Change Management at Royal Dutch Shell: A Case Study

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UNDERSTANDING AND LEADING CHANGE

Table of Contents
INTRODUCTION............................................................................................................................. 3
LO1.................................................................................................................................................4
P1 COMPARE DIFFERENT ORGANISATIONAL EXAMPLES WHERE THERE HAS BEEN AN IMPACT
OF CHANGE ON AN ORGANISATION’S STRATEGY AND OPERATIONS........................................4
LO2.................................................................................................................................................6
P2 EVALUATE THE WAYS IN WHICH INTERNAL AND EXTERNAL DRIVERS OF CHANGE AFFECT
LEADERSHIP, TEAM AND INDIVIDUAL BEHAVIOURS WITHIN AN ORGANISATION.....................6
P3 EVALUATE MEASURES THAT CAN BE TAKEN TO MINIMISE NEGATIVE IMPACTS OF CHANGE
ON ORGANISATIONAL BEHAVIOUR..........................................................................................10
LO3............................................................................................................................................... 12
P4 EXPLAIN DIFFERENT BARRIERS FOR CHANGE AND DETERMINE HOW THEY INFLUENCE
LEADERSHIP DECISION-MAKING IN A GIVEN ORGANISATIONAL CONTEXT..............................12
LO4............................................................................................................................................... 14
P5 APPLY DIFFERENT LEADERSHIP APPROACHES TO DEALING WITH CHANGE IN A RANGE OF
ORGANISATIONAL CONTEXTS..................................................................................................14
CONCLUSION............................................................................................................................... 18
REFERENCES.................................................................................................................................19
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INTRODUCTION
Changes are an inevitable part of a business and it is a challenging task for the company as the
employees are not always ready for the change and a lot of resources also need to be arranged
to carry the change management process. This report will study the change management
process at Royal Dutch Shell and the way the company used these changes to move forward on
the path to future success. The initial part of the report will discuss what the immediate reasons
for the changes were and compare the change management process of Shell with British
Airways. Later, the report will discuss some of the barriers which make the process of change
management challenges. Some of the models of change management like Kurt Levin's change
management model is also discussed in this report which help the organisation plan the change
management process in a strategic manner and avoid some major pitfalls while managing the
whole procedure of change management.
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LO1
P1 COMPARE DIFFERENT ORGANISATIONAL EXAMPLES WHERE THERE HAS
BEEN AN IMPACT OF CHANGE ON AN ORGANISATION’S STRATEGY AND
OPERATIONS
Changes are necessary for an organisation to stay competitive in the business. The process of
change management is a proactive approach which is focused on identifying areas which may
pose resistance against the change. In 2004, there was a severe oil crisis due to which the prices
of the shares of Royal Dutch Shell dropped down quickly (Burnes, 2017). In the meantime, the
erstwhile chairman of the company Sir Philip Watts resigned from his position. Jeroen van der
Veer was appointed as the new chairman. He believed that the company need a complete
transformation to survive in this situation of crisis.
In 1981, British Airways also had to face some challenges due to low-profit level and the
subsequent appointment of the new chairman. To make the operations of British airways more
profitable an organisational restructuring process was initiated for which strategic planning was
required. Below discussed is a comparative account of the drivers of change in both these case
studies and the impact of the change process on different aspects of the management.
SHELL BRITISH AIRWAYS
Drivers for change The increasing prices of oil were
making a severe impact on the
profits of the company and it
was necessary to restructure the
basic function of the company to
increase the productivity and
reduce the cost by eliminating
wasteful practices (Shell, 2019).
An Oil crisis also hit British
Airways in 2004 and the
company experienced low-profit
levels. Continuous loss in the
business made it difficult to
provide salaries to the large staff
of British Airways and it started
making an impact on the quality
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of services, in such situation
organisational restructuring was
required (British Airways, 2019).
Impact on strategy The primary strategic actions
taken by the new chairman was
to improve the skills of the
employees by the help of better
training programs which helped
the employee perform daily
tasks in an efficient manner.
The new chairman assessed the
profit level of the company and
the recent trends on the aviation
industry and found that British
Airways were not using the best
technology available and there is
a need to change the existing
processes.
Impact on people Convincing the employees for
the change process was a
difficult task for Jerone. As
opposed to the British Airways
no employees were fired from
the job, In fact, additional talent
was recruited to make the
processes more efficient (Arnold,
2015)
British Airways forces a major
layoff to make the organisation
lean and efficient. The employee
strength of 50,000 as reduced to
39,00. The new chairman Lord
king held many meetings with
the unions to convince them for
this change process.
Impact on processes Shell focused on improving the
skills of the existing employees
and therefore many new training
programs were designed for the
employees so that they can learn
to minimise the use of energy at
the workplace and increase
efficiency.
Introduction of the latest
technology in the company was
the primary goal of the change
exercise and hence many new
machines were installed in the
airlines to make the operations
more efficient and reduce cost
(Troyani, 2017).
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LO2
P2 EVALUATE THE WAYS IN WHICH INTERNAL AND EXTERNAL DRIVERS OF
CHANGE AFFECT LEADERSHIP, TEAM AND INDIVIDUAL BEHAVIOURS WITHIN
AN ORGANISATION
The need for the change is felt with the effect of different internal and external drivers which
makes it mandatory to transform the basic work methodology. SWOT and PESTLE analysis of
Shell is discussed below which will help in identifying the drivers for the change process:
SWOT ANALYSIS OF SHELL
STRENGTHS
 Shell is known as the largest oil company
in the world which provides an excellent
brand recognition to the company
(Crawford and Nahmias, 2010).
 The large scale operation of Royal Dutch
Shell makes it possible to reduce its
prices.
 Company has a strong network of
suppliers which helps in making the
production system fast.
WEAKNESSES
 Outside the core business of producing
oil, the company has not been able to
make a mark.
 In recent years, strikes and agitations
have maligned the public image of the
company.
 The company is lacking innovative efforts
as compared to rival companies.
OPPORTUNITIES
 The company can use new technologies
related to cloud computing and artificial
intelligence to make business operations
more efficient.
 To develop a partnership with the
companies in developing countries and
expand its scale of operation.
THREATS
 Due to inflation, consumer spending has
reduced which can make an impact on
the sales of the company.
 Stronger competition given by rival
companies as British petroleum and
Valero.
 Tough rules and regulation by the British
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 Green initiatives by the government have
provided new business opportunities to
Royal Dutch Shell.
government (Erwin et al., 2010).
IDENTIFIED INTERNAL DRIVERS OF CHANGE
Technological advancements
Technology related to the drilling and filtering the oil is changing rapidly which can reduce the
time to extract and refine the oil very fast. To adopt the new technology the company has to
start a process of change (Chintakananda and McIntyre, 2016). The older machines need to be
abandoned and new machines have to be installed to stay competitive in the industry.
Organisational culture
Due to ineffective leadership by previous managers, some distortions in the prevalent culture
happened which makes it necessary to start a transformation process in which new work
cultures are established. Therefore the culture of the company can also act as a driver for the
change process.
Dissatisfaction of Employees
When the employees are not happy with the policies of the company and the management
does not pay attention to the grievances of the employees, the employees resort to the strikes
and agitation. To resolve the matter new policies has to be introduced in the company which
may help in creating a better environment for the employees (Blomqvist, 2017).
PEST ANALYSIS OF BRITISH AIRWAYS
POLITICAL FACTORS
 Royal Dutch Shell is working in above 150
countries and the policies of the local
government make an impact on its
management process (Brunsson and
Olsen, 2018).
ECONOMIC FACTORS
 The economy is getting stronger and the
better position of Pound in the
international market has raised the profit
levels of the company.
 To implement new technologies related
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 The increased inclination of the
government to adopt sustainability in its
operation has increased the cost of
operation of the company.
 The UK government has allowed Shell to
explore new oil reserves within the UK
which is a positive sign for the company.
to drilling oil the company need to
manage funds from external sources.
 Liberal trade policies by emerging
economies have provided greater
benefits to the company (Cummings et
al., 2016).
SOCIAL FACTORS
 The company need to work on
developing alternative fuel due to
growing awareness regarding the
disadvantages of using fossil fuels.
 An effort to reduce the carbon footprint
of the company has enhanced the brand
image of Shell (Dalati, 2015).
TECHNOLOGICAL FACTORS
 The company need to focus the research
and developing activities in developing
such fuels which have a low negative
impact on the environment.
 New technologies related to GPS may
help the company find new oil reserves in
the UK.
 Using technologies related to cloud, the
operations of the company can be made
more simplified.
IDENTIFIED EXTERNAL DRIVERS OF CHANGE
Changed customer preferences
The preference of the customers to such fuels which does not have any adverse impact on the
environment has made it necessary for the company to develop technologies related to green
fuels. To develop such fuels the company needs to change the traditional system of refining the
oil and the use better technologies to make these fuels more sustainable (Endrejat et al., 2017).
Economic factors
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The economic factors also become the reason to make changes in the business. The drop in
profit levels of the company in 2004 was a major reason for initiating a change process.
Therefore, it is necessary that the business is able to gain enough revenues to stay competitive
and register regular growth according to the changing conditions (Burnes, 2017).
Competitors
The major competitors of Royal Dutch Shell in the UK are British Petroleum and Valero
(Freeman, 2018). Use of innovative technologies and new business techniques by these rival
companies makes it necessary that Shell makes advancement in the current process and adopt
a better work methodology.
IMPACT OF IDENTIFIED RIVERS ON LEADERSHIP, TEAM AND INDIVIDUAL BEHAVIOURS
As discussed above a number of factors are there which may become a reason for the starting a
change process. All these factors need to be studied deeply by Shell, so that company can make
itself ready for the upcoming changes. The change process makes an impact at both managerial
and individual level. The leaders need to make strategies to implement the change process is an
efficient manner, the teams and individuals also need to learn new skills and adjust their work
schedules in order to incorporate the change in technology (Helfat and Martin, 2015). All these
people work as a team to make these changes successful because these changes are a promise
for a brighter future and enhanced growth for the company.
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P3 EVALUATE MEASURES THAT CAN BE TAKEN TO MINIMISE NEGATIVE
IMPACTS OF CHANGE ON ORGANISATIONAL BEHAVIOUR
The change process is not taken in the same spirit by all the employees in the organisation. For
some employees, it is an opportunity for growth while for some these changes bring anxiety
and fear. Due to this feeling of uncertainty, the employees may feel stress and loss in efficiency
(Holten and Brenner, 2015). To minimise these negative impacts of change, below discussed are
some of the measures which can be taken by the Shell management:
INITIATING COMMUNICATION
The first step to make the change management programs successful is to establish
communication with the employees. The leader needs to think of the future position of the
company after implementation of the changes and communicate this future vision to the
employees so that they can feel confident about all these changes (Burnes, 2017). The
communication should also contain a clear explanation of the expectation of management from
the employees so that they can make up their mind regarding new job responsibilities.
DESIGNING TRAINING SCHEDULES
Training programs initiated by the company can be an effective medium to clear the
uncertainty over the new processes. The employees feel lost because they think that they do
not have enough expertise according to the new things coming (Kaufman, 2017). The training
programs help in reducing the mist and make the employees more accepting of the change
process. Training programs also improve the involvement of the employees in the new work
environment.
INCREASING PARTICIPATION
The participation of the employee in the new environment can be increased when the
management is ready to take the suggestions of the employees regarding the change
management process. The inputs of the employees help the leaders make better change
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management plans well as make the employee satisfied that his views and concerns are valued
by the management.
PROVIDING SELECTIVE MOTIVATION TO EMPLOYEES
As discussed above the agony of the change is not taken by all the employees in a similar
manner. Therefore it is necessary that the employees who have reached up to the level of
depression due to this change process are given selective motivation by the means of
consultation and group programs (Parsons et al., 2016). These programs boost the morale of
the employee by talking about the change process and the role of the employee in this process.
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LO3
P4 EXPLAIN DIFFERENT BARRIERS FOR CHANGE AND DETERMINE HOW THEY
INFLUENCE LEADERSHIP DECISION-MAKING IN A GIVEN ORGANISATIONAL
CONTEXT
Every organisation has its own set of barriers when it is trying to implement a new work
methodology; the most obvious barriers for Shell when trying to implement an organisational
change are discussed below:
Poor communication
The organisation which are not able to make the change management process a success are the
one who is not able to make timely communication with the people who are going to be
affected by this change process (Lewis, 2019). Management thinks that just by informing about
the changes is enough; the leaders need to talk with the people and convince them how these
changes will be beneficial for them and for the company.
Not enforcing a reward system
It has been seen that when the management attaches some sort of rewards with the transition
process, the employees show better participation in the change process. When the employees
are asked to bear the pain of the change and are not ready to compensate. The employees do
take these changes in a positive spirit and it creates a barrier in the whole exercise.
Change in culture and work climate
New work systems also bring new time schedules and the change in the existing culture. These
changes make a negative influence on employees (Parsons et al., 2016). The management
should try to make the work schedules according to the older time table for the initial stage and
enforce the changes in a gradual manner so that employees can adjust themselves to the
changing scenario.
Lack of competence and skills
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