Crash of NARC Olive Extraction Plant: Role of Technical and General Management

Practices

Student Name

Subject

Teacher

Date
Case Description

The National Agriculture Research Council (NARC), in the year 2016, decided to initiate a new

project. Started as a small initiative, the project’s primary reason was to aid in the extraction of

olive oil in Pakistan. Like all oil extraction facilities, the National Agriculture Research

Council’s site reserved for this project operated via the use of machinery. In order the ensure the

smooth operation and enhanced performance of machinery, it is necessary for manufacturing

organizations and facilities to hold frequent and regular check-ups for the capital good and repair

them accordingly. These actions fall under Maintenance, Repair and Operation (MRO), which is

vital for the continued operation of any machine.

The condition at oil extraction plants operated by the National Agriculture Research Council

does not comply with the requirements discussed above. This mainly due to the organizational

structure and hierarchy used by the council. NARC consists of numerous departments. Once the

council decided to initiate the new olive oil extraction project and plant, these departments were

not in the favor of this decision. This is primarily attributable to the fact that the departments’

conventional policies and monopolies did not allow for the creation of a new extraction unit.

As a result of this lack of support from the departments of National Agriculture Research

Council, the new olive oil extraction site was confronted with a number of issues. The upper

management did not conduct any regulatory activities and this, combined with continual

negligent behavior from the supervisor, resulted in deterioration of the extraction facility. In

addition to that, the upper management and supervisor responsible for the new plant and

extraction site failed to provide the employees with proper leadership and support. While a

leader is supposed to motivate the subordinates, and aid them in solving issues, the management

and supervisor failed to complete most of the tasks assigned to them.

In addition to that, the new project was also confronted with a humungous issue in the form of

scarcity of skilled labor. The extraction plant comprised of complicated machinery, which

required some level of technical knowledge before successful operation. This increased the

demand for skilled labor, further aggravating the labor scarcity problem.

Apart from that, the extraction site also required a proper MRO plan to ensure that the installed

machinery continued operating smoothly. The design and approval of this plan required the

supervisor to ask for a permission from the senior management after informing them of the costs

associated with maintenance. Since the extraction plant did not have any proper plan or methods

for maintaining and upgrading its machinery and technological infrastructure, it became prone

wear, tear and deterioration. As a result, it became inefficient and faced a decline in its

performance levels.

Introduction of NARC

The case under consideration takes into account the company National Agriculture Research

Council (NARC). As the name suggests, the company is engaged in the research related to

agriculture. The company is a government entity based in Pakistan. The entity was initiated in

1984 with a view to provide a platform to further research in the area of agriculture. Since

Pakistan is an agriculture based economy, the work of the entity plays a vital role in the survival

and growth of the Pakistani economy1.

The work of this institution is to conduct researches on the agricultural products that are

currently grown in Pakistan. In addition, the institution also explores the variety not yet grown in

Pakistan but there is potential in the country for the growth. In order to carry out such researches,

1
NARC, "National Agricultural Research Centre," NARC, Islamabad, April 11, 2013, , accessed
December 05, 2017, http://www.parc.gov.pk/index.php/en/2013-04-11-06-13-50/narc-islamabad.
the institution employs a host of employees from the scientific and managerial background. This

is to ensure that the research work as well as the management of the company proceeds in the

right direction fluidly. Moreover, in order to carry out the work of research and exploration, the

institution also acts as a bridge between other government level and provincial institutions to

enhance the level of research carried out by the company 2.

Furthermore, NARC also has state of the art technology available in the country. This is to

ensure that the research carried out on the crops, both existing and the new ones, is accurate and

provides the desired results. The institution has instruments such as electron microscopes and

ultracentrifuges that make it a leader in the field it works in. Furthermore, to analyze the data

collected with the help of these instruments, the institution utilizes highly skilled employees.

Moreover, these employees are equipped with fully functional high-performance computers as

well. Therefore, NARC is a state of the art research council working under the government of

Pakistan 3.

In order to carry out the functions assigned to it, NARC works on the following vision:

 Following bottoms up philosophy in research work

 Promotion of research work throughout the country

 Diversification of agriculture

 Development of human resource in the field of agriculture

 Conservation of scarce natural resources

 Infrastructure development and strengthening

2
NARC, "National Agricultural Research Centre," NARC, Islamabad, April 11, 2013, , accessed
December 05, 2017, http://www.parc.gov.pk/index.php/en/2013-04-11-06-13-50/narc-islamabad.
3
Ibid
  Decentralization of research management and planning4

Literature Review

The consumption and production of edible oil in Pakistan is far away from being the same. The

country, due to its increasing population and consumption of food, is faced with an extreme

deficit of edible oils as well. The following graph shows the condition of the country’s oil

consumption and production5:

As the figure above shows, the country’s production and consumption of edible oils was close to

each other in the mid-nineties. However, the deficit started in late nineties and began to grow far

apart with time. Therefore, the country was faced with a deficit of edible oils which it then

4
NARC, "Vision of NARC," Vision, December 12, 2013, , accessed December 05, 2017,
http://www.parc.gov.pk/index.php/en/about-narc/2013-12-12-09-18-58.
5
Muhammad Ali, Manzoor Hussain Memon, and Syed Arifullah, "Edible Oil Deficit and Its Impact on
Food Expenditure in Pakistan [with Comments]," The Pakistan Development Review, 2008, 5.
imported. Therefore, as it is clear from the chart above, Pakistan, despite being an agriculture

based economy, faced a deficit of edible oils6.

One such oil in which the country is working in deficit is olive oil. The increasing awareness in

the population has led to the popularity of this edible oil. Since NARC is assigned with the duty

of carrying out the research and exploration of crops that are or can be grown in the country, the

institution looked was assigned with the duty of exploring the country’s potential regarding the

production of the olives and the processing of the fruit into oil7.

The deficit of olive oil as discussed above in the study has led to a huge import bill to the country

Pakistan. The country, as per the sources, paid 1.784 billion on the import of olive oil for

consumption purposes. This commodity is imported at heavy rates from Spain and Italy.Not only

do these countries charge premium rates, the transportation costs are also borne by the importer.

Therefore, the country has to suffer from extra costs due to these added outflows. Keeping this in

view, NARC conducted a survey and a proper research to identify the areas in Pakistan that have

potential to cultivate the fruit olive. Once the research was carried out successfully, the

institution found that the areas of Potwar in Pakistan are best suited to the production of Olives.

On the other hand, the areas of Rawalpindi, Khushab and other adjacent areas are also

considered to be very resourceful and appropriate for the cultivation of olives. In order to

promote the production of olives in the country, the Punjab government imported 20 million

plants and the farmers were also provided with a subsidy to carry out the farming of olives. The

subsidy was set at 70 percent for water resources and 60 percent for the irrigation purposes8.

6
Ibid
7
Muhammad Ali, Manzoor Hussain Memon, and Syed Arifullah, "Edible Oil Deficit and Its Impact on Food
Expenditure in Pakistan [with Comments]," The Pakistan Development Review, 2008, 5.
8
NARC, "Project of Olive Promotion," Project of Olive Promotion, 2012, , accessed December 05, 2017,
http://www.parc.gov.pk/index.php/en/olive-project-of-olive-promotion.
Furthermore, NARC was also a part of the project designed to promote the production of olives.

The project was a result of the MoU (memorandum of understanding) signed between the

government of Pakistan and Italy. The project was valued at a total cost of Rs.382,153, 016. The

aims of the project included the expansion of olive cultivation in the country. In addition, the

project also aimed at setting up new facilities in the country that would be able to process the

olives and turn them into oil and other products. Lastly, the project also aimed at providing

technical training to the people employed in the field of olive cultivation and processing to

enhance the production of the fruit as well as the products derived from olives9.

As discussed above, the country is an agrarian economy but still faces a deficit in terms of olive

oil production and consumption. As a result, NARC started a small olive oil production unit

which started functioning in 2016. The plant was imported from China at a cost of around one

million. However, the plant was not installed in its original condition and was modified before it

was installed in Faisalabad. The plant modifications were made by the plant maker. The plant

was capable of carrying out the following tasks10:

1. Cleaning of olives
2. Grinding the olives into paste
3. Mixing the paste
4. Separating the oil
5. Filling of oil in bottles
Two plants were set up at the center. Each extraction unit had the capacity of 50 kilograms per

hour. Therefore, the two plants had a total capacity of 100 kilograms per hour. The extraction

efficiency of the plant enables it to extract 20 percent of the weight of the olives as oil.

Therefore, the plant extracts 200 grams in one kilogram. The plant functioned for 16 hours a day

9
NARC, "Project of Olive Promotion," Project of Olive Promotion, 2012, , accessed December 05, 2017,
http://www.parc.gov.pk/index.php/en/olive-project-of-olive-promotion.
10
NARC, Five Years PARC Business Plan (2013-18), report (Islamabad: NARC, 2013).
in two hour shifts. It was this plant that faced difficulties due to the management issues faced by

it. The plant also had mismanagement and poor maintenance of the machinery it utilized.

Therefore, the plant was at a disadvantage consistently and the wear and tear of the machinery

led to the final demise as discussed in the case above. In case proper technical and and HR

management was carried out in the plant, the situation could have been different. This is because

HR and technical management have important roles in the smooth running of an organization.

This concept is discussed in the coming section11.

Role of Human Resource

Human resource is one of the most important assets of a company. The company uses its human

resource for the creation of value that it later transfers to its stakeholders. Good human resource

is a function of effective human resource management (HRM). This is because effective human

resource management gives direction to the company employees. This direction is useful if the

company has to work coherently to achieve common goals. Achievement of common goals is the

mission of all the organizations12.

Human resource management, as the name suggests, is related to the management of human

resource that a company employs. This includes planning, leading organizing and controlling the

human resource. Like the management of any resource, human resource management also

requires the manager to understand the functioning of the resource before attempting to manage

it. However, there is a difference in understanding other manageable resources that a company

11
NARC, Five Years PARC Business Plan (2013-18), report (Islamabad: NARC, 2013).
12
John Bratton and Jeffrey Gold, Human resource management: theory and practice (London: Palgrave Macmillan,
2017), 3.
operates and human resource. Therefore, the managers of human resource have to be specifically

careful about many aspects of a human being13.

There have been examples recorded in the history about organizations that have achieved success

by employing good HRM practices. A host of HRM theories exist that explain the concepts

associated with HRM and how it can positively affect the organization. These theories focus on

the importance of empowerment, motivation and satisfaction of employees on the performance

of a firm. Effective HRM is usually a product of top management support and the cooperation of

employees working at the base level. This makes effective HRM a function of relationships

between the employees and the managers. The company managers usually lead the employees

into the direction provided by company's mission and vision. This direction, if properly

followed, will lead to the achievement of goals which is considered very important as discussed

earlier 14.

Effective Human Resource Management is when the manager acts as a leader instead of a

dictator. The company management has to play the role of leaders and motivate the employees

instead of directing them. This can be achieved in various ways. The management of the

company should focus on understanding the needs of the people working as employees. In

addition to the monetary needs, the management should also identify the non monetary needs of

the employees. This will send a signal to the employees and will motivate them to carry on the

hard work they are inputting15.

In addition, as the work of Parameswari and Yugandhar shows, human resource management is

an important factor in ensuring that the company grows as planned. This is because the

13
Ibid.
14
John Bratton and Jeffrey Gold, Human resource management: theory and practice (London: Palgrave Macmillan,
2017).
15
Dipak Kumar. Bhattacharyya, Human Resource Management(New Delhi, India.: Excel Books, 2012).
organization is constituted of the members that run it. If the company employees are motivated,

the individual employees will grow. As a result, the company, as an entity made of the

employees, will grow. Therefore, it is clear that regardless of the company being public or

private, the role of human resource management is clear and evident. Similarly, NARC also

needed a good HR management system to improve the situation of its plant16.

In addition to that, the presence of a good HR management system in an organization leads to the

development of a sense of belonging in the employees. This is because a good HR management

framework ensures that the company employees are valued. This is ensured by designing a

reward and appreciation system that values the input of the organization. Therefore, the

employees, seeing the value assigned to their work, will be motivated further to work hard and

add value to the organization. In the same essence, NARC could also avoid the situation if it had

carried out the management of human resource17.

Companies, nowadays, work with teams that are working to bring additional value to the

organization. These teams are normally cross functional with the presence of members of all the

departments in them. Therefore, organizations are now creating value by utilizing these teams.

The utilization of these teams, however, efficient, leads to conflict among team members. The

role of HR management comes when the issues are to be resolved. The members are initially not

comfortable working with each other as their methods are not the same. The role of HR

management is to create harmony within the organizational members18.

16
Naga Parameswari and V. Yuganhdar, "The Role of Human Resource Management in Organizations,"
International Journal of Engineering Technology, Management and Applied Sciences 3, no. 7 (2015):.
17
Ibid.
18
Hassan Danial Aslam et al., "Importance of Human Resource Management in 21st Century: A Theoretical
Perspective," International Journal of Human Resource Studies 3, no. 3 (2014): , doi:10.5296/ijhrs.v3i3.6255.
As mentioned earlier, the work of HR management is to ensure that the employees are satisfied

with their jobs. This is achieved by designing appropriate payment and bonus framework. Once

the HR management designs the aforementioned frameworks correctly, the company employees

are treated fairly. The employees are paid properly and are provided with appropriate bonuses as

well. This leads to greater motivation and the employees work harder and more focused19.

A direct responsibility of the HR management department is to create a proper workplace

environment. By carrying out the aforementioned functions, the HR management team ensures

that the environment of the company is genial. This is to ensure that the company employees

work in an environment where they feel comfortable. The HR management achieves such an

important role in the organization by being a mediator among the organizational members in case

of a conflict. On the other hand, HR management also ensures that the code of conduct is

followed by the people. By ensuring this, the department ensures that the employees are in line

and conflict situation does not arise20.

Another important role of the HR management is to ensure that the employees are communicated

the ethical requirements and expectations. This includes the ethical standards related to the

fulfilment of duties assigned to the employees and managers alike. This ensures that the

employees do not use unfair means in order to achieve the goals they set. This will lead to ethical

attainment of goals. Furthermore, this will also ensure that the company management and

employees are using the prescribed means to add value to the organization21.

19
Hassan Danial Aslam et al., "Importance of Human Resource Management in 21st Century: A Theoretical
Perspective," International Journal of Human Resource Studies 3, no. 3 (2014): , doi:10.5296/ijhrs.v3i3.6255.
20
Ibid.
21
Tracy Wilcox and Diannah Lowry, "Human resource management and ethics," Human Resource Management in
a Global Context, 2012, , doi:10.1007/978-0-230-35885-0_6.
In addition to that, another role of HR management in the organization is to ensure that the

organization obtains the resource it needs. This means that the organization recruits the

employees that it needs. This will lead to the matching of the job to the right employee. This is

an important role since it is normally human resource department that advertises the job and

recruits the personnel. The description of job requirements as well as the outline of the company

culture and ethics to the new employees at the time of recruitment is a function carried out by the

HR management. Therefore, this department matches the applicants to the requirements, a

common issue faced by firms of technical operation. Consider the olive oil extraction plant

operated by NARC, the firm was not able to succeed because the company did not assure that the

staff is skilled enough to carry out the jobs assigned to them22.

This is an important concept for organizations and setups with high initial costs and maintenance

requirement. Since organizations like these require specific skills. A manufacturing plant

requires specific skills for the maintenance and running of the machinery installed. Therefore,

the HR management has to ensure that the company recruits the right personnel. In addition, the

technical management is responsible for the provision of correct technical training to the

employees from time to time. This is to ensure that the employees do not lag behind on the

technical changes brought in by the organization. In case newer machinery is installed, the

organization’s management has the role to train the employees about the maintenance and repair

schedule of the new machine so that the machine is operated correctly23.

22
Mark A. Youndt et al., "Human Resource Management, Manufacturing Strategy, and Firm
Performance," Academy of Management Journal 39, no. 4 (August 1, 1996):.
23
Ibid.
Human Resource Management Lapses and the Failure of

NARC Plant

Reviewing the case of NARC and the HR and technical management roles discussed above, it is

easy to identify certain errors that were present in the management of the plant. If the plant was

managed properly, the failure of the plant could have been avoided. A clear mismanagement is

evident from the behavior of the supervisory staff. As the case dictated, the managers were

neglectful on their part which led to a lack of discipline in the plant.

Bibliography

Ali, M., Arifullah, S., Memon, M.H. and Salam, A., 2008. Edible Oil Deficit and Its Impact on

Food Expenditure in Pakistan [with Comments]. The Pakistan Development Review,

pp.531-546.

NARC. "National Agricultural Research Centre." NARC, Islamabad. April 11, 2013. Accessed

December 05, 2017. http://www.parc.gov.pk/index.php/en/2013-04-11-06-13-50/narc-

islamabad.

NARC. "Vision of NARC." Vision. December 12, 2013. Accessed December 05, 2017.

http://www.parc.gov.pk/index.php/en/about-narc/2013-12-12-09-18-58.

NARC. "Project of Olive Promotion." Project of Olive Promotion. 2012. Accessed December 05,
2017. http://www.parc.gov.pk/index.php/en/olive-project-of-olive-promotion.
NARC. Five Years PARC Business Plan (2013-18). Report. Islamabad: NARC, 2013. 1-20.
Bratton, John, and Jeffrey Gold. Human resource management: theory and practice. London:
Palgrave Macmillan, 2017.
Bhattacharyya, Dipak Kumar. Human Resource Management. New Delhi, India.: Excel Books,
2012.
Parameswari, Naga, and V. Yuganhdar. "The Role of Human Resource Management in
Organizations." International Journal of Engineering Technology, Management and Applied
Sciences 3, no. 7 (2015): 58-63.
Aslam, Hassan Danial, Mehmood Aslam, Naeem Ali, and Badar Habib. "Importance of Human

Resource Management in 21st Century: A Theoretical Perspective." International Journal of

Human Resource Studies3, no. 3 (2014): 87. doi:10.5296/ijhrs.v3i3.6255.

Wilcox, Tracy, and Diannah Lowry. "Human resource management and ethics." Human

Resource Management in a Global Context, 2012, 98-124. doi:10.1007/978-0-230-35885-

0_6.
Appendix A: Interview Questions

1. What, according to you, led to the failure of the plant?

2. Were the staff communicated about the plant commission beforehand?

3. What were the main policies ensuring smooth functions at the organization?

4. Were the staff properly trained about the functioning of the plant?

5. Was the staff recruited on the basis of their skills in the area?

6. Was the higher management competent enough to manage the plant?

7. Were there any employee teams working in the plant?

8. If yes, was there a proper conflict resolution system in place?

9. Did the centralized HR management have enough power to resolve the issues decisively?

10. Were the employees communicated about the ethical requirements of the organization?

11. Were managers provided with leadership training and assessment?

12. Was there a proper feedback system between the employees and management?