POSTING BY A SHELL INSIDER: “JO BLOW”
The state of Accountability within Royal Swiss err.. I mean Dutch Shell
After the recent announcements concerning moving more of the finance functions to shared service centers in India and Manilla I thought now would be a perfect time to make a few points that are obvious to me. If we all recall last May, the Board of Directors for RDS came under intense fire from shareholders on the disparity between executive pay packages versus performance. Mr. Voser apparently heard the cry and began cutting fixed cost immediately, however the question remains whether his cost cutting will be effective and sustainable. In my humble opinion all he has accomplished is short term cost reduction, I don’t see that he has fixed anything culturally that will translate to sustainable cost structure improvement. At this point you may be saying “but Jo, these folks he got rid of are not coming back so that cost reduction is permanent”, and ordinarily I might be inclined to agree with you. The fact of the matter is simple he did not hold the people accountable that created the bloated cost structure, he promoted them. This does not really suprise me in the least because despite the corporate claims, Accountability for actions does not exist, I will qaulify this assertion with a few specific points.
What was Mr. Van der Veer given for his contribution to the state of Shell Oil today? A big fat pay package that outraged share holders.
What happened to the brain trust that created the bloated cost structure Shell operates in today? Massive IT projects that never delivered the promises of improved efficiency, Support sections like Finance and HR that are empires in themselves. Shell Global Solutions, our own internal technology group that cost a business unit more to use then they lose by not inviting them in. If you want to know where these folks are, just take a peek in EC-1 through EC-3, you will find them there. I doubt that they have learned any valuable teachings about accountability.
Who was fired or disciplined for the poor performance of the Crude Expansion project at Port Arthur? I can tell you that it was not the Venture Manager Forrest Lauher. Under Lauher’s control the project budget escalated from a 7.2 billion dollar project to north of 10 billion, productivity in the field did not exist, the managing contractor had sufficient control of the project to work it as a schedule driven project instead of the cost driven project it had always been. Where was Mr. Lauher during all this? I would expect he was up at the Lake with his buddy Mr. Purves. What happened to Mr. Lauher after the meltdown and re-organization of the project? Well, He got him a nice little promotion to GM of Port Arthur Refinery instead of the pink slip that he deserved if held accountable for his poor management.
The vast majority of people that have been or will be let go as part of Transition 09 had nothing to do with creating the problems, but they are the people that will pay the price. The jobs in finance and that will be migrated to India and Manila were not created by the employee filling the job, but by some executive. Do you think that executive will be held accountable for his apparent bad decision to create a bloated finance section that cost to much to operate? Until Shell makes meaningful changes to its culture at the top leadership levels the sustainability of cost improvement will not exist.