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ShellNews.net: A song and dance at Shell: Astonishing revelations by a Shell Insider

Sir Philip Watts spaceman

(“SPACE, VISION AND STRATEGY”: Sir Philip Watts, sacked Shell Chairman who once donned a space suit at a meeting in Maastricht – details at foot of article)

Dear John

When I was cleaning up my old PC and migrating all data to a new model, I stumbled across some old stuff that I hope you will post on your site. I also have some comments to make as I have no other avenue to vent my frustration, anger and yes, sadness at what has happened to a company of which I was once proud to be associated. Now I am but one of many demoralised, disillusioned and disappointed employees waiting retirement.

It will show the world why Shell is nowadays in such a mess. Most senior managers of 10 years ago are still around, desperately hanging on to their jobs after using shareholders money to hire expensive lawyers to keep them out of jail. I have included some comments from an earlier letter since you now have a much larger audience.

Firstly, I will briefly mention the overall background to the mess in which we now find our company. I would then like to remind colleagues about a lucid Shell internal presentation document dated 26 June 2000. It is interesting and educational to reflect on the content and prophetic warnings six years on. I will conclude my musings with a rousing song which our beloved senior management will be overjoyed to hear and see on your website which I am sure will add even further to their affection for you and your father.

BACKGROUND

Great changes, such as the large reorganisation started by Cor Herkstroeter in 1994, created great stress in the workforce. These changes were considered unnecessary by Bob Sprague, one of the cleverest people who ever worked for Shell. But initially this was still fairly positive stress and it led to a feeling of freedom and desire to conquer and improve the world. Remember, at that time we were the biggest and the best oil company and had been since the mid 70s! So there was still a lot of latent know-how and professionalism around, which the company cannibalised in creating a ‘new Shell’ with ’self managing teams’, ‘Olympic targets’, ‘unleashing talent’ and other trendy nonsense. It even led to record profits in one year, I believe it was 1997.

THE MACARENA

Moody-Stuart took over the reins of power from Herkstroeter and unleashed another reorganisation, this time labelled “transformation” – the code word for mass redundancy in which we lost many of our best staff (and are still suffering the consequences).  Senior management made complete asses of them selves by dancing the Macarena at a Shell function.  During the Moody-Stuart tenure someone had the brainwave of setting up “hydrocarbon value creation teams”. The foundations for the reserves scandal were laid.

The company had got (with the explicit knowledge of the top brass) into the hands of people who were only motivated by personal rewards, and who smelled their chance. None of that ‘Enterprise First’ stuff. It was ‘Me first’ and all the snouts were in the trough and nobody wanted to take their snout out of the trough. Anyone complaining or making remarks that things were not right was publicly destroyed and removed. And those with their snouts in the trough started to make promises and ever more ridiculous demands. Explicit instructions to cook the books or ‘err on the high side’ were hardly given in written form or were at least well disguised. It was said and whispered in meetings, conferences and workshops and personal discussions during the annual staff evaluation time. There were clear instructions to aim for the impossible with those stretched targets and anyone who said he could go even further or higher was handsomely rewarded with promotions or fat bonuses.  Brinded was a real champion of this, he was #2 and later MD in Shell Expro and I believe they missed their business targets for 7 years in a row under his reign!

When Watts came to power (he actually stole that job at the time with his gorilla talk and behaviour) the pigs were truly feeding. Watts started his circus with new and bigger promises every year. And then it became unsustainable and the truth came out. We have internet, everyone knows what has happened and why it happened. Inflated reserves, massive fines, massive bad publicity which brought about the end of Anglo Dutch Shell in the form in which it had flourished for 100 years.

THE PRESENTATION

The internal presentation was made to Shell Exploration & Production senior managers, including Phil Watts. It shows very clearly that at that time, Shell E & P were embarking on another cycle of over-promise and under-delivery. The people in the Capital Allocation department (CA) had made very extensive analysis of past performance (against past promise) and showed there was a very distinct break in trends.

From 2001, all trends increase steeply at an angle of existing trends. Clearly a lot of hyperbole was built in to all the plans of all the operating companies. But the senior management of E & P (and therefore the senior management of Shell) did nothing: they simply did not want to hear. And with the power of hindsight, it turned out much worse than predicted, and Shell was only saved by the steep rise in oil prices.

A mixture of telling and prophetic headlines from the presentation:

Projects appear over-optimistic both in Exploration and Production

The Capital Allocation Process appears to be flawed with overstatements of key parameters to secure funds

We run the risk of initiating an Over-promise Under-delivery Cycle…..

Most large post-FID projects indicate underdelivery

New projects have very aggressive FID dates

Extremely optimistic when compared with history

LINK: Excom Early Look Business Plan 2000

THE SONG

They were all singing along with this attached song!!!! Nobody spoke up. The CMD danced the Macarena. People resigned because they saw Shell was going over the cliff. And still nobody woke up. Staff in the Philippines working on the Malampaya project signed some of their personal promises and goals with their own blood and pinned the documents on the wall of the office. And still nobody woke up.  Instead some bad apples took the power and started the period of promise over performance and removal of the non-believers. The result was the Reserves crisis and of late the Projects crisis. I hope someone will some day write a book on how a great company was destroyed in a short period.

If we go back to the heady days of Phil Watts, where he did some time-travelling to the future and returned in a horrendously expensive spacesuit to tell the large audience of the self proclaimed ‘Leaders’ of Shell that he had seen the future and liked it. Presumably we are in that future now. Since as a good born again Christian he would never lie, I can only assume he compared the current state of affairs with Hell. And this is indeed better than Hell (so he must be feeling more miserable by the day as he gets older and closer to the day of the final judgement….)!

I also remember a movie that Shell made in those days looking in the future. That was 2007 and a young Chinese woman was running Shell, from an office somewhere in Moscow!!!. Major problems were presented to her and by using the latest IT technology, she tapped three buttons to get all relevant information at her disposal and she solved these problems within seconds. But I apologise, there were no problems, there were only challenges. She exhibited no stress at all. Could go home early to look after the kids, Shell had self managing teams and needed only a minimum of steering. So, if it was all correct, we can see Jeroen stepping down soon and making room for this Chinese woman who will sort out Sakhalin in no time. But since there is no Chinese woman in sight near the top, either the head-hunters are making overtime or Linda Cook may have to take that role. Fortune telling is no hard science after all and we can forgive the LEAP people to only get the type of woman wrong.

The attachments are the lyrics of a song as well as the song itself. I do not know whether you are allowed to publish the song without breaking copyright laws.

All this emanated from the collective madness that gripped Shell. The leaders of that day (most still on active duty now) created LEAP and this was used as an engine to transform the company. The transformation is now nearly complete and Shell is also wrecked. Putin will soon put them out of misery it appears.

The inventor and director of LEAP was Gary Steel, one of many HR gurus that blindly followed the ideas of the big bosses. His motto was ‘me first rest later and always agree with the boss’. He was the one that got the CMD dancing the Macarena. In itself a great achievement. I bet they still feel bad about it. Steel is now HR director in ABB http://www.abb.com/cawp/abbzh253/3e6d078754bd3b43c1256d41005119f1.aspx

Poor staff in ABB, I feel sorry for them.

In the meantime I will bide my time in Shell. The pay is good, some work is half interesting and it will last my days until retirement. And I can watch them squirm. I can also enjoy the amusing spectacle of the pompous windbag John Hofmeister peddling his PR bullshit in a 50 city tour of America as President of Shell Oil. This swollen headed throw back to the days of snake oil salesman will surely need to buy a larger Stetson. More empty words and promises instead of truth and integrity. The days when we could be sure of Shell are long gone.

Presumably you will understand why this has to be anonymous.

AUDIO LINK FOR THE SONG “WE ARE ALL WINNERS”:

The Lyrics

GROWING AND WINNING (WE ARE THE WORLD)
THERE CAME A TIME
WHEN WE  HEED A CERTAIN CALL
FOR CHANGE , WE NEED TO BOND TOGETHER AS ONE

NOW WE’RE ON A JOURNEY
TO STREAMLINE THE WAY WE WORK
AND BUILD A GLOBAL ENTERPRISE

WE HAVE MOVED ON, GROWING DAY BY DAY
SHARING STRENGTHS, WE PRACTICE WHAT IS BEST
WE ARE ALL A PART OF
SHELL’S GLOBAL FAMILY
DOING WORK ALIGNED WITH EVERYONE
(Chorus)
WE ARE THE BEST
WE ARE ALL WINNERS
WE ARE THE ONE’S WHO HAVE MADE THE CHANGE
WE’VE GROWN THE BUSINESS
WE ARE SHELL’S TOMORROW
B2B, WE’RE ONE GREAT TEAM
WITH OUR SPACE, VISION AND STRATEGY
WE WILL SUCCEED

WE’LL WORK WITH OUR PEERS
CAUSE THEY’RE PART OF OUR TEAM
HAND IN HAND WE’LL BUILD THE VISION WE PLANNED

OUR HIGHEST GOAL IS TO BE THE CUSTOMER’S BEST CHOICE
FOR THE TEAM, WE MUST LEND A HELPING HAND
Repeat Chorus

WHEN TRIALS ABOUND
OUR MISSION SEEMS IMPOSSIBLE
BUT IF YOU JUST BELIEVE
THERE’S NO WAY WE WILL FALL

WELL, WELL, WELL, LET’S REALIZE
THESE TRIALS WE’LL OVERCOME
WHEN WE…..STAND TOGETHER AS ONE
Repeat Chorus

SONG THANKFULLY ENDS

*”SPACE, VISION AND STRATEGY”: Sir Philip Watts, sacked Shell Group Chairman who once donned a space suit at a meeting in Maastricht, Netherlands, in 1998 to pump up his troops. Subsequently defendant in various US class action law suits arising from his role in reserves fraud. Shell already agreed to settle some lawsuits at cost of over $100 million and has set aside $500 million to settle the largest one. Sir Philip was rewarded by Royal Dutch Shell with $18 million pension pot/settlement for destroying Shell’s reputation. This description added by John Donovan)

1 Comment on “ShellNews.net: A song and dance at Shell: Astonishing revelations by a Shell Insider”

  1. #1 Sudhir Jatar
    on Dec 27th, 2006 at 01:08

    I thought this happens only in the public sector!

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