The Way Ahead: Interview: Jeroen van der Veer: CEO, Royal Dutch Shell:  "Honesty, integrity, and respect for people are core values in Shell.": Posted Monday 24 October 2005

Jeroen van der Veer is Chief Executive Officer (CEO) of Royal Dutch Shell, which operates in more than 140 countries and territories and employs more than 112,000 people. Shell is best known to the public for its service stations and for exploring and producing oil and gas on land and at sea, but the company delivers a much wider range of energy solutions and petrochemicals to customers. These include transporting and trading oil and gas, marketing natural gas, producing and selling fuel for ships and planes, generating electricity, and providing energy efficiency advice. Shell also produces and sells petrochemical building blocks to industrial customers globally and is investing in making renewable and lower-carbon energy sources competitive for large-scale use.

Van der Veer joined Shell after military service. His first degree was in mechanical engineering, and he later studied economics. His first Shell appointment was in process design, followed by manufacturing operations in Pernis in The Netherlands and in Curaçao. Other postings were in corporate planning and in marketing for Shell Nederland, and also marketing with Shell U.K.’s liquefied petroleum gas business.

Van der Veer was Area Coordinator for Africa, Liaison Officer for Canada, and Managing Director of Shell Nederland before becoming President and Chief Executive of Shell Chemical Co. in the U.S. He joined Shell’s Executive Committee in 1997 and was appointed CEO in October 2004. Van der Veer is also a nonexecutive Director of Unilever.

What in your early life led you to choose a career in the oil and gas industry?

It was an easy choice for me. I wanted to see the world, and I was keen to live and work abroad. The oil and gas industry offered that opportunity—it still does—and that was the main motivator. The idea of living in many different countries was very attractive to me.

What was your first job, and what was your impression of the industry when you first joined?

I was a mechanical engineer, and my first job was as a junior process designer working on distillation columns and process-flow schemes. This was a sound technical development role and useful grounding. My impression was that junior process designers had little opportunity for managing people, so I looked for that responsibility in my following job. I joined the maintenance team at the massive Pernis refinery in The Netherlands. First I worked in the central workshops and then as shutdown leader, shutting down large sections of the refinery to carry out maintenance. This was completely different from my designer job. I could be managing a team of between 25 and 800 contractors. That was an incredible experience. I had a large responsibility at a young age. It takes real guts to give that kind of responsibility to a young professional, and more companies need to do that.

What are the most memorable experiences in your career since?

Strengths are forged in adversity, and so it is the tough times I remember the most. In the 1980s, we had major economic problems with our refinery on the island of Curaçao. The margins were too small for the refinery costs. The hard numbers showed we had to lose people or sell or close the refinery. We respected our people and did our best for them, but about a third lost their jobs. That was a difficult time for the people affected, and eventually we had to sell the refinery anyway. In hindsight, we could have been even tougher and we might have saved the refinery. I would have been even more unpopular, but perhaps we could have secured the future of that business and the remaining jobs. Sometimes the right decisions are not the most popular ones.

Shell has been through some tough times over the last year or so. We made some difficult decisions, moved on from the reserves recategorizations issue, and continue to work hard. The unification to create Royal Dutch Shell plc is a more positive memory—but that wasn’t just down to me. I like to roll up my sleeves and work hard, but our new company is the result of a lot of effort by many people in Shell, and I was grateful for the very strong support of our shareholders and many other well-wishers.

What advice would you give to professionals in the early stages of their E&P careers?

You should learn to focus. Try not to fly around like a bird pecking at a seed here and a seed there. Focus on a few good things. It is good to be able to look back and say, “I did that.” When I was at Pernis, I reviewed the plot layout of the workshops, made the case for a more efficient arrangement of equipment, and implemented the changes, seeing through the full cycle of idea inception to realization. I encourage all professionals to see the whole cycle; it is ultimately more rewarding.

Another important aspect is about people. Even the best engineer still has to understand the human side of business and what makes people tick. I have learned from the good examples of others. Since my student days, I have read Harvard Business Review to keep up with the latest thinking. My advice is to keep reading books, keep learning, and always think about people. Honesty, integrity, and respect for people are core values in Shell.

One more thing: speaking the local language gives you a huge advantage in a global organization. I have found that understanding the local language helps appreciation of the respective community and culture. It is also much easier to build trust and communicate effectively if there is that bond of common understanding.

Who has helped you the most in your career, and what lessons did you learn from your mentors?

In my early career, I was helped greatly. My managers at Pernis Central Workshop and the Curaçao refinery manager taught me how to motivate people. I like to listen to the frontline people, to the salespeople, or the operators. I learn from them how to remove blockers and help them do a better job.

Young professionals benefit from seeking advice from more experienced colleagues, but we can learn from each other. I always take every opportunity to learn from our young professionals. It is a two-way dialogue.

What are the key technology challenges you see for the E&P industry now, and what can young E&P professionals (YEPPs) do to help?

First of all, this is a gigantic growth industry. The scale and complexity of what we have to achieve is unprecedented. We do this in a glass house, with every action under scrutiny. Technology enables this enormous growth and its sustainability. Shell has always been at the forefront of technology, and our industry record is second to none.

Technology has to advance faster and faster to deal with the large-scale transformation of our industry over the next decade. We will strive to significantly enhance production from our existing fields and widen new horizons like unconventional hydrocarbons. This will take increased professionalism from young professionals in every dimension of our business, and developing technical expertise will continue to be crucial.

What is on the horizon for the industry, and how might YEPPs prepare?

Young professionals will get to work on large projects and make multimillion-dollar decisions. This is a fantastic opportunity, but my advice is always to keep your feet on the ground. The scale and complexity are a challenge, but I find that analyzing things in simple elements can help. I like to apply simple philosophies to subjects like managing costs by asking myself, “How would I do this at home?” My advice is to keep thinking about how to make the complex things simple. This is important both in communication and in organizing your work.

Another challenge is the need to get more talented people to join our industry as we grow. Shell is already truly multicultural and a global business, but we need to attract more of the best people from across the world and make full use of their talents.

How is Shell encouraging young people to join the industry? What can YEPPs do to help?

This is where YEPPs can help considerably. In Shell, we have our Campus Ambassador program, in which our recent graduates go back to their universities and explain what they do in their jobs. We also fund education in schools, particularly to encourage students to study science and technology. Shell is very keen on internships because they offer the opportunity to try working in the industry without having to fully commit, and it is usually an immensely rewarding and fun experience whatever the person decides to do afterward.

What changes would you make to the way our E&P industry attracts people?

The industry is doing a lot better than 5 years ago, when we had low oil prices and some short-term measures damaged our reputation with graduates. But I am convinced we are getting the right message across now. We are here for the long term, and we always need the best people. I attend young graduate events regularly and can see the amazingly good quality of people we are attracting into Shell and the industry.

I think that the industry also needs to help itself by providing the right materials and people to attract the best talents from universities and other educational establishments, and encouraging more people to study science and engineering. For example, we must put more effort into vocational and technical colleges—this is where we will find the operators of the future and top-quality technicians.

As CEO of one of the world’s biggest companies, what lessons can you share about leadership?

First, look at what is going on today and do not be too optimistic or pessimistic—take a balanced and clear view. Second, think about where we should be in so many years in the future. The amazing thing is that if you can explain both, then people will help you go from A to B.

When I make a speech or consider a strategy, I want to be very clear about where we are, where we are going, and what we need to do to get there. Leadership is about simplifying complex issues and setting a clear direction. One of the best things leaders can do is to fight what I call “organizational entropy”—the deterioration of an organization into disorder and complexity. An example of this simplification is our Shell strategy, which is “more upstream, profitable downstream,” a clear and focused direction in only four words.

You have traveled a great deal. What advice do you have for young E&P professionals when they get the opportunity to travel or work abroad?

Travel helps to widen horizons and opens your eyes to appreciating the world and respecting its many people and cultures. I think it is very rewarding to spend several years living and working in different countries. It is a formative experience. For example, when I was living in Houston, Texas, I found it an incredibly dynamic society. Shell has world-class research and development facilities in Houston, and many world firsts have been achieved there. For example, we drilled the first expandable-tubular monodiameter well in Texas recently. People there look to the future, and there is an automatic drive to get there first. That energy has always stayed with me.

What involvement have you had with professional organizations like SPE, and what benefits do you see from such professional organizations?

I am a dedicated member of the Royal Dutch Inst. of Engineers and have served in various capacities. I was also honored to be world President of the Soc. of Chemical Engineers, which was quite an achievement for a mechanical engineer! They have a wonderful saying, “where science meets business,’’ that has always summed up my feelings about these organizations.

Professional organizations provide a way to receive positive and negative feedback about your company. They also provide awareness of early trends and help you develop a nose for these. Most important, it’s fun too, with a great network, and it is nice to meet enthusiastic people who have a deep belief in professionalism.

What issues are most important in your life and work?

I am grateful to Shell. There have been many house moves to many countries, but always with excellent schools and facilities for my family. I have been able to successfully combine my family life with my career. This balance can change over time. In my younger days, I would work pretty hard during the week, but the weekend was the weekend! It is a bit more difficult for me now, but work/life balance is also about respecting choices. People need to be given space, and we all need to accept that others may have a different view on where the balance lies.

There have been many positive changes compared to when I started out in the industry. For example, working from home is now a credible alternative. Options like these allow us to show greater respect for people’s personal circumstances. Our industry is much more flexible and caring than it used to be.

What do you do to relax? What is your ideal escape?

I like taking part in individual sports—jogging, cycling, ice skating. I am not a watcher. I enjoy team games too, and played field hockey for 20 years. When I jog, the first 20 minutes are for the body, and the second 20 minutes are for the spirit. That second 20 minutes takes my mind to another type of thinking.

Is it true you have completed the famous Elfstedentocht 124-mile-long ice-skating event twice?

Yes, I like all long-distance sports. The 11-cities event is a reflection of what we call “volhouden” in Dutch. This can be translated into English as something like “perseverance.” This is something in my nature, and the nature of Shell, too: long-term, patient, and hardworking.

Finally, what would your message be to young E&P professionals about the attractions of the industry and, specifically, about working in a major integrated oil company like Shell?

This is an incredibly exciting industry and, if I were young again, I would join Shell all over again. We are genuinely international, with huge growth prospects, requiring teamwork with people from all backgrounds and cultures, developing and deploying advanced technology and management concepts. And we produce energy, which is essential for society. Without us, everything stands still.

There are so many fascinating dimensions of our industry. We connect the world, and the provision of energy relates to so many other subjects, including geopolitics and climate change. No other industry offers such a unique proposition.

I respect other career choices and encourage everyone to find their right place in the industry, whether in a major integrated oil company, a government organization, or in a service company. But a major integrated oil company gives you a different kind of challenge and achievement. We take risks in many different places, in increasingly tougher environments, and implement highly complex and capital-intensive projects, and then we produce oil and gas, helping to give the world the energy it needs. You get to say, “That was our vision, and now it is reality.”