Being a Leader Final Project (Part 2

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A Study of Shell Nigeria Oil Company and its Stakeholders Part 2 (Week Seven)

A review of basic issues regarding the Background and Interests of Stakeholders of Shell Nigeria Oil Company

RICHARD M. EAILEY 15561671

Finally the findings of the investigation and possible solutions and recommendations for a resolution to this wicked problem would be put forward for discussion. performance. A local Shell Nigerian employee and A Shell investor. Secondly it looks at the various theories from different literature sources that relate to the Shell Nigeria Corporation and its operations in the Niger Delta region as it relates to the oil spillage problem and compensation sort by affected communities. contribution to national income and its contribution to keeping the environment green. the communities in which they operate and the response of the Shell Nigeria Oil corporation. The Shell Chief Executive Officer.Being a Leader Final Project (Part 2) 2 Chapter 1 Introduction The intent of this research project is to provide basic knowledge of The Royal Dutch Shell Corporation and the Shell Nigeria Oil Company and its operation in the Niger Delta in particular regarding its ethics. . social involvement. This is done from three different stakeholders prospective. This research starts with a background into the history and culture of the Shell oil company worldwide and in particular its Nigeria operations. Thirdly it looks specifically at the issue of this wicked problem of oil spills in the Nigeria and the different views of the politicians. It provides an insight to the extent of their operations worldwide and its contribution to the worlds’ energy demands and responsibility to minimizing pollution of the environment in which it operates worldwide.

It is headed by Chief Executive Officer Peter Voser and is located in The Hague. The CEO of Shell.Being a Leader Final Project (Part 2) Chapter 2 Introduction and Discussion of Theories and Models from the Literature In this chapter we would look at the Royal Dutch Shell Oil company operations worldwide and in particular the Nigeria operations from several different angles. Then we would look at this wicked problem with the oil spill in the Niger delta. The parent company The Royal Dutch Shell plc is incorporated in England and Wales. The company is located in over ninety countries worldwide and has a total staff of around ninety three thousand employees. In essence the code of ethics states the following: a. They should excuse themselves from any decision making process that may cause conflict of interest by affiliation and should advise about this in writing. The company boasts of having some of the most stringent code of ethics in the oil industry as well as some of the more environmentally friendly operations and safety records for oil and gas operations worldwide. They shall all act in accordance with the highest standards of honesty. 3 Shell is a global group of energy and petroleum companies. the Netherlands. We will look at how Shell Nigeria operations can impact upon the three stakeholders. integrity and fairness and that they should expect the same from others while maintaining a good work relationship that encourages that encourages the same. Ethics The company emphasizes adherence to its high ethical standards it has set in its code of ethics for all Directors and Senior Financial Officers. b. . According to Forbes Global 2000 the Royal Dutch Shell plc is the fifth largest company in the world. an investor and a local Shell employee.

“Shell’s standard for their ethics is considered an asset worth protecting at all cost. To this end they have invested in state of the art technology to enhance exploitation of reservoirs by extracting the maximum possible from wells. Should not have any financial interest in any contracts awarded by any Shell company or affiliates. Avoid any relationship with a contractor that may compromise transacting business in a professional fair and competitive basis. Operating in such a manner would boost a stakeholder like an investor confidence that the company would not run afoul of the laws. It is clear for anyone to see that Shell has very high standards of ethics engrained in its corporate profile. d. If any of these codes are broken it is the responsibility of any employee in the organization to report it without any fear of intimidation of victimization. These follow the many scandals of large corporations during recent times and the increasing investigations from regulators and the general public at large.” 4 Technology advancement Shell has pledged to continued enhancement of its operation by continually searching for new ways of producing energy in as safe and efficient a manner as possible. . e. Generally individual countries would have their regulations regarding code of ethics for corporations. Their facilities are engineered to the latest industry codes in order to maximize production while at the same time reducing the rate of plant and equipment failure and by extensions accidents. Good companies who preach high ethical standards generally operate above the minimum requirements set by these regulations. In todays’ world there is a strong emphasis on organizations and its managers being ethically strong. Should not accept third party gifts that may seem to impact their decision making on any particular issue related to awarding of contracts. They have reduced the flaring of gas from wells thus minimizing the carbon dioxide emitted to the atmosphere.Being a Leader Final Project (Part 2) c.

once the necessary skills are available. They adhere to all local environmental regulations and consult with the people in the community to work towards ways to continually improve the social and environmental performance. They have taken a decision to put back money into the communities by assistance with social projects both financially and by volunteering employee and technical assistance where necessary. They stated they are determined to be transparent in their response to oil spills and have launched a website to track their response to and clean up of all oil spills at their facilities. Similarly an investor would also be impressed by this because it would minimize the possibility of law suits which may inhibit the company to pay dividends. Shell Nigeria has even shown faith in local communities by letting them decide on and develop projects themselves while Shell takes care of the funding. In 2010 they spent 13 Billion dollars on goods and services from countries with lower income and over 121 million dollars in voluntary social investments in 2010. Shell has shown tremendous social responsibility by advising that it would take care of oil spills at their location even if the spills were an act of sabotage. From a stakeholder like a local Shell employee’s standpoint this is great news as they wouldn’t think they are working for a company that’s destroying their environment but rather enhancing the community. This would also help Shell’s image in the communities from which these employees come from. The environmental impact assessment captures all . Environmental responsibility Shell has insisted that they always do impact assessments by trying to identify the positive and negative impacts that can arise out of their activities.Being a Leader Final Project (Part 2) 5 Shell’s corporate social responsibility Shell insists on using as many employees as possible from the areas in which it operates.

Here again the investor would be impressed as important steps have been taken to protect the assets and the environment.1 Billion dollars on alternative energy development.Being a Leader Final Project (Part 2) relevant baseline data and goals are set and tracked throughout the life of the project.5 billion in royalties and taxes paid to the Nigerian government in 2010. Production capabilities Shell is responsible for two percent of the world’s oil production and 3. On the downstream side they operate over thirty refineries around the world that convert raw crude into lube oils. All of the above measures enhance the Shell CEO as a person who is highly concerned with not just making profits. This is evidenced by the phasing in of all barges to be double-hulled and achieving these seven years ahead of the European Union requirements. This again has a positive effect on the investor stakeholder as it shows the responsibility of Shell to take all necessary precautions before starting a 6 project which minimizes potential operational accidents to plant and environment which bodes well for longevity and stability which would encourage an investor to even invest more in the company. liquefied natural gas and a host of other products that the world depends on. Similarly all their ships that transport crude are all double-hulled in an effort to minimize spills from tankers. but doing so in a highly ethical and corporately social and responsible manner. Over the past five years they have spent over 2. carbon capture and storage. Shell awarded 947 million dollars worth of . Shell is a significant player in both the upstream part of the oil and gas business as well as the downstream aspects.3 percent of natural gas production. On the upstream side they search for oil and gas in every place around the world. Quality assurance Shell is committed to the highest quality standard as required by law of all countries in which it operates. Economic contribution Shell has contributed approximately 3. bitumen. gasoline.

”Individual s differs according to their personal beliefs etc. it’s a mistake people make.”A tame problem is stopped when it is solved. 4.” Every solution to a wicked problem is a "one-shot operation".8 million dollars to the Niger Delta development fund and 22.Being a Leader Final Project (Part 2) 7 contracts to Nigerian companies in 2010. (Rittel and Webber) suggest that there are ten criteria for wicked problems. . because there is no opportunity to learn by trial-and-error.” Wicked problems have no stopping rules. hence the suggestion by most experts that one comes up with resolutions rather than solutions to wicked problems. 3. Wicked problems It is quite clear to see that the issues present in this case make this a wicked problem.”One would have to go through an infinite amount of data to understand or solve a wicked problem 2. They contributed 59. every attempt counts significantly. 5. and thus has different perceptions on solutions. 1. Even thought the criteria seem to overlap and that some scholars advocate they be trimmed to five categories. but better or worse. Wicked problems can be defined as long complex. non linear type problems that often do not have any clear cut wrong or right solution to them. obscured. They tend to be like a virus that constantly mutating all the time.” There is no immediate and no ultimate test of a solution to a wicked problem. Ninety percent of employees employed in Nigeria are Nigerians. Wicked problems are resolved not solved so it never stops.9 million dollars to community development projects in 2010.”Any solution today will spark controversy about another possible solution the next day and so on. “Solutions to wicked problems are not true-or-false. “There is no definite formulation of a wicked problem.

10.”There are no guide lines for determining the right or wrong approach to solving wicked problems.Being a Leader Final Project (Part 2) 8 6. nor is there a well-described set of permissible operations that may be incorporated into the plan. usually political professional or generally social issues to which there is no right or wrong answer. and thus one should look for the right resolution that fits the right time. 2.”Every wicked problem has its own set of rules.” Wicked problems can seem to go to infinity. 8. The choice of explanation determines the nature of the problem's resolution.” Every wicked problem is essentially unique. 9.” [With wicked problems. There are no set patterns. 4. The question of how did the spillage occur? Was it operational or equipment failure? Was it sabotage? 3. “Every wicked problem can be considered to be a symptom of another [wicked] problem. “The causes of a wicked problem can be explained in numerous ways. The engagement of the services of unscrupulous companies lacking certification. Compensation for the people in the affected community. The issue of the oil spills.] the planner has no right to be wrong. Most wicked problems are stakeholder dependent. . Because unlike a tame problem which can be classified as linear in nature and can be approach in a logical problem solving manner and come up with a correct or incorrect solution.” 7.” Because a wicked problem can go on and on and on.” Wicked problems do not have an enumerable (or an exhaustively describable) set of potential solutions. it more than likely would have had its genesis from a previous wicked problem. This case is classified as a wicked problem because of the following issues: 1.

“persons or groups with legitimate interest in procedural or substantive aspects of corporate activity. 9 7. 1963. In other words the managers of corporation should encourage inputs from all stakeholders as a means to an end. Obviously there will be no support for an entity operating in this environment and it would be subject to protest and sabotage from residents of the community. growth and establishment. Stakeholders Stakeholders can be classified as. This would not auger well for the long term sustainability of the organization and certainly would not encourage a stakeholder like an investor to be interested in the business. “Stakeholders are those groups without whose support the organization would cease to exist. consider a scenario where the community is not taken into consideration and all employees are external to the region.e. . Dishonest government officials who may be in bed with the oil pirates. Whether or not the Government would mandate companies to clean up their spillages and pay adequately people who are affected. Stakeholders are identified by their interest in the corporation whether or not the corporation has any corresponding interest in them.” (Donaldson and Preston) In this case it is evident that the CEO. the organization’s ultimate goal of continuity.Being a Leader Final Project (Part 2) 5. The cutting out of all the illegal homemade refineries that are polluting the forests of the Niger Delta.1984:31). an investor and a local Nigerian employee are all stakeholders in Shell but albeit for their own different reasons. profitability. 6. To understand the principle of equal treatment to all stakeholders.” (SRI. This is further emphasized by the Stanford Research Institute quote. (Donaldson & Preston) further emphasizes that each stakeholder should be given equal attention at the same time. quoted in Freeman. i.

sociably and environmentally. it’s of paramount 10 importance for the CEO as a stakeholder to steward his organization to be at the cutting edge of all three facets and enhance his reputation as a leader. . This can affect the company’s’ ability to pay dividends. A local Shell employee may similarly have interest in Shells’ sustainability from a personal standpoint of job security as well as concerns for the ecological damages caused by spills that affect their families who depend on fishing and planting the land for survival. An investor stakeholder would be concerned about the stability and longevity of the company and would have issues with the possibility our huge law suits imposed on Shell for damage to the environment caused by oils spills.Being a Leader Final Project (Part 2) In today’s world where businesses are highly scrutinized for the way they operate both financial.

This is the basis for .Being a Leader Final Project (Part 2) 11 Chapter 3 An Examination of the Various Approaches to Leadership In this chapter we would review some of the different types of leadership which can be used by all the parties concerned to try and resolve this wicked problem. Transactional leadership Transactional leadership is basically like a give and take business relationship. One of the issues with situations like these is the aggrieved parties always make the assumption that the government is in collusion with the company and allow them to have their way for in exchange personal benefits (bribery). Charismatic leaders are people who seem to have been born with this innate ability to affect people’s inner emotions and get them to follow their lead. Charismatic leadership usually is a good enhancement to other forms of leadership. Charismatic leadership Charismatic leadership is where the leader has the ability to effectively communicate in such a manner that compels followers to be inspired and motivated emotionally. The following leader may not have any charismatic qualities. A modern day example of a charismatic leader is Nelson Mandela. However a leader should not just rely on charisma alone to lead as this can be a problem for succession planning. You have something I want and I have something you want.

Being a Leader Final Project (Part 2) the term as it is in fact a tran-saction. Throughout the eight fast paced weeks of this module on leadership I have been enlighten by the knowledge gained from the literature as well as the invaluable exchanges with my fellow students and instructor over the blackboard discussing various topics. Here the leader is known to have control over his or her followers and can provide reward or punishment depending on whether a deed gets done or not. Also it was amazing to see how . Transactional leadership doesn’t guarantee loyalty from one’s follower. Intellectual stimulation. (stimulating others) and Individualized consideration: (coaching and developing others). Usually transformational leadership is intertwined with charismatic leadership as leaders of this disposition tend to inspire and motivate followers to go way beyond the call of duty without looking for any reward. transformational leaders display behaviors associated with five transformational styles: “Idealized behaviors: (living one’s ideals). 12 Transformational leadership Trans-formational leadership seeks to form a partnership where the leader and followers work together for the good of the organization or cause and seek to effect changes that would transform the situation into something mutually acceptable to both parties. According to Bass and Avolio. This is where I have learned tremendously because we are all from different cultural backgrounds and what we may take for granted in our part of the world is not necessarily so in others. Transactional leadership is deemed to be old school leadership by some people. This way they achieve higher levels of achievements than they would have as individuals. 1994) Transformational leaders can therefore be looked at as a sort of mentor and motivator that encourages individual members to look beyond their individualism and seek to enhance each other for the benefit of the whole group. Inspirational motivation: (inspiring others). however it is still one of the more common forms of leadership in the world today. unlike transactional leadership.” (Bass and Avolio.

Sanjiv Ahuja–Chairman. This would have involved keeping meetings with the head of all the main stakeholder groups. the communities in the affected areas. As (Margolis and Stoltz 2010) stated. I would have used a collaborative approach to resolve this situation as well as follow the transformational leadership approach. I would gather a group of my top executives in Shell Petroleum Development Company of Nigeria headed by the CEO and first get all the facts of the situation in the Niger Delta region. I would stand by the Shell brand of ethics and do a presentation of all that Shell has done for the communities and what it has contributed to the development of the country as well as the plans for the future continuity of operations in Nigeria. As the CEO of Shell “I would state my personal brand that is a reflection of the business as state this openly for all to know and be committed and do not compromise this under any circumstances”. inquisitive and encourage people to generate their own options and possibilities. the environmental interest groups.” For this situation to be resolved it must be an all inclusive effort and every one must be heard.” collaborative. Orange. principally among them are the government.Being a Leader Final Project (Part 2) 13 different cultural heritage impacts upon how leaders operate in different parts of the world. UK . Shell’s integrity can be reinforced by testimonies from local shell employees. Had I been the CEO of Shell I would have viewed this case as an opportunity to heed the advice of Giam Sweigers. I would be up front and admit if we were at fault and advice what action we would take to rectify such situations. as they would quicker believed by the Nigerian stakeholders than a foreigner. One of the mistakes leaders make is not admitting wrong doings and it creates feeling of mistrust which is difficult to overcome.“Never waste a good crisis” and view this situation as an opportunity and not a headache.

There appear to be several corrupt government officials working with the pirates who steal oil from Shells’ facilities using badges that transport the oil to tankers anchored off the coast. Shell has reported that most of the spills have been caused by illegal refining and theft at their facilities and thought they are willing to clean up the spills they are unable to do so effectively because of the militant gangs operating in the area.Being a Leader Final Project (Part 2) Chapter 4 Conclusion/Recommendations 14 In concluding this project and survey of literature on the Shell oil company it can be said that the company has high ethical standards and generally stands by its words. employing locals once they have the necessary skills required and even go as far as training people with skills so that they can be employed. Findings on Shell operations in the Niger Delta Most of Shell producing fields is located in the Niger Delta region in Nigeria. The problem began with the head of the Environmental Health Services Provider Association of Nigeria insisting that the government force Shell to pay compensation to communities affected by oil spillages from their operations. Each stakeholder would have their own perspective on how the situation should be resolved. It clearly assist in all communities in which they operate with many social projects. The wicked problem This situation has resulted into a wicked problem with many stakeholders as mentioned by (Conklin and Weil 1997). Shell has stated that any oil spillage whether as a result of failures or sabotage would be cleaned up at their expense and that the appropriate remedial work would be done. The nature of these problems prohibits them from being solved by any one individual and I suggested . Shell is at the forefront of technology and has a very good safety record throughout all its operations worldwide.

The government would have to assist by weeding out corrupt politicians who are in concert with the pirates who are stealing oil from Shells’ facilities on a daily basis. . 15 Stakeholders The different stakeholders in this case would all have their own individual feeling about the issues at hand and should be encouraged to keep regular meetings as it’s the only plausible way to effect come to a resolution of the situation. Next they would have to find some means to meet with the leaders of the militant groups who are a constant source of harassment to the government and sabotaging of Shells’ facilities. The CEO would be wise to reiterate Shells’ commitment to working with the people of the Niger delta in remediating areas affected by spills and even though they may not have been caused by Shell to foster confidence in the company. Shell being the outsider may have to even go beyond what they are presently doing and give more to the people of the Niger Delta region in an effort to win them over as many of these people are extremely poor and live below the poverty line.Being a Leader Final Project (Part 2) a collaborative effort on all the stakeholders to find a resolution that is workable for all parties concerned. Finally this situation is a very complex one with the future of Shell Nigeria operations hanging in the balance. Shell would be well advised to get into serious discussion with the government and the environmental groups to find workable solutions that are acceptable to all concerned.

65–91. B. E.E. J. (1995) 'The stakeholder theory of the corporation: concepts. Reproduction in whole or in part is strictly prohibited. and implications'. E. Fifty Lessons Ltd.& Avolio. & Preston. pp.aspx? direct=true&db=buh&AN=9503271992&site=ehost-live&scope=site http://www.asp?l=1213 http://search.uk/login.J. B.liv. 1984.Strategic management: A stakeholder approach. UK 50 Lessons Reference #325 © 2004–2010. H. Elsevier Scientific Publishing Company.M. The Academy of Management Review.leanconstruction. Donaldson.R. T. Policy Sciences. Available from http://www. Sanjiv Ahuja–Chairman. Vol.com. "Dilemmas in a General Theory of Planning". (1973). All rights reserved.dk/_root/media/15.Being a Leader Final Project (Part 2) Reference List Bass.fiftylessons. CA: Sage Publications Conklin. Thousand Oaks. (1994) Improving organizational effectiveness throughtransformational leadership.com/viewlesson. & Weil.com/home/content/footer/about_this_site/shell_websites/ Rittel.ezproxy. 4. Inc: Amsterdam. Boston: Pitman. evidence.ebscohost.shell. 20 (1). .pdf Freeman. Orange. pp 155-169. "Never Waste a Good Crisis” (Giam Swiegers) http://liverpool. W. and Webber. M.ac. L. (1997) ‘Wicked problems: naming the pain in 16 organizations’.

Being a Leader Final Project (Part 2) 17 Appendices .

Being a Leader Final Project (Part 2) 18 .

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