Over the last decade, organisations of all sizes have embraced Organisation Benchmarking as a means of improving business performance. It is now a crowded market for providers, which range from small specialists to divisions of the global management consultancies.
At Fulcrium we are occasionally approached to undertake benchmarking to provide data confirming predetermined decisions by senior management on maintaining, increasing or decreasing headcount. We regard this as a misuse of benchmarking.
In contrast, we only provide our Organisation Benchmarking data to businesses genuinely committed to using it as a tool to drive exceptional performance improvement, whether as a standalone process or as an element of a transformation initiative.
Often, we find that our client organisations already have the best and most appropriate performance processes in place, but they are not optimised to deliver the expected benefits. As a result, the problems within the company may be misinterpreted as “people” issues and a fault of “organisational culture”.
Our benchmarking data will cut through these mistaken beliefs, ensuring that the organisation applies processes appropriately and has as accurate picture of resource capacity and capabilities to meet its strategic objectives.
We are often appointed to find the best-performing parts of organisations, those in which meeting targets seems to happen effortlessly: staff are motivated and responsive, teams collaborate, objectives are aligned, and there are no empire-builders or competing interests.
The ultimate benefit of identifying such successful units is that their culture of excellence can be replicated elsewhere – and ultimately raise the performance levels of the entire organisation.
Over almost two decades, we have built the world’s most comprehensive Benchmarking and Market Intelligence database, enabling us to benchmark any element of your organisation against the best-in-class. For instance, if you operate in the energy sector, we could provide comparative data from your peers, or from organisations in e.g. upstream Oil & Gas, mining and chemicals, or even in seemingly unrelated sectors in which we also have expertise e.g. airlines, banking, insurance, FMCG.
By acquiring in-depth knowledge of costs, processses and performance, you will be able to evaluate yourself against organisations which we know are the outstanding performers – delivering the data to enable you to replicate them in-house.
We have extensive experience of conducting customised Organisation Benchmarking with major organisations seeking to either grow organically or through mergers and acquisitions. In the latter cases, complex legacy or inherited organisational structures frequently hinder performance.
With cost-cutting strategies and merger synergies exhausted, the next wave of efficiencies must come from simplifying the organisation, ensuring the best people are assigned to the right functions and business units, and that executive directors and employees are aligned to overcome barriers to improved performance.
Fulcrium is the preferred Benchmarking Data and Market Intelligence partner to some of the world’s largest companies – because we are no ordinary benchmarking company. Our differentiator is that we undertake only the toughest “special” benchmarking engagements, often for CEO’s, COO’s and Board Executives that have been previously disappointed with other providers, using our proprietary customised benchmarking methodology and our unsurpassed Organisation Benchmarking database.
Rest assured that we do not use our Organisation Benchmarking Data services to sell consultancy engagements. Fulcrium has extensive strategic capabilities, and we are more than capable of delivering exceptional quality in this area should clients require it, but our primary focus is on utilising the unique power of our database.
This global supermajor operating under unstable conditions in an African nation appointed Fulcrium to benchmark the upstream oil and gas business processes and practices against its comprehensive exploration and production database for the region.
Fulcrium also identified opportunities for remodelling the organisation for optimum exploration, appraisal, development and production performance.
Fulcrium was commissioned by the in-house specialist division that provides exploration and production technology (EPT) services to the business units of a Supermajor.
The brief was to undertake a wide-ranging benchmarking assignment comparing the strategy, systems, processes, organisation, human resources, charging structures, and commercial strengths of the EPT division with those of peers at IOCs, NOCs and service companies.
Part of the brief was to provide tangible evidence of what constituted a world class EPT organisation and how such insights could translate into Capex and Opex value. Fulcrium was also required to provide evidence of the resources needed to fund a centralised EPT facility to ensure full capabilities to support global field operations.
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The Deepwater Horizon accident in the Gulf of Mexico was undoubtedly a watershed event for BP, for regulators and for the industry.
Under chief executive, Bob Dudley, BP needed to change.
Having inherited a disparate collection of upstream assets from the 1998 merger with Amoco, Bob Dudley’s predecessor Tony Hayward embarked upon a journey of standardisation and simplification.
Safety was a focus area but his approach was incremental. Bob Dudley does not have that option – the scale and volume of issues dictates that radical change is inevitable. In shaping BP, Mr Dudley needed to compare the integration with Amoco to Exxon’s integration with Mobil.
Rex Tillerson, chief executive of ExxonMobil at the time, said his company’s structure is a source of competitive advantage that other supermajors cannot imitate easily.
BP needed to find a way to do just that.
One senior joiner said he was surprised by BP’s complexity and lack of standardisation – in his own words, BP-Amoco was reinventing the wheel time and time again.
If Mr Dudley was to improve the safety and performance of BP’s upstream assets, he needed to address the balance between mandatory and discretionary central guidance.
However, an ExxonMobil-style centralised model could work only if BP strengthened its leadership with people experienced in running a centralised organisation.
Mr Tillerson had good reason to feel confident about ExxonMobil’s model, which had consistently provided return on capital employed (ROCE) more than 50 per cent higher than any other supermajor.
In addition, the accountability of service companies such as Transocean and Halliburton needed to be addressed. The then balance left BP vulnerable to supplier relationship management headaches.
It is now neither acceptable nor desirable to manage service companies on an arms-length subcontractor basis.
BP’s internal investigation into the causes of the Gulf of Mexico accident involving the Macondo exploratory well suggests team paralysis between BP and the service providers was a key contributory factor. For example, the joint BP-Halliburton team should have challenged the cementing proposals.
Also, the abnormal pressure build-up in the well was incorrectly dismissed by the joint BP-Transocean team as low significance.
Going forward, BP needed to improve radically the governance for operator-service company partnerships.
BP would have had to decide whether the service companies became full technical advisory partners (which BP may not override) or remain junior contractors with few decision rights.
Whether or not accusations by US politicians that BP has put profits ahead of safety are true, it is clear that BP and its competitors are now limited in the extent they can drive efficiency because key operational areas with high safety risks will require expensive oversight.
This will have posed problems, especially if Mr Dudley wished to continue to pursue Mr Hayward’s strategy of trying to attain cost-leadership.
ExxonMobil, however, was ahead of the game.
Greater regulation and a more conservative approach means other supermajors are likely to remain less efficient than ExxonMobil for some time.
BP may have retained many high-performing employees from both Amoco and BP but Mr Dudley needed to revisit aspects of the merger integration once he had determined how much centralisation was feasible.
Under Lord Browne and Tony Hayward, merger synergies were being realised at a slow, steady pace. ExxonMobil, by contrast, declared its merger integration a success within 18 months of the deal, thanks to a more centralised organisation and operating model underpinned by the rapid adoption of best-in-class benchmark practices.
As Mr Dudley pondered the outcome of the various independent investigations into the causes of the accident in the Gulf of Mexico, he would have been acutely aware that a slow pace of business reform would stall BP’s transformation to the different company he wanted it to become.