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Shell Transition 2009: Key thing to guard against is “Cronyism”

The key thing to ensure you guard against is “Cronyism” – this is a cancer that will spread rapidly and cause great affects to morale.

Greetings from Jo Blow,

It has been some time since my last post, and since I am finally settled in my life after Shell I thought I might offer my thoughts as I have continued to watch things unfold in “Transformation 09”.  It has been a great disappointment to me to see the way Shell has chosen to improve itself, I once held such a high opinion of Shell as a company. My entire life has been lived with Shell as a major part of it.  The company today is spiraling towards an uncertain future in my opinion.  I don’t say this out of bitterness or any other similar emotion, I say this out of logical clarity.  It is a proven fact that in any business, performance is based on 3 key tenets, Sound Strategy from Executive Leadership, High Levels of Performance from the men and women in the field, and market conditions for your product or service.  Now we all know that we can’t control the market in the Oil and Gas business, it will ebb and tide based on a diverse mixture of variables.  That only leaves us with the 2 things that we can control, Strategy, and People Performance.

So lets for the moment assume that Mr. Voser (above right) and his team has developed a sound strategy for performance and growth in the coming years.  I have read many articles indicating that he believes that they have, I personally am not qualified to question him here as I am just a common East Texas redneck.  So once again assuming the strategy is sound, its success is then dependent on the performance of the people in the functional areas of the business.  So in essence this means that the lower level executives have to do a good job communicating the key initiatives that their area of the business needs to deliver to contribute to the overall success.  At the field level, the people need to be suitably engaged and motivated towards delivering these initiatives.  If you have done all of these things right, in an ideal world you have just mastered 2 of the 3 key tenets for success.

Since my entire background is in US Downstream Manufacturing, I will use this functional area as the basis for my conclusions.  So once again we will assume that the strategy that EC-1 has developed is sound.  In Downstream Manufacturing this means a consolidated manufacturing footprint, a streamlined management and decision making process, lower fixed costs through a combination of reliability, efficiency, and overhead reduction.  Now, I suppose at this point you folks realize that this is really what is needed right, I mean at least from a dollars and cents view.  I imagine lots of folks out their in the rank and file would pump their fists at some of these concepts, well right up to the point that they realize that they are “Overhead”.  But again, I have said in past posts, and I will say  again, Shell is fat on people there is no way getting around this.  So that brings me to one of my favorite points, to be successful you must have a well engaged, highly motivated workforce executing your initiatives to realize success.  So how do you manage to cut people without affecting morale and motivation of the people that remain; well you seek to nab the poor performers first, followed by voluntary early retirements, and then if you need more cut then you move on to your average performers.  The key thing to ensure you guard against is “Cronyism” – this is a cancer that will spread rapidly and cause great affects to morale.  Unfortunately this was not how the reductions have been handled thus far; in fact on the Gulf Coast there are numerous examples of long term employees that were consistent above average performers, in one swipe of the pen these folks IPFs were cut as much as in half.  When people become aware of this behavior, it impacts morale and motivation levels significantly.  Without the work of the rank and file, Mr. Voser cannot expect to achieve the strategy he has laid out with any hope of sustainability.

Regards,
Jo Blow

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