In an attempt to save over $3 billion (over N3 trillion) by the end of 2025, oil giant Shell PLC is laying off staff and cutting costs worldwide. How will this affect its public relations and CSR campaigns locally?
Shell’s Chief Executive Officer, Wael Sawan seeks to trim costs and be more competitive with its biggest US rivals, Chevron and Exxon Mobil.
Roles are being eliminated on a division-by-division basis, with those affected offered options including redundancy packages or applying for jobs elsewhere in the company. Shell declined to comment on the number of jobs involved.
The company laid out a plan to investors in June to reduce “structural costs” by as much as $3 billion by the end of 2025.
“Achieving those reductions will require portfolio high grading, new efficiencies and a leaner overall organization,” Shell said in an email Thursday. “While no formal targets exist, we will continuously look to right-size the activities that deliver the most value.”
Sawan pledged to be “ruthless” in improving Shell’s performance after taking the CEO job earlier this year. The former divisional natural gas chief is making a concerted effort to boost its stock’s valuation by selling assets and reducing low-return investments, including some in clean energy.
Shell employed about 93,000 globally on a full and part-time basis at the end of 2022, more than double that of Chevron. In October, Shell said 200 positions in its Low Carbon Solutions unit would be cut in 2024, about 15% of the total.
Big Oil executives are cautious about the future despite reaping record 2022 profits in the wake of the worldwide disruptions triggered by Russia’s invasion of Ukraine. Uncertainty over long-term fossil-fuel consumption and investor demands for dividends and stock buybacks are prompting Western oil explorers to be more disciplined with spending.
Rival company, Chevron, recently instructed staff to “do better” in 2024 after failing to deliver on some key performance metrics. Exxon has reduced headcount 17% since 2019 and earlier this month announced a plan to save $6 billion in structural costs by 2027.
How will the Shell job cuts affect its CSR and public relations?
Shell has not announced any major cuts in its public relations and CSR budgets in Nigeria and other strategic locations around the world.
Public relations analysts strongly believe that significant reductions in community development projects and CSR campaigns are in the pipeline.
Budget and job cuts at Shell can affect its public relations programs in 3 ways:
- Stakeholder relations: It can affect strain relationships with various stakeholders, including investors, customers, and communities. If stakeholders perceive the cuts as indicative of a lack of commitment to their interests, it could lead to increased tension and a decline in the company’s social license to operate.
- Increased scrutiny and media coverage: Budget and job cuts often attract media attention, especially when it involves a major corporation like Shell. The company may face increased scrutiny and negative press coverage, potentially making it challenging to control the narrative.
- Impact on public relations and CSR Initiatives: PR and Corporate Social Responsibility (CSR) initiatives often form a significant part of a company’s PR strategy. Budget cuts might force Shell to scale back some of its CSR programs, impacting its ability to demonstrate commitment to sustainability, community development, and environmental stewardship.
The Shell Petroleum Development Company Ltd (SPDC) operated Joint Venture has so far in 2023 disbursed a total of N3.72 billion and another $12.32 million for community development in compliance with the provisions of the Petroleum Industry Act (PIA,).
No major CSR or community development project has been announced in recent times by Shell NG.
Mr. Osagie Okunbor, Country Chair of Shell Companies in Nigeria, earlier assured that “our relationship with Nigeria remains strong and we are focusing our ambitions on our Nigerian deep-water production and gas distribution businesses.”
2024 will be a test year for Shell to see how the budget and jobs cut will affect its public relations operations and subsequent perception.