Who Owns Reality? Part 5

The autumn of 1986 marked a milestone for Statoil. After years of planning and development, production was finally set to begin on Gullfaks – the company’s great masterpiece and its first major field as operator. But just as optimism peaked, oil prices plummeted. What was meant to be a triumph quickly turned into a challenge.
The organization, painstakingly built to manage a large-scale operational unit, now faced a demanding restructuring. Staffing changes hit Gullfaks particularly hard. Such changes rarely come without resistance, and it didn’t take long before a crisis of trust emerged between employees and management – a crisis that would take years to heal.
A story in nine chapters.

Project 95 – and a tense atmosphere

Project 95 was a comprehensive and ambitious reorganization within Statoil, designed to better equip the company to meet future demands. With key concepts such as reassignment, retraining, mobility, and increased efficiency, the project was based on the principles of “continuous improvement.” It was primarily aimed at the Exploration and Production (E&P) division, which was responsible for all license activities. The goal was to reduce costs by two billion kroner annually compared to the original budget.

Around 400–500 employees from Gullfaks, Statfjord, and Veslefrikk were to be transferred to the onshore organization or to new fields.[REMOVE]Fotnote: The American economist Michael Porter’s theory, The Competitive Advantage of Nations, had a significant influence on Norwegian businesses. Companies were encouraged to focus on their core activities. For oil companies, this meant concentrating on reservoir management, production, operations, and maintenance. Although management assured that no one would lose their job, the measures meant that fewer employees had to handle more tasks. Surplus personnel were to be reassigned, not laid off—but the workload increased significantly for those who remained, especially offshore.[REMOVE]Fotnote: Claussen, Tor. (1994). Moderne ledelse og moderne fagbevegelse. Rogalandsforskning 40/94. s. 7.

The project had several main initiatives:

• A focus on continuous improvement and quality enhancement
• Improved collaboration and communication, where everyone—both internally and externally—was to be seen as customers and suppliers
• Introduction of (positive) competition among employees to boost efficiency
• Enhanced competence and strengthened training[REMOVE]Fotnote: Claussen, Tor. (1994). Moderne ledelse og moderne fagbevegelse. Rogalandsforskning 40/94. s. 8.

In 1994, Rogalandsforskning published a critical report on Project 95, funded by OFA and SAF. The report pointed out that many of the initiatives lacked clear justification, and that vague and ambiguous terminology created frustration and uncertainty among employees. Particularly frustrating was the use of euphemisms like “multiskilling” and “rational resource utilization” to describe downsizing, without calling it what it actually was.

The project had a dual purpose: to develop the organization through quality improvement, and at the same time streamline operations through cost reduction. These two goals often overlapped, contributing to confusion about the project’s true intent.[REMOVE]Fotnote: Claussen, Tor. (1994). Moderne ledelse og moderne fagbevegelse. Rogalandsforskning 40/94. s. 21.

Statoil’s leadership was clearly inspired by organizational theories from the 1980s, especially the “New Leadership” philosophy and the principles of Total Quality Management (TQM).[REMOVE]Fotnote: Meland, T. (2015). Kontinuerlig forbedring: kulturendring i Amoco Norway 1987 til 1994. Arbeiderhistorie. S. 200. The book In Search of Excellence by Peters and Waterman had a major influence, emphasizing culture, internal competition, and vision-based leadership as keys to success. To become the best, the company had to focus on what it did best—its core business.[REMOVE]Fotnote: Peters, T. J. (1986). Derfor er de beste bedre. Hjemmet-Fagpresseforl.

Core business

Statoil wanted to concentrate on its core tasks and considered increasing the use of contractors—particularly for maintenance work on installations. This met strong resistance from the Statoil Employees’ Association (SAF), which argued that maintenance was part of the company’s core business. They feared that increased use of hired labor would weaken both the working environment and safety.

SAF pointed to the Piper Alpha disaster in 1988, where 167 people lost their lives. The investigation concluded that the high proportion of contractors on the platform was a contributing factor.[REMOVE]Fotnote: Stavanger Aftenblad. (1993, 24. mars). Sparereform en trussel. Several unions felt sidelined in the process and expressed strong dissatisfaction that management bypassed the corporate council. SAF chose to withdraw entirely from the collaboration, while Nopef – traditionally more cooperative – also voiced strong criticism.

SAF, part of the umbrella organization OFS, received support in its opposition. OFS had a more confrontational style than many other unions in the industry and had built a strong position, particularly on Gullfaks A.

A frosty labor climate

When Project 95 was launched in 1992, the relationship between OFS and Statoil management, led by Harald Norvik, was at a low point. The conflict had its roots in the 1990 wage settlement, where high expectations among employees led to a strike and compulsory arbitration. OFS refused to accept the ruling and continued the strike illegally.

Norvik responded with tough measures. He announced personal dismissals and disciplinary actions against strike leaders. The message was delivered via the public address system on Gullfaks A, and eventually the employees gave in.[REMOVE]Fotnote: https://equinor.industriminne.no/ Several were dismissed, and the conflict left deep scars and a divided organization.

When Project 95 was introduced two years later, the relationship was still marked by mistrust. OFS accused management of ignoring workplace democracy and claimed that Statoil was in the process of “Americanizing” Norwegian labor relations.[REMOVE]Fotnote: Stavanger Aftenblad. (1993, 8. mai). Statoil omplasserer på ansatte. Nopef, usually more moderate, also adopted a critical stance toward the efficiency process.

Despite the resistance, management succeeded in implementing significant efficiency measures and offshore staff reductions. But it became increasingly difficult to claim that safety was unaffected.[REMOVE]Fotnote: Thomassen, E. (2022). Statoil og Equinor 1: Middel og mål: 1972-2001 (Vol. 1). Universitetsforlaget. s. 326-319.