Just over a month
ago, on 20 June, I predicted that BP would have to remove Tony Hayward, its hapless CEO, if it
was to have any chance of rebuilding its reputation after the deadly accident
on its Deepwater Horizon platform and
the consequent catastrophic oil spill in the Gulf of Mexico. Despite BP’s share
price rebounding by five percent on news the other day that he was being moved
from the top job, I’m now wondering if even the departure of Terrible Tony, as
British tabloids dubbed him, will be enough to save the world’s fourth largest
company from bankruptcy.
To be sure, many
companies have managed to rebound from the brink, even after major
environmental disasters. For example the Exxon
Valdez oil spill in Alaska more than 20 years ago did not sink the parent
company – indeed it has become one of the largest and most successful energy
companies in the world.* But commitment and hard work are necessary to repair
organizational reputations. Companies that have been through disaster,
particularly ones for which they have been culpable – not just responsible, need to demonstrate by their actions that
they have changed, that they have put in place strategies and operational procedures
to ensure history does not repeat itself – or, at least, is much less likely to
recur.
That’s what the
public will be looking for from BP. A shuffling of its management team may not
be sufficient to satisfy an American public whose patience has been shredded by
an uncaring corporate giant. They rightly expect a fair and ethical response
from BP.
What is the
corporate culture?
The real question for
that public – particularly those from the Gulf States directly affected by the
oil spill and who have lost their very livelihoods – is how much of the cynical
response was the fault of BP’s bumbling CEO and how much flowed from a corporate
culture that has been corrupted to its core. And, if the latter, the question
is: can it be fixed?
Irrespective of
the technical aspects of managing an oil leak 1,500 metres under the sea, most
commentators agree that BP managed the communications of the Deepwater Horizon crisis very poorly
indeed. The company has been accused of arrogance, stonewalling and flat-out
obfuscation. BP’s communications with all stakeholders across the board — with
the US government and regulators, with the media, and most importantly with the
American public — were off the mark from the very beginning.
Sure, Tony Hayward
made a fair hash of it. This CEO was undoubtedly a communications department’s
worst nightmare. He seemed to suffer from terminal foot-in-mouth disease,
breaking every principle of crisis communications. He blamed his business partners
for the accident. He called the worst oil spill in American history “relatively
tiny”. And then there was his heartless comment that “There’s no one who wants
this over more than I do. I want my life back”, when 11 lives had been lost in
the initial accident and countless people of the Gulf States were losing their
livelihoods.
Hayward seemed to be
doing more harm for British-US relations than anyone since the American
Revolution, as the US media started referring to BP as British Petroleum – a
name it had not used for more than a decade.
It was interesting
to read Jeremy Warner’s commentary
in The Telegraph after Hayward’s
departure had been announced. He asked whether Hayward had been a good CEO even
before this accident. Hayward, after all, had long been held in high regard by
business analysts and other members of the CEO club in the UK for turning BP
around by getting it to focus on health and safety, operational efficiency, and
profitability since he took the top job in 2007. Warner pointed out that Hayward
“was not as highly rated and lauded internally at BP as is generally made out”.
I thought some
bright PR spark had come up with the idea to “leak” this in order to deflect
criticism from the company. Hayward – who was undoubtedly an appalling
communicator – is now a convenient scapegoat.
But it seems the
real problems with the poor handling of the BP crisis lay at the core of the
company’s culture, despite rumoursabout Hayward’s leadership now that he is
gone.
Keep in mind that
when Hayward took over in 2007 BP was already reeling from two deadly accidents
at its Texas City, Texas, refinery. Yet since then BP was cited by the US’s
Occupational Safety and Health Administration (OSHA) as responsible for more
than 97 percent of safety violations in the country’s oil refineries. A deputy
assistant secretary of OSHA, Jordan Barab, concluded that
“BP has a serious, systemic safety problem in their company.”
Toxic Tony’s toxic subordinates
Others, including
MercatorNet’s Carolyn Moynihan, have reported extensively on the safety
breaches and disregard for proper procedure on the Deepwater Horizon. Suffice it to say, OSHA had grounds for concern
about the cavalier attitude of BP. If Hayward was concerned with safety, his
focus had failed to permeate the organization.
Likewise, the
company’s callous responses to the crisis cannot all be laid at Toxic Tony’s
feet. Whose idea was it to handout US$5,000 compensation to the people of the
Gulf provided they signed a legal waiver against further claims? Who obfuscated
the numbers on the amount of oil leaking into the Gulf? Who was the bright
spark who came up with a $50 million TV advertising campaign to say BP would
“make it right” even while good people of the Gulf were losing their businesses,
and even while BP still planned to pay quarterly dividends of $10.5 billion to
shareholders?
I wonder if it was
the same bright spark who decided to purchase the term “oil spill” from key
search engines so that the top result would be a link to BP’s home page. Now
that’s what I call an anti-social media strategy.
BP’s PR strategy
seemed to be going from bad to worse. It tried to shut down a parody Twitter
account (BPGlobalPR), which resulted in the account’s followers jumping to
188,000 over night.
Next BP issued a
statement saying the company was “not aware of any reason” which caused its
share price to collapse.
Then it emerged
that BP (and other oil companies) had elaborate plans in their Gulf of Mexico
emergency response procedures to protect the walrus – an animal that has not
been sighted in the Gulf since the last Ice Age.
And then, as
recently as 22 July, BP admitted it had been photoshopping images of the spill
so it would appear less severe.
As one who has
worked on the teams managing many a crisis, I know the work is often done in
smoke-filled back rooms. In this crisis I had to wonder what BP’s PR department
might have been smoking to be making basic — even bizarre — mistakes like
these.
Joking aside,
these mistakes highlight a dangerous corporate culture at the heart of BP. It’s
ironic that the company’s logo – that green and yellow flower you see on their
products and service stations – is called the “Helios”, which for the Ancient
Greeks personified the sun. It’s meant to demonstrate BP’s green credentials.
However, it might henceforth bring to mind the image of Icarus whose pride
carried him too close to the sun.
Similarly, hubris
has brought BP to earth.
The company has
clearly lost touch with reality. The safety of its own employees appears to be
a long buried concern. Compassion for the people of the Gulf has been wanting
throughout the crisis. BP’s response to the very crisis has epitomized its
concern with profit over people and planet.
Can BP survive?
Can it repair its reputation?
Possibly. But it’s
going to take some doing. The company needs to get back in touch with reality.
It will need to demonstrate that its concern for people and planet are more
than just fine words. BP will need to commit to its espoused principles. The
change at the top might help, so long as the new boy has not been imbued with
same tonic as Toxic Tony.
Alistair Nicholas is a reputation
management consultant based in Beijing, China. His company, AC Capital Strategic Consulting,
has provided crisis management advice and services to numerous companies
operating in China. Alistair blogs on reputation management at Off The Record.
* Note: Alistair Nicholas is a
consultant to ExxonMobil in China.
