The Culture of the Organization - The Royal Dutch Shell - Case Study Example

The Culture of the Organization - The Royal Dutch Shell INTRODUCTION The culture which is prevalent in a certain organization can tell volumes about the kind of workforce which will be attracted to join that force. The organizational behavior of organizations makes them stand apart from others and sometimes becomes their competitive advantage as well. The practices followed by HP in the computer and electronics segment have been exemplary and many of their competitors have now shifted towards their business philosophy. Also, the way things work at Google Inc, is bound to attract competitive yet easy going human resource that wants an office environment which provides them with full support. There is a huge land of the leadership in such of organizations, in guiding them to success. They are drivers of the corporations and they dictate them through tough times so that they may sail high in good times. Only companies with head-strong leaders are able to make it through tough times. The vision of the leader translates into the direction of the organization. If the leader is such, the workforce is equally motivated to drive the organization through with the leader’s vision. This is the perfect formula for a successful organization with an immaculate leader. Therefore, leadership is highly important in the success of the organization. The organization which has been chosen is one of the most successful petroleum producing and marketing company; The Royal Dutch Shell. The reason for the selection of this organization is because it went through a major re-structuring in 2005 that must have led to many organizational changes. The impact of those changes will be judged through this essay, where it will be analyzed how leadership, motivation and organizational control is being exercised at different levels of the organization. ROYAL DUTCH SHELL In order to understand the uniqueness if the organization chosen, let us look into the history and how this organization came into being and became the pride of Europe. Royal Dutch and Shell were two different organizations from the Dutch and British origin. The companies merged in 1907; this was done to compete on an international level with other companies, especially from United States. The Brand name and Shell is one of the biggest brand names of the world. The core business is oil exploration and production, gas and power, trading and shipping amongst others. The company is heavily diversified into other areas of power generation namely nuclear energy and solar power. This keeps them on the top of their core business as in the future; they can slowly shift their core businesses and move towards more sustainable energy sources.  The organization is currently operating in more than 100 countries; hence it has a very de-centralized organization structure. The businesses can be divided into two streams, the upstream and the downstream. The upstream business sector that includes production and operation companies are far more centralized and they receive basic technical and financial information from the headquarters. The downstream business sectors which include the retail petrol station networks, oil marketing, lubricants sales etc are now de-centralized and mostly managed by local management organizations, keeping in mind the culture of the locals (Company Website,2010) . This uniqueness of the organization makes its perfect for the analysis. The organization went through a de-merger in 2005-06 to reduce some of the organizational redundancies and unnecessary layering to make the organization more responsive to change and faster decision making. Major re-organization also took place in 2000 made the organization focus on individual leadership, downsizing; this made the organization more efficient. SHELL’S ORGANIZATIONAL STRUCTURE The organization structure of Shell is divided into two main areas, the upstream and the downstream businesses. The directors for both the streams are different and they report to the CEO of the company. As of 2009, the upstream businesses included the Exploration and Production, Gas and Power and Oil Sands. The Upstream North America and South America as well as International Upstream will have different directors. Wind Power, which was a downstream business, is now moved to the upstream businesses. Various other posts have been merged and changed with others to increase efficiency. The changes that were made were expected to increase the communication, speed up the decision making as well as personal accountability in the organization. This re-structuring will help in de-layering of the organization (Sandra, 2001). This de-centralized structure helps them in responding effectively to changes that are taking place in their environment. Under the current leadership of Peter Voser, more downsizing is expected; this may be in response to increase efficiencies and remove redundancies. This may also be as pre-cautionary measure as the leader believes consumer spending will not increase so easily after the economic recession (New Release, 2010). INDIVIDUAL LEVEL MOTIVATION AT SHELL When it comes to the dynamics with which individual level work is done at Shell, a very important indicator is that of motivation. Motivation is a phenomenon which drives the person's determination as well as the ability to complete a task or even to get started with it. Performance of an individual at his job depends on the motivation level as well as his abilities that he inherits from birth or through grooming, educational or otherwise. Motivation helps since it puts the encouragement within an individual that certain task or job must be done, and that the outcomes would also be beneficial for him, and then he persists on the task with a lot of determination and energy. The strength of one's purpose towards reaching a certain goal increasing on the individual level if motivation is there (Drillings, 1994). Talking with respect to Shell, it can be said that the motivation level of the workers was quite high. This is because a number of changes have taken place in the recent past, but the workers have motivated themselves to circumvent these issues, taking an adaptive behavior as a response to these changes. For one, there was the de-layering, with which the organization was restructured to a three-layer organization. Such restructuring could have increased the job insecurity of many workers and might have also accelerated the human nature of resisting change. But this did not happen. Shell workers were motivated enough to pass this process of change, and rise successfully over the situation. Moreover, other changes like adapting a culture which was very pro-entrepreneurial, that is, an intrapreneurship culture, was also one of the factors that needed Shell workers to be motivated at the individual level (Becker, 1996). There are many theories of work motivation too which can be aptly applied to the work life at Shell. One of the first theories of motivation was that of scientific management, which said that pay was one of the main factors which motivated the human resources in doing the tasks effectively and efficiently. But the modern theory says that social and self-actualization needs have to be met too, for workers to be motivated, which is known as the human relations movement (Delaney, 1996). The application of the human relations movement can be seen at Shell, since they are encouraging new ideas of the employees, and helping them grow in their careers while they stay at Shell or start their own business with the help of Shell. LEADERSHIP AT GROUP LEVEL AT SHELL As far as the group level at Shell is concerned, the leadership is what drives these teams. Leadership is that aspect which gives motivation to the individual level, and keeps the belief of the employees in the task, in the company and in the whole organizational entity. The nature of the leadership can differ from either being functional or descriptive. Functional leader is one who is known or remembered by the way he handles the tasks. Whereas descriptive leader is one who is known or remembered by the qualities that he possesses. When it comes to Shell, the leadership is of a functional nature. This is because a great deal of decision making had to be done, which was then divided into individual leadership, leading the decision making time to go very small, and helping the organization in taking proactive steps against the changing environment (Sandra, 2001). Each business sector at Shell is now looked upon by a board member, which actually helps to trace back the accountability of the decisions being taken. The committees which were formed first had been replaced by the Chief Executives, an individual who would lead the whole business sector now. There are many approaches to the leadership study, such as trait theory, style theory, Fiedler's contingency theory or house's path – goal theory. The trait theory and the style theory are universal theories, which are not held back by any situations. In the style theory, Shell leaders can be suggested as democratic leaders since they are involving the subordinates and other workers at the company in the decisions that they are taking. The theory propagates the fact that these styles actually play a very important role in defining the kind of motivation that the workers have, or how much they trust and care for the organization. Had the Shell leader being a autocratic leader, one who just wants to control the subordinates and makes them do what he has decided, then Shell might not have survived so successfully all this while. In the contingency theory, the situation is vital and the leader changes his leadership style from situation to situation. The needs of the subordinates have to be addressed, whether they are professional or off-the-job, the readiness of the subordinate has to be increased, and the leader also has to make sure that there is no gender bias in the company. The company culture is also a very prominent factor which has to be governed by the leader alone (Kinichi, 2004). ORGANIZATIONAL CONTROL AT SHELL Shell can be considered as a learning organization, when compared to its history for the past ten to fifteen years. The organization has been consistently monitoring its environment and making changes in their organization structure to support the changes that are taking place in the environment. Major organization structure changes took place in 1995 and then in 2000. According to the company website, the upstream and downstream businesses were re-grouped and some of the over-lapping positions were removed. Layers were decreased making the whole system more efficient and cost effective. With fewer layers it becomes easier for organizations to exercise organizational control. Organizational control is an ongoing activity and it seems the company has been exercising sound control over its resources and restructuring when necessary. The de-centralized structure of the organization is bound to increase the flexibility and authority that managers are enjoying (Omoweh, 2005). According to the latest CEO Peter, the 2009 re-shuffle was done to increase personal accountability as well; this is another measure that would help the top management exercise control over the organization.  Currently, the organization is following the approach which has been widely accepted. Management by objectives is when objectives are set for each period. Towards the end of the period, an evaluation takes place whereby it is decided if the objectives set at the start were met or not and the managers were awarded accordingly. This style of management works best for uncertain changing times like today. Especially in the downstream sector of businesses, the organization is de-centralized, assuming that they are following the management by objectives approach in that particular area. CONCLUSION In conclusion, it can be said that Shell is an organization which is on the lookout of the changing trends in this dynamic society. It is not a static organization. Keeping in mind the organizational behavior of a typical organization, it has adapted itself with time to be in tune with the changing demands of the society, the human resources and the stakeholders, in general. Before and after 1995 the organization shows two different structures, two different corporate cultures. Such acceptance of change and highly dynamic organizations are characterized by amazing efforts, all at the individual level, the group level and the organizational level. From the leadership to the organizational control, from the motivation of the individual worker to the complete organization working towards a vision through such 3-layering, the efforts are there and they are showing results, since Shell is a world renowned company, and one of the best in its own industry. With time, a lot of changes have been brought about to ensure that changing times do not forget the organization Shell, thanks to an adaptive behavior. BIBLIOGRAPHY Books Kreitner & Kinicki (2004) Organizational Behavior. Tata McGraw Hill. Drillings, M. (1994) Motivation: theory and research. Routledge. Omoweh, D. (2005) Shell Petroleum Development Company. Africa World Press. Hartman, S., Harris, J. (2001) Organziational Behavior. Routledge. Web pages Communication, Centaur, Employee Benefits. London Periodical , Retrieved 9th July 2007, from http://proquest.umi.com/pqdweb?did=1231416911&sid=12&Fmt=3&clientId=25727&RQT=309&VName Akdere, M. & Schmidt, S, Cambridge Business Review. Vol. 8, Iss. 1;  pg. 172, 6 pgs Available from  http://proquest.umi.com/pqdweb?did=1292526441&sid=20&Fmt=4&clientId=25727&RQT=309&VName= [21st May 2010] The beginnings. The Shell History [Internet]. Available from [22nd May 2010] Royal Dutch Shell. Source: http://www.search.com/reference/Royal_Dutch_Shell. Accessed on May 22nd 2010 Media and News Releases. Sourcehttp://www.shell.com/home/content/media/news_and_library/press_releases/2009/new_management_structure_27052009.html. Accessed on May 22nd 2010 Journals Becker, T & Billings R.(Apr., 1996) Foci and Bases of Employee Commitment: Implications for Job Performance, The Academy of Management Journal, Vol. 39, No. 2, pp. 464-482 Delaney, J. & Huselid, M. (Aug., 1996) The Impact of Human Resource Management Practices on Perceptions of Organizational Performance  The Academy of Management Journal, Vol. 39, No. 4, pp. 949-969 Read More