PHILLIPS TO STREAMLINE HEADQUARTERS WORK

Phillips Petroleum Co. will lay out a streamline project for its Bartlesville, Okla., headquarters as a key element in a campaign to boost cash flow by at least $200 million/year during the next 23 years. Phillips Chairman C.J. Silas said he expects the project to have "a considerable impact on the way we conduct our headquarters activities and the staffing required to conduct them."

Nov. 18, 1991

2 min read

Phillips Chairman C.J. Silas said he expects the project to have "a considerable impact on the way we conduct our headquarters activities and the staffing required to conduct them."

Project planning is to begin immediately and be complete by the end of March 1992. Its goal is to "eliminate unnecessary work and fundamentally change the way we work so only higher value functions are performed," Silas said.

The company also expects asset sales to yield at least $500 million by the end of 1993.

A work review will analyze activities being performed, determine their value to the company, and develop recommendations on how activities can be eliminated or more efficiently performed.

James J. Mulva, Phillips' chief financial officer, will head a project team consisting of about 25 employees who will be responsible for coordinating the process throughout headquarters operations. Mulva will report to a steering committee made up of the company's inside board members.

Phillips is using an outside firm, McKinsey & Co., to help facilitate the project through a process termed activity value analysis (AVA). However, it will be up to employees to assess the value of activities and make recommendations for more efficient ways of doing the work.

Personnel cuts will result as activities are changed or eliminated. Although no special early retirement plan is anticipated, enhanced severance benefits will be developed. Severances won't occur until the project ends in March.

Silas also said a number of cost reductions not related to the AVA process were identified during the past few months. Severances related to those reductions, expected before the end of this month, will result in a pretax charge of about $15 million against fourth quarter 1991 earnings.