PART B: Answer ALL TWO (2) questions in the answer book provided. Please be organized, precise, concise and coherent. (Total marks = 40)

Reorganising Sapura Energy Berhad after laying 20% of full-time staff

By Ayisy Yusof

Sapura Energy Berhad is a Malaysian integrated oil and gas services company based in Seri Kembangan, Selangor. Sapura Energy trades in over 20 countries, such as China, Australia, United States of America, and those in Western Africa and the Middle East, employing approximately 13,000 people.

Sapura Energy Bhd has appointed Tan Sri Hamid Bugo as its new independent and non-executive chairman, with immediate effect.

Tan Sri Hamid, who is currently the group's director, replaces Abdul Jalil Abdul Rasheed, who has vacated the post following his resignation as president and group chief executive of Permodalan Nasional Bhd recently.

Tan Sri Hamid, who is also currently the chairman of Sarawak Consolidated Industries Bhd and Sapura Resources Bhd, was previously the state secretary of Sarawak. The 74-year-old joined Sapura Energy's board on Feb 27, 2012 as an independent and non-executive director.

According to the group's Annual Report 2019, Tan Sri Hamid once served as the administration manager of Malaysia LNG Sdn Bhd, as well as the first general manager of the Land Custody and Development Authority, Sarawak. He was also formerly the permanent secretary at the Ministry of Resource Planning, Sarawak.

He also previously sat on the boards of companies and statutory bodies such as the Employees Provident Fund, Sime Darby Bhd, Malaysian Airline System Bhd, Malaysia LNG, Universiti Malaysia Sarawak, and Universiti Pertanian Malaysia (now known as Universiti Putra Malaysia).

Sapura Energy shares have dropped 63% this year. The counter closed at 10 sen today, for a market capitalisation of RM1.52 billion.

Sapura Energy Berhad ("Sapura Energy" or "Group") is a leading global integrated oil and gas services and solutions provider operating across the entire upstream value chain. As a fully-fledged upstream player, the Group's spectrum of capabilities cover the exploration, development, production, rejuvenation, as well as decommissioning and abandonment stages of the value chain.

With a highly skilled and technically capable multinational workforce, strategic world-class assets, and strong project management capabilities, the Group today has a global presence in over 20 countries.

Sapura Energy made the prestigious Forbes Asia's Fabulous 50 listing for the second successive year, demonstrating its commitment to excellence in all aspects of its business. Sapura Energy was also voted Asia's Overall best managed company in Natural Resources for 2014 in a poll conducted by the international financial publication, Finance Asia.

The company's vision is to be the best entrepreneurially led, technically competent and most trusted global oil and gas company in the eyes of our customers, shareholders and most importantly, our empowered people.

Sapura Energy is guided by honesty, trust and respect for all. It aims to achieve its business objectives by being safe, agile and professional to continuously strive to meet all of our stakeholders' expectations.

Due to economic situation, Sapura Energy Bhd is reducing about 20 per cent of its full-time workforce worldwide as the company adjusts its cost structure and adapts to the challenging operating environment.

President and group chief executive officer Tan Sri Shahril Shamsuddin said the integrated oil and gas services provider had identified 136 cost-saving initiatives.

"We employ more than 10,000 people, of which 4,000 are full-time employees. With a heavy heart, we would like to inform you that we are currently meeting several colleagues, at every job level, to discuss their departure from the company," he said in a letter sent to employees.

Of the total 20 per cent full-time employees, Tan Sri Shahril said 63 per cent were on contract, while the remaining permanent employees.

"It is necessary to right-size the organisation based on a focused business strategy, anticipating and managing the cyclical nature of the oil and gas industry," he said.

Shahril said Sapura Energy had previously ruled that it tried to delay retrenchment but it was inevitable at this point.

"We have spoken previously about the need to implement austerity measures to sustain our business.

"While a lot of work has been done to grow revenue and improve the way we operate, the economic slowdown brought by Covid-19 and oil price volatility continues to bear upon our financial strength," he said.

Tan Sri Shahril said every facet of the cost structure would need to be analysed, based on productivity standards in allowing the company to be significantly more competitive globally as a major portion of its revenues were derived outside of Malaysia.

In late April, Sapura Energy had announced salary reductions affecting a third of its workforce.

This involved the leadership team, which took a 50 per cent pay cut while those earning less than RM10,000 were shielded from the measure.

"Through the salary reduction, we managed to lower our manpower cost by about 7.5 per cent. We deeply appreciate your sacrifice and acknowledge the adjustments your families had to make," he said.

Apart from the severance package, Sapura Energy has allocated an additional RM1 million to help affected employees transitioning to their next career.

These include continuation of medical coverage for the next three months, help with personal branding, resumes and interview skills, networking and job-leads to accelerate new career opportunities, advice on personal financial management and entrepreneurial workshops.

"We have created a dedicated team, which include external experts, to deliver a comprehensive career transition program to support your growth beyond employment with the company," Tan Sri Shahril said.

Sapura Energy will also have plans to optimise manpower cost, benchmarked against industry best-practices, to ensure the company's productivity and efficiency.

"We will be announcing other voluntary measures to enable flexible work arrangements for those remaining in the company, including reduced workweek, permanent work-from-home and sabbaticals," he added.

Source: https://www.nst.com.my/business/2020/06/603640/sapura-energy-lay-20pct-full-time-staff

***END OF CASE***

QUESTION 1 (20 MARKS)

Tan Sri Shahril said: "We will be announcing other voluntary measures to enable flexible work arrangements for those remaining in the company, including reduced workweek, permanent work-from-home and sabbaticals."

Based on this statement, explain two (2) structural issues might arise in managing employees' flexible work arrangements. (20 marks)

QUESTION 2 (20 MARKS)

Recommend two (2) ways to Tan Sri Shahril as President and CEO of Sapura Energy to manage global structural issues due to corona virus pandemic and subsequently laying off full time employees. (20 marks)

P/S: PLEASE ELABORATE MORE AND GIVE MORE EXPLANATION BECAUSE THE TOTAL MARKS FOR EACH QUESTION ARE 20! AND YOU MUST RELATE WITH ANY TOPIC THAT RELATED IN MANAGEMENT. THANK YOU IN ADVANCE ^^ MAY GOD BLESS YOU