CNBC Business | Petroleum-Head

Petroleum-Head

Jeroen van der Veer, CEO and 37-year veteran of Royal Dutch Shell, talks to Simon Hobbs

Simon Hobbs: What does “leadership” mean to you? 

Jeroen van der Veer: As a leader you must have the combination, on the one hand, to respect people, to listen to them and take on what they say; on the other, you must not be afraid to give direction. Being a leader is not just being a manager, you must know what is good and bad today and to be able to explain that in a one- or three-minute story — and not in a PowerPoint story! And you need to be able to say, “this is what we are going to do one Monday morning,” and “this is what you are going to do today”. You must get from Position A to Position B. 

SH: What about your background? You were born in the Netherlands, just after the war; your mother worked in book publishing and your father was a headmaster. 

JvdV: I had to do well at school. Being the time after the war, we had limited means. Both my parents had studied languages and felt they were really academics — and that those who studied subjects such as engineering were not real intellectuals. But I chose to go into mechanical engineering at Delft University. I was also conscripted into the army but when I look back on it, for leadership and other things it was actually pretty good training. 

SH: You began with Royal Dutch Shell at the age of 24, and 37 years later this is the first and only employer that you’ve had. 

JvdV: In those days, I was very keen to work overseas and I had this idea that if you joined Shell you would go to the tropics or very exciting places. But in my case they sent me from the Hague to the Rotterdam refinery!  

SH: Throughout the 20th century Shell became incredibly well-known for its leadership theory and practice, through which it repeatedly changed its managers’ mindsets so that they didn’t get stuck in old ways that would create risks down the line.  

JvdV: Yes, in Shell you learn very well that you always have to lead but that there are  always more uncertainties in the world than you think. And you also learn that if you don’t have the ability to discuss the future in scenarios you get a kind of emotional discussion between managers — “I believe this” and “I believe that”. What we do at Shell is to say that everything is possible but let’s figure out, whatever the beliefs are, how the company will come out of it as a strong company. 

SH: What did Shell’s conflict with Greenpeace in 1995 mean to you? 

JvdV: Sometimes, people think that Shell does sneaky dirty things and I take issue with that: it’s utter nonsense. Here we had a group of people who had thought through a logical solution to a problem but the public perception of this went completely the other way. While you feel in cool and clean logic that you have a strong case, there was no way you could win from the media. It was a kind of traumatic experience. Out of this, my predecessors organised to listen around the world and realised that people thought of Shell as having a closed culture with old rules. Ever since, we’ve tried to change that but it takes a long time to change public perception. 

SH: How did you decide that you were going to lead when you rose to higher ranks in Shell? 

JvdV: Well, we sold half of our chemical portfolio, we reorganised what we had, we reintegrated sections. It was, very simply, how to  go from Position A to Position B.  

SH: By the end of 2003 you were vice-chairman of the entire group, you’d been invited to sit on  the boards of Unilever and the Dutch Central Bank, you’d absolutely made it. So how did you feel,  in 2004, when you had to comply with the SEC and announce a 20% cut in your proven oil reserves? 

JvdV: I was convinced that something in this great company went wrong and that it wasn’t easy to explain. But, you know that people, customers, shareholders — all kinds of people — were angry at Shell and were not interested in long explanations.  

SH: But they didn’t get a lot of explanations, did they? Shell management stayed silent for two months, saying they would explain the matter further down the line — but still you had to manage 115,000 people. How did you lead through that period? 

JvdV: You have to be physically present, you have to be approachable, you don’t know all the answers, so you need a lot of honesty. You say, “I don’t know the answer to that now, but how does the company have to go forward?” People will want to talk about what happened today and yesterday, but you have to talk about how to get to Position B, which is in  the future. 

SH: At the end of it, you became the CEO.  Did you want the job? 

JvdV: In the end, if this is a company where you have worked for 30 years, which you believe is a strong company with good people, that’s an easy question. 

SH: What is at the heart of leadership? 

JvdV: I think most leaders recognise that sometimes it feels confused and that there are many uncertain things but sometimes you have this internal certainty that this is how it is, this is what I am going to do, this is how I inspire the troops going forward, these are the behaviours that I like to have. And once you feel sure of yourself, you feel a certainty, in spite of all the different advisors that you get. 

SH: You’ve said that too much job movement has created a world of gifted amateurs in a world that needs professionalism, commitment and discipline. 

JvdV: I know now that the average senior person at Shell used to stay for just 2.2 years in his or her job. So, you make a plan, someone else has to carry it out, and you never get a good relation with your reports. So it was not only short job tenure that led to lack of professionalism, but there was no real respect for our leaders. So I stopped that. 

SH: And what about outsourcing? 

JvdV: We had consultants all over the company and a consultant will give you advice — but every time you use one, that consultant will walk away with insights. However, if you use your own people, who are as bright as those consultants, you keep the insight and get in-house capability. We do it ourselves and we lead by example. That was my message to the senior leaders as well. As a leader, you have to think about where you are going and you have to stick your neck out. 

SH: What do you plan to do after you retire  at the end of June? 

JvdV: They do not pay me to think about what I will do after the 1st of July. 

SH: As you look back, of the mistakes you’ve made what taught you the most? 

JvdV: I have learned that you must always make speed. With hindsight there are always times when you can say, “Well, the direction was good, you knew enough, but you could  have made more speed.” Speed works in two ways: one is the speed of your mind and the other is not accepting the slow speed that your workers make. 

Curriculum Vitae

 Jeroen van der Veer , CEO of oil company Royal Dutch Shell  

Born: 27 October 1947 in Utrecht, Netherlands 

Education: Mechanical Engineering (Delft University), Economics (Rotterdam University), Honorary doctorate (University of Port Harcourt in Nigeria) 

1971: Joined Shell and worked in manufacturing and marketing in the Netherlands, Curaçao and the United Kingdom. 

1984: Returned to Shell Nederland as manager of Corporate Planning, and then of Pernis refinery in Rotterdam.  

1992: Became a managing director of Shell Nederland in 1992.  

1995: Moved to the United States as president and chief executive of the Shell Chemical Company. 

1997: Appointed a group managing director in 1997.  

2002-2004: World president of the Society of Chemical Industry. 

Other positions: Non-executive director of Unilever, serving as a member of the Nomination and Remuneration Committees.  

Other information: Retires as chief executive on 30 June 2009 and will be succeeded by Peter Voser. 

Interests: Married to Mariette and has three daughters. On his travels he enjoys visiting museums. He keeps fit by playing golf off a 16 handicap. And he has twice skated the 200km Elfstedentocht — 11 cities marathon — in the Netherlands.