A change in a company’s leadership can trigger a shift in strategy and is usually followed by periods of convergence. The convergence periods are characterized by small incremental changes which have both advantages and disadvantages. A company leader with high social intelligence can leverage on the advantages of the convergence period and reduce the effects of possible disadvantageous factors, by implementing the principles of evidence based management. This research paper evaluates Shell’s performance against the principles of evidence-based management; it identifies the company’s points of convergence in the last five years and finally discusses two social intelligences qualities best characterized by the Chief Executive Officer, Peter Voser. Royal Dutch Shell Increases Performance Using Evidence-Based Management The Shell 2012 Annual report highlighted progress in performance and some achievement in the company’s operations and business activities.
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The review by the Chief Executive Officer, Peter Voser, identifies accomplishments in 2012 by continuous expansion of company’s portfolio and harnessing innovation. This has helped underpin Shell’s strong record in growth rate in earnings per share and cash flow from operating activities over the past. Records of past success stories in notable conventional exploration discoveries and appraisals, helped to push Shell’s portfolio expansion; adding to new exploration acreage in 2012 and positions in liquid-rich shale. In harnessing innovation, shell continues to fine-tune existing global businesses and network of technology to support new business opportunities; building its future by investing in project that help drive growth. (Shell, 2012) Critically looking into some obvious factors has helped Shell reduce its exposure to risks.
The possible effects of risk from the global macro-environment were considered when Shell analyzed its risk factors. Even though Shell may not have a material adverse effect as in time of a sovereign debt downgrade or default, their partners and customers may be exposed and that could weaken their ability to meet their commitment to shell (Shell, 2012). The spending power of an individual can be greatly influenced by activities of ruling power in a nation. This analysis shows taking a different look at the effect of macroeconomic activities on the business from
Page 2 Management and Leadership- A case study of Royal Dutch Shell Essay
the outsider’s viewpoint and realizing that seemingly inconsequential things can make a big difference. Building on this evidence, Shell is able to looks other ways to mitigate risks on the company’s profit generation, and reduce cost that could be passed on to customers. Shell’s achieved its biggest success story of 2011, gaining Gas Leadership by starting up Pearl GTL in Qatar, the largest gas-to-liquid project in the world. The world demand for cleaner energy is growing rapidly, a fact that facilitated construction of Pearl GTL to make tomorrow’s fuels and lubricants from clean-burning natural gas. (Shell, 2010) Peter voser used an implementation principle of evidence-based management “master the obvious and mundane” (Pfeffer & Sutton, 2006) as a key component in his restructuring programme at shell.
He assumed you need the people who are closest to areas where you are operating or in areas of possible opportunities if you want to get business opportunities in the portfolio for long-term growth (World of CEOs, 2013). Better decision quality can be made and cost will definitely be save when both very obvious facts and trivial details are considered. The company applied the strategy to have the key staff in the field and streamline the amount of time spent on management meetings. Royal Dutch Shell’s Points of Convergence in the last five years After the appointment of Peter Voser as the Chief Executive Officer of Royal Dutch Shell in July 2009, it took Peter about seven months reorientation period to change Shell’s Organizational Structure (Karlgaard, 2012). The company saw large incremental changes as Peter to hit the ground running with his plans to reinvigorate the business after period of reorientation. He was set to use his proven record on restructuring and cost-cutting experience to enhance precision on strategy and requirement on operational performance.
This commitment to strategy refined policies and procedures in the organizational structure, and change the company’s culture by identify roles and relationships. Shell moved from the customs of debating management decisions to that of swiftly implementing them; which made the company more efficient in carrying out its strategy. (EuropeanCEO, 2010) As with every incremental changes made during the period of convergence, there are advantages and disadvantages (Yukl, 2001). In focusing on performance delivery, Peter spoke in an interview with the CNN Money, “[…..] You need to measure performance, have resources to deal with the highest priorities, and leave behind anything that isn’t necessary to carry”. Over 5000 jobs were left behind in 2009, many of which were in middle management levels; confirming Peter’s conviction that vision is driven mainly at the top and by frontline managers (EuropenCEO, 2010). Notwithstanding, there were advantageous incremental changes during this period. A restructuring programme driven by Peter, called Transition 2009, delivered competence development schemes like the Shell Project Academy; developing people to their full potential and contributing to their performance improvement. (APM, 2012) Peter Voser’s Social Intelligence Qualities
The social intelligence qualities that best characterize Peter Voser are Teamwork and developing others. Peter Voser’s predominant emphasis on strategy, vision and performance operation, underpins his belief in giving people the freedom and the accountability. Particularly in his earlier stages in the CEO position, he stretches the need in development that to make shell competitively strong, it takes the input of every on in the shell group.
He established the Shell Project Academy, which was the heart of the drive to increase scale of projects and to centralize capability of projects and technology competence applications into one business. (APM, 2012)This is one result of the restructuring program and signals a key social intelligence quality, developing others. Peter also shows his passion for teamwork by setting up a CEO-25 group, a number of Shell staff from the different sectors Shell business come together a few times in a year to discuss strategy performance and operation issues. (World of CEOs, 2013) This helps employees to develop strategic planning skills and other executive management skills especially in terms of making decisions to tackle issues in an organization. Although Peter characterizes himself as understanding and down to earth person in his speech “I am not a big ego CEO” (Hoppe, 2009), his involvement in developing others and emphasis on teamwork has been most frequently observed. Conclusion
Shell is able to increase it performance by leveraging the evidence of past success and implementing the rules of the evidence based management. Shell implements the development programs during the convergence period under the leadership of Peter Voser, to teach employees to develop accountability and the right mindset of evidence-based management. Engaging employee in discussions of the strategic and operational issues, made them aware of their part to play in order to delivery on strategic performance. Peter Voser used the fact on existing project success stories, taking cognizance of the obvious situation to developed new projects. Implementing the evidence-based management principles, Shell was able to leverage on the advantages at points of convergence to increase company performance and profit with a rapid growth in price per earning, and to deliver on strategy as shown in the 2012 Annual Report.See More on Management