As my fellow student, Sophie Barry described in her blog post “Employees Gone, Morale Gone”, “From boom to bust. Perhaps that can best describe the events that have unfolded in Calgary.” In September 2014, the price of oil plummeted to an unpredictable low and caused many Calgary companies in and out of the oil sector to take on drastic organizational change. The majority of oil companies in Calgary before the collapse of oil prices held an organizational structure that most closely resembles an mechanistic model. A mechanistic model is a design characterized by a structure characterized by high specialization, rigid departmentalization, a clear chain of command, narrow spans of control, and centralization.
With the plummeting profits came the need to cut costs within oil companies. The first step for any company to cut costs is to reduce wages costs by creating a leaner structure. This leaner structure was met through downsizing. As the oil sector is the beating heart and main industry of Calgary, when all 1538 energy businesses in Calgary took on emergency cost-minimization through downsizing, the effect was 60,000+ energy professionals being laid off and many of these professionals leaving Calgary to find work else where. This depletion in population has had adverse effects on other sectors as well due to reduction in customer base. This collateral effect of the collapse of the oil industry on other industries has effected my family personally as my brother, a recently graduated Sauder student, was let go from his position at a corporate bank in Calgary due to the tough financial time the city is facing. With Calgary being such a large city, people would not expect the collapse of one industry to cause the need for organization change city wide, but that is the nature of an oil industry heavy town: without warning city wide boom can turn to city wide bust.
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References:
Barry, S. (2017, February 5). Employees Gone, Morale Gone | Sophie Barry’s Blog. Retrieved March 25, 2017, from https://blogs.ubc.ca/sophiebarry/2017/02/05/57/
Burns and G.M. Stalker, The Management of Innovation (London: Travistock, 1961); and J.A. Courtright, G.T. Fairhurst, and L.E. Rogers, “Interaction Patterns in Organic and Mechanistic Systems,” Academy of Management Journal, December 1989, pp.773-802
Cattaneo, C. (2016, August 26). Jobless in Alberta: Tens of thousands of energy professionals are out of work and out of hope. Retrieved March 25, 2017, from http://business.financialpost.com/news/energy/jobless-in-alberta-tens-of-thousands-of-energy-professionals-are-out-of-work-and-out-of-hope
Kirbyson, G. (2015, November). Alberta feeling full brunt of oil price collapse. Retrieved March 25, 2017, from http://search.proquest.com/docview/1732234548?pq-origsite=summon&accountid=14656
Peters, A. (2015). Oil & Gas Industry | Calgary Economic Development. Retrieved March 25, 2017, from http://www.calgaryeconomicdevelopment.com/industries/focus-areas/energy/
