ANALYTICAL REPORT ON

HUMAN RESOURCE
MANAGEMENT
SUBMITTED TO:
SIR ABBAS CHANDIO
SUBMITTED BY:
1) KAMRAN AKRAM
2) BILAL NAWAZ
3) FARHEEN NAZ
4) BIBI NASREEN
CLASS: MBA-3

DATE: 13-02-2012

TABLE OF CONTENT

S.NO

1
1.1
1.2
1.3
1.4
1.5
1.6

AKNOWLEDGEMENT

PSO Introduction
History of PSO
Core business of PSO
Vision Mission Value Framework
Departments in PSO
Employees working at PSO

5
5
5
6
7
7

HR DEPARTMENT AND STRUCTURE

Role of HR at PSO
HR department at PSO
HR department structure of PSO
HR-Strategic Partner at PSO
HR Philosophy of PSO

3
3.1
3.2
3.3

PAGE.NO

ORGANIZATION

2
2.1
2.2
2.3
2.4
2.5

TOPICS

8
8
9
9
9

HR POLICIES AND PRACTICES

Recruitment and Selection
Training and Development
Performance Management
3.3.1) Setting objectives

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10
10
11

3.4
3.5

3.3.2) Mid-year review of the objectives

3.3.3) End of the rating period.

12
12
13

Compensation
3.4.1) Salary Structure of PSO
Succession Planning

4.1

4.2
4.3

RECRUITMENT AND SELECTION POLICIES AND

PROCEDURES
Recruitment Sources
4.1.1) Internal Recruitment
4.1.2) External Recruitment
Screening
Selection Criteria

14

14
14

ANNEXURE
References
Questionnaire

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17
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ACKNOWLEDGEMENT:We conducted the necessary requirements to complete this project and put in efforts. However, it
would not have been possible without the blessings of Almighty Allah and without the kind
support and help of our course coordinator, many individuals and the Pakistan State Oil
Firstly, we thank Almighty Allah; for His blessings throughout this project.
We would also like to thank Mr. Misbah Kazi (Sr. HR Executive) for his co-operation and for
giving us his precious time and providing us valuable information regarding our final project.
This report would not have been completed without his invaluable contribution
Then, we would extend our thanks to our course coordinator Sir Abbas Chandio for his
extraordinary support, motivation and help. His invaluable guidance helped us in completing this
report on time. We also thank him for providing us an opportunity to learn and get experience of
corporate world and to work as a group for gathering information about compensation policies
and practices of Pakistan State Oil. His help will carry us a long way in our future.
Thanks to all the group members for their efforts and abilities in developing this job analysis
report. It was a great learning experience for all the group members

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We would like to extend our sincere thanks to all of them.

1) ORGANIZATION:
1.1) Pakistan State Oil Introduction:
Pakistan State Oil or PSO is a Karachi-based Pakistani state-owned multinational petroleum
corporation which is involved in marketing and distribution of petroleum products such as motor
gasoline (Mogas), high-speed Diesel (HSD), furnace oil (FO), jet fuel (JP-1), kerosene, CNG. It
has a network of 3,689 filling stations, out of which 3,500 outlets serve the retail sector and 189
outlets serve bulk customers. Its primary listing is on the Karachi Stock Exchange and it is a
constituent of the KSE-30 Index. PSO has been named among the Forbes Global 2000
continuously over the years

1.2) History of PSO:

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1
the government took over and merged National Oil (PNO) and Dawood Petroleum Limited
(DPL) as Premiere Oil Company Limited (POCL).
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Soon after that, on 3 June 1974, Petroleum Storage Development Corporation (PSDC) came into
existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23, 1976.
Following that, the ESSO undertakings were purchased on 15 September 1976 and control was
vested in SOCL. The end of that year (30 December 1976) saw the merger of the Premier Oil
Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO).
After PSOs inception, the corporate culture underwent a comprehensive renewal program which
was fully implemented in 2004. This program over the years included the revamping of the
organizational architecture, rationalization of staff, employee empowerment and transparency in
decision making through cross functional teams. This new corporate renewal program has
divided the companys major operations into independent activities supported by legal, financial,
informative and other services. In order to reinforce and monitor this structural change, related
check and balances have been established by incorporating monitoring and control systems. Due
to this effective implementation of corporate reform and consistent application of the best
industrial practices and business development strategies, PSO has been able to maintain its
market leadership in a highly competitive business environment.

1.3) Core Business of PSO:

The company has the most extensive retail network among all OMC's (oil marketing companies)
in the country with 3,557 retail outlets out of which 1,776 outlets have been upgraded with
enhanced facilities as per New Vision Retail Outlet (NVRO) standards. PSO has 251 CNG
stations operational in more than 34 cities and towns across Pakistan. It is also the Largest Fuel
Oil Supplier to the Energy Sector across Pakistan including Independent Power Producers (IPPs)
and Gencos. With 9 installations and 23 depots, PSO can store approximately 1 million metric
tons which represents 74% of the nation's total storage capacity. The Company provides fuel to 9
airports nationwide as well as the 2 major sea ports in Pakistan. As part of its Non-Fuel Retail
(NFR) initiatives, PSO has more than 150 Shop Stops at its retail outlets across Pakistan which
provides customers with round the clock service and convenience. PSO operates a fleet of 24
Mobile Quality Testing Units (MQTUs) which carry out regular inspections at its retail outlets,
industrial consumer sites, installations and depots to ensure product quality.
PSO developed and focused on a business model which highlighted the importance of due
diligence and implemented a strategy to pursue profitable growth while rationalizing its product
portfolio. The Company merged critical aspects of both internal financial review and external
market reconnaissance to strike an effective balance between volumetric sales and profitability.
During the year marketing, distribution and administrative expenses increased by 3% against an
average increase of 14% during the last 3 years and against inflation of 8.5% during the year.

1.4) Vision Mission Value Framework:

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1.4.1) Vision: To excel in delivering value to customers as an innovative and dynamic energy
company that gets to the future first.

1.4.2) Mission: PSO is committed to leadership in energy market through competitive

advantage in providing the highest quality petroleum products and services to our customers,
based on:

Professionally trained, high quality, motivated workforce, working as a team in an

environment, which recognizes and rewards performance, innovation and creativity, and
provides for personal growth and development

Lowest cost operations and assured access to long-term and cost effective supply sources

Sustained growth in earnings in real terms

Highly ethical, safe environment friendly and socially responsible business practices

1.4.3) Values:

Excellence
Cohesiveness
Respect
Integrity
Innovation
Corporate Responsibility

1.5) Departments in PSO:

The following departments of PSO are certified against ISO 9001 standard.
Supply
Operations (Depots/Installations)
Lubricant & Chemical
Lube Manufacturing Terminal
Construction & Retail Facilities
Retail Business
Quality Assurance (MQTU & Central Lab)
Cards
Logistics
Health Safety & Environment
Procurement & services
Gaseous Fuel (LPG)
Non Fuel Retail
Marketing Planning

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1.6) Employees Working at PSO:

PSO employees 3000 employees which are distributed among a network of 3,689 filling stations,
out of which 3,500 outlets serve the retail sector and 189 outlets serve bulk customers.

2) HR DEPARTMENT & STRUCTURE:

2.1) Role of HR department at PSO:
HR plays an integral role in PSO. HR being a business partner of PSO has much stronger growth
now. The top management is now realizing the importance of HR and starts to serve HR
department as an important business partner. They consider human assets as the most important
asset of the PSO, and aligned organizational success by utilizing these assets more efficiently and
effectively. All the management functions, decision making and processing is aligned with their
core business strategy. As a true business partner, HR is striving to add value to the
organizations strategic objectives as a whole. The HR department is continually adopting ways
through which they can improve the image of HR department.

2.2) HR department of PSO:

Human Resource Department serves as the backbone of any organization same is the case with
PSO. It is responsible to manage employees relations, rights, hiring and firing, enquiring,
compensation and benefits etc.
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In PSO, Human Resource Department is divided into 4 divisions namely:

2.2.1) Organizational Development: It is engaged with HR planning and development. Human
Resource Department of PSO follows Equal Employment Opportunity standards and believes
that both, males and females should be treated fairly while hiring, firing, and training or
providing benefits etc.
2.2.2) Enquiry and Discipline: It enquires about the permanent employees of the organization.
2.2.3) HR Operations: Operational Department deals with the affairs related to Executive
framework, all the hiring and firing issues related to employees.
2.2.4) Industrial Relations: It deals with subordinate framework.
Other important functions are: HR Information System (HRIS), Contracts Management,
Grievance Management, Succession Planning and Transfers.

2.3) HR Department Structure:

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2.4) Human Resource PSOs Strategic Business Partner:

PSO like many of the worlds leading businesses has found success in aligning business goals
and objectives with those of human resource.

2.5) HR Philosophy of PSO:

Consider human asset the only asset which appreciates with the passage of time the right
place. Right person at the right place.
Continuously re-align organization in line with contemporary business practices.
Make Organization lean and flexible to become more responsive. To handle HR issues with all
fairness and transparency.

3) HR Policies and Practices:

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3.1) Recruitment and Selection:

In Recruitment section of PSO employees are given Grades. Grade 1 Designation held the least
post while Grade 10 Designation held the highest post and after that Board of Directors are there,
which are above Grade 10 and are not ranked according to the grade.
PSO Human Resource Department follows 4 types of Recruitment:
3.1.1) Internal Recruitment: This happen through job posting program which inform about
openings and required qualification and invite qualified employees of PSO to apply.
3.1.2) External Recruitment: This happen when HR department advertise the job and
qualifications needed in newspapers, business magazines etc. so that people from outside can
apply.
3.1.3) Ex-staff Recruitment: This usually happen in rear circumstances, where the company
need experience and want the job to be completed safely and in less possible time.
3.1.4) Outsourced Recruitment: As per this recruitment PSO does not hire employees itself,
employees are hired through contractor and are not on the pay-roll of the company.
* Note: Only eligible candidates will be selected from the recruited pool.

3.2) Training and Development:

The main purpose of this sub-department/ section was to give trainings to the employees so that
their efficiency and productivity increases. Moreover, there was a training program named as
Succession Planning, in which employees were given trainings for higher positions.
3.2) Foreign and Local Trainings: PSO conducts both foreign and local trainings. It focuses on
employee development for this PSO have separate training institution for its employees in-house
training. In order to conduct foreign and local trainings company follows some steps. These are
as follows:
i) Request for training from respective department is received.
ii) If training is available as per request from the department then nominations will be received
and approval from the concerned authority is required.
iii) If training costs less than 1 lakhs then GMs approval is required and if costs more than 1
lakhs than MDs approval is must.
iv) Administrative Services Department is involved if training is conducted outside Pakistan and
other than Karachi.
v) After final execution of training a payment voucher is prepared through Oracle Software and
sent to Finance Department for payment to those who are concerned.
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* Note: In case of foreign trainings MDs approval is must no matter what it costs and NOC (No
Objection Certificate) from Ministry is required.

3.3) Performance Management:

It is done to provide a consistent system for employee performance feedback linking job
performance with department goals so that pay links to performance and contribution of an
employee. Compensation and hiring supervisor is responsible to oversee all the activities related
to performance management.

In PSO, there are three steps to the performance management process. The process includes:
3.3.1) Setting objectives
3.3.2) Mid-year review of the objectives
3.3.3) End of the rating period.

PSOs supervisors are encouraged to meet and discuss objectives and performance with their
subordinates whenever warranted.
For senior staff (grade 8 and above) this process takes place on a fiscal year schedule of July 1
through June 30. For all other staff, this process parallels their designated time determined by the
department in consultation with Human Resources.

3.3.1) Setting Objectives

For new hires and internal transfers: Upon completion of the orientation period, all employees
will meet with their supervisors to set objectives for the remaining performance review period.
For all other staff: Objectives will be set at the beginning of the performance management
period.

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3.3.2) Mid-year Review

New Hires and Internal Transfers: The mid-year review should occur approximately 90 days
after setting the objectives. Timely feedback will foster the future success of the new employee.
For all other staff: The mid-year review will occur in six months or half way through the
performance review period.

3.3.3) End of Rating Period

At the end of the performance review period, the supervisor will hold an end of rating period
performance discussion with the employee. Together, they will review the objectives for the
current review period and discuss the performance for future. It is for both new hires and internal
transfers and for all other staff members.

3.4) Compensation:
Compensation is given to employees on the basis of a loss they have incurred. It is an alternative
provided to an employee by a company.
PSO has adopted an objective and merit based salary and compensation system which enables
executives to set their own performance objectives and monitor their achievement. This is an
equitable system which records performance and provides rewards in a fair and transparent
manner. Basically, they follow salary and compensation policies related to grading structure.

3.4.1) Salary Structure of PSO:

PSOs current salary structure was re-evaluated in 2007 via market study (survey with different
companies) conducted by Ferguson Associates to realign the full compensation structure of the
company at 60th percentile. Under this revised salary package as approved by the Board of
Directors and implemented with effect from 1st July 2007, the following objectives were
considered:
To substantially increase the take-home salary of each executive.
To bring compensation level closer to the prevailing position in the companies operating
in the Oil, Gas & Petrol sector in the country.
To restructure the existing policy with progressive market practice.
To adequately cater for providing improved financial prospects during career
development and advancement.
To be tax effective and efficient.
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The most important factors included in the basic salary are enlisted below:
Bonus
Car allowance and Fuel
Medical and life insurance
Utilities
Mobile allowance
Provident fund and Gratuity
Employees at lower level (labors) are hired on contractual basis and are not on the payroll of
PSO. That is why PSOs HR department only caters salary and compensation of employees from
grade I to X. PSO has no fixed time to review their pay structures. They review it as per change
in Government policies.

3.5) Succession Planning:

It is an important tool used by SSGC to train and develop their employees for current and future
senior management positions. Employees who are flexible enough to deal with organizational
changes and deal with efficiently have a potential of growth in them. Other factors which effect
development are: professional qualification, ability, experience etc.
The main purpose of Succession Planning is to develop managers that can be placed into top
management positions. Top positions include: GMs, SGMs and Departmental heads etc.
Succession Planning is also used for organizational development and strategic planning.

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4) RECRUITMENT AND SLELECTION POLICIES AND PRACTICES

PERTAINING TO ENTRY LEVEL AND MIDDLE LEVEL POSITIONS:
4.1) Recruitment Sources:
PSO uses two sources of recruitment for hiring entry and middle level positions.
i) Internal Recruitment: This happen through job posting program which inform about
openings and required qualification and invite qualified employees of PSO to apply.
ii) External Recruitment: This happen when HR department advertise the job and qualifications
needed in newspapers, business magazines etc. so that people from outside can apply.

4.2) Screening:
After attracting candidates who are suitable for the applied position, PSO then shortlist three to
five candidates through initial interviews with the recruited candidates. Then they will proceed to
final selection procedure.

4.3) Selection Criteria:

The screened candidates who proceed to selection process will qualify for the position once they
cleared the final interview. PSO has structured interview protocols and select an employee
completely on merit and one who completely fulfills the criteria.
PSOs test is conducted through NTS (National Testing Service). According to PSOs recruitment
policy this test is conducted three times in a year.

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5) GPA REQUIREMENT FOR FRESH GRADUATES:

They have a GPA requirement for fresh graduates because they do not want everyone to apply
for the vacancies. The minimum GPA requirement is 3. PSO do not specify university names in
the advertisement which they published for recruitment and selection of fresh graduates.

6) SALARY PACKAGE FOR ENTRY LEVEL GRADUATES:

6.1) Executive Job Grades of PSO and Benefits:Grades
X

Management Levels
Top

Positions
Deputy Managing Director

IX

Top

Senior General Manager,

CIO, CFO

VIII

Top

General Manager

VII

Top

Deputy General Manager

VI

Middle

Chief Engineer, Chief

Manager

Middle

Deputy Chief Engineer,

Deputy Chief Manager

IV

Middle

III

Entry

Senior Engineer/Manager,
Executive Secretary
Deputy Engineer/Manager

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Benefits
Car, Fuel, Travelling, Stock
Options, Medical, Insurance,
Mobile, Utility
Car, Fuel, Travelling, Stock
Options, Medical, Insurance,
Mobile, Utility
Car, Fuel, Travelling, Medical,
Insurance, Stock Options,
Mobile, Utility
Car, Fuel, Travelling, Medical,
Insurance, Stock Options,
Mobile, Utility
Car allowance, Fuel, Medical,
Insurance, Bonus, Utility,
Mobile
Car allowance, Fuel, Medical,
Insurance, Bonus, Utility,
Mobile
Car allowance, Medical,
Insurance, Bonus, Mobile
Medical, Car allowance,
Bonus, Mobile

II

Entry

Entry

Assistant
Engineer/Manager,/Secretar
y
Secretary and helpers

Medical, Bonus, Mobile

Medical, Bonus, Mobile

6.2) Basic salary for entry-level positions:

Grades

Basic Salary Ranges

Minimum
16,750
14,750
13,000

III
II
I

Mid-point
26,250
23,125
20,375

Maximum
35,750
31,500
27,750

7) MBAs IN JUNIORE AND MIDDLE MANAGEMENT (Approx):

University
IBA
IOBM
Bahawuddin Zikariya University
Karachi University
Muhammad Ali Jinnah University

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Junior Management
3
4
2
6
1

Middle Management
4
4
4
3
-

11) ANNEXURE:
11.1) Reference:
1.
2.
3.
4.
5.
6.

www.psopk.com
https://en.wikipedia.org/wiki/Pakistan_State_Oil
https://snousheen.wordpress.com/2011/01/06/psopakistan-state-oil-short-overview/
www.pakistanicompanies.blogspot.com
www.compensationinsider.com
Mr. Misbha Kazi (Senior. HR Executive of PSO)

11.2) Questionnaire:
Q.1) Define PSOs HR Structure.
Q.2) Give us an overview of your organizations HR policies and procedures related to:
i) Recruitment & selection
ii) Training & Development
iii) Performance Management
iv) Compensation
v) Succession Planning.
Q.3) What are the recruitment & selection policies and procedures of PSO pertaining to entry
level & middle management positions?
Q.4) How PSO recruits employees?
Q.5) What are the recruitment sources?
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Q.6) After recruitment how PSO screen and select recruited employees?
Q.7) At selection stage do you consider only final interviews, tests or both?
Q.8) For fresh graduates do you have any GPA requirement?
Q.9) Do you specify universities in your Job advertisements?
Q.10) What salary packages do you offer to entry level graduates?
Q.11) How many MBAs are in your organization in junior & middle management? From which
universities they belong?
Q.12) Have you ever hired Bahawuddin Zakariya Universityn: BBA/ MBA? Are you satisfied
with their performance?

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