework provides a blueprint for the formal training of leaders across all job grades
from the point of entry to the organization as Junior Executives (E1) through General Manager (E5),
and above. All new entrants to the organization are required to attend a two-week induction
programme, PETRONAS Induction Programme for New Executives (PIPE). This compulsory
programme is designed to imbue the participants with the organization’s corporate values of Loyalty,
Integrity, Professionalism and Cohesiveness as well as introduce them to the Leadership
Dimensions of Developing Others, Outperform, Behave as Owners and Inspire Others. The learning
methodology involves games, simulations, experiential learning and small-group discussions.
Lectures are kept to a minimum.
The new PETRONAS executives that are attending the PIPE programme have not yet been
assigned to any positions within the PETRONAS Group of Companies. As a result, all PETRONAS
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staff are imbued with the corporate values and leadership competencies from day one. This enables
the organization to streamline and align all employees with the organization’s goals and objectives.
As the Petronas staff progress in their careers from Junior Executives (E1) through Senior
Executives (E2) spanning a period of three to five years, they will have gone through the Petronas
Leadership Learning Series, a suite of training programmes custom designed to address the nine
leadership competencies that Petronas executives are required to demonstrate in their respective
jobs. Examples of these programmes include ‘Presentation Skills’, ‘Planning and Implementing’,
‘Personal Career Planning’ and ‘Essential Finance for Non-Finance’ and ‘Leading Teams’. These
suites of training programmes are designed to enable the employees to ‘Lead Self ’ and later in their
tenure as executives, to ‘Lead Others’.
Just before they become Managers (E3), they are required to attend a capstone leadership and
business skills programme, the ‘Building Managerial Excellence (BME)’. This 10-day programme
has been designed in collaboration with the Private Melbourne University, Australia, and aims to
develop business management and leadership competencies among middle managers.
Apart from the Petronas Leadership Learning Series, both junior and senior executives are also
expected to attend the ‘Skill Group’ programmes, which are functional training programmes
designed to equip them with the necessary technical competencies. These training programmes
have been developed by the respective line fraternities within the Petronas Group of Companies.
Currently, there are about 31 Business and Technical Skill Groups in Petronas. Examples of these
Skill Groups include Planning and Marketing for the Business Skill Groups, and Electrical
Engineering and Process for the Technical Skill Groups. Each Skill Group, be it Business or
Technical, has developed a series of training programmes that address the critical competencies
required for the respective vocational fraternities.
Once appointed as Managers (E3), the employees will attend a training programme that equips
them with the competencies to manage subordinates and/or teams of subordinates in an effective
manner. The ‘Managing Your Leadership Success’ (MYLS) programme is a six-month programme
that begins with a two-week kick-off which develops leadership competencies after which they will
attend a series of training programmes addressing specific leadership competencies, e.g. integrity,
change management and coaching. These programmes are purposely spaced so that the
employees will have ample time to internalize and apply the learning gained in their respective work
places.
In their tenure as E3, Petronas employees are also required to attend the Petronas Leadership
Learning Series for Managers, a set of training programmes designed to enable them to ‘Lead
Change’ and ‘Lead Business’. Examples of training programmes include ‘Enhancing Effectiveness
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of Leaders’, ‘Leadership Coaching Skills’, ‘Managing Change’ and ‘Advanced Communication for
Leaders’. Towards the end of their tenure as managers (E3), Petronas employees will have the
opportunity to attend a capstone management and business leadership programme called the
‘Management Development Programme (MDP)’. This two-week programme is an advanced version
of the BME that they had earlier attended. An important element of this programme is the group
projects which allow them to apply their learned skills to achieve business results.
Apart from the leadership programmes, E3 employees will also attend business-specific
programmes to meet their organizational business needs.
As the employees progress to the higher levels of Senior Managers (E4), and General Managers
(E5), they will be given the opportunity to attend the ‘Leadership Excellence Series’ designed to
enable them to ‘Lead Change’ and ‘Lead Business’. Two of these programmes are ‘Senior
Management Development Programme (SMDP)’ and the ‘Leadership Excellence at Petronas
(LEAP)’.
3. Management of Change in Current Socio-Economic Environment
3 A. Business Restructuring
In March 2016, PETRONAS under Datuk Wan Zulkiflee announced the new board of executives
(strategically positioned as the ‘leadership team’), with several new appointments for the Executive
Vice Presidents, Senior Vice Presidents, Senior GMs; together with a new high-level group
organizational structure. This sweeping top management shuffle brings a punctuated equilibrium
effect, as the circumstances then required succession for several incumbent leaders whose service
contracts had come to an end. The main catalyst however, was the strategic review of PETRONAS’
business operating model for better business efficiency, resilience and sustainability; amidst the
current challenging time for the oil and gas industry, as global oil price is projected to drop further.
The new board of executives under Datuk Wan Zulkiflee’s lead, marks the start of PETRONAS’ total
group-wide transformation, geared towards a more focused organizational approach to thrive both
in the current and future industry landscapes. The new high-level group structure - designed for a
flatter, leaner business operating model – is a part of deliberate, sequential measures that
PETRONAS is undertaking to better navigate the organization through tough external environments.
In fact, PETRONAS had started its cost cutting measures since the last quarter of 2014, when it
became apparent that the price of oil will be on a long term decline. In 2015, PETRONAS cut 30%
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in its capital expenditure (capex) and 20% off its operating expenditure (opex). There are no figures
as to what this amounted to but Petronas generally spends more than RM 60 billion per year for its
capex. Datuk Wan Zulkiflee said Petronas would be cutting up to RM 50 billion in capex and opex
over the next four years, and would defer some of its projects as it goes through yet another round
of cost cutting.
3 B. Employee Retention and Motivation
Consequently, this year’s group-wide transformation is expected to result in redundancies of under
1,000 positions. Exhaustive efforts are on-going to re-deploy affected employees. PETRONAS
would further embark on a separation exercise for the remainder affected employees as needed,
which was expected to be completed by September 2016.
Not only PETRONAS faces the above stated economic-induced manpower re-deployment and
reduction situation. In general, the Malaysian oil and gas sector continually faces a rigorous
challenge concerning employee retention, particularly among the limited and highly specialized
engineering expertise in oil and gas extraction, refining processes; whereby such talents were highly
sought-after at the international level as well.
The dilemma faced by Malaysia’s oil and gas companies, was most evident in 2008 whereby a
number of local engineering employees relocated to the Middle East serving for other foreign
companies in oil-rich countries such as Qatar, Saudi Arabia and Kuwait, pursuing a significantly
higher salary and tax-free living conditions. This phenomenon captured national attention which
made headlines on the local news and has been dubbed as the ‘Middle East Syndrome’. The loss
of these talents which mostly comprise of those with years of valuable experience and accredited
skills by professional bodies, urged the management of Malaysia’s affected oil and gas companies
to revisit their existing strategies on employee retention and tackle the issue of talent poaching.
Consequently, more costs need to be incurred on recruiting new talents (particularly in the oil and
gas engineering, petro-chemicals R&D specialty) and providing them with intensive, systematically
holistic training. However, it would take a considerable number of years for these fledglings to match
the loss of the experienced workers, due to uniquely acquired tacit knowledge.
In the effort of overcoming this critical issue, Malaysia’s oil and gas sector management (including
PETRONAS) had taken drastic steps to revise the remuneration packages along with a more
competitive salary scheme considering lucrative monetary pay and other benefits concerning care
of personal well-being, in order to increase employees’ organizational commitment. While the
implementation of the revised remuneration system followed with a subside in mass-resignation
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incidents, Malaysia’s oil and gas sector management is far from being complacent with regards to
containing employee turnover rate and instilling a sense of organizational loyalty.
Resignation among non-technical skilled employees can also occur contributed by combined factors
of geographical limitations, work-life balance, stress, and wages among others.
4. Power and Politics: Influences and Conflicts From Internal and
External Environment
PETRONAS occupies a unique position in the oil and gas industry. Owned by the Malaysian
government, it is tasked with the country’s oil and gas resources, and is the national oil and gas
company (NOC), apart from also being an international oil and gas company (IOC). The
appointment of the President cum Group CEO, comes under the purview of Malaysia’s Prime
Minister’s Office in Putrajaya. Together with PETRONAS’ predominant Malay social and work
culture, culminates in the various influencing forces, and political conflicts within the below two
dimensions of operational environments:
4 A. Internal Environment (Within Departments)
Critics from certain social quarters mentioned that the culture in PETRONAS, as in many
Government-linked companies, is that everybody wants to take ownership in only successful
projects. “When it comes to less-successful projects, nobody wants to take ownership,” says a
former executive of PETRONAS.
Besides, criticisms from some present and former employees about PETRONAS’ decision making
processes (e.g. project operations execution) and career progression programmes, are regarded
as being layered with time-consuming bureaucratic requirements. For instance, a junior executive
may need to wait for minimum 4 – 7 years to be promoted to senior executive. In another work life
insight, technical career progression is much more assessment oriented without taking into account
employee’s practical contribution in project delivery. Revision of grading system for career ladder
promotion indirectly suppressed career progression.
There are also accused favouritism practices in some departments, where junior staff need to curry
favour the superiors in order to get better chance of benefit rewards and promotion opportunities.
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4 B. External Environment
4 B (i). Government and Contractors
In a June 2014 interview with Malaysia’s The Edge Weekly publication, PETRONAS’ then-President
Tan Sri Shamsul Azhar Abbas mentioned the struggles encountered in his charge, to maintain some
semblance of management autonomy in deciding PETRONAS’ strategic direction, away from
external political meddling. "It's so difficult to do an honest day's job," Shamsul says of the
bureaucratic interference all around him. "You spend a lot of time away from your true function (of
running PETRONAS).” He had to deal with conflicting interests from government bureaucrats as
well as influential business owners, who have lost out on lucrative oil and gas job contracts after the
previously practiced fixed allocation was replaced by open bidding method; where they had to
compete with companies from PETRONAS’ vendor development programme as well. The
favouritism for the fixed allocation method has personal gains motives, as it was exploited by some
contractors by loading up their costs by as much as 48%, making exceptionally big profit margins.
Recently although Prime Minister Najib Razak pledged to rein in the cronyism that dents Malaysia's
global competiveness, the actual extent of realisation remains to be seen for PETRONAS.
4 B (ii). Malaysian and International Stakeholders: The Public
As an NOC, not only PETRONAS management is expected to take care of the company’s
profitability; there are social obligations to fulfil public welfare as well, particularly towards the Malay
community. PETRONAS’ socio-economic position as both NOC and IOC, renders the
communications role for PETRONAS a high-stakes one, and a relatively complicated one at that.
Stakeholder relations is core to its communications, over any other forms.
At PR Asia 2014 convention, PETRONAS senior general manager of group strategic
communications, Liz Kamaruddin stated there are two hats that their communications department
must wear: one as an NOC and the other as an IOC, managing national and international
stakeholder relations.
It is clear that managing national stakeholders is what takes up most of her attention, and is her
team’s biggest concern. “If anything goes wrong with the country it’s our fault, if anything goes right
it’s not us. That’s the PETRONAS dilemma.” she said.
In 2015, when the Malaysian government decided to lift petrol’s subsidies substantially, the public
was riled, with much of the blame falling on PETRONAS (the public’s perception that PETRONAS
controls Malaysia’s petrol prices). There even was a rally advocating consumers to boycott
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PETRONAS, even though other petrol providers e.g. Shell are equally affected. “So what we did
was to engage the stakeholders and government. We were part of the key communications plans,”
she said.
Another instance, where PETRONAS’ operations had an explosion in the long pipeline across
Sabah and Sarawak that cut across dense forest. As the accident went viral through social media,
PETRONAS faced a PR crisis for being initially lacking awareness of the happenings. The
communications team had to swiftly act to mitigate public outcry, and PETRONAS mobilized front-
line employees on the ground level to do safety briefings and get down to the affected area to deal
with the situation. Subsequently, planning was set to build disaster-relief centres, which were not
available in remote jungle areas. This demonstrates the public’s influence in lobbying for business
organizations to cultivate greater level of vigilance in problem identification and acknowledgement.
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REFERENCES
Edge Weekly (21 Jun, 2014) Petronas President speaks out fearlessly amid rumours he is under
pressure to leave. Published on the Edge Markets.
Retrieved from:
http://www.theedgemarkets.com/my/article/edge-weekly-petronas-president-speaks-out-fearlessly-
amid-rumours-he-under-pressure-leave
Fortune Global 500 list (2016): http://beta.fortune.com/global500/petronas-125
Fry, L. W. (2003). Toward a theory of spiritual leadership. The Leadership Quarterly, 14, 693-727.
http://dx.doi.org/10.1016/j.leaqua.2003.09.001
Human Resources (11 Mar 2015), Q&A with Raiha Azni Abd Rahman of PETRONAS, Lighthouse
Independent Media Pte Ltd.
Retrieved from: http://www.humanresourcesonline.net/features/qa-raiha-azni-abdul-rahman-
petronas/
Low, E. (28 Nov 2014), Managing a crisis of national proportions: PETRONAS speaks up.
Retrieved from:
http://www.marketing-interactive.com/managing-crisis-national-proportions-petronas-speaks/
Media Relations Dept (01 Mar 2016), PETRONAS pushes forward with the new structure,
leadership team.
Retrieved from:
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