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Delusion at Shell

Daily Telegraph: Dr Rieley is wide of the mark on Shell’s ‘malaise’, writes a reader: the delusion of senior managers that because they had got to the top of Shell, and Shell was huge, they must be brilliant”: “No organisation can have had so many initiatives, change programmes and organisational upheavals.”

Posted 6 August 2004

LETTERS PAGE

I read your article with interest (Plain Talk July 29, Danger of not fixing it when it’s clearly broken).

I spent 20 years working for Shell and I am afraid your diagnosis of Shell’s problem is wide of the mark. Shell managers who are deemed to have potential traditionally have only stayed in a job a maximum of two and a half years. So they don’t have time to suffer from your “malaise”. The temptation is, on coming into a job, to rubbish the previous incumbent’s efforts and set an entirely new course safe in the knowledge that by the time you move on the problems associated with it will not have emerged. Skilled incompetence – which appears to mean a resistance to change – is also not a charge that can be laid at Shell’s door. No organisation can have had so many initiatives, change programmes and organisational upheavals.

Therein lies some clues to the real problems.

First: change for the sake of it. Once upon a time when the highly paid had new and original ideas in their bath on a Monday morning they had a middle manager to share it with. He would say either we have done this before and it didn’t work for the following reasons, or we will pilot this with the following skilled personnel and if it works, roll it out. Now that middle manager is tending his roses, the victim of downsizing, the highly paid rain down initiatives on their over-worked subordinates who spend huge amounts of their time in multi-functional project teams with no time for their day job. Service to customers erodes and no one is allowed to do their own job with their own targets. The effect is destruction of shareholder value – in Shell, examples can be found in outsourcing initiatives that cost more than the in-house version, E-business, SAP information technology projects, and ringing the changes on the full gamut of organisational structures.

Second: the managing upwards culture. Given the short-termism inherent in the length of their assignments Shell managers tended to seek easy options that further their boss’s, and their, careers and offer no resistance to bizarre notions from above.

Third: the effect produced from the above two diseases is a switched-off staff who are hit with waves of new panaceas and react with a weary cynicism. Stress grows and working hours multiply.

Fourth: the arrogance that many commentators have mentioned. It stems from the existence of priority shares in Royal Dutch, making the business immune to take-over; the delusion of senior managers that because they had got to the top of Shell, and Shell was huge, they must be brilliant; the dominance of engineers and marketers leading to a feeble finance function and a lack of appreciation of the need for compliance with the financial regulators; and the lack of external hiring for senior jobs making comparison with the market difficult and ensuring that the old hands could sabotage the few outside appointees.

The new management of Shell appear to have some understanding of these problems but changing the culture is not easy. I am sure other businesses have similar problems. Until we get back to the idea of management as a science and abandon the pseudo religious pursuit of internal change for its own sake, shareholders will continue to be ill-served.

Francis Dobbyn. Accounting and Investigations Services Limited, Semington, Wilts

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