Shell is the world’s leading oil and gas company, and it is one of those organizations that have successfully implemented the change program. It is significant for businesses and organizations to stay ahead of the competition by keeping changing relevant to the changing environment. However, successfully executing the change program is difficult when they have got large organizational structures. Today, we’ll discuss the Shell change management case study; its historical background, internal and external factors impacting the company towards change; strategies, challenges, and results of change management.
Historical Background of Shell
- 1907 – Hugo Loudon, Henri Deterding, and Jean BA Kessier laid the foundation of the Royal Dutch Shell Group in April 1907
- 1952 – Shell acquired the computer to use its operations and the company sold
- 1970 – Shell bought the mining company Billiton, and sold it later in 1994
- 20th Century – the company was on the oil and gas exploration mission of finding the natural reserves across, and it allowed the company to become the world’s largest oil and gas company
- 2002 – the company acquired the Pennzoil Quaker State through its American division for 1.8 billion dollars
- 2022 – Approximately 86,000 people are working for the company to manage its worldwide operation with a total assets of 443 billion dollars.
Shell has recently diversified its business operations into the following categories to show its commitment to the sustainability of the environment and they are;
- Oil and gas
- Renewable energy
Factors Caused Shell to Change Management
Some of the main internal and external factors that caused the company to change in the Shell change management case study are as follows;
Advancements in technology and efficient mechanical tools made the oil and gas industry highly competitive. Shell was facing a lot of challenges in terms of efficient production and operations and lower costs. It pressurized the company to transform its processes and operations.
Many employees of Shell were familiar with and used to the idea of the status quo, and the company faced a lot of resistance while introducing the change program. It was difficult for the oil and gas company to bring employees on board with the change initiative and successfully execute the changes.
Isolated Business Departments
Many business departments of Shell were completely isolated and they didn’t have any type of communication with the rest of the units. It resulted in the form of the following;
- Missing opportunities due to lack of coordination
- The inefficiency of the business process
- Double and duplication of efforts
The organizational structure of Shell was hierarchical and complex and the company’s decision-making process had many levels of management. It made it highly difficult for the oil and gas company to execute changes efficiently and quickly.
Tech advancement has transformed various processes, equipment, and methods of production. It made it necessary for the Shell Company to bring innovative changes in the following areas;
- Exploration of oil and gas
Governments of different countries are moving towards renewable sources of energy in order to reduce the carbon emission rate. It means that Shell has to operate its business operation under new rules and regulations, and it would be highly time-consuming and expensive. The oil and gas company has got no other choice but to implement changes.
Changing Customer Trends
The young consumer market has become highly cautious about sustainable energy and sustainable practices. In fact, their focus is on encouraging those businesses and organizations that are showing commitment to the environment. Shell had no other choice but to develop a new strategy that is environmentally sustainable.
Shell was facing a lot of competition in the oil and gas industry with many new competitors in the developing markets. It pushed the company to gain a competitive edge by differentiating its products and services.
Strategies & Practices Shell Implemented Toward Change Management
There is no such thing as one right-fit strategy for all businesses and organizations, and Shell needs to develop a strategy that would meet its organizational needs and cultural requirements. Some of the key success strategies and practices that Shell implemented in its change program are as follows;
Metrics & Evaluation Indicators
Shell maintains a proper record of data and it focuses on conducting analysis from time to time. The focus of the change management strategy is to put stress on the significance of tracking performance, evaluation metrics, and measures to make sure accountability.
Agility & Flexibility
The organizational structure and decision-making process of Shell were strictly hierarchical and complicated; it made it highly difficult for the company to execute changes efficiently and effectively. The company developed an agile and flexible CM strategy to deal with rigid structural issues. Its focus was to;
- Empower employees to participate in the decision-making process
- Improve the communication among various units
- Breaking down the barriers of isolation
The leadership of Shell realized and acknowledged the fact that its employees could play a significant role in the change management program. The company developed a strategy that focused on bringing employees to all levels of the company and chain of command. It comprised of following;
- Creating opportunities for employees to participate in the change program
- Sharing ideas and thoughts
- Collecting feedback
Exploiting Organizational Culture
Instead of changing the organizational culture, Shell developed a strategy that focused on the company’s strengths and build on an already established foundation. However, the focus of Shell is to achieve safety and operational excellence and maintain values towards innovation and efficiency.
Challenges to Shell for Implementing Change Program
Some of the key challenges Shell faced during the implementation of the change program are as follows;
Stressed & Skeptical
Shell had a long history of implementing changes in the past, and it made employees highly skeptical and stressed out every time they come across the idea of change. But the company managed to deal with the issue by taking the following steps;
- Discussed the benefits of the change program
- Communicating regularly and providing them with updates
- Onboarding employees about the change management plan
The change program becomes highly difficult when you have got limited resources; Shell faced similar issues in terms of limited resources, employees, and funding. The company dealt with the issues by taking the following steps;
- Strategic allocation of resources
- Prioritizing the change requirements
- Exploiting the current resources and capabilities
Large Complicated Organizational Structure
Shell had a large and complicated organizational structure, and it comprised various business functions and departments. The complex structure made it difficult for the company to implement changes consistently across the organizations. Oil and gas companies dealt with the problem by;
- Following flexible approach
While introducing and implementing the change program; Shell faced a lot of employee resistance because they were comfortable with the existing status quo system. They were right because they were using the same system for years.
Results of Implementing Shell Change Management Case Study
Innovative & Customer Focused
The successful execution of the change program allowed the company to transform from a conventional Oil and Gas Company to an innovative, customer-focused, and flexible organization. The transformation helped the company to keep itself up-to-date and relevant to the changing environment. However, it was beneficial for;
The change management program of Shell allowed the company to amplify collaboration, communication, avoid delays, and streamline various processes. Efficiency in various processes helped the company to lower the cost.
Collaboration & Better Communication
Improving the communication channel among various departments helped the company to comprehend the needs and wishes of customers. Ultimately, the company took steps that satisfy the needs and demands of customers.
The overall performance of Shell increased significantly in terms of market share, growth, profitability, and revenue. Most importantly, the successful implementation of the change program helped the company to maintain its competitive position in the industry.
Conclusion: Shell Change Management Case Study
After an in-depth study of Shell change management case study; we have realized that Shell successfully implemented the change management program. If you are learning about Shell successful transformation, then you should keep in mind the abovementioned strategies, challenges, and results.
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