Chevron's Nigel Harris

Chevron's Nigel Harris:

How Corporate Real Estate Lives and Breathes the Company Strategy

By Richard Kadzis

Working as a senior real estate advisor for one of the world's leading integrated energy companies takes an integrated approach in itself.

Nigel Harris, MCR is a valued member of Chevron Business and Real Estate Services, or CBRES as it's called internally. CBRES provides an integrated approach to service delivery to Chevron business units throughout the world. It is Chevron's in-house expert for all real estate, facility management and infrastructure support services. CBRES is a microcosm of the company, according to Harris' detailed depiction of how the corporate real estate (CRE) and facility functions align with the enterprise.

Harris is a 30-year veteran of the real estate industry with the last 10 years at Chevron. He has served as the $265 billion company's Senior Real Estate Advisor in Asia Pacific for the past six years. The native of Australia, who's now based in Singapore, oversees a regional portfolio of 1.6 million sq. ft. (148,645 sq. m.). With Harris' diverse experiences and broad knowledge of the real estate field, he finds the Chevron culture rewarding.

The company does things very well. It allows you to be the best you can be, he says.

Harris' view is a reflection of Chevron's focus on human energy, as its corporate identity conveys. A culture of collaboration and consensus underlies a company vision centered on its people, partnerships and performance.

While Chevron has been around for 130 years, it's not a culture of hierarchy or mandate, Harris explains. An environment that stresses learning and knowledge-sharing allows the time to do the job well, do it once correctly and with the right people, he adds.

Emphasizing an in-house approach

It makes sense, then, that Chevron places heavy emphasis on the development and retention of internal talent, including the CRE team. While Harris and the internal team work with outsourced service providers, they maintain the philosophy that an in-house, dedicated team is a very powerful, productive resource, Harris explains.

Chevron is set up so that we manage the internal business from within so there's not a lot of outsourcing and there's complete accountability, he adds.

That approach ties to a big alignment opportunity for CRE that Harris calls the guts of how we work, one founded on Chevron's three enterprise enabling strategies:

• Invest in people
• Leverage technology
• Build organizational capability

Company traditions of quality process control and good governance also afford leadership opportunity for the Chevron CRE function that's most often played out through a well-run CRM and decision support system.

Harris points up the role of trusted advisor in explaining how he and other global regional CBRES executives coordinate efforts to meet the needs of the Chevron business units. The framework for the relationships is a structured matrix organization that cuts across the breadth of the global enterprise. Although Harris reports to the Manager of International Real Estate at the corporate headquarters in San Ramon, California, he and the other international advisors are accountable for developing and delivering the regional real estate strategy. Advice without prejudice The model provides an independent structure making Harris an advisor without prejudice of business unit P&L responsibility, although the objective is for CRE to be cost neutral. It makes everything we do more acceptable to the organization as a whole.

He describes this kind of linear accountability as being common to Asian business organizations, one that makes the advisor side very unique. It's not found in other energy companies, he is quick to observe.

The advantage, Harris relates, is that you really have at the forefront of your mind what's best for the business. Advisors are also subject matter experts whose knowledge helps the business units make well informed decisions. The business unit decision makers then consider the advice and either accept it or not.

Harris and his group support both the upstream and downstream sides of the business that range, respectively, from exploration and production to product refining, marketing and transportation. The integrated team includes two real estate advisors, two project managers, one facility planner and an adjunct team of 50 facility management personnel.

We're an in-house boutique organization, as Harris terms the CRE team. We're small, nimble and the right size to handle the Asia Pacific market. Harris was a founding member of the team and oversaw the development of the service line and offering to internal customers. The ability to see and work the whole region and to structure where the business is going is a fantastic opportunity, Harris adds.

Capital stewardship

The company's three enabling strategies of people, technology and effective organizational capability provide a way for CRE to enhance the business at any point in time, Harris remarks.

We live and breathe the three strategies every day with the business units, he insists. That links CRE more closely to the process of building a higher level organizational capability defined by profitability, cost management and capital stewardship.

With many of the world's national economies in recession, Cost management, which was especially important in the last three to five years, is now even greater.

Effective capital stewardship is a high-level corporate priority. Capital stewardship emphasizes the strong alignment that CRE has with the business and how it accommodates growth. The growth trend reflects a long-term, 20-year upward curve. So is the real estate strategy, which commonly has three to five year horizons using the right deal with maximum flexibility, Harris explains.

Getting accurate long-term commitments to facilities and locations takes a well-structured form of due diligence. Understanding the needs of the business involves a multi-functional approach, he says.

Chevron has a results-driven, collaborative way for business units to review, expand and explore recommendations as part of a development and execution process known as Chevron Project Development Execution Process (CPDEP).

At a time of intense cost-cutting pressure, how does CRE help the businesses balance that against long-term strategy? To this end, rental levels have been set at very competitive levels, Harris notes. We've already taken the maximum (value) out of what we've got. We're below market (lease prices) in all our major Asian markets.

It now means that the terms of many leases are being reduced or extended, depending on the situation. Harris describes the current environment as, Trading tenure for rental rates. Landlords want the cash flow, regardless.

A good time to re-evaluate

For landlords, the economic climate means frustration with the client cost containment landscape today. For example, with occupiers desiring hand-backs of space like subleasing, few landlords want that vacancy back on their books, as Harris sees it. That's why landlords are seeking mutual benefits.

It's also why now is an ideal time to go back to the negotiating table with landlords and link high-level portfolio leasing values into cost containment and long-range strategies, Harris believes.

The risk is anticipating what the location and facility strategy is going to be when leases run out. It equates with the ability to balance short-term demands for efficiency with long-term need to meet future growth.

Harris insists that Chevron's landlords and other service providers develop a full understanding of the business and accept full accountability for it. By working issues together with external service providers, Harris has strengthened the internal value proposition.

You're a mentor to the business, according to Harris, but you also have a governance role.

It's important, then, that Harris and his colleagues are always there for the internal client. An initial contact or question will often lead to a fuller understanding of the opportunity or problem that the business unit faces, continues Harris, who feels that his longevity in Chevron enhances his advisory role.

The knowledge and contacts that come with that level of experience provide an important hedge knowing that at the end of the day, you have to justify your actions and recommendations to the senior leadership of Chevron.

Despite the current global economic challenges, Chevron has not reduced its commitment to the talent needed to manage within the company's culture of operating excellence.

Teams that work well together are the strength of our operation, Harris concludes.

Their commitment to the business, keeping the right expectations and challenging sub-standard approaches gives you eyes' for the next big decision.