35. NAME:
GBAJUMO-SHERIFF MARIAM.A
AFFILIATION:
UNIVERSITY OF LAGOS
DEPARTMENT:
INDUSTRIAL RELATIONS AND PERSONNEL MANAGEMENT
TOPIC:
CASE STUDY: IMPACT OF NIGER-DELTA CRISIS ON
HUMAN RESOURCE PRACTICES IN OIL COMPANIES
CONTACT:
08037148629,mariam_gbajumo@yahoo.com
ABSTRACT
Nigeria today faces considerable pressure from both local and international sources
over its policy response to the Niger Delta crisis which is a subject of intense debate
and heated controversy .This case study examines human resource practices in
Gold Oil Nigeria before and after the Niger Delta Crisis aiming to examine the ways
that the Niger Delta crisis has impacted on the Human resource policies of the
various oil companies Qualitative research approach is used on the basis of primary
data collection through personal observations and interviews combined with
secondary data analysis. Conclusions are made about the role of residents,
government and the Gold Oil Nigeria.
KEYWORDS: HUMAN RESOURCE PRACTICES, CRISIS, NIGER DELTA, OIL
COMPANY: CASE STUDY
Human resource policies are continuing guidelines on how people should be
managed in the organisation. Human resource policies aim to ensure that any HR
issues are dealt with consistently in accordance with the values of the organisation in
line with certain defined principles.
The most common areas HR policies exist are age and employment, AIDS, bullying,
discipline, e-mails and the internet, employee development, employee relations,
employee voice, employment, equal opportunity, grievances, health and safety,
managing diversity, promotion, redundancy, reward, sexual harassment, and worklife balance.
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Values expressed in HR policy include:

Equity –treating employees fairly and justly

Consideration-taking account of individual circumstances when making
decisions

Organisational learning

Performance through people

Quality of life-consciously and continually aiming to improve the quality of
working life.

Working conditions-providing healthy, safe and, so far as practicable, pleasant
working conditions (Armstrong 2009).
The Niger Delta and Gold Oil Nigeria
The Niger-Delta area of Nigeria is one of the largest wetlands in the world. It is the
heart of Nigeria’s oil/gas fields. It lies within the equatorial and tropical climatic
zones. The south of the Niger-Delta area is the coast of the Atlantic Ocean about the
Gulf of Guinea while the north of the Niger-Delta area is forests of sorts. The Niger
delta, home to a significant minority of Nigeria’s population, produces almost entirely
all of Nigeria’s oil and gas
Gold Oil Nigeria is a multinational company specializing in oil exploration with
Headquarters in Norway. With the discovery of oil in commercial quantity in Nigeria
in the 1950’s, the investors of the company decided to invest in Nigeria having
projected and researched that it will be a profitable venture.
Gold oil is not a research-based company, it is business-oriented, and hence the
profit maximization maxim is paramount. The company became known for high
quality products which are among the most technologically advanced in the
marketplace today, as well as superior customer-driven services which respond to
the needs of today's customer. The company places great importance on making a
difference in the environment in which people live and work, fostering and
maintaining relationships with communities, taking care to be a good neighbour and
contributing to sustainable development initiatives.
Gold Oil Contributions
In 2003, Gold Oil contributed huge sums of money to the government-backed Niger
Delta Development Commission as well as community development programmes
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To prevent money earmarked for community projects being siphoned off, Gold Oil's
Nigerian operations introduced rules to tighten internal spending. The rules abolish
cash payments to local groups. Gold Oil does not tolerate corruption, and has global
regulations making this clear to staff. The company’s report on Nigeria says it
dismissed 29 career and contract staff in 2003 for corrupt practices
In the area of education, it introduced an interactive web-based solution for the
teaching and learning of Mathematics and science subjects in Nigerian primary and
secondary schools.
In the area of health, it collaborated with NGOs on various exercises e.g. mass
deworming exercise which will see more than 10,000 school children being
dewormed as part of a campaign to reduce infant and maternal mortality in the Niger
Delta. Also the company hospitals met international best-practice standards. Also, it
responded to HIV/AIDS by delivering workplace and/or community activities.
In respect of safety, the company believes in zero fatalities operations, and zero
significant incidents. Accidents are prevented by introducing simpler and clearer
safety policies that are easier for employees and contractors to understand and
follow.
In respect of human resources management, the employees of the company were
paid higher salaries compared with their counterparts in other sectors. There were
also other additions to employee packages like the funding of employee family travel
within Nigeria 4 times a year, provision of company cars when employees get to a
particular level, and funding transportation fares of staff children. There was also the
Gold Club with the swimming pool and other games in order to help employees
recreate thereby enhancing their work-life balance. Staff quarters were also provided
for staff at a particular position in the organisation structure.
Staff training and development was a priority. Staff were trained both locally and
internationally. Promotion was given regularly once employees’ performances were
rated high. Succession planning was not left out as employees with leadership
potentials were been groomed for higher positions.
The Niger Delta Crisis
Roughly 75 percent of the 27 million civilians living in the Niger Delta, a globally
critical wetland, rely on the natural environment for their livelihood; they were mainly
farmers and fishermen. Villagers in the Niger Delta believe Gold Oil has rendered
their land useless due to oil spills and gas flaring. While oil spillage and gas flaring
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are the most significant causes of environmental damage associated with oil
exploitation, a number of other problems are also widespread in the Niger delta. For
example, drilling generates effluents in the form of mud deriving from the natural
environment, which, if dumped in rivers or at sea may destroy bottom-living aquatic
life and so cause serious damage to riverine and marine ecosystems
The Niger Delta problem has been around for several decades, the emergence of
organized and militant pressure groups in the 1990s has added a new dimension to
the crisis. Protests and the threats of outright rebellion against the state are now
ubiquitous. Environmental activism and militancy are a direct response to the
impunity, human rights violations, and perceived neglect of the region by the
Nigerian state on the one hand and through sustained environmental hazards
imposed on local Niger Delta communities as a result of the oil production activities
of multinational oil companies on the other
Conflict in the Niger Delta arose in the early 1990s over tensions between the foreign
oil corporations and a number of the Niger Delta's minority ethnic groups who felt
they were being exploited, particularly the Ogoni and the Ijaw. Ethnic and political
unrest has continued throughout the 1990s and persists as of 2007 despite the
conversion to democracy.
The people of the region believe they have not benefited from the economic activities
of oil exploitation as the proceeds are carted away to develop other parts of Nigeria
or embezzled by politicians, soldiers and government officials to buy choice
properties in the capitals of Europe and America. They believe they have been
abandoned, deprived and oppressed for too long and live in abject poverty and
squalor. There is a very deep and widespread feeling that they must fight for their
own survival or perish.
While many villagers may not be familiar with the concept of climate change, they
complain that the air around them is hotter and foul-smelling because of the gas
flares. In the areas close to the gas flares, medical staff report treating patients with
all sorts of illnesses that they believe are related to the flames: bronchial, chest,
rheumatic and eye problems, among others.
According to one of the villagers, ―The Delta is characterized as one of the world’s
most severely petroleum-impacted ecosystems. Gold Oil’s practice of gas flaring
(where natural gas which is a byproduct of the oil extraction is burned off in open
spaces) has contributed more greenhouse gas emissions than all other sources in
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sub-Saharan Africa combined. The process has contaminated waterways and fields
with toxic chemicals and carcinogens, land which local communities rely on.‖
Competition for oil wealth has fueled violence between innumerable ethnic groups,
causing the militarization of nearly the entire region by ethnic militia groups as well
as Nigerian military and police forces. These resulted in killings and kidnappings of
foreign oil workers and the government’s retaliatory attacks.
Militants in the delta have targeted oil workers for kidnapping in the past during their
campaign to bring more oil money to a region that suffered environmental damage
and economic neglect over 50 years of production. However, criminal gangs
increasingly target wealthy Nigerians and politicians for kidnappings, as well as
foreigners who stumble into their path. One major reason the situation in the Niger
Delta is irresolvable is that neither governments, nor oil companies accept
responsibility for its utter neglect.
From January 2008 to July 2009, foreign nationals were being snatched in the delta
at an average rate of one every 10 days, according to U.S. State Department data —
though the vast majority of kidnappings still go unreported (Asokan, 2009).
Residents complain about degradation of the environment resulting in air pollution,
emanation of various diseases and emission leading to shorter life span now and in
the future
Change in Human Resource Practices
Activities of the militants, who are fighting for a bigger share of the huge oil wealth
from the Niger Delta, have slashed Nigeria's crude oil production by at least 1 million
barrels
Most Gold Oil installations (also called swamp area) are on land than any other oil
company. This makes its facilities prone to disruptions by the Niger Delta militants
.This made the company to stop production .i.e. they have to shut in the oil wells.
This therefore reduced the company’s production from time to time. This of course
heated the company’s economy and that of the Nation as well. This of course has
led to reduction in reported profits over the intervening period
Due to these happenings, the company decided to review its operations in order to
trace the cause of the reduced earnings. Experts from the various departments were
put together.
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It was discovered that the reduction in earnings was as a result of its huge overhead
costs. The management therefore decided to reduce the company’s overhead costs
in order to increase earnings.
Generally, overheads costs consists of 2 main headings; capital assets acquisition
and manpower costs. A thorough evaluation of capital assets of the company like
rigs shows that it cannot be disposed because of the following reasons:
1. Newer assets are now being produced i.e. their technology were outdated
and the assets were reaching their End Of Life (EOL)
2. No other operator in the operating country will need it because they are
facing the same kind of stress from the militants.
3. The cost analysis of transportation abroad may not be justifiable to consider
the option of transfer to other areas.
This therefore leaves only one option for the company-reduction of manpower costs.
The reduction of manpower costs was broken down into the following:
1. Downsizing
There was series of downsizing/redundancy exercises within the last few years.
There has also been a voluntary retirement option for interested staff with mouthwatering exit packages.
2. Re-classification of job grades
Job levels have been cut down. If the grades have been arranged from 1-5 for
senior-junior job levels respectively, a job on grade level 4 was re-assigned to
job level 5.This actually served as a form of demotion since grade levels
determine the jobs to be done.
3. Welfare packagesUnder this, the following were discarded;
 Payment of flight for staff’s spouses
 Transportation of staff children to school
4. Staff Training and Development
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International training was drastically cut down. It was even banned at a point in
time except for very important reasons. This was replaced by video-conferencing
and importing the trainer from overseas into Nigeria.
The focus was now on local resource development to fill in the gap for
international training.
It was however discovered that online-courses did not have equal positive
feedback from participants as the overseas training.
5. Recruitments and Dismissal
Despite all the cuts, recruitments were still been made in specific areas where
such are required. This means that recruitment and dismissal were done
simultaneously.
6. Social Responsibility
Despite the crisis, the company wanted to make a positive statement and
therefore increased social responsibility in order to earn the trust of the host
communities. This is because lack of social responsibility will be seen as
insensitivity on the part of the International Oil Company (IOC). They
therefore increased the amount spent on social responsibility like
collaboration with state government in awarding scholarship, building of
schools & hospitals e.t.c.
7. Recreation/work-life balance
Access to the Gold club was restricted to employees only as the club is
located in their staff quarters. This was done in order to curb and manage
militant activities.
8. Impact on employee working life
The effects of conflict are not only incident to indigenous communities in the
region. Escalating violence has threatened optimal exploration and production
activities of petroleum resources. Staffs of trans-national corporations are known
to be victims of murder, kidnapping and several other felonies and
misdemeanours. There is the fear of kidnapping and indiscriminate killings .There
are also violent attacks on oil and other facilities and unrests due to the
operations of ethnic militia and insurgent groups of various kinds. All these make
the entire environment hostile and unsafe.
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Conclusion
The profound neglect, militancy and lawlessness of the Nigerian youths therefore,
appeared justified to the extent that many Nigerians started sympathizing with the
cause of militancy. This has led to general frustration of the entire poor masses in
Nigeria and very stiff resentment of the leadership elites who live robustly at the
expense of the poor masses.
Nigeria may be a special case but expatriate staff is at risk of kidnapping where
judicial and police systems are weak or corrupt, there is a huge disparity between
rich and poor and there is political and economic breakdown.
The Federal government is expending considerable funds allocation on security in
the area as her agencies are ceaselessly involved in fatal clashes with indigenes of
the region.
A multinational corporation’s managers at an overseas operation or at the firm’s
headquarters who learn the details of the local cultures where work is being
performed will likely have a more productive workforce (Smith, 2008).This implies
that Gold Oil should embark on other strategies of tackling the problems like liaising
with the locals themselves especially the youths and other stakeholders in order to
discuss about solutions to the problem.
References
Asokan,S.(2009), Nigeria’s kidnapping culture on the rise, Retrieved on December
27,2010
from
http://www.globalpost.com/dispatch/nigeria/091217/nigerias-
kidnapping-culture
Earth Feed, (2009), Justice in the Niger Delta?, Retrieved
on December
29,2010,from http://www.earthfeed.com/justice-in-the-niger-delta
Edwards, L. (), Managing risks associated with a kidnap threat
Hourfield,K, (2007),Ransoms Fuel Surge in Nigeria kidnapping, The Associated
Press, July 11
Ikpatt, C, Scott, L.(2001), The Niger Delta Problems And Solutions: The Equilateral
Resource Control (ERC) model as an Alternative Dispute Resolution (ADR) concept.
Smith,J. (2008), Understanding Foreign Culture can boost productivity. Retrieved on
December
31,
2010,
from
http://www.shrm.org/hrdisciplines/global/Articles/Pages/ForeignCultureProductivity.a
spx
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Quist-Arcton,O. , Gas Flaring Disrupts Life in Oil-Producing Niger Delta, Retrieved
on
December
31,
2010
http://www.npr.org/templates/story/story.php?storyId=12175714
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from