Case Study 4

Caltex Indonesia Inc. The Appointment of a Senior Systems Analyst

Summary
California Texaco (Caltex) Indonesia Inc. is an oil company. It is a subsidiary of Texaco Co. in
the United States. Caltex Indonesia employs 500 people, of whom 350 are engineers. Most of its
operations are in the field of offshore exploration.
Caltex Indonesia is divided into five departments, namely Exploration, Production, Finance,
Personnel and Information Technology. The company is a technology-driven company with a
huge dependence on the expertise and productivity of its employees.
The head of the Information Technology Department has to appoint a new senior systems
analyst. Yanti, one of the company's top performers, was interested in the position. She had only
one problem, she was not senior enough. The company discourages rapid progress on the
corporate ladder. Knowing Yanti, Adamson expects her to resign if she is not promoted.
As Information Technology Director, the decision of whom to appoint falls on Adamson.
Introduction
Mike Cleere, President director at Caltex Indonesia, had made an appointment with James
Adamson, Information Technology director, to discuss the appointment of a new senior systems
analyst. They had to decide whether or not Yanti, one of their star-performers, was the right
candidate for the job.

2. Nature of the Company

California Texaco (Caltex) Indonesia Inc. is an oil company. It is a subsidiary of Texaco Co. in
the United States. Caltex Indonesia was formed five years ago and currently employs 500 people,
of whom 350 are engineers. Most of its operations are in the exploration field. Exploration work
is mainly offshore, 700 km north of Jakarta, the head office. Of the 18 operating fields explored
up to date, only "Field Charlie-3" has significant yields (16,000 barrels per day). Oil exploration
is an expensive process and Caltex Indonesia is under pressure to find oil as soon as possible in
order to contain investment costs.
As a technology-driven company, its most important assets are engineers (including field
engineers, analyst engineers, and computer engineers). The long-term success of the company
depends on the expertise and productivity of these engineers. Employees are continuously
motivated to develop the knowledge and expertise required by the company.
Labor turnover contributes to the cost of Human Resources. A significant part of these costs
results from the influence of this high turnover on the available expertise and hence production.
The company can only overcome a loss of expertise if they can find engineers with similar
qualifications to those of the person who resigned. This is very often difficult to achieve. Even in
the rare cases when such a person is found, a short to medium term loss in productivity will still
follow until the new engineer is fully integrated.

3 The Information Technology Department.

Caltex Indonesia used to have four departments namely Exploration, Production, Finance, and
Personnel. Every department had a director who was responsible for managing his or her
department. The directors reported to the president of the company. Each director had a number
of superintendents and supervisors reporting to him or her. These people were mostly
expatriates. The Exploration and Production departments had a similar career path. Promotion
was based on expertise and seniority.
The career paths in the Finance and Personnel departments were somewhat different. Things
were more flexible and cross-functional moves were common. Initially, before the discovery of
field Charlie-3, the Information Technology (IT) Department reported to the Finance director. Its
functions were restricted to the storage and processing of financial data. Daily activities centered
around the maintenance and operation of the system. All of the software used by the company
was bought in from outside. After the discovery of Charlie-3, the department was upgraded to a
fully fledged Information Technology Department. The head of department post was upgraded to
director level, reporting directly to the President of Caltex Indonesia. The functions of the IT
department were expanded from the storing and processing of financial data to include the
development and implementation of management support and information systems for the whole
company.

4. Problem Description
A couple of months ago, James Adamson, the director of the IT Department, discussed the need
to appoint a new senior systems analyst with Mike Cleere, the company president. Cleere gave
the go-ahead and Adamson contracted a recruitment consultant to provide a short list of suitable
candidates. The consultant came forward with two candidates, both with considerable skills and
knowledge. Yanti responded to the in-company advertisement.
During her interview, Yanti told Adamson that she had just been offered a position as Electronic
Data Processing Manager at another company. It was, however, clear that she was very
interested in the position of senior systems analyst. Yanti was confident about her performance
in the company. She was also pleased that the company appreciated her past achievements. She
believed it was time to start climbing the corporate ladder. She needed a new challenge, and
especially something which would expand the current restriction to technological matters. She
talked enthusiastically about a new version of the network operating system in which she thought
the company should invest.
Yanti could not understand why the company wanted to recruit people from outside when they
had perfectly suitable people available amongst their current employees. Knowing Yanti,
Adamson expected her to resign if she was not promoted. This put Adamson in a difficult
position. If he could find someone to replace Yanti immediately, it would have been a much
easier decision. The chance of this happening was remote. Yanti's resignation would jeopardize
the running of the system. She was the only person with the skill and expertise to maintain the
system and do any troubleshooting.

5. Yanti's Background
Yanti graduated from the University of Western Ontario, Canada, majoring in computer science
and business administration. Before coming back to Indonesia, she worked for six months as
systems analyst at a computer consultancy in Hong Kong. She joined Caltex as a systems analyst
at the time when the IT department was in the process of changing from a data processing
section of the finance department into its current form. It was Yanti's idea to set up an
Information Technology Department. The IT department then started to design, develop and
customize its own software. Before Adamson arrived, she reported directly to the financial
director. During that period, she dealt with technical matters as well as vendors and users. She
often had to arrange bids for acquiring computers at a reasonable price and of satisfactory
quality. After one year, she succeeded in setting up the new department. The system was running
very well. Adamson accepted the job at Caltex at a time when the department and system were
well established.
Yanti was a star performer. Most of the employees knew her as hard-working and very helpful.
She was also known as being very ambitious and headstrong. It was difficult to change her mind,
once set on something and she could become emotional during subsequent debates.

6. The Decision
Adamson went to Mike Cleere's office. Mike opened the discussion by commenting on how well
he was managing the IT department. His fifteen years' working experience as project leader in
head office were helping him a great deal in recognizing and resolving problems. Mike then
changed the topic to Yanti and the new position for a senior systems analyst. Although he had
plenty of admiration for her work, he was not in favor of her promotion. His only problem with
appointing Yanti was that she was not senior enough. Caltex was not in favor of rapid career
paths. The company policy encouraged its employees to include personal development in their
definition of career advancement. Overseas training was regularly used as a measure to expand
expertise and knowledge.
Adamson was very worried about losing Yanti. He was in favor of bending the rules in this
special case. Although he was not 100% sure that this was the right time to give her the added
responsibility, he thought it was worth taking a chance. Yanti was bright and very
knowledgeable.
Mike proposed that they explore alternative ways to make sure that Yanti would not resign. His
first proposal was to give her the opportunity of six month's training at head office in the United
States. Adamson was not very optimistic. He gathered from their discussion during the interview
that she was looking for promotion and added responsibility. She had already worked for six
months at head office.
Mike decided to discuss the matter with the Personnel director. He suggested a 25% salary
increase (as token of their appreciation for Yanti's excellent performance) combined with a six-
month project at the head office.
Adamson thanked Mike and the Personnel director and left for his office. It was within his
authority to bend the company's promotion policy. He had to consider the pros and cons of the
different alternatives. It was his decision to make and he had better make the right one.

7. Adamson's Decision and its Consequences

Adamson decided to take the Personnel Director's advice. He raised Yanti's salary by 25% and
offered her a six-month project at head office when he told her that her application had failed. He
explained the company's policy regarding promotion to her. Yanti was very upset. She perceived
the head office project as unimportant relative to the wider responsibility and authority of the
senior systems analyst position. Two weeks later she quit after she had become certain that top
management was not prepared to treat her as a special case.

8. Questions
 How appropriate is Caltex' s policy on promotion for the time and the industry in which it
operates?
 What are the advantages and disadvantages of the different alternatives open to
Adamson?
 What was Adamson's decision and what were its consequences?
 In your opinion is Yanti’s decision to quit is right? Why?