Shell pours oil on employee relations

Communicating with employees was, until very recently, a feature of the industrial age when incentivising an enormous salesforce to push products consisted of running competitions and telling them to watch the TV ads at a given time.

But news that Shell, a company that has more than enough problems improving its consumer image, is planning a considerable investment in a one-off project to boost the morale of its own staff (MW November 22), signals that times are changing.

British Airways, Sainsbury’s, Safeway and a host of other companies are now investing heavily in schemes to justify management changes or explain the background of media stories about the companies.

For Shell it is part of an attempt to redefine its branding in response to enormous market pressures. For many other companies, employee communications is becoming as significant as TV advertising in the battle for reputation.

Accordingly, the agency world is trying to secure a new source of income. Next month, WPP officially launches its first dedicated internal communications company, Banner McBride, which unites disciplines from three WPP companies – identity consultant Sampson Tyrrell, PR consultant Hill & Knowlton, and audio-visual and multimedia company Metro Video. The brief: to work on internal communications projects for blue-chip clients.

Banner McBride is pitching alongside sister agency Ogilvy & Mather, M&C Saatchi and the Added Value company which had already begun work on the internal project before the pitch began.

Though Shell is outsourcing its internal communications, others have gone a step further and restructured their marketing operations to accommodate change. In January BA merged its internal communications and PR departments as part of a management restructure.

Director of communications Kevin Murray says the changes were introduced to develop a single image of the company in the media.

“Consumers pick up the reputation of the brand from advertising, the product itself and from the contact with the company,” says Murray. “It was therefore important to bring a unified brand message to consumers and employees.” The Virgin/Dirty Tricks legal case had a damaging effect on the public image of the airline and was a further factor in the internal restructure.

Mike Pounsford, managing director of Banner McBride, says a company’s reputation is everything. He highlights the case of Sainsbury’s which, after falling behind Tesco in the supermarket stakes, suffered negative publicity in the financial pages. “So many things can affect purchasing decisions other than how the pack looks on the shelf,” says Pounsford.

Over the past 18 months, a number of companies have begun addressing internal communications. Asda’s “Tell Archie” campaign encouraged staff to make suggestions and win rewards for improving sales performance. In the same vein, Safeway has introduced in-store terminals to allow staff to make suggestions; Sainsbury’s has launched a narrowcast satellite television network aimed at its 110,000 staff; BT is undergoing a social audit to measure how it treats staff, customers and shareholders; and BA launches its own satellite TV station BA TV next year.

Shell is understood to be considering installing terminals at petrol retail outlets and refineries to encourage feedback. “The aim,” says one insider, “is to improve the morale of the workforce by getting it to understand the brand values better.”

In the past, Shell has been condemned for its environmental record and 12 months ago faced a worldwide consumer boycott for its support of the Nigerian regime which executed the political activist Ken Saro-Wiwa.

Last month, Shell International announced it was reviewing its general business principles to include an explicit reference to human rights in the wake of the Nigerian controversy. Part of the internal communications programme is to publicise Shell’s new general business principles.

The charity Christian Aid recently launched a campaign to shame manufacturers and retailers out of using third world child labour. And last week, the international sports goods industry agreed to develop a code of conduct on human rights, following protests that their suppliers in Latin America and Asia use child labour.

But the Shell initiative is more than just responding to consumer pressure. The agencies are involved in reassessing the company’s core values in the wake of profound restructuring and rethinking of what the company should be. Like other oil companies, Shell is undergoing an identity crisis.

There is a fundamental reassessment of its structure from the refining and pipeline side of the business to downstream. There are also new opportunities opening up for the gas market with Shell Gas poised to enter the UK sector next year, when limited competition is introduced.

In the US, Shell has signed a downstream (retail) deal with Texaco to combine marketing operations and resources, mirroring the deal between BP and Mobil in Europe. There are indications this may be brought to Europe as well.

In addition to this there is the petrol price war sparked by Esso earlier this year, but really triggered by the supermarkets entry to the market, which has drastically cut margins. Shell has responded with price cuts and an attempt to widen its loyalty scheme via the smartcard consortium, including improved relations with erstwhile rival Sainsbury’s (MW September 6).

The supermarkets have not only stolen 22 per cent of the petrol market, but the upmarket chains like Sainsbury’s and Tesco have helped shatter consumers’ belief that the main petrol brands, Shell, Esso and BP, sell the best product.

In fact, consumers increasingly see petrol as a commodity, despite the best efforts of Texaco which insists on promoting the “quality” of its petrol. Marcel Cohen, a lecturer at the Imperial Management School, says petrol retailers, such as Shell, are no longer able to differentiate brands on product quality.

From supermarket competition to industry consolidation and de-regulation of the gas market to human rights abuses, the company needs to maintain a presence on many fronts. The days when Shell could run with a simple brand proposition based on the quality of its petrol are over. This goes a long way to explaining the internal communications campaign.

Whichever agency wins the task, Shell will need to pump more than petrol into its brand before consumers – and staff – can be “Sure of Shell”.