Daily Telegraph (UK): Plain talk: when leadership fuels discontent: “Perceptions are the realities you and I live with, and if we think that management is not fit to lead, we just won't follow them. That is what appears to be occurring at Shell.”: “"Without exception, every Shell person I have met recently has asked me if I am able to help them find something else. Others are leaving without even waiting to find another job. The people who are leaving are those who have the skills and knowledge to get Shell out of its current hole. This is undoubtedly a very serious issue." “No kidding.”: "Shell's chief executive Jeroen van der Veer does seem to realise that the company has problems his senior team needs to address. But it is a bit perplexing that last year he said that both his and Malcolm Brinded's... "heads were on the block" because of the mess that Shell was in. They are both still there and the internal mess has not gone away." (ShellNews.net) 10 Feb 05

Dr James Rieley tackles management issues head on

 (Filed: 10/02/2005) 

Shell is in the news once again, for good reasons and bad. Profits from pumping out its $50-dollar-a-barrel reserves – which were again restated – hit a record-breaking $17.6 billion. But in reports published a few days before the financial figures, it emerged there has been a dramatic drop in the number of employees who believe that the energy giant is being well led.

Reports on a leaked survey of Shell staff stated: "morale problems are acute in the exploration and production division". This is exactly the same division that was responsible for over-stating the company's reserves of oil. Does this suggest that poor management decisions influence staff morale? And if it does, what are they doing about it?

The power of company morale should not be underestimated - it can make or break a company. Too often, management teams make the foolish assumption that low morale will improve in good times, and all they have to do is make the times good again.

But in the case of Royal Dutch/Shell, times should be good. With the price of oil finding new high levels, profits are rolling into the coffers of their headquarters.

So if profitability is not the big issue, what exactly is going on? The answer is probably that the mid-managers and employees who were part of the Shell's "people survey" think that the people at the top are not fit to lead the company. This too is not surprising.

Making sound decisions (the lack of which is usually the great de-moraliser in business) is a function of management's competence in the four areas that this column touches on from time to time: how managers think about the challenges they face; how they influence others; how they go about achieving goals and targets; and how they demonstrate leadership.

It doesn't matter how managers talk about how they think, influence, achieve and lead. The only thing that matters is how others perceive that they do it.

Perceptions are the realities you and I live with, and if we think that management is not fit to lead, we just won't follow them. That is what appears to be occurring at Shell.

One report about the group's morale problems referred to one source as saying: "Without exception, every Shell person I have met recently has asked me if I am able to help them find something else. Others are leaving without even waiting to find another job. The people who are leaving are those who have the skills and knowledge to get Shell out of its current hole. This is undoubtedly a very serious issue." No kidding.

The real rub is that the people who will leave are the ones who are either trying to avoid being marked as incompetent or those who are good enough to get jobs somewhere else. Either way, Shell is deeper in the muck.

Companies that have serious morale issues need to be able to act quickly. First, the senior people need to take responsibility for what has occurred in the past, not just say they are sorry and then continue to do what they had done before. Either that or get out.

Second, they need to create a culture where communication flows both ways – downwards and upwards – and make sure that the communication is valued.

Third, they need to live the same values they expect everyone else in the organisation to live. Having the posh office means you probably get paid tons more than the guys doing the real work of a company, but it doesn't mean you have your own set of rules to live and work by.

Fourth, make sure that the rest of the people in the organisation feel valued for what they do. This doesn't mean put their salaries on the same level as yours but find ways to let them know that their work and their input genuinely is valued. Because if you don't, they will leave.

Now if you are a manager in a company other than Shell, don't sit back smugly because your company is not in the news. Go and find out what the people in your organisation really think about your ability to manage and lead. These lessons apply to you as well, and if you don't change the way you make decisions and improve morale, you will be in the news.

Shell's chief executive Jeroen van der Veer does seem to realise that the company has problems his senior team needs to address. But it is a bit perplexing that last year he said that both his and Malcolm Brinded's [head of Shell exploration and production] "heads were on the block" because of the mess that Shell was in.

They are both still there and the internal mess has not gone away. I'm sure Einstein said something about a person not being able to change outcomes by using the same thinking that produced the problem in the first place.

Dr James Rieley is the author of Gaming the System (Financial Times/Prentice Hall) and Plain Talk about Business Performance (PenPress). Dr Rieley can be contacted by e-mail at management@telegraph.co.uk. He is speaking at three free The Telegraph Business Club seminars: Coventry on February 17, Bristol on March 3, and London on March 16. Visit www.telegraphbusinessclub.co.uk

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/02/10/ccrie10.xml