Transformation of Shell
Transformation of Shell
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In the late 1990’s, Shell underwent transformation - Transformation of Shell introduction. The key changes that Shell made in the area of organization structure and culture, relationship with stakeholders, reporting practices and business principles. They changed their organization structure from a matrix form of organization (where the chief executive of the National operating companies reported to two superiors) to a single line of command.
They undertook a series of interrelated initiatives aimed at improving their social and environment performance and the public’s perception of its corporate citizenship. To do this, they studied society’s perceptions of the company, reviewed their company’s business principles and adopted a new approach of reporting social and environmental performance to stakeholders. The revised principles were adopted by all operating companies and it was made a requirement that each operating company audited their principles annually for compliance. In relationship with shareholders, Resolution 10 was placed during their AGM. This resolution was to take 3 steps which were to place a director in charge of environmental and corporate responsibility; to monitor, externally audit and report to shareholders on its environmental and social policies, and to issue a report by the end of the year on the company’s operations in Nigeria. This resolution generated intense media and investor interest. Resolution 10 failed but the company moved in to institute a social accountability team.
The most importance cause of Shell’s transformation was a need to change their view to meet society expectations. Their organization was very technical minded and bureaucratic blinding them to what the world out there wanted. The organization had purposed to take a new approach of identifying with customer needs since the customer is the king. I think company was motivated more by external pressure than internal pressure. Looking at the commitment the company took to make up with their past controversies, it is clear the changed was driven more externally.
I believe Shell was sincere in the changes it made. This is because top management was wholly involved in the changes. They made the changes after holding a series of retreats with the top management and during these meetings; they identified the gap that existed between the company and the society. We also find that they involved a number of consultants in the change process and this was an indication they wanted to get it right. They also held dialogues to review the past controversies and this showed genuine commitment and accountability.