THE ROLE OF COMMUNITY RELATIONS ON THE CORPORATE IMAGE OF ORGANIZATION (A CASE STUDY OF SPDC NIGERIA, OGUTA TOWN)

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.