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The New Face of Leadership

Steve Miller marshaled a diverse group of Royal Dutch/Shell employees to transform the company’s operations in Europe. Now, as president, chairman of the board, and CEO of Shell Oil Co., he is using that same grassroots approach to meet a new challenge: diversity itself.

Steve Miller understands the power of diversity. Back in 1998, when Fast Company profiled Miller for the “Best of the Best” issue, he was a senior executive at one of the most powerful companies in the world. As group managing director of the Royal Dutch/Shell Group of Companies, Miller was responsible for transforming the company’s “downstream” operations — everything from selling gasoline at the company’s 47,000 filling stations to selling lubricants to factories. His model for change? Rely on a diverse group of rank-and-file managers and employees organized in cross-functional teams to identify exciting new business opportunities and solve thorny business problems.

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Today, as CEO of Shell Oil Co., Miller has a new — and even more important — job. And he’s got a new strategic priority: diversity itself. By using the same model of grassroots leadership built on frontline involvement across a range of businesses, he is helping make Shell Oil Co. more diverse with regard to age, race, gender, disability, and sexual orientation.

It’s a tall order, even for a determined leader. The oil and gas business does not spring to mind as a gusher of creative thinking in the field of workforce diversity. According to an unpublished Catalyst report from 2000, both female and male MBA grads from 12 of the top business schools rated the oil and gas industry the least likely out of 11 industries to provide a good working environment for women. So how is Miller planning to tackle his next big challenge, and how will he turn the campaign for greater diversity into a grassroots leadership initiative — one that rank-and-file managers feel they own, rather than one that is thrust upon them from above?

The formula is a delicate balance between top-level commitment and action in the trenches. Two years ago, when Miller became CEO and focused on making diversity a strategic initiative, senior leadership spelled out the business case for creating a diverse talent pool. The thinking went like this: If you build a diverse workforce, you’ve got one more weapon in your arsenal for winning the talent wars. Ultimately, great people want to work with other great people, and great people come from all kinds of backgrounds. “We are competing for talent against Silicon Valley and Wall Street,” Miller says. “To have a good shot at talent, we have to recognize that it comes in all shapes and colors.”

Smart thinking, but Miller knew the trickier part would be delivering on that insight — turning rhetoric into reality. “When you go through a restructuring or consolidation in a business, it’s easy to get the diversity equation wrong,” Miller concedes.

Witness what happened when the global chemicals business went through a major reorganization. In 1998, Shell Oil began integrating its businesses with Royal Dutch/Shell. Because the companies were globally integrated, that meant international opportunities for senior employees. The company recruited internally for global jobs from its divisions in the United States, Europe, and the Far East. Of 48 U.S. citizens selected, only 2 were African-American. Nearly 23 nationalities had applied for the 80 plus global postings, and only a small number of those applicants were African-American. During its regular biannual meeting, the black employee network raised concerns about the small number of blacks selected.

The leaders of the U.S. chemicals business met with the employee network. The managers emphasized that some of the U.S. candidates needed to develop more global skills and experience, and suggested upcoming opportunities for candidates to gain some global experience. Employee network members then identified candidates who were prepared to take on more global assignments. The partnership principle was at work: If a manager does not find enough diverse candidates to fill his jobs, it’s his responsibility to improve his training and development programs to create a larger pool. In addition, employee networks are responsible for ensuring that its talented members are securing the right experiences and then applying for global positions.

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In 2000, Miller began a pilot program within the chemicals business to mentor candidates for global positions. Meanwhile, the employee networks wanted to expand the scope of the mentoring and received funding from the Global Diversity Center to reach more network members.

Then, late last year, at Miller’s prompting, each Shell Oil Co. business started to define the scope of a more formal mentoring program — determining, for example, if a division would focus on developing new recruits or higher-level managers. Depending on the audience and level of training involved, a division would require a different budget. Now divisions are budgeting for their different training audiences and programs. With a budget in place, managers and employees hope that mentoring will become a regular line item in division budgets.

And that leads to the third piece of Miller’s strategy. Miller wants managers in the coming year to focus on developing a pipeline of candidates. That means leaders become talent developers or “sponsors,” as well as business managers. They must train candidates and “open doors,” so that nobody is denied a job for lack of preparation.

The incentive for managers? Compensation. If a manager isn’t developing, hiring, or promoting enough candidates who are women, disabled, gay/lesbian, or ethnic minorities, it affects his performance review. Miller himself presents an annual report on diversity to his board of directors. “Although the wellspring of ideas is always at the grassroots, employees can’t do it alone,” Miller says. “That’s why the link to senior management is important.”

Of course, Miller realizes that each business within Shell sits at a different point along the diversity spectrum. Some businesses, such as Shell Legal Services, have won awards for their minority-development programs. Others are just starting to think about training. “I’m not worried,” Miller says. “I’m concerned that we build momentum toward a diverse workforce, not that all Shell businesses arrive at the same point at an arbitrary time.”

Shell Chemical Co.’s Diversity Scorecard:

As of January 1, 2000 As of January 1, 2001
82% men, 18% women
11% black, 82% white
4% Hispanic, 3% Asian-Pacific
80.7% men, 19.3% women
12.2% black, 79.2% white
5.5% Hispanic, 3% Asian-Pacific

Shell Oil Co.’s Diversity Scorecard:

As of January 1, 2000 As of January 1, 2001
73% men, 27% women
11% black, 80% white
5% Hispanic, 4% Asian-Pacific
74% men, 26% women
10.5% black, 79.7% white
5.8% Hispanic, 4% Asian-Pacific

The petroleum-refining industry: 7.2% women corporate officers (Source: Catalyst)

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Shell Oil Co.: 18% women members of the Shell Oil Co. Executive Leadership Team

Rekha Balu (rbalu@fastcompany.com) is a Fast Company senior writer.

Read more on Royal Dutch/Shell: Grassroots Leadership and Updating the Agenda

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