One of the modern shibboleths that businesses seem to worship is that of "contracting out" wherever possible - hire an outside contractor when you need to rather than managing that activity yourselves, especially when that activity is problematic in some way. But what if that activity is pretty crucial to your business and what, even more importantly, if it is crucial to your reputation?
To understand the dogma that is driving this management imperative in Shell I have told the story about how it applied some years ago I was working for Shell in Dubai. In Dubai there was a small but successful downstream (marketing) operation. This was a fairly conventional business involving the marketing of a wide range of petroleum products to a variety of different customers across the United Arab Emirates. A key element of this business was, and always had been, the operation of a product distribution/transportation activity involving oil depots, vehicles and drivers. For more than thirty years this business had been built up as a professional, cost-effective and customer focused operation. It also had an admirable safety record (in a high-risk area) and the staff of thirty or so tanker drivers were a loyal, skilled and motivated team.
Well the battle raged on for a while with the argument that to go arms-length in an area as safety sensitive as dangerous fluids distribution was bad practice – especially as no possible cost savings would result. Furthermore to dispense with the services of the drivers many of whom had up to thirty years service hardly sat well with "Corporate Social Responsibility"! But this was ideology at its most sinister. The man from Oman had on his "scorecard" the target of outsourcing in Dubai. If he succeeded his remuneration would benefit – as well, of course, as showing that he was a loyal implementer of the new edict. He didn’t care one jot about the employees or their futures – all he cared about was showing himself off in a good light. Well we did fight on but in the end we lost. The drivers were sacked and the operation was outsourced. The irony of this story is that there was no financial benefit to Shell at all from the decision. Outsourcing (in this instance) wasn’t cheaper – it was simply the application of a dogma!