The Statoil Book
At Statoil, the way we deliver is as important as what we deliver.
Dear colleague We are on a journey together to transform Statoil into a global energy company. We have a successful history of innovation and growth, and a distinctive values-based performance culture. Our vision of crossing energy frontiers represents both past achievements and the challenges we have to solve to continue developing our great company. At Statoil, the way we deliver is as important as what we deliver. Safe, secure and efficient operations are our top priority. Together, we create value for our owners with integrity. We have a strong framework for safety improvements and a clear security policy. The Compliance and Leadership model describes how we plan, execute, evaluate and learn from any task. This is the way we work in Statoil and your commitment is needed to continue to strengthen our performance. By using the model, you and your team will deliver with precision and quality. We face an increasingly competitive and complex industry environment, growing expectations from a broad set of stakeholders and high attention towards safety performance. Our leadership profile is aimed at making Statoil even more fit to meet these realities, and will serve as a catalyst to drive performance and accelerate our journey. Our management system contains the principles, policies and requirements we need to work safely and effectively. As part of the management system, this book describes the most important policies and requirements for our entire group. The Statoil book is the foundation of how we conduct our business. It sets standards for our behavior, our delivery and our leadership, and it is clear on what is required and expected of each of us. The Statoil Book is an important tool for you in your daily work and for us as a group. I expect you to understand and follow our principles and requirements. Statoil needs your personal commitment and contribution every day to reach our goals and to be an exceptional place to perform and develop. Helge Lund President and CEO Copyright Statoil 2013 The Statoil Book - version 3.1 3
Contents Part I Title: The Statoil Book Version: 3.1 Valid from: 5 July 2013 Validity area: Statoil group all locations Classification: Open Owner: Function owner management system The Statoil Book will be printed in updated versions when deemed necessary. However, any changes will be updated in the electronic version as and when required, and this will always represent the most recent edition. The career model on page 21 has been inspired by Charan, R, Drotter, S & Noel, J (2001). The leadership pipeline. Liability disclaimer None of the provisions of the Statoil Book are intended to be construed as creating any right(s) enforceable by a third party and all third-party rights implied by law are, to the extent permissible by law, excluded. Our management system Introduction 8 Our responsibilities 9 Our values 12 People and leadership People partnership 16 Our leadership 17 4 Copyright Statoil 2013 The Statoil Book - version 3.1
Part II Part III Operating model Organisational principles 24 Ambition to Action 27 Compliance and leadership 34 Capital Value Process 36 Arenas 38 Governing documentation 39 Process owners 40 Function owners 42 Monitoring 43 Corporate policies Safety 56 Security 58 Sustainability 60 People 62 Communication 64 Risk management 66 Finance and control 68 Procurement 70 Ethics 72 Managing information 74 Corporate governance Corporate governance 48 Governing bodies 48 Authorities and internal control in Statoil 50 Appendices Appendix A Organisation Appendix B Decision authorities Appendix C Control in subsidiaries and joint ventures Appendix D Committees Appendix E Capital Value Process Appendices are available electronically Copyright Statoil 2013 The Statoil Book - version 3.1 5
Our management system Introduction 8 Our responsibilities 9
Our management system We have a management system which defines how we work and describes how we lead and perform our activities. Copyright Statoil 2013 The Statoil Book - version 3.1 7
Introduction Our management system has three main objectives 1. Contribute to safe, reliable and efficient operations and enable us to comply with external and internal requirements 2 Help us to incorporate our values, our people and our leadership principles in everything we do 3. Support our business performance through high-quality decisionmaking, fast and precise execution, and continuous learning Commitment to and compliance with our management system are a requirement. Our management system The Statoil Book Values People and leadership Operating model Corporate policies Function requirements Business area requirements 8 Copyright Statoil 2013 The Statoil Book - version 3.1
Our management system Our management system is the set of principles, policies, processes and requirements which support our organisation in fulfilling the tasks required to achieve our objectives. The management system is documented in governing documentation, which includes the Statoil Book, common function requirements as well as requirements specific to the business areas. 1. The Statoil Book covers the following topics 3. Business area requirements Our values: guiding our behaviour People and leadership: describing what we expect from our company, our people and our leaders Describe the organisation and operating model for the business areas and other organisational units. Business area requirements also include local governing documentation related to the common function and process areas. Operating model: describing our organisational principles, the way we work, and the way we manage and improve our performance Corporate governance: describing governing bodies, authorities and internal controls in our group Corporate policies: regulating our actions and decisions in important areas 2. Common function requirements Describe function requirement for function and process areas as well as work processes and technical requirements. Our responsibilities All our people are required to comply with relevant governing documentation, in addition to adhering to country-specific laws and regulatory requirements. Every leader is responsible for ensuring that their people know where to find the relevant requirements, understand how to use the management system and comply with the requirements. Leaders are role models for how to use the management system. All our people are responsible for contributing to governing documentation improvements. Copyright Statoil 2013 The Statoil Book - version 3.1 9
Our values Our values 12
Our values Our values embody the spirit and energy of Statoil. Our values are essential if we are to succeed over time in a competitive environment. They are at the core of our management system. Our values drive our performance and guide us in how we do business, and in how we work together and towards external stakeholders. Copyright Statoil 2013 The Statoil Book - version 3.1 11
Courageous Be imaginative and ambitious, and stimulate new ideas Use foresight, and identify opportunities and challenges Challenge accepted truths and enter unfamiliar territory Make clear demands on each other and push for constructive change Understand and manage risk Open Be truthful and act with integrity Be curious, work together and share experience Promote and value diversity Communicate in a precise way, give and accept constructive feedback Bring up ethical issues and challenges immediately 12 Copyright Statoil 2013 The Statoil Book - version 3.1
Our values Hands-on Deliver on promises Continuously develop sound expertise, demonstrate commercial awareness and customer orientation Strive for simplification and clarity, and focus on value-adding activities Act decisively and be loyal to decisions Show dedication and endurance, follow through and pay attention to important details Caring Cause zero harm to people and prevent accidents Reduce the negative impact of our activities and products on the environment Act within the law and comfortably within our own ethics policy Demonstrate social responsibility and contribute to sustainable development Respect the individual, help others to succeed and contribute to a positive working environment Copyright Statoil 2013 The Statoil Book - version 3.1 13
People and leadership People partnership 16 Our leadership 17
People and leadership It is our people who enable us to meet our challenges and deliver on our promises. We need your skills and personal commitment as well as effective leadership to reach our goals. We believe in involving our people and their appropriate representatives in the development of our group. Copyright Statoil 2013 The Statoil Book - version 3.1 15
People partnership We establish and grow a partnership between our group and the individual based on clear expectations and a mutual commitment to the way we behave, deliver and develop. What you should expect from our group and what the group expects from you We: Promote a stimulating work environment guided by our values and a commitment to your personal and professional development Provide a good match between your professional interests and goals and challenging and meaningful job opportunities Build a high-performing environment, and give direct feedback on your performance Recognise and reward your performance based equally on what you deliver and how you behave Value diversity and provide equal opportunities You: Live our values in all aspects of your work Recognise that change is vital to our business, commit to agreed objectives, and strive to deliver beyond expectations Take the initiative and look continuously for ways to improve performance Take responsibility for your own learning and development, continuously build new skills and share your knowledge Respect and motivate others, are a team player and create effective working relationships Are proactive in ensuring high-quality decision-making. Once a decision has been made, you promote that decision and focus your energy on its execution 16 Copyright Statoil 2013 The Statoil Book - version 3.1
People and leadership Our leadership If you accept leadership responsibility in Statoil, you will be required to meet expectations which go beyond the people partnership. These expectations are described in the leadership profile and in the leadership development principles. Statoil leaders have impact and deliver sustainable results Leadership profile INTEGRITY Be honest and build trust with others Be direct and raise issues early Advance our company and values in all you do, and place organisational success ahead of personal gain PERSONAL HUMILITY Know how others perceive you and how you can best influence others Continuously work on developing yourself Be humble, ask for feedback and help when needed WILLPOWER Have inner drive to enhance the performance of self, others and the business Have stamina, create optimism and energy, also in difficult times Be ambitious on behalf of the company, act decisively, drive change and be passionate about winning EXTERNAL ORIENTATION Understand external forces, create business opportunities, manage risks and adapt to reality Collaborate with stakeholders to strengthen our business and create innovative solutions Have a commercial mind-set, drive competitiveness and be cost conscious Copyright Statoil 2013 The Statoil Book - version 3.1 17
EXECUTION RIGOUR Manage the critical details, follow through and deliver on promises Collaborate across boundaries, develop and empower your team and people Have a strong focus on safety, capital efficiency, operating excellence, and compliance ACCOUNTABILITY Set clear direction, clarify responsibilities and accept your accountability Take full responsibility for whatever happens within your area, and never blame others or bad luck Celebrate and reward the right behaviour and outstanding delivery, and tackle poor performance Leadership development principles Our leaders are talent scouts, responsible for building our future leaders to meet our business goals Our leaders: drive their own development demand stretch assignments and embrace mobility develop both domain expertise and general leadership capabilities build strong and diverse teams grow the next generation of professionals and leaders 18 Copyright Statoil 2013 The Statoil Book - version 3.1
People and leadership People@Statoil People@Statoil is our common process for people development, deployment, performance and reward, and is an integrated part of our performance management. People@Statoil process 1 Ambition to Action for your team is reviewed Even Stronger Values survey is completed Pre-review meetings are held to ensure calibration of performance, potential and development Preparation November December People@ Statoil dialogue 2 Performance appraisal of last year s delivery and behaviour is carried out My Performance Goals for the coming period are set Short- and long-term development plans are established August October January March 4 Progress is reviewed on the basis of performance goals and development plans Required actions to reach goals and fulfill development plans are discussed Additions, revisions or updates to goals and development plans are agreed Follow-up dialogue April June Capability and deployment review 3 Organisational capabilities and gaps are identified on the basis of the business strategy Development actions for individuals, teams and the organisation are agreed Deployment actions are discussed and succession candidates identified Copyright Statoil 2013 The Statoil Book - version 3.1 19
Our common career model We have a common career model for leaders and professionals which guides us in developing the expertise required to meet our business needs. It provides a clear direction for your career planning, and highlights the broad range of career opportunities which we as a group can offer. The career model is based on stages in which progression depends on your performance and potential. It supports the creation of development plans and deployment opportunities. 20 Copyright Statoil 2013 The Statoil Book - version 3.1
People and leadership This model enables you to develop in both the professional and leadership pipelines, and movement between the two is both possible and encouraged. The professional pipeline The leadership pipeline Copyright Statoil 2013 The Statoil Book - version 3.1 21
Operating model Organisational principles 24 Ambition to Action 27 Compliance and Leadership 34 Capital Value Process 36 Arenas 38 Governing documentation 39 Process owners 40 Function owners 42 Monitoring 43
Operating model The operating model is about how we manage our performance. It guides us to set the right priorities based on our values, and drives our performance through safe execution with precision, quality and speed. Copyright Statoil 2013 The Statoil Book - version 3.1 23
Organisational principles How we are organised affects how we deliver results. Our organisational principles define how we structure and manage our organisation. Our organisational principles define a simple organisational design which has the flexibility to meet demands of a changing business environment. Principles 1 Value and performance are created in our combined asset-based and function-based organisation 2 The organisational entities have clear responsibilities and two distinctly defined roles; the line role and the support role 3 Responsibilities and authorities are established through the process of delegation to the line role, and through the assignment of tasks to support roles in delivery entities 4 A single point of accountability applies 5 The line role has primacy, and acts in accordance with our management system Principle 1: Value and performance are created in our combined asset-based and function-based organisation Our organisation has two main types of entities; asset-based and function-based. Asset-based entities have a mandate to define, develop and operate assets in the value chain to ensure optimum return on investments Function-based entities have a mandate to deliver advice, services, products, projects and governing documentation to drive synergies and functional excellence across the group We have four different types of function-based entities, with a global mandate. Corporate staff entities support the CEO and the corporate executive committee (CEC) in the development of Statoil, key business decisions and in driving a values-based performance culture. They develop and monitor corporate standards, and drive improvement initiatives Delivery entities provide professional cost-effective services, products, projects and expertise across the group 24 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Process owners develop and improve the Statoil global work processes and drive simplification and improvement initiatives across the group. They monitor compliance of Statoil s global requirements and support business areas in deployment of key positions Arenas perform quality control and support quality decisionmaking Principle 2: The organisational entities have clear responsibilities and two distinctly defined roles; the line role and the support role The line role is responsible for people, results and performance. A solid line in organisational charts represents the organisational line dimension. The support role is responsible for deliveries of services, products and projects, and providing advice and expertise to other entities. Roles and responsibilities of organisational entities are described in governing documentation. Principle 3: Responsibilities and authorities are established through the process of delegation to the line role, and through the assignment of tasks to support roles in delivery entities Delegation is the establishment of responsibility through the organisational line role. The leader with delegated responsibility is accountable for the deliveries, agreed contributions, resource ownership and the People@Statoil process. Assignment of tasks is the establishment of responsibility across organisational entities for specific deliveries. Assignments of tasks to support roles in the delivery entities are regulated through the use of service level agreements or task and project assignments. CEO Line role CEO Delegating responsibilities to line role CEO Assigning responsibilities for tasks to support role Asset-based entity Delivery entity Asset-based entity Delivery entity Asset-based entity Delivery entity Support role Copyright Statoil 2013 The Statoil Book - version 3.1 25
Local delivery entities work in an integrated way with the local asset-based entity. The local delivery entity is responsible for delivering functional excellence. The delivery entity has resource ownership of its own people. To strengthen local commitment a coordinated Ambition to Action and People@Statoil process may be agreed upon with the asset based entity. Principle 4: A single point of accountability applies A single point of accountability means that one individual is accountable for actions and measurable deliveries. A single point of accountability applies also when several organisational entities contribute in deliveries. Contributors are accountable according to the service level agreements, task and project assignments, and towards own line. The individual s responsibility for results and performance is independent of whether they use resources from their own entity or from other entities, or whether they use external resources. Assignment relationships are normally not shown in organisational charts. If there is a need to illustrate a strong interdependency with another entity a dotted line may be applied. In such a formalised relationship collaboration normally takes place through leadership team participation. Principle 5: The line role has primacy and acts in accordance with our management system If conflicts of interest arise between the line role and a support role, the line role has primacy. When exerting primacy, the line role acts in accordance with our management system, and the defined roles in the organisation. Delivery entity 1 Asset-based entity Single point of accountability Delivery entity 2 Conflict of interests are to be resolved at the lowest relevant level. If resolution cannot be reached, the support role can take the conflict to a higher level within own line. Procurement Development entity Drilling In the case where there is a conflict of interest related to an assignment between an asset-based entity and a delivery entity, the asset-based entity has primacy and the authority of the final decision. 26 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Ambition to Action Ambition to Action is our integrated performance process, and has three purposes: Translate ambitions and strategies into Strategic objectives - where are we going? Key performance indicators - how do we measure progress? Actions - how do we get there? Team or individual goals - what is our or my contribution? Create a dynamic and flexible execution framework Activate values and people and leadership principles Our business environment is demanding, dynamic and unpredictable. We must continuously evaluate risk and respond quickly when the unexpected occurs and when opportunities or threats arise. This is best achieved through a dynamic and event-driven performance management process. Ambition to Action balances alignment around strategic direction and common business processes with empowerment and local business responsibility. To support this, the following is an integrated part of the process: dynamic resource allocation forward-looking and action-oriented follow-up holistic performance evaluation learning through sharing and improving Ambition to Action covers five perspectives: people and organisation health, safety and the environment operation market finance These perspectives are dependent on each other and have a cause-and-effect relationship. Together, they build on one another and require us to address what creates and drives good performance in the short and long term while maintaining focus on all our stakeholders. Ambition to Action separates target-setting, forecasting and resource allocation from each other in order to improve the quality of these activities. Ambition to Action is established and followed up in our management information system MIS, and through individual goals set in People@Statoil. Copyright Statoil 2013 The Statoil Book - version 3.1 27
The The Ambition to to Action Action process process Strategy translation and target setting ambitious Planning expected outcome People@Statoil holistic assessment Strategic objectives KPI selection and targets Actions and forecasts My Performance Goals (MPG) Performance evaluation and rewards Execution - dynamic resource allocation Learning - sharing and improving Follow-up - forward looking and action oriented Ambition to Action key principles Performance is about performing better than those we compare ourselves with Do the right thing in the actual situation, guided by the Statoil Book, your Ambition to Action, decision criteria and authorities, and sound business judgement Within this execution framework, resources are made available or allocated case-by-case Business follow-up is forward-looking and action-oriented Performance evaluation involves a holistic assessment of delivery and behaviour 28 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Strategy translation and target-setting Strategy development is a risk based and event-driven process, defining ambitions and direction. Ambition to Action translates strategies into more specific strategic objectives with a medium-term time horizon across all five perspectives. A good strategic objective provides clear guidance and direction, engages and motivates. High performance is about performing better than those we compare ourselves with through continuously improving. We set objectives and targets inspired by expectations from customers, shareholders, partners and other stakeholders, and by the performance of competitors and other relevant benchmarks, internal or external. We measure delivery against strategic objectives by using key performance indicators (KPIs). A good KPI: measures progress against strategic objectives is relative, comparing our own performance to others, or connects the use of resources to deliveries (e.g. unit cost) primarily addresses areas where improvement is required Short and longer term KPI targets reflect the direction and ambition level of the strategic objectives. KPI targets have business driven time horizons which may vary depending on urgency, lead time and complexity of what we aim to achieve. Business challenges may differ significantly across the organisation, and a top-down cascading of strategic objectives, KPIs and actions should normally be avoided. Ambition to Action requires strong line ownership to be a meaningful and value-adding process enabling teams to manage their own business. When establishing Ambition to Action for own entity it is therefore recommended to translate relevant Ambitions to Actions to reflect own business realities. In this way a strong local ownership and alignment with overall corporate ambition and direction is maintained. Strategic objectives, KPIs and KPI targets are updated when necessary. Major changes are to be approved by the relevant leader. The entity initiating an update is responsible for informing other affected entities. KPIs may be challenging to establish in some areas. Clear strategic objectives and actions can secure focus and direction if specific KPIs cannot be developed. Copyright Statoil 2013 The Statoil Book - version 3.1 29
Planning Planning starts with understanding risk and actions needed to manage risk and includes: actions required to move towards strategic objectives and deliver on KPI targets, including action planning (what, how, who, when) unbiased forecasts of these actions expected effect on relevant KPIs, providing an early warning of possible gaps in reaching targets and for other financial/operational trends A target is what we want to happen; a forecast is what we expect to happen. The purpose of a forecast is to support decisionmaking. Forecasts must therefore be unbiased and reflect the expected outcome. Actions and forecasts are dynamic and updated as required. Updates are event-driven rather than calendar-driven. The forecasting horizon varies with the type of business and event. The need for new or revised actions is continuously reviewed as part of the business follow-up. My Performance Goals People@Statoil is an integrated part of the Ambition to Action process. My Performance Goals (MPG) are set in two dimensions, delivery and behaviour, reflecting that delivery and behaviour are equally important and weighted. Delivery goals are defined or inspired by the Ambition to Action for your entity and other relevant entities. If MPG delivery goals for all team members are defined directly by Ambition to Action, individual responsibility for specific actions or KPI targets is set to clarify each team member s accountability and support performance evaluation. Using Ambition to Action in this way also makes it easier to manage changes, as they are maintained in one place only. Behavioural goals help us to live our values, and to address the behaviour required and expected in order to achieve our delivery goals. Behavioural goals are also set on the basis of feedback from the People@Statoil dialogue, the Even Stronger Values (ESV) survey, Global People Survey (GPS) results, and day-to-day observations from leaders and colleagues. 30 Copyright Statoil 2013 The Statoil Book - version 3.1
Operating model Execution dynamic resource allocation Execution is based on a framework which is dynamic and flexible but has clear boundaries. The execution framework Ambition to Action The Statoil Book Our management system Empowerment and room to act and perform Sound judgement Dynamic but with clear boundaries Decision authorities and criteria The purpose of the execution framework is to create a dynamic, efficient and self-regulating resource allocation which optimises value creation within our human and financial resource capacities. Within this framework, resources are made available for operations through various mechanisms or are allocated at project decision points. Annual pre-allocation of resources should be avoided. Cost targets are established if and when necessary. These are primarily set using relative KPIs (unit cost or league tables). Absolute cost targets may be set if a significant change in activity and cost levels is required, but must be set at the overall rather than the detailed level to secure the necessary flexibility. Even if no cost targets are set, both actual and forecasted cost trends are monitored and corrective measures taken as required. All entities should continuously challenge their own efficiency, level of activity and resource use. Agile and iterative project methodologies are recommended for business support, research and development, and technology projects. Copyright Statoil 2013 The Statoil Book - version 3.1 31
Follow-up; forward-looking and action-oriented Business follow-up is a monitoring activity conducted through Ambition to Action reviews. Follow-up is forward-looking and action-oriented, and focuses on gaps between forecasts and targets, and on the development of underlying risk drivers. If positive gaps, which risks could jeopardise this forecast? If negative gaps, which actions must be taken to get back on track? Corrective actions are described in the MIS system. Holistic performance evaluation Performance evaluation is based on your individual goals. It is a holistic evaluation, combining measurement and assessment, and addresses both delivery and behaviour. Since KPIs are only indicators, sound judgement and hindsight information should be applied before drawing final conclusions by asking the following questions: Did KPI deliveries contribute to reaching the strategic objectives? How ambitious were the targets? Should changes in assumptions be taken into account? Were agreed or necessary actions taken? Are the results sustainable? The outcome of the delivery and behavioural evaluation form the basis for individual salary and variable pay reviews, and provide input for the following year s development plan. The evaluation aims to give a clear picture of both performance and potential. 32 Copyright Statoil 2013 The Statoil Book - version 3.1