Hearing credible rumors from multiple sources this week that YL has set a target for functional cost to be cut 50% by 2030 from 2026 levels. Meaning all current reorgs are only a stepping stone cost cutting measure to be followed up in 2028/2029 with another round equally as deep. Please share what you know. promoted this year, feeling a bit vulnerable now.
24 replies (most recent on top)
@2n - it'll keep happening in pockets, but no mystery that Downstream will see the most cuts in the aggregate over the next few years. The roi simply cannot justify additional capex. If you can post out to IG/UP or T&S, odds will likely improve of making it past 2030.
When do we expect another round of Sales reorgs? JL sold, supply shortages ..
@1mm you really believe that, because there isn’t enough work (which is not true), all functions pretend they’re busy by intentionally delaying delivery and can orchestrate this is one uniform group? If you really believe this conspiracy theory, you’re lost.
In my opinion, both functions and business have to many overhead roles (project managers, opportunity managers, contract managers etc.) which is why these departments are not effective.
@1ke so your defense is that because these groups are so ineffective already that we shouldn’t reorg/cut them further? I think a more appropriate take is that there isn’t enough work for them to currently do. So they’re dreaming up tasks that don’t add value in order to appear busy. This takes them away from value add work.
Funny how the loudest calls to cut function costs come from the same staff who complain when their IT or HR requests that are outsourced to an Indian SBO take weeks to get resolved.
@v2, the acclimation time is for the businesses, not the functions themselves. Agree with everything else you said, which is why I can’t disagree with what Wael is mandating.
@ts not trying to be contentious, I’m really not understanding why we give support functions time to acclimate but with businesses we just gut them and move on. What do they need to acclimate? Less resources? We all deal with that and keep going. I also argue the assertion there’s more work to do. So many times people in these groups talk about how many hours a week they work but can’t defend the work they’re doing as being value add. “Value add” needs to be endorsed by a business or revenue stream as well. Not just, “oh without us you’ll be sorry.” Or “look at all the work I’m doing.”
Legal just finished a global 30% cut that’ll go live June 1, so I can see how it’ll take a year or two to acclimate and then have another 30% cut just before 2030. Can’t do a 50% cut in one fell swoop.
If this is real, cut functions now or in 2027. Waiting until 2030 adds no value. We already closed clinics at WCK and STCH so why do we still have to pay for JG1 medical people?
A lot of work on finance and definitely HR can be replaced by AI easily. Mindboggling how many mismatched PO and invoices businesses have to deal with after copying 10+ offshore teams. I do like some friendly colleagues in finance and contracts, really gold to have them, so if you are in functions domain stay human and be friendly and helpful, otherwise AI is gazillion times better than you.
@pf finance didn’t fall to us, went to SBOs in the east as the other poster said. Although I wouldn’t say there were no issues. Definitely some growing pains. I also highly doubt expat roles were created. The whole point of the SBOs is to reduce cost of employees. Expat roles don’t support that goal. Sorry if I missed sarcasm. Also, don’t get too attached excited about an internal audit. They don’t make or break Shell despite the conviction you’ll hear from anyone in those roles. Not just finance. To the other person asking internal or external, I agree with the comment. Highly doubt the SEC showed up to WCK and said, “look how awful your books are.”
@pf Internally audited? Or audited by a regulatory body?
@pf no, everything went to Philippines and Chennai with no issues at all. Was even cheaper amd lots of expat opportunities
In 2018 ish, CFO J. Uhl tried this "world class finance team" which basically cut finance support by 30-40%. That was a disaster. The work did not go away, the work fell to the business unit, of which we did not have resources to pick up the work. Stuff got sloppy. Process and controls were not being done. 2-3 years later things came to a head when the business was audited and it was ugly. Random staff cuts comes with consequences!!
@f7 - functional support is now viewed as structural freeloaders, like adult children that will never move out of the house. I’m in a function and the number of times I’ve heard how valuable I am to the business while they have no clue what [insert the name of some other functional group] does . . .
Every P/L center currently being decimated with reorgs saying this about every one of their functional cost centers company wide is not good. To the original poster who just got promoted . . . yes, be concerned. Not trying to be mean here, just the new reality. No one is going to defend you when it’s time to remove your cost.
genius comment
wael has never ever tried using mass firings to bump the stock before! it will work this time!
@d1 still can hit 30+ years just not freeloading functions anymore. Fully support this. Our costs are out of control.
Confirmed. Not a secret. Wael snd sinead dont care how fast it happens. Just how slow it happens. All functions will finish reorgs this year, adjust to their new budgets and then reorg again in a couple years. Process and reasons are straight forward. Days of hitting 30+ years are over. Days of growing bloated and expensive functions are over.
@aa I know coming out of Covid in 2022, I had to get GM approval to visit my sites that I supported and even that was hard to get. Yet the LT was able to fly all over the world and stay in 5 star hotels for team building but I couldn’t fly to visit operations.
Agree with some other comments. If it’s identified now that cuts need to/will be made, why would it take years to do it?
That strategy is guaranteed to ensure some staff remain in situ awaiting a pkg and the remainder of staff gets even moral demoralized.
Too many bloated IT staff with golden handcuffs, sitting and waiting to get layed off with a package.
Just Do it Wael, stock needs to be inflated more with something, pls make a move.
Why the fu-k would that take until 2030? A fake rumor being spread. If you can cut businesses by 30% in 18 months but can’t cut useless functions for 4 years, you don’t deserve to be a competitor to even EOG.
This is welcomed. FFS cut corporate functions: cut medical 100%, real estate 100%, IT cut to prior 2022 levels. Just the start. Good lord functions haven’t cut at all while businesses have been gutted. Medical flew their entire org to Thailand for a fu--ing boondoggle last year and we have to cut actual business travel. I’m fu--ing done with these functional fu--s
I do not know about all businesses in Shell, but definitely the cost centers plan to replace many people with AI across all hubs.