Outlook: Shell shows unnerving signs of life
Friday 04 September 1998
The question is whether this is a full awakening we are about to witness or just another transitory break in the big sleep. The Anglo Dutch oil major is merging its European marketing and refining operations into a joint venture with those of Texaco. While this stops short of the fully blown merger with Texaco that everyone has been speculating about since BP and Amoco announced they were getting hitched, it is plainly a big step in the right direction.
Largely unnoticed and usually unreported, Shell has actually done a whole host of things in an effort to improve on its lamentably poor return on capital over the past year, selling off superfluous interests here and closing others there. But the sheer size of the organisation has meant the effect has so far been marginal. At 3 to 4 percentage points below the leaders, Shell still has the lowest return on capital employed of all seven oil majors. Given that Shell is the second largest, this would seem a pretty poor show.
If Shell cares about this, it certainly doesn't show it. Unlike BP, which has reinvented itself in the 1990s along American `can do', high executive remuneration lines, Shell has turned a deaf ear to the call of shareholder value. At virtually every level, Shell is seriously overmanned compared to its competitors and curiously enough management seems to be positively proud of it.
Executives have tried all kinds of wacky ideas for injecting a bit of positive energy into the organisation - including, unbelieveably, securing the services of a buddist monk to exorcise the bad karma - but seem culturally incapable of doing the one thing that tends always to do the trick in the seriously overweight - reducing the head count.
In any other company of this size, the City would long ago have acted. Despite attempts to reorganise internationally along product lines, Shell remains essentially a collection of national fiefdoms and its management by committee, Anglo Dutch corporate and capital structure, seem to make it largely immune to the pressures of shareholder activists.
Shell prides itself on the paternalism of its corporate culture, and nobody disputes that this has fostered some of the best talents in the industry. But in the end, the function of management is to make the assets sweat. That's how ultimately Mark Moody Stuart, chairman of Shell Transport & Trading, is going to be judged, not for running a university of excellence. As Niall Fitzgerald at Unilever has shown, it can be done, even in unwieldy Anglo Dutch multinationals.
- 1 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 2 Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
- 3 Sussex couple die in suspected Christmas Day 'suicide pact'
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...