COMMUNITY RELATIONS & ITS ROLE IN CORPORATE IMAGE-A

case study of SPDC

BY

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CHAPTER ONE

1.1 BACKGROUND TO THE STUDY

The world is constantly becoming sophisticated, complex and

dynamic. Public relations as a Profession have continued to play

tremendous revolutionary roles in changing the face of the earth. As

the human society becomes more challenging and complex, people

become more enlightened and aware of their fundamental human

rights. This has led to series of crisis and face off among business

organizations and their host community.

There is no doubt that most of the activities of these

organizations constitute a nuisance to the host inhabitants and put

their health at great risk. The paramount objective of every business

organization is profit maximization. This would not be achieved

without serene business environment.

The concept of community relations is fundamental for effective

public relations practice in every organization. The survival of any

organization is contingent upon the measure of cordiality and

continued acceptance it enjoys in its business premises. A company

whose policies do not reflect the desires and aspirations of its host

inhabitants is seriously inviting reprisal attack from the community. It

is only through good community relations programme that company

can improve the quality of life of the host inhabitants.

Community relations entail creating and sustaining

environmental friendly programmes and actions of mutual benefit to

both the organization and its host community. In business parlance,

the transaction of these needs and expectations is regarded as

“Corporate Philanthropy” (Nweke, 2001:20).

Corporate social responsibility is a business philosophy which is

of the view that organizations in the pursuance of their profit motive

ought to be responsive to the needs of the society by meaningful

contributing to the socio-economic development of that society.

Organizations that are socially responsible are always rewarded

with favourable serene business environment. Thos that are insensitive

and don’t live up to expectation are faced with reprisal action. The

favourable business atmosphere will make the responsive

organizations to flourish, whereas the insensitive ones are distracted

by the hostile attitude exhibited by the host community. Their

prosperity and progress are stifled.

Good community relations ensure a well planned and sustained

corporate identity which inversely plays a paramount role in shaping

the corporate image of an organization.

In Nigeria today, community relations is growing very fast and

more interest is being taken by organizations and corporate bodies in

this aspect of public relations. This is so because of some important

factors (Osuji, 1999:951-99).

Today Nigeria’s economic survival is dependant on petroleum.

Since the exploration and exploitation of crude oil which give the

country major percentage of its income are carried on in rural

communities with its attendant numerous risks, it becomes

imperative that public relation practitioners in those

organizations should give more attention to community relations.

Secondly, the oil installation and gas flaring that are located in

these communities make the people vulnerable. It becomes

important that adequate measures should be taken to reduce the

risk of this vulnerability. The surest way is by designing and

executing a good community relations strategy.

Thirdly, the constant leadership tussles, conflicts and youthful

violent outburst among youths and community leaders could

have carryover effect resulting to misdirected aggression against

oil companies. Maintaining good rapport with these groups

through excellent channel of communication which invariably

must be a concomitant of effective community relations strategy.

This study therefore, will look into the concept of community relations

and the role if has played on the corporate image of Shell Petroleum

Development Company of Nigeria (SPDC).

1.2 STATEMENT OF THE RESEARCH PROBLEM

People like Bittner (1989) argue that in a bid to ensure good

community relations, organizations expend shareholders money, cut

down workers salaries, waste precious time which should be used for

other profitable things. He calls it “a fundamentally subversive doctrine

which offers insoluble practical problems”.

While Nweke (2001:220) is of the view that compliance and non

compliance with the idea of corporate philanthropy determine the

measure of goodwill, cordiality and continued acceptance an

organization enjoys in its business premises.

The problem of this study is to ascertain the role Shell’s

Community Relations has played on their corporate image. The

reasons behind the negative or positive public perception, about SPDC.

As well as whether this is a result of its compliance or non

compliance to the business philosophy of corporate philosophy and the

positive or negative attitude of the management and staff members

towards the money expended on community relations.

Moreso, it will examine the extent to which these perceptions and

attitude are capable of affective the success or failure of the

organization.

1.3 OBJECTIVES OF THE STUDY

The central goal of this study is to find out the role community

relations has played on the corporate image of Shell Petroleum

Company of Nigeria (SPDC); with the aim of evaluating their corporate

philosophy, its benefits and peoples attitude towards SPDC. This would

be achieved through the following objectives:

i. Assessing the community relations programmes of SPDC.

ii. Finding out people’s opinion and attitude toward SPDC as a

corporate entity.

iii. Probing into the reasons for such perception about SPDC.

iv. Assessing the programmes of SPDC for enhancing the lives of

its host community members in order to forestall crisis.

v. Making recommendations based on the research findings for

effective community relations programmes /projects for SPDC.

1.4 SIGNIFICANCE OF STUDY

This study is not only significant but absolutely essential, because it

will help students or practitioners of public relations in diverse

organizations to understand the usefulness of good community

relations in the life of every organization.

Since public perception is very crucial in every organization, the

study will help SPDC in understanding people’s feelings towards its

community relations practice. Other organizations will see the findings

useful as they will help them in ensuring good community relations in

their host areas. The study will help in furtherance of knowledge in the

areas of community relations and the emergent business ethnics of

corporate social responsibility.

1.5 RESEARCH QUESTIONS

The following research questions will be answered through the

study:

1. In what ways have SPDC maintained good relationship with its

teaming publics and host community?

2. How do people, the stakeholders and staff, perceive there sources

expended in ensuring good community relationship?

3. What are the expectations of the community members from SPDC

in their community relations effort?

4. What role have community relations played on the corporate

image of SPDC?

1.6 RESEARCH HYPOTHESIS

H1 SPDC maintained good relationship with its teaming publics and

host community.

H0 SPDC did not maintain good relationship with its teaming publics

and host community.

H2 The people, the stakeholders and staff did not perceive the

resources expended in ensuring good community relationship.

H3 Community relations played a role on the corporate image of

SPDC.

H0 Community relations do not play a role on the corporate image of

SPDC.

H4 Community members expectation from SPDC in their community

relations effort.

H0 Community members do not have expectation from SPDC in their

community effort.

1.7 CONCEPTUAL AND OPERATIONAL DEFINITION OF TERMS

To clarify meaning, it is pertinent to present and explain some

terms used in the study to the level that will facilitate understanding of

the inherent ideas. The terms include the following:

CONCEPTUAL DEFINITION OF TERMS

Community Relations: It is a public relations activity that tends to

create and sustain environmental friendly programmes and actions of

mutual benefits to both the organizations and its host community. It

fosters and nurtures good neighbourliness in a reciprocal interest of

both parties.

Corporate Identity: This means and also includes the totality of what

an organization stands to its public and host community, how it does

that, its communication process and environment. It serves as the

forerunner to corporate image, it hits the soil for corporate image to

grow without problem. This is seen by the physical manifestation of

good deeds the organization does.

Corporate Image: This is the public perception of the organization.

This sums up the impressions formed about an organization based on

its corporate identity and general relationship with its public. It goes

with mental perception.

Corporate Social Responsibility: This is a business philosophy

which is of the view that organizations in the pursuance of their profit

motive ought to be responsive to the needs of the society, socially and

economically.

SPDC: It is an acronym for Shell Petroleum Development Company of

Nigeria.

OPERATIONAL DEFINITION OF TERMS

Crisis: Is any occurrence described as a turning point, for better or for

worse with both negative and positive effects.

Host Community: This is a group of peoples residing in an

environment where an organization operates.

Publics: These are various groups of people who may directly or

indirectly be affected by the activities of an organization. They include

the shareholders, employees, host community inhabitants and

contractors.

1.8 ASSUMPTION OF THE STUDY

Let’s assume that Shell Petroleum Development Company of

Nigeria Limited is the pioneer and the largest hydrocarbon exploration

and production company in the country. Originally known as Shell

D’ARCY, SPDC commenced geological survey in 1937 and

subsequently was granted an exploration license precisely on the 4th of

November, 1938. (2008 SPDC Immunization Campaign P.5)

After drilling several unsuccessful wells, Shell Nigeria in 1956

discovered the first commercial oil field in the country at Oloibiri, River

State (Now Bayelsa State). Later, Shell entered into a joint venture with

British Petroleum resulting in a joint venture operation known as Shell

- B.P.

In 1979, B.P’s share of participation in Shell’s operations was

nationalized leaving the NNPC/Shell Upstream joint ventures with an

80:20% split. Today, SPDC operated on behalf of a joint venture with

NNPC, Shell, EIF and Agip in accordance with the Joint Operating

Agreement (JOA) and within the legal and fiscal framework of the

Memorandum of Understanding (MOU) agreement with the Federal

Government of Nigeria.

(SPDC Briefing Note, 2008, p.45).

Shell Nigeria operations concentrated mostly in the Niger Delta

region of Nigeria and the adjoining shallow offshore, where they

operate in an oil mining lease areas of about 31,000 square kilometers.

The operational divisions of Shell Nigeria are:

The Eastern Division with Port Harcourt as the Headquarters,

Bonny in River State and Forcados in Delta State are its export

terminals with its corporate office at Lagos State. Ninety-five percent of

their workforces are Nigerians.

With the discovering of more oil wells in the country, the

company has continued to increase its oil product capacity from 6,000

barrels of crude oil pre day in 1958, when the first cargo was exported,

to millions of barrels per day now.

Today, Nigeria is one of the highest oil producing nations in the

world. In 2001, the joint ventures accounts for some 39 percent of

Nigeria’s oil production and about 55 percent of the rations

hydrocarbon reserve base.

SPDC has over 6,000 kilometers of pipelines and flowline 87 flow

stations, eight gas plants and more than 1000 producing wells. The

Joint Venture involves the Nigerian National Petroleum Corporation

(NNPC) which holds 55 percent, Shell 30 percent, TOTALFINAELF 10

percent and Agip 5 percent. The funding is in proportion to their

shareholdings (People and the Environment SPDC Annual Report

2008).

1.9 LIMITATIONS OF THE STUDY

This study is only limited to Shell Petroleum Development

Company of Nigeria. The researcher will not go into organizations as it

will be cumbersome. The result from the study are intended to be

generalized.

REFERENCES

Bittner, J. (1989). Mass Communication: An Introduction. New Jersey: Prentice – Hall Incorporation.

Nweke, O. (2001). Public Relations Practice: Concepts and Strategies. Enugu: Hanson – Pal Agency Limited

Osuji, C. (1999). Dynamics of Public Relations: Theoretical and Functional Framework. Owerri: Dynamic Communications Incorporation.

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