By John Donovan
Today we publish the opening pages of Shell’s internal consultative document which, although directed at Shell’s Dutch employees, includes a detailed description of Shell’s proposed global organisation changes.
With regards to the Shell VP musical chairs analogy, a Shell Blog contributor has pointed out “50% of VPs would have to leave, and GM level even more.”
The content of the Shell document is all valuable, commercially sensitive insider information, most definitely not meant for consumption by the public, Shell shareholders, or Shell’s competitors.
Its publication ranks as a total humiliation for Shell senior management, Shell Global Security and Shell’s army of internal and external lawyers. The fact that it is published by a website operating under the domain name royaldutchshellplc.com, which Shell failed to seize in widely reported legal proceedings over a decade ago, only adds to the loss of corporate face.
BvB had advance notice but took no preventative action. Maybe he was distracted while day-dreaming about his new Mercedes 500e, or perhaps still reflecting on being caught out in a wiretapped unethical response to a police OPL 245 raid in progress at Shell HQ earlier this year.
More extensive extracts from the document will be published tomorrow.
The purpose of this document is to seek advice from the Dutch Staff Council with regard to the proposed changes within P&T in the Netherlands, specifically within PTP, PTE, PTI, PTD and PTU.
Next to this, as a consequence of the above-mentioned changes some immediate adjustments within the HR function and CP organisation and a small change within the Wells organisation are also needed and therefore also part of this RfA.
Please note this RfA describes the global organizational changes/ context for information, the requested advice is for the changes within the Netherlands only.
I request your advice based on article 25 of the WOR and I would appreciate if the Staff Council could give its advice by the 25th of September.
GLOBAL CASE FOR CHANGE
P&T’s Delivery Model work is an integral part of our drive, under PT2020, to improve productivity and capital efficiency and make a sustainable step change in Shell’s competitiveness. As the fifth PT2020 transformation theme – ‘Efficient and Effective Delivery organisation’ – it not only seeks to achieve a substantially more cost-effective delivery organisation (targeting a net cost reduction of 35% by end 2018 compared with 2015 actuals), it also addresses the “what” and the “how” of our work.
Our ambitions are far-reaching. We don’t only want to be the best in our industry, we want to match the very best industry players anywhere, so that people want to come and work for us. To do that, we need to create a world-class technical delivery organisation with a performance and commercial mindset, whose contribution is unique and vital to Shell’s performance and whose thought- leadership helps solve the challenging issues faced by the businesses.
We want our Projects, Technology and Operational Excellence capabilities recognised as providing significant value, well above industry benchmarks, with consistently competitive delivery tailored to the needs of each of line of business. We aim to better leverage the opportunities offered by digitalisation, big data, augmented reality, drones and more, building these into the way we, and our contractors, work. And, through greater empowerment and accountability, we want our people to be inspired and motivated to help P&T and Shell to deliver.
Case for Change
The case for transformational change in P&T is driven by fast-moving technological development, a highly competitive and changing energy market and an exciting new vision for Shell. PT2020 is making great progress, but the competition also continues to do well, and outside the oil and gas industry other industrial sectors are making enormous improvements in productivity, suggesting that simply beating our peers should not be the limit of our ambitions. At the same time, Shell’s portfolio is changing, with lower levels of investment, more divestments, more small projects and a greater number of NOV projects. There is more focus on assets that rigorously optimise cash generation, and technologies that improve our cost competitiveness. These changes, coupled with our desire to be in the optimum position to help deliver Shell’s strategy, require a different delivery model aligned with the needs of each of the businesses supported by P&T.
The Delivery Model Journey
In mid-2016, we began work on a new proposed Delivery Model (DM) for P&T across three core activities (Project Delivery, Asset Support, Technology Development and Deployment). The work also involved consideration of a new charging model. A first DM ‘Blueprint’ was discussed with the PTLT in late 2016 and a more detailed Blueprint was presented to the EC in April 2017. A great deal of the Blueprint focused on a more tailored way of delivering P&T’s capabilities to suit the projects and assets within the changing RDS portfolio. It also suggested making use of industry solutions as standard, building more replication and greater use of digitalisation inside Shell, adopting new approaches to working with 3rd parties and changing our ways of working and expectations across P&T and the businesses.
Our DM work represents an ambitious suite of complex and interconnected changes impacting processes, systems, structure, organization and ways of working which will culminate over time in a transformation of P&T. It has to date been a series of steps to get us here and this next step (Wave 1 Delivery Model) represents a large and important re-set for the organization; the enabler for the improved delivery ambition outlined in the DM Blueprint and a base from which to continuously improve.
We expect to approach continued change through “Waves”. This Rfa represents Wave 1 ie; Technology, Project Delivery and Asset Support.
Our design guidance consists of three elements: Design principles, design requirements and sizing.
Principles: PRIME principles will apply: Greater partnering with UP, IG and DS to provide technical solutions and be the technology ‘glue’, clearer accountability to allow integrated technical contribution in the front end and smoother flow through decision gates to drive improved performance for Shell, leveraging the P&T expertise base and deepening capability. Accountabilities and handoffs between LoBs and P&T will be streamlined. Business/asset interfaces will be simplified with a maximum number of reporting lines into a country. Strong structures for governing RDS technical functional capability will be put in place.
Requirements: Clear lines of accountability are required with decision-making at the lowest appropriate level. Spans of control will, on average, be at least six. And there will be a maximum of 7-8 organisational levels. Individual contributor roles at manager and above will be minimised. The conditions for an agile organisation must be created with, for instance, multi-disciplined teams, co- location of resources, direct contact with the external world, transparent information systems and decision-making processes.
Sizing: Outsourcing will take place where activities are part of peak load or are non-differentiating or lower value-adding, and where labour arbitrage and synergies can be leveraged. We will aim to reduce our global dependency on ex-patriate positions and materially reduce the number of LC+ positions.
Proposal for high level Organisational Design
Our initial high level proposals can be summarised as follows:
Delivery Models Wave 1:
- One Technology organisation that consolidates all technology development and deployment activities, and provides end-to-end accountability for technology commercialisation.
- One Projects & Engineering organisation that better integrates Engineering with Projects, and one Asset Support organisation, consolidating dedicated, multi-skilled teams focused on a group of assets/per line of business. It is proposed that Service Management would move out of P&T to strengthen the interface with Production Excellence and IG.
- Wells organisation. The focus will be on opportunities to better integrate Wells Technology and the new end-to-end Technology organisation.
- Upstream Development organisation – a proposed shift of service management and technology activities, and efficiency improvements to their own delivery organisation.
- C&P – limited proposals to adjust the C&P organisation as a result of the proposals above.
- PTHR- limited proposals to adjust the HR organisation as a result of the proposals above.Out of scope of Delivery Models wave 1 or under review for later wave(s) of Delivery Models
- The Safety & Environment (S&E) Technical Division is out of scope for Delivery Models, as proposed changes to create one integrated S&E organisation for P&T, and merge central activities with the S&E centres in Upstream and IG, are already in staff consultation.
- C&P continues to be on its own change journey to become more affordable and effective with a simplified organisational structure that has more senior roles at the frontline fully aligned to the business, supported by a leaner “central office” and full leveraging of our SBOs.
- The TaCIT organisation, which has also been undergoing its own change journey, will be considered as part of a later wave, with the intention to review its current operating model to implement further synergies and reduced interfaces within P&T and the IT function at a later date.
- The ASU Organisation
Explanation of proposals in diagram format