Shell Company Oil Spills in Nigeria
Shell Company believes that oil and gas will remain an important aspect of economic and development of the world for many eras. They seek to maintain high standards of performance and to conserve long-term relations with the environment in which they operate . The Shell Company is one of the major providers of energy and petroleum in the world. Its operation started almost 200 hundred years ago in a small shop where they were selling antiques and see shell and now Shell company is one of the largest firms which provides energy and petroleum services.
According to Shell Global (n. d. ) the headquarter of Shell Company is situated in Hague of Netherlands and the parent company of Shell is situated in England and Wales and the Chief Executive Officer (CEO) of Shell Company is Mr. Peter Voser. Shell Company branches are located in 130 countries and has employed more than 93 thousand employee globally. In Nigeria, Shell Company is involved in Niger Delta to produce onshore oil and gas. This Company also produces offshore oil and gas in Gulf of Guinea and operates the first ever deep-water project of Nigeria.
According to Shell Global (n. d. ) one of the largest branches of Shell Company is Shell Petroleum Development Company (SPDC) in Nigeria which has joint venture with Nigerian Government’s Nigerian National Petroleum Corporation (NNPC). The ratios are divided in a method of 55% to Nigerian Government, 30% to Shell Company, 10% to ELF Petroleum Nigeria Ltd and 5% to AGIP. The operation of SPDC in Nigeria has added $38 billion to the Nigerian Government in the past five years (2007-2011) together with the taxes and royalty payments.
The Nigerian Government receives 95% of its profit from SPDC onshore oil and gas production in Niger Delta. In relation to Shell Company’s relation following are some key aspects. 1. 1. 1 Ethical Standards and Code of Conduct: The outlay of Shell Company’s ethical standards and issues are noted under the Company’s ethical code of conduct. The Shell Company employees cannot make decision which can involve conflict of interest. It is written in code of ethics that the employees of Shell Company cannot receive gifts or payments from the contractors or other involved parties with Shell Company.
The employees should behave fairly with the customers and should understand the nature of their diverse work and should never discriminate. The employees of Shell Company cannot take part in financial interest activities. They are strictly forbidden to interact with the contractors because they might transfer confidential information in times of bidding to the contractor. The Shell Company employees are required to maintain highest standards of honesty and integrity at work. 1. 1. 2 Social Investments:
Shell Company supports the community both directly in community development projects and indirectly through Shell independent foundation. The company aim is to understand the needs of local communities and to address the local community’s social and economic needs which is access to energy, there business development etc. Shell Company’s staff voluntarily contributes on different social and environmental projects around the world. The programs offered by Shell Company aims to support the young people so that they can set up their own business.
Shell Company expended about 13 billion dollars to the poor people with lower income on different humanitarian services. Maximum number of Shell Company employee in Nigeria is local Nigerian which is a good indication of job creation for the Nigerian citizens. 1. 1. 3 Environmental Contributions and Responsibilities: Shell Company works to avoid any sort of hazardous, this means that they strives to operate safely and according to the community inspection and maintenance. SPDC is dedicated and loyal in cleaning of the oil spills in the Niger Delta.
In the last five year (2008-2012) under a quarter of the oil spillage from SPDC was because of the operational causes such as human error or machinery miscarriage and for this operational spill Shell company has compensated people who has suffered. 1. 1. 4 Economic Involvement: The local Nigerian communities is being benefited in a wide ranged through the finances and supports of Shell Company and mean while the company pays a great portion of taxes and royalties to the Nigerian Government.
The Nigerian Government have earned about $38 billion form the taxes and royalties since 2007-2011 from Shell Company and this is a major contribution for the Nigerian Government in monetary terms. The Nigerian Government can use the funds in development sector, to increase the economic stability and to reduce the the poverty in the community. Adding to this Shell Company has donated $76. 3 million to Nigerian Government to enhance the community development projects, enhance skills training, agriculture and to support health care and small businesses.
In 2010 local Nigerian companies have earned approximately $947 million contracting number of awards with Shell Company. 1. 2 Background of the Study: For those who lives in third world country it is really disturbing to acknowledge and understand that the whole country is organized to serve a small group of people. The Nigerian Government is ignoring all the oil spill and pollutions harmed by Shell Company. The Shell Company does not have any way to estimate the amount of oil spills in Nigeria.
Shell Company power has influenced the Government of Nigeria and it’s people which has increase the hatred perception of people affected from the oil spills towards Shell Company and the Government because the people do not get anything from the revenue given by the Shell Company while on the other they are being affected through the destruction of their land, agriculture and other sources. The Government of Nigeria should compel Shell Company to commit the payment compensation of all the affected people in Nigeria. 1. 3 Objectives: 1.
To provide Shell Company Introduction, its operation in Niger Delta, its ethical issues and social responsibilities. 2. To provide concerns of different Stakeholders in Shell Oil Spillage as a wicked problem. 3. To provide literature sources and references of theories regarding the Shell Company’s oil spills in Niger Delta. 4. To illustrate the stakeholders (Investors, CEO and local Nigerian employee) responses to the oil spills in Niger Delta. 5. To create productive understating for the stakeholders about the oil spills of Shell Company. Chapter 2 2.
Wicked Problem and Stakeholders Sense Making Process: Wicked problem is a social or cultural problem which is very difficult or impossible to solve. In wicked situation the problem is not clearly defined due to which it is impossible to make solution for the problem. According to (Ezigbo, O. & Bassey, O. , 2010) The Shell Oil Spills in Nigeria is also said to be a wicked problem because media is spreading news that the Government is not taking any action against the Shell Company because the Government is influenced by the power and revenues given by Shell Company.
This also increases the hatred perception of the people towards the Shell Company. Another major problem is that the people affected by the oil spill are concerned and curious that whether they will receive the compensation against the disaster happened in their lands and agricultures or will Shell Company clean the places affected by the oil spills. The People is also curious to know that even if the oil spills are cleaned by the Shell company the effects of oil spills will remain there for several years.
In order to solve this wicked problem multiple approaches should be used. Conklin, E. and Weil, W. (1997) states that “There are many stakeholders-people who care about or have something at stake in how the problem is resolved”. Following are the explanations to this wicked problem in respect of the three stakeholders of the Shell Oil Company. 1. The Shell Investors Viewpoint 2. The CEO Viewpoint 3. The Local Nigerian Shell Company Employee Viewpoint 2. 1.
1 The Shell Investors Viewpoint: The Investors in Shell Company being caught up in such a disaster situation of oil spills is a great concern. The Investors will be more concerned about their investments in the Nigeria due to which they would not be able to see what the situation is in community and if the investors does not take this substantial seriously and does not approach the problem correctly it will be a great loss both in short term and long term.
The investors can take social responsibility approach by cleaning the environment from the oil spills disaster which will help the investors in long term by securing their investments. The benefit of cleaning effort is that it will establish good reputation of the organization and it will be a good investment for the investors because it will enhance the credibility and can lead the organization to better position within the industry.
The investors can agree to the terms of Government and accept the compensation payment this will enhance the company’s image among the people of Nigeria. 2. 1. 2 The CEO Viewpoint: Leading the organization and controlling such wicked problem in a company requires serious and demanding leadership and the CEO should give full attention to this needs and concern of the company. The CEO can use sense-making and can involve other parties in order to find possible solution for solving the problem.
The CEO should deeply measure the situation and the needs and anxiety of stakeholders associated with the situation. If the CEO applies resilient questioning the can find a common ground where all the associated parties with the problem will be considered. If the Shell Company takes the lead, accept its environmental responsibility and start the cleaning effort, it will benefit both the company image and credibility among the society and also while doing the cleaning effort they will hire employee from the local community which will indirectly benefit the local economy.
The CEO can make a promise to public that the company will add new technologies and machineries in the company and can instruct the operational management to quickly handle this disaster. This action will give the stakeholders an image that the company is considering the rules and regulations of the Government as well as they care for the public. It will reassure the Shell Company image among Nigerian Government considerably that Shell Company is taking into consideration the ethics and operational standards of Nigeria.
If the CEO approaches this way it will compel the investors to think that the company is going on the right way and if the company achieves this approach the company will attain the public acclaims and praises which will benefit Shell Company in long term as the public will assume that even in time of disaster Shell Company is fulfilling their responsibilities and is caring for the Nigerian Government and Public.
The Local Nigerian Shell Company Employee Viewpoint: For local Nigerian Shell employee this issue will be very difficult because the employee will not be able to make decision regarding whether he/she should take the organization side or the Nigerian Government and Nigerian public side.
The employee reaches to state where on one side the public and Government will develop thoughts the employee is working against the community they are harming the local community and destroying the environment through exerting oil spill pollutions and on the other side the employee should work in order to compensate the needs of their family members, their living costs and by working in such a Global organization the employee can earn more and can easily fulfill the needs of family members.
In Such situation the employees cannot make decision regarding the company because the employee themselves tries hard to hide their identity because everyone is pointing finger on the company they works which may result to conflict between the employee and community members. The employee cannot decide to be on which side because such situation can affect the employee’s loyalty as well as can develop questions on the ethical and moral standards of the corporation.
If the organization makes a social responsible response such as starting the cleaning effort so in that situation the employee will get encouraged and will take the responsibility to work both in company and will also take active part in the social context which will be a great approach for solving this wicked problem. If the organization does not consider the social responsible response then it will affect the employee’s loyalty and ethical standard and will produce a state in which the employee is forced to choose one among the company and the public. 2. 2 Literature Reviews and Sources:
Decision Making: Brook (2009) states that “Poor decision making is often the result of short-term target setting, which is a particular feature of the decision processes of chief executives who are on fixed-term contracts”. In week seven I have learned different approaches of decision making process and the approach that I think the CEO should use is ‘bounded rationality decision’ because in bounded rationality the CEO will make the decision that the CEO first come across which is the CEO should compensate the people affected by the spillage and to clean the oil spillage.
The CEO should use ‘bounded rationality decision’ because on one side the CEO have limited information about the problem that what the stakeholders will if the CEO do not compensate them or do not clean the oil spillage and on the other side the CEO has finite time to make decision. Donaldson, T. & Preston, L. E. (1995) defines that in a survey it was found that 80% of the senior manager were not working to according to ethical code of the organization because the managers, employees and customers were thinking that they are not being valued by the organization instead the organization was giving values only the shareholders.
If the organization do favoritism in decision making process it will harm the organization in long term because after the decision is made the employee will not implement the decision which will decrease the organizational productivity. If the organization involves all the stakeholders in decision making then after the decision is made everyone will agree to the decision will favorably implement the decision. 2. 2. 2 Shell Oil Spill a Wicked Problem: Shell Company oil spills are clear indicator of wicked problem and as we have studied in past weeks regarding wicked problems there is no true solution because the problem is not definitive.
In order to solve the wicked problem a leader should first understand the problem that what is the problem and to understand the problem the leader should analyze and gather data regarding the problem. When the leader gathered data then he/she will implement that data in order to solve the problem. The shell company wicked problem solving involves following process. 1. Data Gathering: The CEO should gather data regarding the oil spillage the stakeholders associated with oil spills so that the CEO can find a solution. 2.
Data Analysis: When the CEO gathered data regarding the oil spillage and associated stakeholders the CEO should analyze the data and form multiple solutions for this wicked problem. 3. Implementation of Solution: The CEO should consider and implement the best solution regarding the wicked problem. The CEO should consider the approach step by step. The CEO should not implement the gather data regarding the oil spillage without analyzing the data. The CEO should find solution and implement that solution which will not be effective.
For a wicked problem there is no clean solution because the bases of such problem are not defined and that is why every wicked problem is managed differently. 2. 2. 3 The Associated Stakeholders: Stakeholders are people who have some sort of interest in the project or company. The primary stakeholders of the company are the investors (Shareholders), the employees, the company customers and suppliers while the secondary stakeholder’s are those who are associated with the company in one way or the other.
The Stakeholders can affect the organization as well as can be affected by the organization actions. In case of Shell oil company the identified stake holders are the investors, local employees, CEO, the Nigerian Government and the community’s members who are affected from the oil spills. It is really important that while making decision the CEO should consider all the different stakeholder of the organization. The CEO should make sure that when the decision is made it should involve all the associated stakeholders. 2. 2. 4 Primary and Secondary Stakeholder Perspectives:
In case of investors they should decrease the efforts of the charges on the company and should pay the compensation of $20 billion to the affected community members and Nigerian Government. In case of local Nigerian employee they want that all the charges regarding the oil spills gets solved so that they can state freely with no fear among the community that they are working with Shell Company because now they are also affected with this oil spill, the community members threat them badly because they think that these employees is also involved in the oil spillage process.
In case of CEO, he/she should make a decision that should favor everyone an as per the case study the best decision to pay the compensation and clean the areas affected by the oil spillage. In case the Nigerian Government, they want to compel Shell Company to compensate the remedies of the oil spills. In case the community members; they want the affected area clean from oil spillage. They also want to be compensated for oil spillage because they consider that even if the affected area is cleaned by the Shell Company still for few years the oil spillage will have effect on the environment.
Chapter 3 3. 1 Contrast between Various Leadership Styles: Throughout this module we have studied different types of leadership styles and approaches in relation to resolve wicked problem. This project will define the following three Leadership types. 1. Charismatic Leadership 2. Transactional Leadership 3. Transformational Leadership 3. 2 Charismatic Leadership: Charismatic Leadership is one of the best ways to boost and motivate the employees in order to achieve the organizational goals.
Charismatic leaders use their charms to handle and solve a problem. They have strong influence over the followers though which the can make the followers accomplish the given task. Charismatic leaders energize the environment and inspire the followers to give their best while performing an action. Charismatic leaders enhance the moral of the employees and decrease the anxiety of the employee in wicked situation. In many organizations it is observed that during difficult situation the employee moral gets down so is the case with Shell Company oil Spills.
The employee’s moral is depressed since they are in position where the community feels that they are working with a company which is harming the environment by exerting pollution in the society. The Community threats them and their family members gravely. In such case the employees can get offended from the situation and can damage the organization. The CEO should use charismatic leadership and should make the employees understand the oil spillage situation that it is not done intentionally by the company.
The CEO should make employees realize that the company feeling regretful for the happened situation and the company will attempt hard to solve this wicked problem. This way the employees moral will get motivated and boosted and they will strive in resolving the situation. 3. 3 Transactional Leadership: Transactional leaders set goals and objectives for the organization and require the followers to attain the goal and objectives with in the specified time.
If the employee achieves the goals and objective they get reward otherwise they are punished by the leaders in order to remain in compliance with the goals. In this leadership style the relationship between leader and manger is more of give and take which is if the employee achieve something he/she will receive something in return of it. The leaders closely monitors and controls the work of their followers that whether they are going on the right path or whether they are working in accordance to the plan given on not.
In case of Shell Company oil spillage the CEO can sit objectives to employees that the employees should spread good image of the Shell Company among the community by informing the community that Shell Company will fulfill it social responsibility of cleaning the oil spill and is also committed to do the compensation payment to those who are affected by this oil spills. This way the employee will receive appreciation from the Shell Company and Shell Company will sustain its good image among the community by fulfilling the ethical standards of the community.
Transformational Leadership: Transformational leaders are those who changes and transforms individuals. Transformational leadership is the skill to make the followers accept a changed and make them recover from a given situation. Transformational leadership can increases the organizations productivity and can result in organizational success because in this leadership styles the leaders give values to it followers. Transformational leaders are enthusiastic and passionate for the work they and is also concerned for others in helping them to perform well.
Transformational leadership highlights that leaders should consider individualized needs and should support the individuals. The transformational leaders create vision and inspire the individuals to achieve the vision. The transformational leaders engage there followers in a way so that they get committed and the follower also become a leader in future. In case of Shell Company the employees are really discouraged because of their association with the company which has harmed the environment. The CEO can use transformational leadership and can energize the employees by making them participate in cleaning of the oil spills in one way or other.
The CEO should require the employees to check all the machines and equipment’s that is used in manufacturing of oil so they company finds the discrepancies and divergence related to the machines. This will enhance employee morale and will energize them to work for the community’s bitterness. The CEO should also consult with the community heads which are affected by oil spillage and should assure them that their compensation will be paid the Shell Company. Chapter Four 4. 1 Conclusions and Recommendations: According to (Ezigbo, O. & Bassey, O., 2010) the Shell Company is not only considered responsible for by the local community, the Nigerian Government, the environmental association for this environmental tragedy happened due to oil spill but also Shell Company was blamed for environmental devastation that has happened over the 50 years by Nigerian Government. The Shell Company reaction to this situation will have a crucial impact over shaping its business reputation in Nigeria for long-term. Taking this into consideration Shell Company is going through a serious problem which will not only have impact on Shell Company but also to the entire nation of Nigeria.
In order to solve this issue Shell Company should work closely with the Nigerian government and the local community to find a common path. Shell Company should carefully use the leadership skills and strategies while dealing with the Nigerian Government and local community. Considering the stakeholder’s needs and distress, the CEO should manage to agree to the deal with the situation which is to accept its social responsibility and should deliver the compensation payment to the affected community and Nigerian Government as well the Shell Company should clean the environment in order to quite the media and NGO protest regarding Shell Company.
It is true that committing the compensation payment to the affected peoples and fulfilling the social responsibility of cleaning the oil spill will be costly to Shell Company upfront but this action will benefit the company in long-term and will establish a good image of the company among the society they operate and also in global market. It is true that the oil spillage has happened by Shell Company but the oil spillage was not done intentionally.
It is clear to everyone around the globe that Shell Company has either contracted or they by themselves have performed many of the humanitarian projects in order to enhance the social developments in the community. Shell Company has donated large amount of money to many communities for the betterment of that communities. The situation in Nigeria is very delicate and in order to resolve this delicate situation the CEO should use certain powers such as expert power, reward power and referent power.