Human Resources are important issues in managing a company successfully. In Human Resources Management (‘HRM’), it has combined by a lot of areas, such as effective selection of staff, international human resources management and etc. In this report, it will introduce what Royal Dutch Shell (‘Shell’) done in HRM, what strategies they use and why they are be successful.
It focuses mainly on effective employees’ selection, human resources developments, performance management, remunerations and rewards of Shell. Each part will mention factors influenced by internal and external factor, the rationales of using strategies and what Shell did on each part.
Effective Employee Selection
Shell has provided a variety of job positions for suitable candidates to apply for jobs at their own choices. Shell will select candidates who possess bachelor degree, master degree or PhD degree to apply for all kinds of job positions. Shell believes that those candidates selected will eventually help Shell to provide quality of services and techniques after trainings.
Application Shell has provided detailed information and instructions for all candidates in making on-line applications via internet. “Job Search” engine at Shell’s website has also been designed for candidates, who could immediately find their desired vacancies and submit their application immediately through internet. When the candidates complete and submit applications, they will receive acknowledgements within 48 hours.
For suitable candidates, Shell will invite them for interviews within 2 weeks from the date of submission. In addition, Shell has also designed and provided “Job Alerts” function for people, who are difficult to find their desired vacancies from Shell in the past. This function is to alert people for job opportunities in future when their desired vacancies are being offered and match with their resume.
Interview Shell will invite suitable candidates for interviews, which will be held via face-to-face meeting(s) or by telephone inquiries. Through the interview, Shell will evaluate candidates how Capacity, Achievement, Relationship Skills and Technical Skills (‘CART’) are carried out. Before the end of the interview, Shell will provide adequate time for candidates to ask questions about working environment, corporate culture and etc. Final Assessment
The successful candidates being selected after interviews will be given with an opportunity to take a final assessment. This final assessment will take 4-hour time to finish designated tasks, which include Case Study, Group Discussions, Scenario Practice and Final Interview. Having passed the final assessment, candidates will be given with an opportunity to get more insight about the job position, rewards and fringe benefits.
Rationale for the employee selection
The rationale for the employee selection by Shell is to select for the company suitable employees, who would provide good quality of performances and services offered to the public. In the selection process, Shell will select candidates being university under-graduates or graduates and requires university qualification as its basic entrance level in the application. Shell is well in selection on the best uses of talents as its employees.
They will provide an opportunity on working environments for employees to have equal opportunity in developing their own skills and talent. In addition, Shell also pays attention to candidates’ resume because those resumes will show key strengths and achievements made in their working experience. The final assessment provides an opportunity for those candidates to tell their own achievements made and how challenges being tackled in the past.
Strategy Influenced by Other Factors
Internal factors Shell provides “Job Search” engine at its website for candidates to choose interested vacancies for them to apply. This function can let candidates to have opportunities to find their dream jobs. If Shell assigns employees to hated job positions, it will affect the employees being demoralized.
External factors At present, many companies require candidates having the university education level as the minimum educational qualification. However, Shell finds that it is difficult to identify talents amongst those university graduates applied. If Shell employs fresh graduates who are lack of working experience, Shell will provide training programs for them so that they will work smoothly after trainings. In addition, Shell also considers economical elements, including other companies’ annual salary increments and its affordability for hiring high-paid employees. As such, Shell usually employs university graduates.
Shell operates more than 110 countries in the world and has attained vast working experiences and expertise in different areas or locations. Also, Shell has established many training centers across different countries and offers a large range of training programs and development activities for its employees. Offers of the training programs and the development activities to selected employees depend on their business areas covered, locations and role of the employee within Shell. An example of Shell’s training activities is shown as follows:
Tailored Training Tailored training is offered for all of Shell’s new employees and includes inductions and a specific program, namely, “Shell Life”.
Shell Life is a course that is highly experiential and interactive designed for university graduates to develop their leadership potentials. The course helps participants to identify their personal direction, leadership skill, interpersonal effectiveness and business awareness qualities that they need if they want to pursue a successful career with Shell.
Leadership Program Leadership program is available to all staffs of Shell. Under the Leadership Program, management team will be invited to be tutors coaching their staffs and will provide their expertise and insights to those staffs. Besides, this program covers the contexts that actually happen in the real life. After attending the Leadership Program, new staffs will be evaluated and will be considered as the first priority to be promoted as senior executives in future.
On-the-job learning On-the-job learning is conducted by senior staffs or supervisors. It is an extensive training service, which facilitates senior staffs to learn in the work stations. On-the-job learning provides hands-on experience for senior staffs in building up required skills and / or expertise. After completion of the On-the-job learning, those senior employees or supervisors will then provide their sub-ordinates with insights into their strengths, development areas and teaching them how effective works be achieved. As such, their supervisors could create an effective development plan for their sub-ordinates.
Off-the-job learning On-line and face-to-face trainings are offered for employees on the company’s Business Principles, which are similar to preventing from bribery and corruption in order to make the employees understand the business mission and vision. The company expects that the employees should follow the business principles in doing their works.
Rationale for the training programs
The rationale for the Shell training program is to improve the current job performances of its employees. Shell coaches their employees through actual practices in order to make the employees understand how to perform their present job better. Besides, Shell designs a large range of training programs to support and guide their employees’ career choices in order to increase their motivation to work with Shell.
The strategy influenced by other factors
Internal factors If the program is not compulsory for the employees to join or employees have choices not to join the program, it will be lack of employees’ motivation to learn any technique in the program. On the other hand, if program trainers have poor training skills, they might mislead trainees in learning incorrect skill from the program. Therefore, the program fails and losses its significance to be continued.
External factors If the world economy is slump, it may make organizations lack of resources in providing training programs to their employees. If a competitor has offered a good training program system to its employees, it will create a yardstick and a comparison within the same industry of its kind. As such, Shell’s employees might want to leave Shell and join the competitor company.
Companies need improvements in performances in order to survive in the highly-competitive world, remain competitive and stay strong. Performance management links to the objectives of improving organizational, functional, group or individual progress towards goal achievements. It ensures that jobs are properly designed and qualified personnel are hired, trained, rewarded and motivated in order to achieve the organization’s strategies and business objectives.
Board Evaluation The Board carries out Performance Evaluations of itself, its committees, its Chairman and each other of the directors within the Board. It has held a significant part in the Performance Management in Shell. These evaluations are led by the Nomination and Succession Committee, which is an external facilitator and does not have any connection and relation with Shell.
The process of the evaluations consists of all directors completing questionnaires, designed by the external facilitator, through online system. When the results of questionnaires are available to the facilitator, he will then prepare written reports to the Chairman. The results of the evaluations on the Board and its committees will be discussed at the Board of Directors’ meeting. The evaluations provide to the Board a wide range of feedback, including some processes and agenda contents.
Controls and Procedures The Board is responsible for Shell’s internal control system and for reviewing its effectiveness and relations to control the financial report. It has indicated that such controls are one of the methods in managing performances and the progress of business objectives achievements. The Shell Control Framework advocated by Shell applies to all related companies of the Group.
The three key components comprise of Foundation, Organization and Process.
- Foundation comprises of Shell’s objectives, principles and establishes the boundaries for the company’s activities.
- Organization sets out how various legal entities relate to each other and organize and manages their business activities.
- Process plays an important role in this framework as it refers to material processes, including how authority be delegated, how strategies, planning and appraisals are used to improve performance
It is an ongoing process for identifying, evaluating and managing the significant risks to achieve Shell’s objectives. According to the Shell’s Annual Review, it could be seen that the Performance Management of Shell’s risk management system and internal controls system has been undertaken by the Board.
Performance Share Plan Shell has indicated the performance share plan into performance management. Its awards under the Performance Share Plan are granted upon certain conditions to eligible employees, who are not members of the Executive Committee of Shell. The actual amount of shares that may vest range from 0% to 200% of the awards, depending on the outcomes of prescribed performance conditions over a three-year period of the award year.
Rationale for performance management
Performance management aims to
- Improve organizational, functional, unit and individual employee performances;
- Identify required performance improvements and developing new performance objectives for converting improved performances into rewards. For information, rewards could be interpreted as remuneration and benefits.
In case of Shell, the Company has applied Shell Control Framework in their business objectives and the system is monitored and controlled by The Board, which will regularly review it. The Control Framework has been put in place to designed tools in managing risk rather than eliminating the risks of failure to achieve business objectives. Therefore, it only provides a reasonable and not an absolute assurance against material misstatement or loss.
Moreover, the Performance Share Plan aims to award employees who are eligible and are not members of the Executive Committee. This Performance Share Plan is effective to reward eligible employees in order to increase their moral and retain their loyalty. On the other hand, the Board’s evaluation is to ensure that jobs are properly designed and that qualified personnel are performed well or not.
Strategies Influenced by Other Factors
Internal Factors Internal factors indicate as factors which are under the organization control, including the business principles, the Board and all employees. In Shell, the business objectives, functions and strategies are lying to the Shell Control Framework whereas the Board is responsible for controls and reviewing its effectiveness. Since three components are lie to the Shell Control Framework and controlled by the Board, the performance management influenced by the Board internally. The strategies and business activities are used to improve performances which are indicated by the Board. Actually, the strategies and objectives have changed year by year.
External Factors External factor comprises of climate change, economic downstream, government, communities and social. In Shell, external regulatory and legal environment are the external factors and are usually out of control. These two external factors were under the Organization component in Shell Control Framwork.
In case of Performance Management, rewards act as important roles, including benefits and remuneration. Shell awards eligible employees by Performance Share Plan and award them with the Shell’s share at a price not less 30% off. During economics downstream or crisis in the oil industry, employees might be awarded with the low price of shares of the Company.
Human Resource Management strategy
Performance Management In managing performances, strategy, performance management and performance appraisal have been introduced. There are co-related commons and differences between Performance Management and Performance Appraisal.
Performance management focuses on enhanced achievements of organizational objectives on group or unit or individual performance. It involves goal establishment, performance evaluation, employee development and reward. There is a strategic link in relation to the five missions and objectives. It can be defined as organizational mission and objectives, functional objectives, unit or group objectives and individual objectives accordingly.
Performance appraisal is a key part of a company’s performance management system. The performance appraisal involves measuring how well individual personnel are doing their jobs against a set of criteria, providing feedback and creating a development plan.
Successful of performance management of Shell
In the above evaluations and measures of performance management, it has indicated that Shell has shown its great efforts towards performance management. The Board and it committee and employees of Shell are using effective performance management leading to its successful implementation of developing new strategies direction and adopting new practices (Manoochehri, 1999). Shell has applied Performance Share Plan, The Board Evaluation and Shell Control Framework in order to manage the employees. The Board undertakes its activities in order to achieve its objectives and to evaluate their performances.
In the Annual Review, Shell has disclosed details and process about the Board Evaluation, which shows that Shell has paid continuous efforts on its successful performance management.
Human Resource Management strategy
Human Resource Development The aim of Human Resource Development (“HRD”) is to enhance the capability of human resource management systems to adapt and respond proactively to a constantly changing environment. HRD includes training, development, career planning and performance appraisal.
Shell has done a lot of works to contribute to the organization’s performances. The company has always focused on developing individual skills and capabilities to ensure that the right number of managers with the right set of competencies and experiences would be available to occupy the most senior jobs in the company. Moreover, Shell always recruits University graduates and uses its strategy of “grown their own people” by providing technical, professional and leadership training programs. This method has involved moving people within the company around the world every few years and encourages its staff to have on-the-job learning.
Besides, Shell has been building long term strategic relationships with all stakeholders, including its own staff as an important stakeholder. Shell understands that its staffs are at the heart of the success of a company. Therefore, the company wants to build and maintain a good relationship with their staff.
Furthermore, in terms of career planning, human resource professional always act as a coach to help the employees in understanding their individual strengths and weaknesses. The professional advises them on development needs and possible career directions against the background of a wider understanding relating to the business requirements and suitable job opportunities. Also, Shell assigns line managers to be coaches to their own staffs and provides the expertise and insights to their sub-ordinates.
On the other hand, Shell uses a set of common criteria, namely, ‘helicopter’, ‘power of analysis’, ‘imagination’, ‘sense of reality’, and ‘leadership effectiveness’ for job evaluation and grading to identify the strengths and weaknesses of people.
Successful of Human Resource Development of Shell
The above practices are successful to use the Human Resource Management of Shell. It is reported that Human Resource Development (‘HRD’) refers to the practices used for enhancing employee skills through training and other forms of knowledge and skill enhancement. (Lepak & Snell, 1999). Shell provides technical, professional and leadership training programmers to employee and focuses on developing individual skills.
On the other hand, on- the-job learning can make the employee having more practical working experience. Those experiences that increase employee tacit knowledge especially are likely to increase the company’s specificity of human capital. Therefore, HRD can improve the human capital that people bring with them to the company.
Besides, the important internal customers include line managers. Line managers are increasingly given key responsibilities for the delivery of Strategic HRD (Morley & Heraty, 1997). As such, Shell assigns line-managers to be coaches to their own staff and providing the expertise and insights to their subordinates. Therefore, the line-managers from Shell can deliver the Strategic of HRD to other employees directly and can make the employees to follow the strategy easier.
Shell has been successful owing to some particular HR strategies, such as performance share plan, tailored training, leadership program and etc.
This report uses journal research method to find out the HR techniques used by Shell and to identify the intended purposes of these strategies. The abovementioned strategies in this report include training and development, remuneration, employee selections and performance management. Also, this report has detailed explanations on the rationales why Shell needs to implement these kinds of strategies.
It has been identified that the common internal factors are affected by employees’ influences to the strategies and policies whereas the common external factors are affected by economics and environments in the world.
This report has specifically evaluated the practices on human resource developments and performance management of Shell. The evaluation made is evidenced by academic journals as a strong support to the findings. Overall, Shell succeeds in Human Resource in relation to employee selection, human resource developments, performance management and managing remuneration.
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