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Research on the StatoilHydro merger provides new knowledge

February 17, 2011, 12:02 CET

These are some of the main conclusions by the research team that followed the integration process for three years, and whose findings are to be published this week.

Since 2008, FAFO, the Norwegian School of Economics (NHH / SNF) and the International Research Institute of Stavanger (IRIS) have, on behalf of Statoil, researched the integration between Statoil and Hydro’s Oil and Gas Division. Statoil has financed this project with NOK 12 million.

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Chief executive Helge Lund

“The researchers’ main conclusion is that the integration process has been planned and implemented in an efficient and successful manner.
At the same time, key areas for improvement were highlighted which we should learn from in our work to further strengthen our capability for safe and efficient operations. For Statoil, there is a lot of important knowledge in the published results,” says Helge Lund.

In a Norwegian and Scandinavian context, the merger is of historical dimensions: social, industrial and organisational. The research program focused on six main areas: change management, collaboration, the safety of the change processes, new organisation, knowledge sharing, and identity.
 
During the project period, the researchers reported continuously on the findings to different parts of the organisation. In this way, Statoil also benefited from the project whilst it was underway.

Important learning curve for Statoil

The researchers point out that one of the challenges during the integration was to ensure safe operations and at the same time introduce the new operations model, new management system (APOS) and rotation of staff.

“The results of the integration research indicate that the organisation was under great pressure during the period with the highest intensity of change,” says Jorunn Tharaldsen, former Research Director at the International Research Institute of Stavanger (IRIS).

The study also examines how organisational issues related to safety, identity and confidence were affected when the new operating model was introduced.

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Jorunn Tharaldsen, former Research Director at the International Research Institute of Stavanger

“Our assumption was that the confidence level would drop and then pick up again when the organisation had ‘settled down again’. This also proved to be the case. Confidence in the line managers and group management dropped, but recovered relatively quickly after the most intense change processes were over,” says Tharaldsen.

To strengthen cooperation

“I want to commend our people for the way they have handled the merger. The introduction of a common operating model on the Norwegian Continental Shelf was a major reform. We will now evaluate the new operating model. This work should also further strengthen the cooperation between management and staff,” says Helge Lund.

“A common operating model on the Continental Shelf is essential for Statoil to achieve our goals. Our ambition is to maintain the current value creation up to 2020. This will require great adaptability and close cooperation between management and employees. The discoveries on the Norwegian shelf will be smaller, and we need to work differently in order to realise their value,” says Lund.

The merger is, in a Norwegian and Scandinavian context, of historical dimensions: social, industrial and organisational. In 2010, Statoil reported a pre tax profit in excess of NOK 140 billion, and paid over NOK 100 billion in taxes and dividends to the Norwegian government.

“We will not be able to maintain this position without change. Change is demanding, but the alternative is worse. If successful, the benefits will be great, not just for Statoil, but for the Norwegian society,” says Lund.

The material that the researchers present will be included in Statoil’s knowledge base on organisational development and change processes.

“I believe that Statoil is in the process of developing a competitive advantage in this area. The ability to implement rapid changes with precision and the positive involvement of our employees puts us in a better position to realise future opportunities and to meet new challenges,” says Lund.

This report will be presented at a seminar in Bergen this Thursday, where the Chief Executive, Helge Lund, will participate.

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