Royal Dutch Shell PLC
Tackling Diversity & Inclusion on a Global Scale
Energy company Shell began to take its Diversity and Inclusion (D&I) work to a global scale in the mid-nineties. So how has it achieved this, and how does it plan to take its commitment forward in the future? As a global company that operates in more than 90 countries worldwide, Royal Dutch Shell PLC is, by its nature, a diverse organization. It works in a huge range of different geographical locations with a workforce that incorporates many different nationalities and cultures. Beyond the immediate workforce, Shell’s other stakeholders, such as customers, joint venture partners and governments, are an equally diverse group, with many different concerns and attitudes. For these reasons, the extensive work that Shell has done on Diversity and Inclusion (D&I) over more than a decade is seen as essential to its business success, and while progress has not always been smooth, the continued commitment of Shell’s leaders to the company’s D&I goals, combined with this clear sense of D&I as a business imperative, have ensured that D&I stays high on the Shell agenda. Shell’s leaders, including CEO Peter Voser (see page 48), are also firmly convinced that, as Shell moves forward, the importance of the work it does on D&I will be relevant to business success long term.
Company name: Royal Dutch Shell PLC
Company headquarters: The Hague, the Netherlands
Company website: www.shell.com
Primary business: Energy and petrochemicals.
Industry ranking: Fortune 1000, World’s largest company by revenue in 2009.
2009 Revenues: $278.2 billion
As a company in the global energy sector, Shell is a leader in working towards overcoming the huge energy challenge currently facing the world. By the middle of this century, the company estimates that the world will need twice as much energy for half the CO2, and Shell sees its key task as helping to deliver those energy needs – safely, responsibly and profitably.
To help meet the world’s future energy challenges, Shell has a clear strategy in place. It needs to increase the efficiency of its operations, invest in new geographical heartlands and innovative technologies, and continue to develop low-CO2 energy.
To do this successfully the company also needs to recruit the most talented people, against a background of increasingly hot competition for worldwide talent. The company also needs to continue to work effectively with governments and other key stakeholders. Finally, it needs to incorporate into its strategies the changing demographics of the global working population. For Shell, D&I is seen as a key factor in meeting all the above challenges.
The Shell Approach
How do you bring D&I values to life for a diverse and geographically disparate global audience? This is how they do it at Shell. Shell defines diversity as ‘all the ways we differ’. This includes visible differences, such as age, gender, ethnicity and physical appearance, as well as underlying differences such as thinking styles, religion, nationality, sexual orientation and education. It uses the metaphor of an iceberg to represent visually its definition of Diversity – an image that has been found to resonate with people worldwide.
Inclusion at Shell means creating a working culture where differences are valued; where everyone has the opportunity to develop skills and talents consistent with the company’s values and business objectives. The aim is to make Shell an organization where people feel involved, respected and connected – where the richness of ideas, backgrounds and perspectives are leveraged to create business value.
Shell sees diversity and inclusion as interrelated, and believes that, to achieve its aspirations, it needs to focus on both.
The D&I Framework
The framework upon which Shell does its D&I work focuses on three areas – Talent, Leadership and Competitiveness. These are represented at the ‘Top of the house’.
Shell’s need for talent now and a sustainable future supply makes it essential for the organization to broaden how and where it looks for talent, especially in growth markets and regions.
Diversity in its talent base and leadership increases creativity, improves decision-making and helps the company to better understand the needs of all of its stakeholders, including customers, suppliers, partners and governments.
Having a clear set of measurable targets, backed by the commitment of its senior leaders, is a key factor in Shell’s D&I progress to date.
The three key global targets for Shell’s work on D&I are:
- Increasing the proportion of women in senior management to at least 20% in the long term;
- Having local people fill more than half the senior management positions in every country in which it operates;
- Continuously improving the Diversity and Inclusion Indicator (DII) as measured by its annual internal Shell People Survey.
So how does the company assess its progress towards those targets so far? The gender target focuses on the progress of senior women within the organization, and here the numbers are fairly encouraging. As of year-end 2009, women represented 14% of Shell senior management globally, compared with 9.9% in 2005. however, the company concedes that things have not moved as quickly as it would have liked – economic conditions and a fragile pipeline in terms of market availability have tended to hold back progress.
Through its most recent reorganization the representation of women in senior leadership increased slightly from what it was as of year-end 2008, even though there are no women currently on the Executive Committee. Shell stresses that the longer-term outlook is encouraging.
Shell’s progress towards its target on the employment of local nationals in senior roles has been encouraging. 2009 data showed that the proportion of countries where local nationals hold the majority of senior roles now stands at 37% of all countries where Shell operates.
Shell’s third target, continuous improvement of its DII score, draws on information from five Shell People Survey (SPS) questions that measure employees’ perceptions on inclusion and fairness issues in the workplace.
The survey, now conducted annually among all employees, asks respondents to rate their agreement or disagreement with the following five statements:
- Where I work I am treated with respect;
- I am free to speak my mind without fear of negative consequences;
- My organization has a working environment in which different views and perspectives are valued;
- My organization has a working environment that is free from harassment and discrimination;
- The decisions leaders in my organization make concerning employees are fair.
Survey data is analyzed across multiple variables, including business segment, function, job level, gender, base country, and, in a few select countries such as the U.S., race/ ethnicity. The DII is a very good way for Shell to measure progress on inclusion, as it assesses potential disparities among sub-groups as to how they perceive the inclusiveness of the culture.
Embedding D&I at Shell
The reorganization carried out in 2009 across the whole of Shell brought major changes to the way the company’s HR services are delivered, and, consequently, to the way the organization developed its D&I strategy. In particular it widened responsibility for delivering against D&I targets to more people across the organization and brought D&I closer to the everyday activities of Shell’s businesses.
While key elements of the Global D&I strategy remained – such as the three global D&I targets – others changed. These included broader accountability for D&I, and the introduction of new HR measures to support these.