Individual Management Planning: Halliburton
This paper will discuss the planning function of management of Halliburton. Within this paper I will analyze the impact that legal issues, ethics, and corporate social responsibility has had on management planning, and the three factors that I believe influence the company’s strategic, tactical, operational, and contingency planning. Halliburton has had a great deal of legal issues that have been dealt with since the beginning of the operation. Political influence has also played a big part within the Halliburton franchise. First I would like to show some insight into Halliburton was started and founded.
Halliburton was founded in 1919, by a man named Erle P. Halliburton. He started the company in Duncan, Oklahoma by borrowing a wagon, a team of mules, and a pump. He built a wooden box and started an oil well cementing business. Today Halliburton employs more than 50,000 people in approximately 70 countries (Halliburton, 2009). In 1926 Halliburton took the initial steps in becoming a worldwide organization by selling five cementing units to an English company, which was the start of the Eastern Hemisphere. After that Erle’s brothers were sent to Canada to open a business there as well. Halliburton expanded to Venezuela in 1940, and by 1946 they had expanded into Colombia, Ecuador, Peru, and the Middle East. Other franchises of Halliburton have been started and opened all over the globe.
When evaluating the planning function of management I have noticed that by being stationed all over the globe, Halliburton has many different departments tailored specifically for the geographical area that the company is in. Each place that Halliburton is located is an office for that location.
Halliburton’s main office was in Houston, Texas but they have relocated their headquarters to Dubai, which is in the Middle East country. Halliburton holds annual planning processes for improving HSE and Service Quality. The performance Improvement Initiative (PII) was introduced in 1997 and helps to ensure organizational alignment. “The PII includes a review of past performance, and assessment of currently available tools, and the development of objectives and strategies for continuous global improvement” (Halliburton, Introduction). In the planning function within the Halliburton organization, the company also incorporates risk identification, risk control, and contingency plans. Incorporating these risk control factors allows the company to control and mitigate risk.
Their planning function incorporates the company mission and vision into strategy and action plans that responds to customer wants and needs. The planning function of Halliburton has allowed the company to expand and grow into a multibillion dollar company today. Without planning and using the strategies Halliburton would not have made it in the world today. The planning function includes “What, why, when, where and how to do it. Who is responsible for what and who to interact with, how to know that we have done it right, and how to make it better” (Correia,P; Lastra, E; Nino, J.M.).
The impact that legal issues, ethics, and corporate social responsibility have had on management planning within Halliburton have been tremendous. During the company’s process of having the headquarters stationed in Houston, TX the organization was not happy about having to pay such high taxes or even any taxes to speak of. Therefore, the company relocated to Dubai. Dubai is located in the Middle East, Saudi Arabia. The reason for the relocate was to avoid paying their fair share of taxes. By moving the headquarters here and the CEO and other top executives the company can argue “a portion of its profits should be attributed to the no – tax jurisdiction” (Cray, C.). Dick Cheney has also had a big impact on the issues surrounding the management planning. Dick Cheney was appointed CEO from 1995 to 2000 and Halliburton’s revenue from the federal government contracts almost doubled. Cheney used his political influence to bring in government contracts.
This has impacted planning within Halliburton because of the issues they are now dealing with. There stocks have fallen and with Cheney’s departure the company share prices started to sink. Halliburton had to initiate the PPI in order to keep things afloat while Cheney was there and even more so after he left. Another legal issue that has impacted the planning function of management would be not keeping honest records of their sales and costs from 1998 to 2001. Halliburton expected workers to keep fraudulent records to make the company look more profitable than it was to keep share prices high. This has led to the company having to do quarterly reports to see where the company is. Halliburton has been investigated by the Securities and Exchange Commission and by the Justice Department for making fraudulent records and the company has even paid out $7,500,000 and never admitted any wrong doing. Halliburton has paid out millions of dollars to make the lawsuits disappear and not make headlines for a great deal of time so that the stock prices stayed up and they would not lose their shareholders. “In 2001 a court ordered the company to pay $130,000,000 and the decision was kept secret. When the judgment later became public the company’s stock price dropped forty -two percent” (Outen, Gwen, 2004).
The examples I can provide for the ethics would be that Dick Cheney was involved with Halliburton and used his political influence to secure federal and government contracts. This is very unethical for an organization to do. If the organization cannot secure the contracts without the influence of the political aspects then they should have not received the contracts to begin with. The legal issues would be that the organization did not pay their fair share of the taxes and relocated to avoid paying them. Another example would be that they falsified the books in order to look more profitable then what they were. The social responsibility I would have to say would be the relocation to avoid paying the taxes. They are avoiding social responsibility here by not paying the taxes that are due. Instead the company has set up off shore accounts in the Cayman Islands so that the money they receive on contracts completed cannot be taxed by the government in the United States. This money that is in the Cayman Islands accounts does not have a corporate tax and the United States cannot impose a tax on money that is not here (Cray, C.).
The three factors that influence the company’s strategic, tactical, operational, and contingency planning would be shareholders, growth in customer satisfaction, and stock price, without these three factors Halliburton would not be the company they are today. Halliburton is a Fortune 500 company and the ownership status is that the company is publicly traded. The shareholders help with keeping the company operational along with the growth and customer satisfaction of their work. The stock prices determine the planning that will take place and where the company needs to go and how to get there. These three factors I believe are the most important regardless of what organization it is. Without these three factors the company would not be able to stay afloat as customers, shareholders, and stock prices allow the public and the company to know where they are and where they are going.
Halliburton may have done some things that are unethical, immoral, and have raised some legal issues but they are the second largest oil services company in the world (Outen, G., 2004). The management planning that has been implemented has helped Halliburton and this has made them see that making fraudulent claims to raise their stocks has only caused legal issues. Chuck Dominy, Halliburton’s vice president for government affairs said it best “We are the only company in the United States that had the kind of systems in place, people in place, contracts in place, to do that kind of thing” (Cray, C., 2004). With the new planning system in place Halliburton may see their fair share of legal issues again but they will survive and continue to keep thriving and profiting in today’s economy.
References
Correia, P.; Edgardo, L.; Nino, J.M. (no date). Halliburton management system: Lessons learned during deployment and implementation. Retrieved July 1, 2009, from http://biblioteca.iapg.org.ar/iapg/ArchivosAdjuntos/CongresodeCalidad/089.pdf
Cray, Charles. (no date). CorpWatch. Holding corporations accountable. Retrieved July 1, 2009, from http://www.corpwatch.org.article.php?list=type&type=15&printsafe=1
Cray, Charles. (2004). Dissecting Bush. Bush administration policies under the microscope. Retrieved July 1, 2009, from http://multinationalmonitor.org/mm2004/05012004/may-june04corp1.html
Halliburton. (2009). History of Halliburton. Retrieved July 1, 2009, from http://www.halliburton.com/aboutus/PrintPreview.aspx?navid=970&pageid=2312
Halliburton, (no date). Introduction. Doing the right thing. Retrieved July 1, 2009, from http://www.halliburton.com/public/tttcp/contents/Books_and_Cataloge/web/ServiceTools/H03280_intro.pdf
Outen, Gwen. (2004, August). Economics Report. Halliburton’s legal troubles. Retrieved July 1, 2009, from http://www.voanews.com/specialenglish/archive/2004-08/a-204-08-13-2-1.cfm?renderforp