The New Humble - A Study in Organization

Abstract

Davis, Morgan J., Member AIME, Humble Oil and Refining Co., Houston, Tex. Abstract Humble Oil and Refining Co. merged with other affiliates of Standard Oil (N.J.) late in 1959 to improve coordination in the far-flung organization, to increase efficiency, to enable Humble to compete better in the nation-wide petroleum market, and to provide a better framework within which to develop men with broad-based knowledge of the oil industry. A decentralized pattern of organization for the new Humble was chosen by an Organization Committee, composed of top management, which gave each field unit and functional division a good deal of autonomy. The various levels of management within Humble's organizational structure are outlined and distinctions are drawn between headquarters and field management. The success of the future of the petroleum industry are also discussed briefly. Introduction It is an economic truism that before a business can achieve lasting success, it must be properly organized. This is true of any venture, from the corner drugstore to the largest and most complex corporation. But the appropriate organizational structure will vary with the nature and scope of the enterprise at any one time, and follow the needs of changing times. There is plenty of evidence in business history to prove that no company can afford to rest on past achievements. Of the nation's top 100 companies in 1909, only 36 remained on the list in 1948. And recent annual surveys reveal that this sort of change is still going on. Therefore, it is an economic myth that size alone is a guarantee of continued success. It is clear, from these facts, that every company which hopes to endure must be flexible enough to meet the rapidly changing circumstances of the marketplace. Keeping an organizational structure in step with the changing times is hard enough in a single company. When several large companies are brought together in a merger and a new unified organization is set up, the problems and considerations to be taken into account are compounded. A case in point is the merger from which the present Humble Oil and Refining Co. was formed; and it is that development and the ensuing steps in reorganization that are covered in this paper. Before Reorganization Before going into the various steps that were taken to create the new Humble, it might be helpful to review some of the problems that Humble and the other leading domestic affiliates of Standard Oil Co. (N. J.) hoped to solve by merging. The basic problem was, of course, disunity. Jersey Standard's operations in the United States had been organized and carried on by a number of separate affiliates, each responsible for its own activities and each dealing separately with the parent company. Each was important in its particular line of operations and, collectively, they accounted for a considerable volume of business. But taken as a whole, they presented a rather motley pattern or perhaps lack of pattern. For example, Humble Oil and Refining Co., with 17,000 employees and headquartered in Houston, operated one large refinery at Baytown, but was predominantly an exploration and production company, having the largest reserves of oil and gas of any U. S. company. It operated in the southern belt of states from Florida to California. Humble's marketing activities, on the other hand, were less extensive and were confined to three states in the Southwest: Texas. New Mexico and Arizona. Esso Standard Oil Co., headquartered in New York, had no exploration or production, but ranked among the leading manufacturing and marketing companies in the nation. With 21,000 employees, Esso Standard operated six refineries in the East and carried on broad-scale marketing activities in 18 states from Maine to Louisiana. The Carter Oil Co., headquartered in Tulsa, was spread out over a much broader geographical area than either Humble or Esso Standard. With 2,700 employees, Carter had exploration and producing operations in 15 midwestern and western states, operated one refinery in Billings, Mont., and marketed products in a 9-state area. In addition to these three lager companies, there were other members of Jersey's domestic family who were marketing products under a variety of brand names. These included Enjay Chemical Co., a major marketer of chemical products; Oklahoma and Pat, Oil Co., which together had 1,800 employees and 600 retail gasoline outlets in five heavily populated midwestern states; and Penola Oil Co., a wholesale marketer of lubricating oils, greases and specialty products throughout the country. JPT P. 395ˆ