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10,000 of Shell’s global workforce of 102,000 likely to go?

The Times

July 27, 2009

Shell cuts up to 600 top jobs in Voser’s overhaul

Robin Pagnamenta, Energy Editor

Royal Dutch Shell is poised to announce a fresh wave of cuts in senior jobs this week as Peter Voser, the new chief executive, intensifies an aggressive restructuring drive within Europe’s largest company.

The Anglo-Dutch oil company will reveal alongside its interim results on Thursday that up to a quarter of its senior management — between 500 and 600 people globally — will lose their jobs in the coming weeks. The cuts represent the climax of a huge shake-up under way in Shell, of which Mr Voser, who is Swiss, took full control from Jeroen van der Veer this month. The redundancies will mark one of the most far-reaching management overhauls in a successful multinational group undertaken by an incoming chief executive.

Mr Voser, who stepped up from his job as chief financial officer, has already trimmed the number of executive directors who sit on the company’s board from five to three, which led to the departure of Linda Cook, Shell’s chief of gas and power and its most senior woman executive.

Mr Voser has eliminated about a quarter of the 80 or so top-level management positions immediately below Shell’s executive committee. The next tranche of departures, to be outlined this week, will involve the layer of managerial positions below this.

The largest number of these redundancies are expected to be in The Hague, where 2,000 people work at Shell’s global headquarters. Many will be drawn from Ms Cook’s former gas and power division, one of the company’s three former upstream businesses that are being folded into two new regional units: Upstream Americas and Upstream International.

Further cuts are expected, including in the UK, where Shell employs 8,500 people and where its global downstream and marketing division is based in the Shell Centre in London.

The global programme of de-layering in Shell is aimed at streamlining the company into a less bureaucratic organisation on the lines of ExxonMobil, the US market leader. The aim is to complete the overhaul by the end of the year.

Robin West, the chairman and founder of PFC Energy, an industry consultancy based in Washington, said that Mr Voser was confronting deep-seated cultural issues in the company that no executive had dared to address in the 102 years since the company was formed by merger.

“It has become very clear very quickly that he is going to run Shell, Shell isn’t going to run him, and that’s a very profound change,” Mr West said. “Decisions will be made more quickly and there will be a higher level of accountability. He is going to continue to cut costs dramatically. Some parts of Shell seem to have operated more for the benefit of the people in the organisation rather than for the shareholders. He is going to cut down a lot of that.”

Analysts expect that about 10,000 of Shell’s global workforce of 102,000 are likely to go under the restructuring, which was launched on May 27 at a meeting of 200 of the group’s senior executives in Berlin. Many of them were told that they would have to reapply for their jobs.

Mr Voser is also creating a new projects and technology division that will manage everything from research and development to project delivery and procurement.

Shell, which reported profits of more than $26 billion last year, is expected to reveal lacklustre second-quarter earnings this week on the back of a lower oil price than during the same period a year ago.

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