Shell Business Framework Coming i. to grips i with our future Getting the best from our past Edition 1 believe all of us want the work we do to be meaningful, enjoyable and successful, and to make a contribution which we know is A number of people throughout our Group have been developing a framework of ideas and principles on how we can achieve this together. This booklet describing the Shell Business Framework is only the first edition of what we expect to be an ongoing evolution. it re?ects aspirations we know we may not currently live up to in every case, but which we feel certain we should be aiming towards. Where we fall short, recognise the temptation to dismiss the booklet?s messages, but believe people in Shell will want to respond constructively and work together to close the gaps. This is our framework, and we want everyone in Shell to have a hand in building it so if you have comments about what we?re getting right or what we should do better, please discuss these with your management or, if you would be so kind, write to me personally at the address below or send me a message via electronic mail. You may, of course, reply in whatever language is natural to you. 1 would be delighted to receive feedback from you. Cor To send comments to the Chairman please write to Shell Centre, London SE1 7NA. An electronic mail postbox with the name has also been set up to receive your comments. Th Everyone in Shell is aware that many changes are occurring throughout the Group and many have already been affected by these changes. The purpose of this booklet is to: 0 re-af?rm the guiding values and principles of the Group. 0 introduce the new Shell Business Framework. 0 encourage breakthrough performance. At its heart, this booklet is about who we are and what we aspire to be. ?We? refers to everyone in Shell. The evolving ideas in the booklet are the framework for what we aim to do, and for our relationships with those we aspire to serve and with everyone We influence through our performance. Who We Are We are a commercial organisation sewing customers in most of the countries of the world, and we are the many thousands of talented individuals working together within this organisation. As a Group, we are one of the largest integrated oil majors in the world, generating wealth for society and our shareholders by creating a platform of top?performing businesses in oil, gas, petrochemicals, and the allied ?elds in which we are proud to work. Our activities range over a wider geographical area than those of any other major oil producer. We are the largest retailer of automotive fuels and lubricants in the world, one of the largest petrochemical companies, and the leading private producer of natural gas. We have a tradition of excellence in developing and applying technology and engineering. We have a long history behind us and, we believe, a bright future ahead of us. THE BEST FROM OUR PAST ln ?nancial terms, this means an ongoing emphasis on improving the returns we achieve from the capital we employ on behalf of our shareholders. ln operating terms, this means increasing returns from all we do lowering unit costs, increasing market share, increasing reliability, and encouraging innovative growth. ln the deepest terms of all, this means holding to the Group Business Principles and the values that should always guide us integrity, professionalism, respect for people, the long?term view, and pride in Shell without arrogance. Even in the midst of transformational change, these values and our Group Business Principles provide the sure foundation for all we are and all we aspire to be. The message Why change? the need for breakthrough performance in an increasingly competitive world full of opportunities What to? the top performer of ?rst choice How? energised leadership focus on customers unleashing talent at all levels The need for change Today?s business environment is characterised by ?erce competition on a greater scale than ever. ln addition, society?s expectations for business are changing. Companies that fail to respond effectively to these challenges will simply decline. Other factors also call for change: 0 there is a more economic use of fuels. 0 many of our businesses are in large markets with low growth. 0 there is an increasing emphasis on reducing the impact of human activity on the environment. Our competitive marketplace is extremely challenging but new technologies, the opening up of new markets, rapid growth in some parts of the world, the rapid change in customer requirements and expectations, and other characteristics of this market present many opportunities for signi?cant improvement. To take advantage of these opportunities, we need breakthrough performance. What We Aspire to Be We want to be recognised as leaders by our customers, partners, suppliers, and competitors, and welcomed by the communities around us. ln the longer term, we seek to continue to create value for society and for our shareholders, recognising that there will be further signi?cant changes to our business because fossil fuels are a ?nite resource, and because society and its needs will continue to change. Speci?cally, we wish to: ?_increase our focus on customers and other stakeholders, both internal and external. 0 increase our return on capital. 0 increase our level of growth beyond our competitors. In short: we aspire to be the top performer of ?rst choice. Creating the Future What is Changing ORGANISATIONAL CONTINUOUS LEARNING CHANGING BEHAVIOURS ORGANISATIONAL CHANGING STRUCTURES BEHAWOURS STRUCTURES ONGOING SUPPORT FOR from: ALIGNMENT TRANSFORMATION EVOLVING BUSINESS . . 0 excessive internal focus NEEDS stimulation of learning at ng?mi?gs all levels and transfer of excessive bureaucracy 0 operating units based best practice. . diffuse accountability on meaningful, practical - - critical a I ainst busmess de?nitions. pp 3?53 39 clear, agreed targets. 0 obsession with consensus 0 Business Committees 0 tolerance for overseeing ?ve major under?performance businesses. to: . a corporate centre that 0 active external focus supports the Committee of Managing Directors in 0 demonstrable customer its leadership role. focus 0 professional 0 making the most of .A. service providers. diver51ty in people . 0 individual excellence within high?performance teams that have a commitment to challenging targets 0 decision?making at the right level 0 commitment to pro?table growth 0 actively seeking breakthrough performance. To go beyond the limits of what was previously thought possible, we will have to ?nd innovative approaches to our existing activities, or even create entirely new sources of value. We will have to be successful in addressing challenges that are often seen as trade?offs for example, growth and return, or innovation and ef?ciency. These challenges will be met only through a heightened level of creativity, energy and leadership throughout the organisation. Decisions must be made at the level where action can be taken most effectively. Each of us will need to assume a new sense of responsibility in our own sphere of operation. We must also look to three groups to perform speci?c leadership tasks in new dynamic ways: - ofthe Group. m. the direction of the Group so that employees understand how their activities help to achieve our overall objectives. including strategies for cross?business issues and overall portfolio management. r, of each of the business strategies to the overall Group strategy, and the Group direction with the speci?c actions needed to achieve it. . i whose scope of operation may be global, regional, national, or multi?national, depending on the nature of the business. . - within the context of the Group direction. ln consultation with the Committee of Managing Directors, . 17. relation to the business plans and performance of the operating units. Breakthrough Performance and Right Relationships Working together to create performance breakthroughs requires a clear understanding of our right relationship to others in the world and of how we can make our own distinctive contributions. OUR SHAREHOLDERS We will deliver sustainable growth of shareholder value in the short, medium, and longer term. 12 OUR CUSTOMERS Our customers include individuals, businesses of all sizes, and government bodies. We will actively seek, measure, and monitor our customers? opinions and listen carefully to what they tell us in order to: 0 anticipate and meet their needs. 0 present them with solutions and choices they value. 0 become their preferred supplier. AND GOVERNMENTS Our ?rst contribution lies in generating the wealth that all societies need to develop and build their future. We will build long?term, mutually bene?cial relationships. We will make available to the public the ?nancial, environmental, and other data legitimately needed to assess our performance. We will act as a commercial organisation and a responsible corporate citizen in accordance with our Statement of Business Principles. We will act in accordance with our belief in the protection of Fundamental human rights of expression, association, fair representation and trial, and non?discrimination. We will provide development opportunities for individuals from the host countries in which we operate. OUR Our neighbours are a part of the societies in which we work, but we have special responsibilities towards them. We will build and operate our facilities everywhere to standards that we could be proud of anywhere, and we will seek to improve our performance continuously. Where there is adverse impact on our neighbours, we will provide fair compensation. When we cease to operate in an area, we will cany out appropriate restoration. When operations are transferred to others, we will endeavour to ensure that all the relevant safeguards are in place. Through the use of our products by our customers, we become neighbours to very large numbers of people. We will seek to ensure in this relationship that we take into account the impact of our products? use and pay proper attention to the stewardship of these products through their life cycle. We will strive to develop relationships characterised by mutual understanding and trust, in which both we and our neighbours recognise our mutual obligations. Projects carried out with our neighbours for the bene?t of the community are an important part of establishing good relationships, and we will contribute time and skills as well as resources to these projects in order to strengthen neighbourly relationships. FUTURE We are committed to the principles of sustainable development meeting the needs of the present generation without prejudicing the ability of future generations to meet 13 theirs. Fossil fuels provide the world with convenient and low?cost energy and feedstocks for materials that allow our economies to grow and develop. ln addition, our industry can contribute signi?cantly to the development of commercial, technical, and managerial skills which are, themselves, a lasting contribution to society. While there is no short? term commercial alternative to using fossil fuels for energy, they are a ?nite resource and we are committed to participating in the development of sustainable and commercially viable alternatives. We share a commitment to reducing carbon dioxide generation where possible by the most ef?cient generation of energy, the elimination of wasteful flaring, and the use of the most appropriate fuels. Recognising the paramount importance of educating the next generation, the bulk of our corporate charitable effort will be directed towards educational ends, particularly in science and technology. OUR PARTNERS We will establish relationships of mutual bene?t with all of our partners. OUR We will participate in open and fair competition and we will outperform our competitors as often as we can and in as many ways as we can. OURSELVES AND 0U We will be an international employer of ?rst choice, together creating a safe, healthy, and creative environment where we can all be proud to work, and where we can develop and grow collectively and individually. 4. Stimulate diversity in THROUGH PERSONAL a perspective by recruiting WE and Women from a 1. Engage in continuous Wide variety of reaming a a backgrounds, nationalities, 2. Share responSibmty for and levels of previous experience. our own personal . . i I 5' Have a competmve that nothing remuneration system which about the future Will attract the best at all including ?fe_long at All Levels be 6. Base rewards on certain. performance and results. 3. Initiate and accept We will be the top THROUGH 7. Base appraisal of people change this is performer of first choice WE and Performance 0? Vlews requ?md' - from all sides. only If: 3? Of us fed .funy . 1. Create an environment 4- great-er to aqua/mg ?ns in which the full potential 8- GlVe increaSEd accountabmty remm for goal: and only Whom of individuals is developed to meat? er ormance matc es our . EOTnmitmem. Success and th?lrlalents arid pencormers' 5. Strive to make personal depends on Opennass trust contributions unleashed, 9_ Where Changing business contributions through . and in which there Shared understandmg of .d I . Circumstances require ec ive eamwor . values and objectives, and pr] ongmg' changes that affect people?s 6, Be loyal to our collective the right matCh 2- Encourage ?mm/am?, 40b5, manage those Changes aims and loyal to the teams business needs and personal teamwork, arid balaYICEd a pTOfessmna] and in which we work. expectations. risk?taking. respect?ll Way . . 7. Live up to our shared 3- Encourage Operating employabmly business principles. decisions close to the point by ?mplovmg comp?em?es of execution. and by providing learning and development opportunities, so that people may move on from Shell if appropriate and pursue their objectives elsewhere. 15 Coming to Grips with Our Future We can all contribute to achieving the type of breakthrough performance needed to make the most of our future. Breakthrough performance will mean different things for each of us - but we all know when we achieve it. This level of performance is enjoyable, ful?lling, and even exhilarating. Each of us needs to de?ne it in its competitive context so that we have ?rm aspirations rather than vague intentions. Achieving breakthrough performance is a challenging process because it is more than simply incremental improvement it is a level ?of innovation leading to growth that transforms the very context in which we act. The dif?culty of this challenge should stimulate new strategic thinking and encourage a sense of renewal. With all of us committed to this goal, we can look forward to the future with con?dence and a real sense of excitement. Shell Shell companies have their own separate identi?es, but in this publication the collective expressions ?Shell' and ?Group? are sometimes used for convenience in contexts where the reference is to companies of the Royal Dutch/Shell Group in general, or where no useful purpose is sewed by identifying the particular Shell company or companies. Shell lntemational Limited (SIL) 1996. Permission to reproduce any part of this publication should be sought From Agreement will normally be given, provided that the source is acknowledged, except for parts shown to be from other sources. Designed and Produced by Publicity Services 4497/7.96/10m