Human Resource Management.

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(MHC) MANAGING HUMAN CAPITAL
Name : Shahlini A/P K.Rajndran
IC No. : 911124-04-5006
Student ID : 0186NEANEA1016
Group : 45
Module: Managing Human Capital (MHC)

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Table of content
Executive summary 3
1.0 Introduction
1.1 Marketing competition
1.2 Organization Structure
4-5
2.0
2.1
HRM practices
HRM practices in PETRONAS
2.1.1 Training And Development
2.1.2 Performance Appraisal
2.1.3 Selection And Recruitment
2.1.4 Benefit And Compensation
2.1.5 Job Scope
8-10
3.0
3.1
Hard and soft HRM practices
Soft HRM practices in PETRONAS 10-12
4.0
4.1
Best Practices And Best Fit
PETRONAS- Best Practices
4.1.1 Training And Development For Employee
4.1.2 Motivational Tool-Performance Appraisal
4.1.3 Better Communication
13-15
5.0 Leadership 15
6.0 Financial Growth Of Petronas 15
7.0 Conclusion 16
8.0 References 16-17

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Executive Summary
The aim of this report is to review and study PETRONAS’s HRM practices and policy.
SHRM policy in another hand is the strategic human resource practices, where the same
policy is introduced in a more strategic and effective way. A brief introduction of hard and
soft HRM is explained in detailed. PETRONAS is more towards using soft HRM Practices as
they care about their employees well beings and feeling. PETRONASwantstheir employees
to be loyal and to work effectively, so they approach Best Approach practices. Throughout
this report PETRONAS HRM practices has been criticized. PETRONAS leadership skill’s
has been discussed and review in this report. PETRONAS human resource management has
very high connection in sustaining its productivity and financial growth. PETRONAS has
also been prioritizing in implementing leadership skills to their students in their university,
this to enhance the future leaders of PETRONAS.

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1.0) Introduction
Agencies or organization’s considering workers as their crucial asset to an organization. But
as for the managerial method, procedure it is always contradicting compared to the statement.
This statement will have a remarkable impact on the workers loyalty and commitment to an
firm or organization where therefor impacts the employees performance and will inspire them
(Gomez-Mejia 2014).
Getting to know and understanding ways ofmanaging people is an important matter in an
organization to achieve and accomplish its vision, mission and also goals. Every organization
wants to be productive and efficient and to achievethis employees need to be motivated and
satisfaction of employees is important. Employees are more likely to be as important as
technology and innovative to an organization (Arthur 1994). SHRM is very important as it
need to be aligned with the company’s HRM practices to have a better and effective business
strategy. Most common strategy is how the management gets the employees to work in a
more productively and work much more effectively. To boost up the company’s performance
level the company’s HRM practices should equipped well with the company’s technique
(Arthur 1994).
Most of the famous HR scholars agree if the organizations HR policy is set to achieve its
mission, vision and goals it would be much easier for the company to enhance its
performance level (Huselid 2011). To stay in the competitive advantage the organization
should always go through and evaluate its internal and also external environmental factors for
more opportunity and challengers. This is also important if the company wants to grow more
sustainable. More over these practices is definitely important if the company is redefining its
needs (Huselid 2011). High competitive in market and globalization has given high impact
on HRM so human resources management is taken more seriously and more importance is
given.
Recruitment, selection and other key activity involved in making HRM should be similar
integrated so that strategic integration is achieved throughout the process. The standard of all
the HRM practices should always be updated and changes according to the environment and
situation should be implemented. The most common mistaken done when recruiting staff is
that gaps are being stuffed but productive and effective employees are not recruited, this is

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due to bad selection and recruitment process done by the HRM (Gratton 2013). It’s also very
common when an HRM is being blamed for not arranging a proper training and development
process that fits in the company’s objectives and goal (Schule 2007).
A good HRM practices can be seen in a company when the organization has very effective
and motivated employees to execute and perform to the fullest. When the employees feel
belonging to the company that they are attached to automatically a boost in performance and
also production can been seen throughout (Gomez-Mejia 2014).
PETRONAS or also known as ‘Petroliam Nasional Berhad’ is and gigantic gas and oil
industry in Malaysia. This industry is established on the 1974, and later on it grew and
became one of the largest gas and oil corporation in the world. The industry grew as the
demand in the world for fuel increased. The growing need of Malaysians and international
demand for PETRONAS has made it to be in the top ranked by the fortune 500. PETRONAS
strongly believes in HRM to be a major role in gaining success and effective aligned HRM
techniques to be integrated strategic positioning. Mission and vision of PETRONAS has
guide policy setting of the organization.
Vision:
- Lead the gas and oil industry and to be people’s choice
Mission:
- Safety is given priority
- Performance delivery
- Dedicated to growth
- Finding talents
- Environmental conservation
1.1) Market competitiveness
SHELL, BHP and ESSO are the few rivalry in the fuel market that PETRONAS has. It is
common typical as all the above stated company has the same product or services. The
product branding,image,promotion,marketing and strategy is what sets it apart. Being a
national gas and oil provider PETRONAS as attained the support of Malaysiangovernment
and equal level with its major competitor SHELL. Normally in a market there is always two
markets which is the business market and also the consumer market. Customer’sare
consumers whom use gas and oil for household is the consumer market and for resale

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purpose it is known as business market. The segmentation for PETRONAS is also known as
Mass Marketing in Malaysia. Their product is delivered directly to the consumer with the
help of their network support and dealers in the industry. For Malaysian market the highest
demand PETRONAS has is for the oil and lubricant. Industrial fuels, aviation and also
automotive is the 3 phases divided by PETRONAS.
1.2) Organization Structure
(PETRONAS board of directors structure)
(PETRONAS executive committee structure)

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(PETRONAS top level management organization structure)
(PETRONAS HRM department’s organization structure)

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2.0) Human Resources practices
HRM practices are very common and mostly it is a must in all the organization or industrial
for its growth and balance in managing human capital wisely. Before selecting the best HRM
policy and practices of the company it is very important to undergo a research and study to
determine the suitable HRM policy which will suit the environment (Schule 2007). The
management team should always focus on long term and the company’s vision and mission
before making and imp mentation or any changes to the HRM practices and also policy. The
below are the area of HRM practices that should be focused by the organization before
implementation or formulating:
1. Employees development and training
2. Staffs performance appraisal
3. Selection and recruitment process in staffing
4. Benefits and compensation
5. Transfer, promotion and demotions
6. Recignization
7. Reward system
8. Health care
9. Safety
10. Empowerment
11. Good communication
12. Employment structure
13. Socialization
2.1) HRM Practices in PETRONAS Malaysia
2.1.1) HRM- Training and development
In order to upgrade and enhance the workers skills and knowledge training is essential and a
must. Training is also important in achieving the target and goals set in the organization. In
order for an employee to attain promotion, increment and improving theirskill in performing
working responsibility it’s a must to send the employee’s for a suitable training and
development process (sikyar 2015). A positive working environment will be attained if the
company has a well-organized and structured training and development programme. The
opportunity given to the employees should be equal and fair to all the staffs has in order to

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have all be able to perform to the standards set by the company. In order for the training and
development programme attended by the employees to be significanttowards attaining the
organization goals a proper monitoring and controlling system need to be implemented.
PETRONAS is always been giving priority to its training and development to enhance and
improve the employees skill’s and also to be in the competitive advantage. This is also very
essentials in PETRONAS as the oil and gas industry is being in a very competitive edge.
2.1.2) HRM-Performance appraisal
Performance appraisal can be defined as the process of evaluating and recording the
employee’s standards and performance in meeting up with the assigned and required task
which is given for a certain period of time (sikyar 2015). This is also important in comparing
the performance level and achievement of the staffs according to the level and position. This
evaluation is a must because it identifies the low and high performance given by the
individual and then the organization will decide the necessary action to be taken to improve
this situation (Gratton 2013). The returns in the hand can be rewards or promotion which will
be decided by the employer. In order to have fair performance appraisal the organization
should be non-bias and transparent in providing the performanceappraisal. A disaster in the
organization can be seen if an unfair performance appraisal is done. In PETRONAS
performance appraisal is done by the department head in a yearly basic. In the end of the
result, the year increment, bonuses and promotion is high influenced by this appraisal. By
implementing this performance appraisal the company is motivating the employees to
perform better.
2.1.3) HRM-Selection and recruitment
Staffing is another term for selection and recruitment process. It’s also known as a getaway in
assuring the right people or candidate is chosen to fill in the job vacant in the organization.
The recruiter of an organization should be very selective in choosing the candidates
addressing to the importance of this task. The candidates should be able to succeed and grow
together with the organization (Rosenzweig 1994). To attract the right people to apply for the
vacant in an organization, there have been so many differences compared to the older era.
Now advertisement in visual media, agencies and audio advertisement is used to attract
candidates (Rosenzweig 1994). Before deciding on the right candidate there is many
procedure handled such as resumes, form, medical background,IQ test,General test and

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reference check is used. PETRONAS has quite poor selection and recruitment policy. This is
because the company is not using the hard HRM practices. In
2.1.4) Benefit and compensation
By practicing fair compensation practices then only the organization can maintain, create
andproduce a loyal employee (Dechow 2010). There is two form of compensation which is
monetary and non-monetary approaches. Compensation is also divided into two categories
which is indirect and direct. Profit sharing, bonuses and salary is direct compensation while
indirect compensation is medical benefits and insurance (Ding 2011). The employee’s
loyalty, working productivity and commitment can be increased by providing very effective
compensation and benefit system. PETRONAS has been kind to the employees throughtheir
reward and compensation practices.
2.1.5) Job Scope
Job scope is also known as responsibility,duties and job description. It’s a must for the
employees to know what their role in the organization is in order to perform accordingly.
Previously job scope can be easily described but now in this competitive world it has become
more comprehensive (sikyar 2015). In today’s working culture all the employees are needed
to have skills in more than one professional area. It’s an important and serious issue is the
unclear job scope. Starting in early stage students are prepared and taught to specialised and
master in various other skills in order to stay competitive in the new era. unhappy employees
can be seen in organization where improper job scope is given or it is not provided at all. It
will be a kiosk when the employees fail to perform or complete their work when the job
scope is not properly defined. PETRONAS has been performing poor in providing job
description and scope to the workers.
3.0) Hard and soft HRM practices
The most general and widely adopted HRM practices of all time are the soft and hard vision.
This practices is actually the different and opposite opinions of human managerial and nature.
Below are the differences of Hard and Soft HRM practices.

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HRM Hard HRM Practices Soft HRM Practices
Ways employee
treated:
 Employees are treated in a strict
manner like (buildings and
machinery)
 Has a very strong link with
businesses and cooperate planning
(the cost of all the resources need)
 Employees are treated
as they are the very
important asset of the
organization and a
very excellent source
of competitive
advantage.
 Employees are treated
with respect as they
are an individual with
their needs.
Focus:  The workforce needs is identified
to suit the recruitment and
business management(firing,
hiring and moving)
 Rewards,
compensation and
motivation are given
importance.
Main features:  The communication between all
level staff is very bad.
 There is many short term changes
in the number of (redundancy and
recruitment)
 A strategy is
developed for long
term planning and
workforce.
 A two ways and
stronger
communication can be
seen.
Salary:  Minimum wages is give(only
enough to retain and recruit staff)
 An overall
competitive and
balance salary
structure can be seen.
 A suitable salary
structure, and reward,
and promotion related
to work can be seen.
Empowerment:  Delegation and minimum
empowerment.
 Employees are given
authority and
empowerment to make
decision.
Performance
Appraisal:
 Normallyperformanceappraisal is
used to making judgement
whether it is bad or good.
 Performance appraisal
is used to improve and
address training and
development to
improve performance.
 It is also used to

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motivate employees.
structures:  Taller structure  Flatter structure
Leadership
style:
 Autocratic  Democratic
3.1) Soft HRM Practices- PETRONAS
PETRONAS is more to using soft HRM practices. In today’s working environment and
competitive world, hard HRM practices is not the very suitable to been carried out as
employees are a very valuable asset for the organization. PETRONAS has been practicing
soft HRM practices for a very long time and they have been growing and developing together
with the employee. And another reason of PETRONAS has very committed and loyal
employees are because they are practicing soft HRM practices where the employees are
treated equally, fair and they are treatedas very important assets of the company.
PETRONAS compensation and rewardssystem is very good and it has been changed
according to the current environmental and economic criteria. PETRONAS also often review
its practice and policy to stay updated and to be focus in providing the employees with the
necessity needs. Employee of PETRONAS is very well taken care of and their ideology and
suggestion is accepted and valued by the organization.
Soft HRM practices are also known as human oriented and also human relations. Soft HRM
practices focus on treating employees as its assets and a source of the company’s competitive
advantage with theirloyalty,commitment and high performance level. Rather than giving
input in a more passive way it’s better to view employees as proactive. Employees will be
more capable of changes in development and organization and they will be more trust worthy
(Huselid 2011). Trust is an important factor because without it either the employer or
employee can perform well. The soft HRM models focus on building up long term loyalty
and commitment so that a high and quality workforce can be attained. Via communication
and motivational techniques a positive human resource management can be seen overall the
organization. The soft HRM practices are more towards the organizations approach in
motivational methods, leadership styles and also the quality of life. Activities organized by
the company can bring both the parties to a stronger relationship to be built.
The working environments and the climate is always used to determine the working
conduciveness. By practicing the soft HRM practices the staffs performance and standard can

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be determined in a easier way. Employees are also given high motivation level to have self-
confidence on the task they are performing. By providing good compensation and benefit to
the employees indirectly theywill be driven positively to take up new challenges and perform
to the highest (Ding 2011). Empowerment is also can see in soft HRM practices as authority
to make choices and decision is given to the staff. Its human nature to make mistakes and
learn from it, so the employees will have a better decision making skills and capability. But in
soft HRM practices the decision making will take much longer than in hard HRM practices,
so this can be a minus point and disadvantage. Another negative effect of dealing a softer
manner to the employees is to leave to organization in a competitive disadvantage.
4.0) Differences between best practice and best fit approach
Best Practice Best Fit
Reward and benefit is one of the HR policies
of best practices.
In best fit it is believed that the company’s
rewards system depends on its strategy.
High employee commitment and motivation
is led by best practices HR policy.
It’s common in best fit HR practice to
achieve high competitive advantage.
4.1) Best practice approach- PETRONAS
PETRONAS practices best practice approach, as they believe in compensation and reward
system in producing the best outcome from the employees. The characteristic of best practice
HR system can be seen through the list of HR practices of the organization. The advantage of
using this best practice HR policy can been see throughout the proactive employees produced
and a balance working environment both for the employer and employee. PETRONAS faced
many difficulty in placing and implementing HRM policy and practices as there is many
difference in the working culture, future changes and challenges can’t be predicted and
minimal business strategy. The features of the identified human resource best practice fit are
stated below:
- Development of employee
- Reward and promotion
- Progression and development in career

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- Performance approval performed fairly
- Communication structure which is well structured
- Recruitment and selection process which is also well structured
- An environmental working place
- Team
- Management system with high commitment
4.1.1) Training and development of the employee
Normally this is a win-win situation for the organization and employee. When a proper
training is provided for the employee it is tie situations where both the parties can gain
benefits from it. The organization will be in a high competitive advantage and benefit from
the boost in employees performance. For the employees in another hand they will go through
self-development process where it can be used for their future development and undertakings.
When an employee is exposed and new skill is been taught they will work in a more
competitive and effective manner. Employer should not only focus on developing the
employees skills related to work but also focus on the work life balance. In PETRONAS it is
common for the organization to send their employees for skill and knowledge enhancement
activities and practices. These practices can be seen nationally or internationally.
PETRONAS is also a member of HRDF, as being one of the Malaysian human resource fund
contributors. This is the reason why PETRONAS is being the leading oil and gas industry in
Malaysia and growing towards the international market.
4.1.2) Motivational tool- performance appraisal
This a method used by many organization to reach their standard set earlier. Its apart of
performance management where increasing commitment the employees has can be seen.
Performance appraisal is also been done to determine the performance level of the current
staff and what the changes need to be done in the future (Gloet 2006). In PETRONAS
performance appraisal is normally done by the head of department in each sector to determine
the capability and capacity of the employee. In PETRONAS it is also used as an motivational
tool because performance appraisal will determine their promotion and rewards.
4.1.3) Better Communication
A good communication is compulsory for both the employee and organization. PETRONAS
focus on many activities organized mainly outdoor to enhance the communication skills. The

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more effective communication they have the more efficient the outcome will be. Sound
communication is established so that organization runs in a smoother way (Huselid 2011).
Communication skills can minimize the problems and negative issues arise in the
organization if they have a better understanding and communication. When specific job and
work is assigned to the members in a team then communication between them is essentials
for the discussion and task performance.
5.0) Leadership
Leadership is a important soft skill, needed in all the organization (kalshovan 2008).
PETRONAS has its own corporate university (PETRONAS Technology University) in bangi
Malaysia. It is also known as centre of leadership. This university has been around for more
than 18 years. The main aim for this centre to be established is to create programmes
focusing on functionally capability. In university of PETRONAS there is a programme
towards every step of the career development. For in house senior management many MBA
programme has been developed by PETRONAS with u university of Melbourne and
university of duke. PETRONAS is also well known for its LDL (leaders develop leaders) as
many top leaders around the world comes and teach at the centre.
6.0) Financial growth of PETRONAS
Labourstatistic of the U.S bureau states that, in this current economy the employment for oil
and gas industry moreover petroleum engineers will see a projected growth of 26% by the
year 2022 (Beker 2016). PETRONAS has been building its very own pipeline for the future
of its employees. But it’san overall different scenario in the U.S as there is a huge shortage
for workforce. Fifth time in a row PETRONAS won Malaysian’s best employer award as
they are investing more towards their human capital, strategy, HR policy and practices. To
ensure PETRONAS has sustainable groups of talents for their future growth they believe in
building their own timber.
7.0) Conclusion
PETRONAS has very balance and effective HRM practices as the organization is
successfullycontinuing to grow and develop together with the employee. PETRONAS has
chosen best proactive approach which has given it a very good competitive advantage. Based
on the overall PETRONAS HRM practices and policy, it is very obvious that the employee’s
has very high loyalty, commitment and trust to their employer. Over the year according to the

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current internal and external need’s PETRONAS HRM practices and policy has been
changed for a better future for the employees. PETRONAS also has been implementing and
formulating many strategy human resource practices to grow and develop globally. Whatever
said, there is many changes and improvement can be done to PETRONAS’s HRM practices.
8.0 References
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