Leadership and management are fields characterized by the constant interactions of individuals and their environments. Therefore, positive interpersonal relations and social interactions are critical for collaboration toward organizational goals because they facilitate effective communication. As a result, individuals in leadership and managerial positions are responsible for encouraging a culture where people are open to others’ opinions and positions. However, leaders can find it hard to associate well or lead their subordinates in the right direction without high levels of emotional intelligence.
Hayward reacted inappropriately and did not acknowledge the implications of his actions, considering the diversity his company’s oil spillage had caused. If I were in Howard’s position, I would have taken the time to investigate the depth of the issue and work on solutions that would support the affected individuals and empower them for the foreseeable future. The oil spill’s aftermath robbed thousands of individuals of their livelihoods and economic resources. Therefore, it is evident that the community members were suffering. Hence, it was unreasonable for Howard to brush off the issue by making disrespectful comments. Additionally, entering his yacht during the race sent a message that he was less concerned about the victim’s welfare. Thus, his lack of empathy disqualifies him as a reliable leader.
Technical skills and emotional intelligence are critical leadership skills because they allow managers to stay aware of their environment and make the right judgments. However, the ultimate goal of business organizations is to advance toward a sustainable future (Robbins & Judge, 2019). Therefore, although technical skills are critical for the appropriate execution of initiatives, emotional intelligence is more important as it empowers leaders to evaluate the implications of their actions and adopt solutions that promise positive outcomes.
An individual’s culture refers to a set of beliefs, practices, and values upheld because of the person’s background, moral standing, or experiences. According to Wamsler and Restoy (2020), customs play a major role in sensitivity as they influence people’s interactions with others, their perceptions of the environment, and their personality. Subsequently, the case study shows that Dudley was more sensitive to the needs of individuals in the Mexican Gulf because of his childhood experiences of swimming and fishing in the Mississippi Gulf. Thus, his culture shaped his appreciation of the Mexican Gulf and encouraged his positive contribution. The analysis also shows that cultural aptitude and awareness of others’ beliefs and values correlate to emotional intelligence, allowing people to resonate with and accommodate diverse cultures. Dudley’s nature reflects his respect for the people’s way of life and dedication to their well-being.
Successful leaders prioritize the interests of their subordinates and the needs of the people they serve. Drucker makes it clear that culture is more critical than a business strategy (Robbins & Judge, 2019). In other words, Howard should understand that even the most effective business strategies can be limited by cultural issues. Great leaders can see beyond their biases and look at the world through others’ cultural lenses (Wamsler & Restoy, 2020). Hence, Howard should work toward improving his cultural aptitude and emotional intelligence to enhance his relationships with people and realize success.
Globalization and effective communication has reconciled various global cultures and allowed individuals to live freely with each other. However, differences often result in conflict, requiring high levels of emotional intelligence to avoid escalations. Although technical skills are critical in management, emotional intelligence guides leaders’ behaviors, relationships, actions, and decision-making. Therefore, the lack of emotional intelligence can limit an organization from achieving sustainability due to issues such as limited trust by shareholders and staff resistance.
References
Robbins, S. & Judge, T. (2019). Organizational behavior (18th ed). Pearson.
Wamsler, C., & Restoy, F. (2020). Emotional intelligence and sustainable development goals: supporting peaceful, just, and inclusive societies. In W. L. Filho, A. M. Azul, L. Brandli, A. L.Salvia, P. G. Özuyar, & T. Wall (Eds.), Peace, Justice and Strong Institutions, 1-11. Springer International Publishing.
Firms in different economic sectors are increasingly incorporating the concept of strategic alliance as one of their best management practices in an effort to develop their competitiveness. However, strategic alliances such as mergers and acquisitions are characterized by a relatively high rate of failure.
This is well illustrated by the case of BP. The firm failed in its effort to acquire a number of firms in the Russian oil industry. There are a number of factors that organizations should consider in their effort to form strategic alliances such as mergers and acquisitions. Some of these factors are evaluated below.
Process
Ensuring strategic consistency –A clear corporate strategy should be developed in the process of undertaking mergers and acquisitions. The two parties involved in formation of merger and acquisition should participate in development of the corporate strategy in order to ensure a high level of consistency.
Building shared value– Before entering into a merger and acquisition relationship, it is important for the top management teams of the firms involved to evaluate the degree of shared value between the two organizations. One of the factors that led to failure of BP and Rosneft merger is poor management of the strategic alliance. This is evidenced by the fact that the merger was characterized by conflict of value between the two firms.
Development of a merger plan– To increase the rate of success in mergers and acquisition, it is important for the firms involved to develop a comprehensive merger plan. The plan should outline the roles and responsibilities of parties involved in the merger. In the process of acquiring Rosneft, BP did not develop a merger plan which led to its failure.
In addition to the above elements, it is important for a strong interface team and a clear communication plan to be developed.
People
The human factor is one of the most important elements that firms involved in mergers and acquisitions should consider. This arises from the fact that it determines the success of the pre-acquisition and post-acquisition processes.
Additionally, a strong relationship between the workforces of firms involved in mergers and acquisitions should be developed. Another element of human factor that should be integrated relates to change management. Effective management of change aids in eliminating possible resistance from employees.
Technology
Firms involved in merger and acquisition should undertake effective system integration in order to promote communication and information sharing amongst employees.
Causes of failure in strategic alliances
Culture shock
One of the major factors that cause failure of mergers and acquisition is culture shock. In the course of their operation, firms develop organizational culture that is unique from other firms. Formation of strategic alliances may result in conflict of culture between the two firms involved.
This may limit attainment of the desired objective. Therefore, it is important for firms’ management teams to conduct a comprehensive cultural analysis prior to making their merger and acquisition decision. The analysis will aid in determining the degree of cultural fit between the firms and hence the probability of the merger succeeding.
Poor integration
Lack of effective organizational integration is another factor that causes failure of mergers and acquisitions. Information about a possible merger and acquisition may lead to uncertainty, anxiety and fear amongst an organization’s employees. Consequently, it is important to ensure that such information is effectively communicated in order to ensure employees of their job security.
Lack of effective control
In addition to the above elements, mergers and acquisitions fail due to lack of effective control. Therefore, it is important for firms involved in merger and acquisition to ensure that effective control is incorporated.
The key strategic and operational issues present in the accident’s events
Disasters affecting natural ecosystems attract governments’ attention because of the governments’ role in safeguarding the safety of the people and adequate management of natural resources. The BP Deepwater Horizon oil spill attracted global attention because of its scale and associated losses to the ecosystem, lives, and property. The main issue around the accident was the safe removal of hazardous water from the water and affected coastlines in the Gulf. There was also the compensation of victims, according to stipulated fines on the company by courts and relevant government authorities. The company needed a strategy to deal with the crisis after the accident to protect its reputation and ensure that similar accidents did not happen in the future (Barrett 2013). Stakeholders in the accident encountered difficulties in identifying human and environmental impacts to quantify the losses due to the oil spill. In addition to short-term immediate losses, many affected communities, such as local anglers, would end up suffering long-term losses due to contamination of breeding grounds for marine life.
The design of oil rigs and their ability to prevent accidents, the concerns of the company regarding maximizing profits and minimizing equipment and management costs were strategic choices that attracted scrutiny due to their role in facilitating the accident. The ownership of blame was also an issue to consider, given that BP relied on third party suppliers and maintainers of its equipment; it made the risk and liability analysis difficult for external observers. Consumers now perceive marine food from the gulf as tainted, even though clean-up efforts are complete (Olson 2010).
BP’s strategy before the occurrence of the oil spill tragedy
The crisis management phase that comes before an accident happens is determined by the strategies put in place to prevent the accident from occurring and how to respond if the tragedy comes. In the BP case, the company needed to have adequate mechanisms of dealing with an oil spill if it occurred and have active policies that sought to prevent such an accident. According to media reports, the safety devices that were used in underwater drilling experienced multiple failures. For example, the company failed to take appropriate test measures to ensure the safety of its rigs. During the crisis, the management had mixed and disorganized objectives for recovery. While the use of blowout preventers was a good move in preventing a crisis, BP still failed in its safety appraisal. It failed to maintain the blowout preventers that were essential for crisis management. It also failed to employ a robust crisis management plan that would ensure communication persisted in clear and timely ways with relevant actors in an oil spill crisis.
Poor management exposed stakeholders to harm. Employees and immediate communities did not get sincere information from the company’s management. Failing to test rigs and blowout preventers according to expert recommendations made the company liable for losses resulting from the accident. Crisis management requires firms to assess the reputation and safety threats of all possibilities in a crisis and intensify actions to evaluate crisis history and reputation impact (Mejri 2013).
Implications of BP’s post-accident strategy in terms of public perception
Everyone affected by the accident, directly and indirectly, played a part in the cleaning, while BP did the coordination. The company was also instrumental in providing required resources, such as aircraft for transportation and materials to assist in cleaning up. The company embraced the cleaning exercise as a public relations activity. It sought to change the negative impression that the accident had caused on its corporate brand. It also wanted to appear as a responsible and fast-acting global corporation that does not neglect the needs of any community. Nevertheless, the PR exercise focused much on providing resources and managing the exercise from a control perspective. It did not provide room for stakeholder engagement that would not only take care of the problem but also fix future perception problems among members of the public.
In its marketing campaign after the accident, BP insisted on its funding for the restoration of the Gulf Coast ecosystem by ensuring that communities in the affected areas got meaningful economic activities that would be sustainable, both economically and socially. Reports show that BP had a difficult time honouring its commitment and got involved in legal battles with the plaintiffs (Barret 2013). As a result, its image suffers in public, despite the expenditure and other public relations commitments.
BP’s interests vs. the wider interests and expectations: Striking a balance
The BP accident is an example of a product-harm crisis, where the company needs to offer clear-cut support to victims and relevant stakeholders. It helps to resolve the crisis faster and to find a sustainable long-term solution. A defensive response seeks to protect the organization from harm in both financial and social terms. Firms try to maintain favourable reputations to ensure that their brands continue to perform favourably in the market. BP would not like to have a boycott of its products in the global market. It would also like to maintain good relations with its suppliers and contractors as a contingency plan against the increased costs of service provision. Failure to maintain a defensive position in its crisis response strategy jeopardizes its relationship with contractors and other suppliers.
The continuum of disaster response frameworks moves from categories that are explicitly defensive to those that are agreeing to the responsibility. A typical firm can choose to attack accusers, deny responsibility, find excuses to absolve itself, justify actions and reactions, ingratiation, become proactive through corrective actions and offer a full apology, or choose mortification. Therefore, any crisis management process is long-term. Nevertheless, the three stages involved vary in duration, with the first two being short-term. The process is considered to be universal when considering the crisis in a non-linear model, where activities happen independently. For example, while the government’s response to the oil spill in BP’s case was immediate, it did not affect the public’s reaction or the crisis management efforts of BP. Therefore, the initial concern by the government could qualify as an independent activity within the crisis context. Later on, in post-crisis management, BP had to act according to the government and community responses to limit damage and recover and learn.
Stakeholder management theories call for the integration of stakeholders’ interest in the company’s strategic decisions. The company has to consider the responses of the employees, government, communities, and consumers when deciding to overlook outreach activities or safety inspections. Nevertheless, the transition from response to recovery remains slow due to the complexities of interrelationships between the stakeholders involved. Shareholders seek to maximize financial gains, while communities seek protection and sustainable exploitation of resources.
Reference List
Barrett, PM 2013, ‘BP’s Robert Dudley on the Gulf Oil Spill’s legal aftermath’, Businessweek.Com, p. 68.
Mejri, M 2013, ‘Crisis management: Lessons learnt from the BP Deepwater Horizon spills oil’, Business Management in Strategy, vol 4, no. 2, pp. 67-90.
Olson, L 2010, The Deepwater Horizon Gulf oil spill: response, resilience and recovery, Web.
Introduction: Risk Management as One of the Primary Tools for Maintaining Competitive Advantage
The environment of the global economy is not only filled with exciting opportunities but also swarming with a range of risks, from financial to competition-related ones. The identified property of the global market needs to be taken into account by a company operating in the global economy; otherwise, the outcomes may be dire. Therefore, it is essential to design the risk management framework that will help keep track of the factors to which an organisation is exposed in the target area (Gil & Tether 2015).
GlaxoSmithKline is one of the companies that follow the framework for addressing the threat of a financial fraud in its risk management (RM). BP has been following the environmentalism-based strategy as the essential tool in handling the emerging issues. EasyJet, in its turn, has been applying the approach of addressing the human factor to create the RM framework that will help it remain competitive in the global market (Raydugin 2013).
As the experiences of the organisations listed above shows, the lack of an appropriate financial risk management strategy has led to a significant drop in the sustainability levels in each of the companies. As a result, the prerequisites for an overall reduction in the companies’ efficiency were created. Consequently, the current risk appetite of the organisation is comparatively high, which might not meet the capacities of the organisation.
Assessment of Risk: Facing the Threats of the Global Economy Realm
GlaxoSmithKline
According to the official statement issued by the organisation, its RM approach is nearly flawless. However, a recent overview of the dents in the framework adopted by the organisation has revealed that the corporate policy allowed for extensive bribery:
The BBC observed that if these allegations are proven, GSK may have violated both the UK Bribery Act and the US Foreign Corrupt Practices Act, which make it illegal for companies based in either country to bribe government employees abroad. (Supplier and credit risk management 2014, para. 4)
Therefore, the RM framework could not help create the sustainable environment in which the corporate values and the essentials of business ethics could become the foundation for the decision-making process (Supplier and credit risk management 2014). The risk appetite of the company is currently in accord with the capacities of the company.
BP
Having become a notorious example of a poorly thought-out RM strategy, BP also failed to prevent the instance of financial fraud. As a result, the corporation is currently viewed as entirely untrustworthy. Furthermore, the lack of an efficient RM approach seems to have been compelling the essential shareholders to leave. As a result, the company’s profits plummeted shortly after the scandal and have been on a consistent decline since then (Unnisa & Rav 2012).
Similarly to GSK, BP provides a detailed description of its RM framework, which seems quite legitimate at first glance. However, scrutinising the current approach, one will have to admit that it has the same flaws that the previous one incorporated. For instance, the lack of control over the financial transactions within the company does not allow for eliminating the threat.
EasyJet
Considering the risks faced by EasyJet, one should mention that the company has been having issues with the quality of its equipment. The identified phenomenon is quite understandable given the fact that the organisation has been focusing extensively and exceptionally on the management of human-related risks. On the one hand, the prevention of errors caused by the human factor is essential, especially in the area of air transportations. On the other hand, the shift toward the specified area created the premises for overlooking another essential aspect of a company’s operations, which is updating the equipment and maintaining it in good condition. Therefore, it is desirable that the firm should focus on investing in the purchase of new aircraft. Otherwise, the customers’ safety will be jeopardised. In addition, EasyJet should consider introducing a system of inventory management and maintenance. As long as the aircraft used by the organisation are in good shape, a range of risks associated with reimbursing the damage caused to the customers and facing lawsuits will be avoided successfully. In other words, the risk appetite of the company can be deemed as higher than EasyJet can currently afford.
Risk Response: What Tools Can Be Used to Address the Risk Exposure
GlaxoSmithKline
Seeing that the issue of maintaining ethical standards and compelling the staff members to follow them was the primary source of the company’s concern, it was only reasonable to create the program for preventing corruption in the organisation. One might argue, however, that the Anti-Bribery and Corruption (ABAC) Programme designed by the leaders of GSK was far too specific to address a wide range of ethical issues that could be faced in the context of the global economy. Indeed, the program revolved around the issues associated with bribery for the most part, as the name would suggest. Nevertheless, by advocating the anti-bribery principles in the corporate environment, the leaders contributed significantly to shaping the members’ concept of corporate values and ethics. As a result, the prerequisites for altering the staff members’ behaviour were created.
BP
To respond to the risks associated with oil spills and at the same time create premises for the restoration of its reputation in the global market, BP built an international system of intervention equipment aimed at addressing oil spills (BP in America: Our commitment to safety 2016). In other words, the organisation has been striving to not only improve its approach toward managing the upstream processes so that higher safety rates could be facilitated but also promote the concept of environmentalism on the global level by contributing to the development of new and improved tools for increasing the sustainability levels (Taylor, Artman, & Woelfer 2013).
The identified approach can be deemed as rather sensible since it helps address not one but several issues simultaneously. To be more exact, by investing in the development of new and updated equipment for oil spills, BP leaders show quite graphically that the company has been reformed and that they have altered their approach toward the use of resources. Instead of viewing natural resources as the means to an end, the new policy promotes the idea that they must be used with care and caution. In addition, the framework used by the company furthers the concept of environmental safety, not only redesigning the corporate strategy toward waste management but also promoting the idea of ecosystems preservation on a global level. It is evident that BP endeavour at not only reshaping its global image but advancing the process of increasing the global sustainability levels. Therefore, the risk management approach adopted by the organisation can be viewed as reasonable (Marks 2015).
EasyJet
EasyJet views the concept of risk management from the perspective of the human factor. In other words, the leaders of the company are inclined to believe that the stress factors are to be blamed for most of the issues occurring in the course of the company’s operations. When being under the pressure of specific circumstances or shaving personal issues, the personnel is quite prone to making mistakes, which is inadmissible in the context of an airline company.
The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. Given the fact that the company offers air transportation services, it is likely to create the situations in which people’s lives will be in danger (e.g., a plane crash). Therefore, the emphasis on the human factor as one of the primary causes of a risk is understandable. However, apart from addressing the factors that cause fatigue and alertness in pilots, as the company’s RM strategy declares, the organisation should also consider the factors such as the quality of the vehicles.
As a result, at present, the RM approach used by the EasyJet Company is aimed mostly at managing the emerging issues as opposed to creating the environment in which the risk can be minimised. For example, the crucial safety rule that the firm views as the foundation for its RM framework states that “In advance of the recommendation of EASA and the UK CAA EasyJet implemented measures to ensure at least two crew are in the cockpit at all times during a flight” (EasyJet 2016, par. 4). The presence of two people in the cockpit during the flight obviously helps manage a specific problem within a relatively short amount of time, yet it does not imply that the problem will not appear in the first place.
Risk Review: Determining the Efficacy of the Corporate Risk Management
GlaxoSmithKline
Purpose
The current purpose of GSK’s RM approach is quite transparent and easy to define. Striving to avoid the threat of financial fraud in the context of its organisational environment, the company aims at identifying every loophole in its design and manage it accordingly so that the instances of financial misconduct could not be a possibility. Granted that the strategy chosen by the organisation is supposed to detect and prevent a very specific financial crime, i.e., bribery, it, nonetheless, seems to be rather efficient (Vanecek & Kubecova 2015).
Capability
The organisation has a substantial number of resources that it can use to attain its essential goals, including the sustainable management of resources. However, when it comes to the tools that are bound to help GSK improve its operations and develop a sustainable strategy, one should mention an improvement in the communication process.
Commitment
As far as the commitment issue is concerned, the current approach seems to put far too strong an emphasis on the organisational aspects of reinforcing the policy and omitting the necessity to appeal to every single staff member on a personal level. Without making the employees recognise the necessity to follow the anti-bribery policy, the leaders of the organisation are unlikely to succeed in creating a sustainable financial strategy. Granted that the supervision process could be enhanced significantly, the staff members and the managers operating in the company will find loopholes to carry out the illegal financial transactions. Therefore, it is crucial that a change in the corporate values should occur in the environment of the company (Fishcer, Leidel, Riemann, & Alfen 2011).
Monitoring and Learning
Apart from facilitating the environment in which clarity and transparency are a possibility, GSK will also have to execute a constant supervision of the essential processes. The identified measure should not be viewed as the sign of mistrust; instead, it has to be recognised as the necessary measure against possible misunderstandings. Furthermore, the use of supervision as the means of controlling the crucial stages of the services provision will become the foundation for learning essential information retrieved from observations. A detailed analysis of the dilemmas and conflicts that employees have to resolve in the workplace will provide the basis for the further quality improvement (Holzmann & Spiegler 2011).
When assessing the model used by GSK from the perspective of the CoCo framework, one must mention that it partially meets the purpose, which is facilitating a risk-free environment (Missioura 2013). However, there is a lack of commitment among the staff members. As a result, the capabilities of the company will be restricted, and the learning process will be impaired. Therefore, a further redesign of the approach will be required. Similarly, the organisation will have to consider the construction of the monitoring devices that will help maintain control over the essential processes (Smith & Merritt 2012).
BP
Purpose
The current purpose of the framework for RM chosen by BP is twofold. The first and most obvious, the process of dealing with the financial, economic, and social threats of the global market need to be mentioned as the factor shaping the organisation’s RM policy. However, besides the specified objective, BP also strives to improve its current reputation in the target market and regain the trust of its stakeholders. Given the altruistic nature of the program in which BP is currently participating, the purpose of the organisation aligns with the goals that it pursues in the global economy realm. Furthermore, the risk communication process must be reinforced so that the staff members could recognise its significance (Hopkin 2010).
Capability
The capability of the organisation seems rather weak at present because of the efforts and resources that it had to put into the management of the recent issues related to the oil spill and the subsequent accusations. Furthermore, the issues associated with the company’s negligence of the needs of its shareholders needs to be brought up as a possible area of concern. Nevertheless, by reconsidering the approach toward the use of resources, the corporation may be able to regain its leading position in the target market. The purpose of the current RM approach adopted by the organisation concerns not only addressing the essential financial issues but also reinventing the image of the company in the global economy realm, which can be considered a giant step in the right direction. By focusing on long-term goals and grand-scale ideas, BP is likely to build the sustainable strategy for managing resources, including not only the natural ones but also the ones that the organisation has at its disposal to address the internal issues (OECD 2013).
Commitment
The levels of commitment in BP leave much to be desired at present. Even though the company leaders have recognised their mistakes as far as the self-centred approach toward resources management is concerned, the staff still lacks commitment. Therefore, it si strongly suggested that BP should alter its current system of values and focus on the needs of all stakeholders involved, including not only customers but also employees, investors, suppliers, etc.
Monitoring and Learning
The RM framework that BP is promoting in its organisational environment at present can be considered a lacking insight about the means of controlling and monitoring the corporate activities. Although establishing the set of strategies that will ostensibly lead to a better management of waste and the enhancement of the corporate morals is essential, it does not offer the tools for making sure that the crucial principles of environmentalism are followed and that the needs of the key stakeholders are met (Rodak 2013). Therefore, it is highly desirable that the tool such as regular reporting should be used as the basis for monitoring the corporate processes. Furthermore, the opportunities for the staff members to improve their competencies and acquire new ones should be provided (Kahkat, Hieronymi, & Williams 2012). Training courses based on the outcomes of the measurement processes may be used as the mean of acquiring the essential information.
The past failure of BP can be explained by the fact that, with a complete absence of any control over the choices made by the financial executives whatsoever, BP could not possibly handle the risk of being ripped apart by the fraudulent actions of its managers.
The current RM approach adopted by the organisation, when considered from the perspective of the CoCo framework, can be deemed as passable. There is a purpose for the identified framework to exist since it helps promote sustainability. As a result, it encourages the staff to commit to the corporate values. Furthermore, the capability of the company is improved with the adoption of the identified model. The monitoring process, however, could use further elaboration (Wolf & Mejri 2013).
The problems in communication were the cornerstone of the firm’s failure in the past. At present, BP focuses on improving the information management strategy and promoting a consistent conversation between the key stakeholders and the organisation. The monitoring process, though having improved significantly, needs the tools for retrieving feedback on a regular basis. For instance, daily reports could be viewed as the means of monitoring the financial activities (Hardy 2014).
EasyJet
Purpose
The approach adopted at EasyJet raises a few questions as far a sits compliance with the purposes of the company is concerned. On the one hand, the idea of promoting the analysis of the human factor and its further elimination for the framework of the company’s operations is rather sensible for the firm offering air transportation services. On the other hand, the identified approach begs the question whether the corporation is capable of handling other factors that are not caused by people. For instance, the issue of delays caused by poor communication with suppliers, the possible damage of the goods, etc. could be explored in much more detail (Rejda & McNamara 2014).
Capability
The capacities of the company currently allow it to comply with the essential provisions of the ISO standards. Therefore, it would be reasonable to focus on improving the quality standards in the organisation. Improving the capabilities by promoting a consistent acquisition of new skills among the staff members should also be viewed as an opportunity (Gertz, Guldentops, & Strous 2013).
Commitment
At present, the members of the company are quite committed to their job. Because of the emphasis on the human factor, the need to create the appropriate environment of the staff and promote an improvement of their skills is recognised and fulfilled in the company. Thus, the prerequisites for enhancing loyalty rates among the staff members and the further adoption of the CSR principles are created (Wendt 2013).
Monitoring and Learning
Although focusing on the human factor is important, EasyJet should also consider some of the other risks, such as the possibility of the equipment depreciation. Therefore, from the perspective of the CoCo framework, the current approach does not serve the purpose of the company (i.e., promoting quality improvement) well. As a result, making the staff committed to the process is going to be quite complicated. The capability of the organisation, in its turn, is not explored fully. However, the current approach allows for close monitoring (Scolobig et al. 2014).
Findings and Conclusion: Common Patterns in the Choices of Risk Management Frameworks
GSK, BP, and EasyJet used to neglect some of the essential concepts of RM. However, over the past few years, the companies have been facing problems in addressing the financial, economic, and organisational challenges that the lack of concern for the external risks has caused. Consequently, a rapid redesign of the RM frameworks was to be expected. Despite the endeavour at adapting toward the environment of the contemporary global market and promoting the concept of sustainability in their RM strategies, the companies could use the approach that would help them take the needs of all stakeholders into account, at the same time promoting a more responsible attitude among the staff members and managers. As long as the companies in question are faithful to their ethic and values, aware of the needs of the stakeholders, are capable of allocating the corporate resources adequately, a rapid improvement in their performance can be expected.
Reference List
BP in America: Our commitment to safety. 2016. Web.
EasyJet 2016, No compromise on safety. Web.
Fishcer, K, Leidel, K, Riemann, A & Alfen, HW 2011, ‘An Integrated Risk Management System (IRMs) for PPP Projects’, Journal of Financial Management of Property and Construction, vol. 15, no. 3, pp. 260–282.
Gertz, M, Guldentops, E, & Strous, LAM 2013, Integrity, internal control and security in information systems: connecting governance and technology, Springer, New York, NY.
Gil, N, & Tether, B 2011, ‘Project Risk Management and Design Flexibility: Analysing a Case and Conditions of Complementarity’, Research Policy, vol. 40, no. 3, pp. 415–428.
Hardy, K 2014, Enterprise risk management: a guide for government professionals, John Wiley & Sons, New York, NY.
Holzmann, V & Spiegler, I 2011, Developing Risk Breakdown Structure for Information Technology Organizations’, International Journal of Project Management, vol. 29, no. 5, pp.: 537–546.
Hopkin, P 2010, Fundamentals of risk management: understanding, evaluating and implementing effective risk management, 2nd edn, Kogan Page, London.
Kahkat, R, Hieronymi, K, & Williams, E 2012, E-waste management: From waste to resource, Routledge, New York City, New York.
Marks, N 2015, World-class risk management, CreateSpace independent publishing platform, New York, NY.
Missioura, OV 2013, ‘Leadership and internal control modelling: A qualitative analysis of conceptual model & external validity practiced by SME directors’, Journal of Business and Economics, vol. 5, no. 3, pp. 349-358.
OECD 2013, Together for better outcomes engaging and involving sme taxpayers and stakeholders: engaging and involving sme taxpayers and stakeholders, OECD Publishing, Geneva.
Raydugin, Y 2013, Project risk management: essential methods for project teams and decision makers, John Wiley & Sons, New York, NY.
Rejda, GE & McNamara, MJ 2014, Risk management and insurance, 12th edn,Pearson, Upper Saddle River.
Rodak, S 2013, ‘ Best practices for hospital risk management. Web.
Scolobig, A, Prior, T, Schröter, D, Jörin, J, & Patt, A 2014, ‘Towards people-centred approaches for effective disaster risk management: Balancing rhetoric with reality’, International Journal of Disaster Risk Reduction, vol. 12, pp. 202-212.
Smith, PG & Merritt, GM 2012, Proactive risk management, Productivity Press, New York, NY.
Supplier and credit risk management. 2014. Web.
Taylor, H, Artman, E, & Woelfer, JP 2013, ‘Information Technology Project Risk Management: Bridging the Gap between Research and Practice’, Journal of Information Technology, vol. 27, no. 1, pp. 17–34.
Unnisa, S A & Rav, S B 2012, Sustainable solid waste management, CRC Press, Point Pleasant, New Jersey.
Vanecek, D & Kubecova, J 2015, ‘Some Aspects of Operational Risks at Enterprises of Czech Republic’, Actual Problems in Economics, vol. 165, no. 1, pp. 119–130.
Wendt, K 2013, Responsible investment banking: risk management frameworks, sustainable financial innovation and soft law standards, Springer, New York, NY.
Wolf, DD, & Mejri, M 2013, ‘Crisis communication failures: The BP Case Study’, International Journal of Advances in Management and Economics, vol. 2, no. 2, pp. 48-56.
The following report is concerned with the extent upon which an organization adopts a structured training process approach to the analysis, design, delivery and evaluation of its learning and development provision. The report starts with an understanding of the Bp Oil. co. Ltd. located in Hull. It also defines the learning and development theories, their applications and also includes the conclusions as well as the key recommendations.
An overview of BP Company
The BP Company has its locations in the United Kingdom and it is one of the leading gas and Oil Company the entire Europe continent. Its headquarters are based at London. However, this report focuses on the BP Company that is located at Saltend which nears the Hull city. The BP Company plays a key role as far as the world’s chemical industry is concerned.
The company also exist as a centre for Technology as well as Research in the entire world. BP is a multinational company and operates in more than 80 countries across the globe.
The initials”BP” was as a result of the organization’s founders, British Petroleum. Apart from being much involved into oil as well as gas manufacturing, the company is also concerned with the social corporate responsibilities. The company is also listed in the London Stock Exchange (LSE) as well as the New York Stock Exchange (NYSE).
An understanding of learning and development theories, models and frameworks in BP
The learning and development theories are part of the larger human resource management that is concerned with the policies, programs and practices which are designed to maximize both the organizational and personal goals.
Employees training and development usually plays an important role of determining the profitability of an organization i.e. it ensures that the employees perform well hence increasing the productivity (Gibb, 2008, 8).
In BP Oil Company that is located in Hull, training is done on old and new members of staff as well. This enables them to adjust with regards to the changes that occur in the course of their duties. It enables them to be conversant with the technological changes that take place.
The methods that are employed in training the employees in BP oil company includes the following; job rotation, lectures, apprenticeships, role playing as well as simulation, audiovisual methods, internships among others. David Kolb who is an educational theorist came up with learning styles in the early 1980s.
David Kold came up with important concepts regarding the learning styles and the concepts are applied in many organizations today. The theory focuses on four learning styles which are interpreted in a cycle. According to David Kolb, the learning process is in form of a cycle whereby, the trainee is expected to touch all the cycle’s bases.
The cycles are composed of the concrete experience, observation and reflection, testing implications as well as the formation of the abstract concepts as well as generalisations. According to him, the concrete experience results to reflection as well as the observation. The reflection and observation are then incorporated into theoretical concepts i.e. the abstracts.
The implications are then tested and experimented so that the corrective action can be taken. The testing as well as the experimentation also enables one to come up with new experiences. Kolb holds the view that learners usually prefers a particular learning style and that there are several factors that influences one to prefer a given learning style. The following diagram represents Kolb’s 4 cycles of learning process
According to sparks and Loucks (1998), there are usually five models with regards to employee’s development. The first model is the individually Guided Development in which the instructor devises the tasks that will be accomplished.
The employees are vested with the role of coming up with the means of objectives attainment.By so doing, the mode; is believed to motivate them. The model is also important because it allows the instructors to attend to their own issues and hence creating some professionalism.
The other model with regards to employee’s development is the observation as well as assessment. The employees are allowed to provide feedback regarding to the teachings that they receive. The employees learn as they observe the teachers’ teaching behaviour. The employees are also allowed to discuss among themselves and this enables them to exchange important ideas (Harrison, 2009, 67).
The third model as far as employee’s development is concerned is the employee’s involvement in the development process. This helps to bring about the maximum individual development of the employees in the organization. The employees are assessed and areas that require to be improved are highlighted. The involvement is important as it enables the employees to acquire new skills.
The fourth model of the employee’s development is training. In this model, the presenter devises the learning activities that should be carried out together with the effects that are associated with the learning activities. In this model, the employees are trained on the theoretical as well as the practical aspects as far as the organizational activities are concerned (Swart et.al. 2005, 89).
The last model with regards to employee’s development is the inquiry. Inquiry is concerned with identifying the problems and collecting the data. Usually, the teacher prepares some questions so as to determine their personal teaching practices and to take actions where necessary.
Application of learning and development theories, models and frameworks
The learning and development theories, models and frameworks with regards to the BP Company are applied in analysis, design, delivery as well as the evaluation of the learning and development provision.
Application of training and development theories in employee’s analysis
Learning and development theories enable the management to effectively analyse the performance of the employees. The employee’s performance is thus measured against the set objectives. The trainees usually liaise with the senior leadership team of the organization so as to provide them with an insight concerning their progress.
Essentially, the trainees are only required to have a positive attitude towards raining and also show their willingness to successfully complete the training and development programmes. They should also put extra effort to ensure that they capture all that they are taught. Training also requires the employees to be reliable and cooperative with their trainers.
The selection criteria of employees who requires training in BP co. is usually informal. The line managers in organizations usually select the employees that require to be trained. Also, the employee who feels that they need training so as to enhance their skills also forwards themselves.
Employees are thus trained on the following areas; customer satisfaction, problem solving, communication skills as well as teamwork management and control. Each area of training is completely different from the other and therefore the teachers should ensure that they teach one area at a time so that the employees can understand well (Walton, 1999, 19).
A SWOT analysis of the employees training is also conducted in order to determine the strength and weaknesses of the programme and whether the programme is facing any threats and has any opportunity in the market. This is usually done by the senior management team in the organization, the organization’s training specialists, and those employees who are through with their training among others.
The SWOT analysis team may also be comprised of a small group or an individual who has adequate knowledge concerning the organizational as well as employees’ training needs. The trainees are thus informed of the reasons why SWOT analysis is being carried out before the process begins.
The strengths refers to the areas that employees are best in i.e. those aspects that the employees performs very well such as outgoing e.t.c. training however, the training team should not give a high priority to strengths (Stewart, 1999,15).
Weaknesses entail the aspects which calls for employees require to be improved. For instance, poor customer service is a form of weakness which if not improved may lead to loss of potential customers in an organization. Opportunities as well as the threats are usually as a result of the outside factors.
Opportunity entails the new openings that if utilized properly, could lead generate greater revenue to the organization for instance, a new product may call for direct sales representatives so as to conduct the market promotion and hence the need for training.
Threats entails the occurrences on the employees that could make it difficult for them to perform their duties effectively and efficiently e.g. the sales staff may find it difficult to promote the company’s product as a result of the emergence of a competitor who offers low prices for goods.
Thus, unless they are trained, the sales staff may not be able to create sales for the business. Thus, the learning theory and development is very important as far as the employee’s analysis is concerned (Reid, & Barrington, 2004, 24).
Application of training and development theories and employees design in BP Company
Employees design entails a program that is set so as to ensure that the employees training objectives are met. The training designs have indeed developed over the years in that it has began using the systematic models. For instance, the BP Company has been using the instructional systems design commonly referred to as ISD so as to enhance efficiency with regards to the training programmes.
The training designs ensure that the employees are ready for the training and it also ensures that learning is carried on in a smooth manner. It also helps in monitoring and evaluating the employees training and development.
Thus training design enables the employees to achieve their training goals. For the training design to be effective, the learning goals to be attained should be determined ahead of the training process (Bee, & Bee, 2003, 89).
The efficiency of an employee training program can be enhanced by the following; the trainers requires to define the training needs of the employees first i.e. they should approach the training with a clear mindset. The company’s needs should also be determined so as to identify the area that requires to be improved. There should be no hurry at all in determining the ideal training programmes.
The training should also be done in a suitable place. Also; the organizational leaders should ensure that they don’t have much workload during the employees training period so as to support the employees where necessary. The trainers too requires to be very attentive in that should act promptly to support the employees in case of anything (Sparks, & Loucks, 1998, 26).
Training programs design is meant to assess whether the employees are able to use the resources available effectively and efficiently. If the employees fail in a program, it results in the waste of resources for the organization. The success of the program depends on the type of the trainees that are selected for training by the company and therefore the right people should be selected (Megginson & Whitaker, 2007, 54).
The training and development thus enables the creation of an effective program that ensures that the employees training objectives are met. The training programs at the BP Company ensure that the employee’s are able to study the materials.
The programs also ensure that the employees are able to utilize the resources that they have in an efficient manner. The training programs help to motivate the employees during the training program.
Application of training and development theories in training delivery
The BP Company usually holds a question and answer session so as to explain to the employees the importance of training, the reason as to why they were chosen to be trained among others. Employees training are usually very expensive particularly in a case where the employee’s exits the organization after being trained and therefore, it is important for the managers to select carefully the employees to be trained.
The trainers should ensure that the training programs’ objectives are in agreement with the employee’s training needs. The training goals should be set in such a way that the employees are able to know where they are today and where they should be in the near future. It is thus important for the senior management team to have meetings with the trainees regularly in order to ensure successful completion of the training program.
In Bp Company, the human resource manager usually liaises with the employees regularly so as to determine as to whether the employees are well trained and to take up the corrective measures as fast as possible. This enables the employees who are being trained to become familiar with the training expectations and so they works extra hard so as top meet these expectations.
The training delivery plays a key role of ensuring that the employees successfully complete their training programmes. The successful completion of the training by the employees ensures that the organization performs well. This is due to the fact that the employees are part and parcel of the organization and so their success reveals the organization’s success.
Employees are usually unique with distinct learning styles and therefore, the delivery methods helps to cater for the needs of each trainee. In the BP Company, the training delivery helps the trainees to know their responsibilities so as to work towards achieving their overall objectives.
Application of training and development theories in evaluating the training programs
An organization requires evaluating the training program that it has implemented so as to determine as to whether the program is successful. The organizations should consider whether the trainees have gained the required skills. If it turns out that the employees have not acquired them relevant skills, the organization should determine the reasons behind it.
The senior leadership team at BP oil Company located in Hull for instance holds regular meetings with the employees so as to determine as to whether the employees fails to gain skills due to their personal inability or due to other factors such as unsuccessful training programs(McKenna ,1997,13).
The BP Company usually collects all the data concerning the employees training so as to evaluate the employees learning programs effectively. Organizations should first collect all the important information regarding the training so as to clearly evaluate their employees learning programmes. The information that is collected should be quantified and measured in such aspects as output, cost, time-period, and value among others.
The BP oil company in Hull also uses quantitative information in form of working habits, employee’s mindset, employee’s growth, compliance, initiativeness among others in evaluating the employees training programs. The company also evaluates the employees training programs so as to determine as to whether the training programs facilitated the employees to adapt to the working environment.
Also, the company evaluates the employees training programs by way of observation as well as holding interviews with the employees. The company monitors the behaviours of the employees all through the learning process so as to establish as to whether the employees are familiarizing themselves with the organization as well as their jobs (Marchington, & Wilkinson, 2008, 34).
The BP Company also gauges the employee’s reactions with regards to the training programmes. The feedback that the company obtains from the trainees is essential as it enables the company to know how the trainees perceive the training programs and hence to come up with measures aimed at improving the programs.
The use of questionnaires as well as the meetings enables the organization to determine the trainees’ attitude towards the training programs.
Conclusions based on analysis of theory and practice
The learning and development theories, frameworks and concepts play a critical role as far as employees training programs are concerned in organizations. An effective training program is very important as it can facilitate the organization’s success.
An organization that is contemplating to formulate an employees learning strategy should consider the following issues i.e. the main customers and the value that they buy from the firm, the competitors and their products in the market, strengths as well as the weaknesses of the organization, the reason as to why the organization is intending to formulate the training strategy e.t.c.
This answer with regards to the above issues enables an organization to determine its employees training needs.
The human resource department of an organization plays as important role of assessing the training needs of the employees. The management can compare the employees existing skills or performance s against the expected skills.In case of any differences between the employee’s current skills and the anticipated ones, then the training should be recommended (Woodall & Winstanley, 2000, 22).
Recommendations
The following are my recommendations; an organization should clearly identify the employees who require to be trained so a not to waste monetary assets in training the employees and the same employees exits the organization as a result of finding employment opportunities elsewhere.
Thus, it is important to find out where learning is required and an internal audit should be carried out so as to assist in pointing out the needy areas for training.
The organizational leaders should maintain an open and trusted relationship with the employees so as to ensure that they share important information with regards to employees training and development.
An organization should asses its current employees skills so as to determine it can provide the appropriate training programs to each and every trainee. The management should thus determine the future directions of the organization so as to determine the effectiveness of a learning program.
Also, it is important for the senior leadership team to determine as to whether the company is committed in supporting the learning efforts based on such aspects as financial aspects e.t.c. This will help to ensure that the training program to be developed does not fail following the lack of financial commitment.
The management should also liaise with the trainees on regular basis so as to determine as to whether the training is in accordance with the set goals.
Reference List
Bee, F & Bee, R., 2003.Learning needs analysis and evaluation: 2nd ed. London: Chartered Institute of Personnel and Development.
Gibb, S., 2008. Human resource development: process, practices and Perspectives: 2nd ed. Basingstoke: Palgrave Macmillan.
Harrison, R., 2009.Learning and development 5th edn. London: Chartered Institute of Personnel and Development.
Marchington, M. & Wilkinson, A., 2008. Human resource management at work: 4th edn. London: Chartered Institute of Personnel and Development.
McKenna, E, P., 1997. When work doesn’t work anymore: women, work and Identity. London: Simon & Schuster.
Megginson, D. & Whitaker, V., 2007.Continuing professional development, 2nd Ed. London: Chartered Institute of Personnel and Development
Reid M. & Barrington H., 2004. Human resource development: beyond training Interventions. London: CIPD.
Sparks, J. & Loucks, H.R., 1998. Evaluating professional development. UK: Corwin Press.
Stewart, J., 1999. Employee development practice. London: Financial Times Management.
Swart, J. et al., 2005.Human resource development: strategy and tactics. Oxford: Butterworth-Heinemann.
Walton, J., 1999. Strategic human resource development Harlow: Financial Times Prentice Hall
Woodall J. & Winstanley, D., 2000.Management Development: Strategy and Practice. Hoboken: Blackwell.
This essay is about the oil giant British Petroleum and one of the world’s worst environmental disasters in history, the Gulf of Mexico oil spill. The aim for this paper is to provide a backdrop for the oil spill and to picture the management change due to the oil spill.
The Gulf of Mexico oil spill symbolised a breakdown of more than mere environmental law and the work of institutions tasked with administering deepwater drilling, business law, governance, and corporate social responsibility principles can also be blamed for the environmental catastrophe (Cherry & Sneirson 2011, p. 984).
As a result of the oil spill and tragedy, BP’s safety programs and mistakes became noticeable. Many of these safety concerns have been ignored by management. The company did cover up these problems by portraying an image as an advocate of CSR and funding a $200 million advertising campaign to promote it.
Since 2002, there have been doubts about BP’s CSR practices in the context of safety and security. By corporate standards, the practices were considered “brand exuberance,” a term that refers to a corporate aspiration that is impossible to attain (Balmer, Power, & Greyser 2011, p. 7).
BP’s maintenance record, vision and training performance have been heavily criticised because they were not in accordance with industry standards. Carolyn Meritt, a U.S. government spokeswoman, commented that there was something wrong with BP management (Verschoor 2010, p. 15).
However, BP and many of its stakeholders are optimistic that there could be a light in the horizon. Revenues and shares prices are gradually showing signs of recovery. This essay will try to show how this is attained.
Introduction
The company British Petroleum had to introduce change management after the Gulf of Mexico oil spill in 2010. New directions included the upstream operations, from a single division to three departments to handle sensitive programs of ‘exploration, development and production’ (Bryant & Hunter 2010, para. 5).
BP’s valued shareholders and investors were briefed on future plans and new initiatives after the oil spill as the organisation was heading for further explorations after its worst performance in the year and throughout its history as a prime oil-and-gas company.
This essay will talk about management change in BP after the oil spill. Everyone was asking, particularly investors, as to what kind of management would resurrect BP. A knee-jerk reaction was change the leadership and management. CEO Tony Hayward was forced to resign, along with second in command Andy Inglis, to appease angry investors (Chazan 2010, para. 2).
The stiff decline in BP’s stock value (Chazan 2010) due to the oil spill prompted the board to conduct change management and appoint Robert Dudley whose mission was to restore BP’s tarnished reputation. Three new divisions were created and contracts were given focus in which top-management portfolio was assigned to manage contractors who are working on sensitive and important upstream operations.
Restructuring and upstream operations are now separate and given emphasis in order to provide long-term advancement of BP’s pool of expert engineers and scientists and strengthen risk management responsibilities. One of the flaws of the old system was that contractors working upstream were not effectively managed. (Bryant & Hunder 2010, para. 4)
Literature review
Leadership and organisational change
Leadership literature that can be applied in the context of BP change management is outdoor leadership with a focus on transactional-transformational leadership. Leadership theory evolved in several stages (Straub, 1980 as cited in Brymer & Gray, 2006, p. 13). Leadership concept started with the ‘inborn principle’. It evolved into the idea of leaders having special attributes.
The next phase is about those having power or authority. The fourth stage emphasised relationships, and the fifth one focused on leaders who became concerned with the world around them and adapted their behaviors according to those situations.
The outdoor leadership theory refers to situational leadership. Ford and Blanchard (1985 as cited in Brymer & Gray, 2006, p. 14) focused their leadership research on the relevance of leadership theory to the outdoors. Leaders demand of their followers certain attributes while followers require some characteristics of their leaders.
Followers would like their leader to assume responsibility, which is very important as most followers trust their leader to take responsibility for their actions. Followers would require their leader to have more experience than them and should know how to get along with them (Ford & Blanchard, 1985 as cited in Brymer & Gray, 2006, p. 14).
Leaders should possess skills on socialisation which may be team-related, for support or empathy; psychological aspects, like trust, stress, motivation, emotions; judgment, like dangers, problems, expectation; and creativity which is about ideas and inventiveness.
Transformational and charismatic leaders focus their attributes on creativity, effective communication, motivation of followers and working out a vision and a goal, among others (Groves 2006, p. 566).
Visionary leadership positively influences ‘net profit margin’ (Waldman et al., 2001 as cited in Groves, 2006, p. 567), stock value and leadership effectiveness. Visionary leaders can effectively communicate goals that inspire subordinates.
Ethics in organisational management theories
The management literature has focused on the subject of business ethics due to the many high-profile ethical violations in corporate America. Many giant firms have suffered malfunctions due to unethical business practices of even top managers of these large corporations.
Because of these incidents, much of the studies have focused on the importance of ethical behavior and to emphasise the call for a more understanding of moral decision-making processes. Gilbert (2001 as cited in Geiger 2010, p. 40) argued on the relative connection between ‘strategic management process and ethics’. Ethics influences this aspect of management.
An important subject of organisational theory is legitimacy which refers to the public’s reactions pertaining to the behavior of the organisation (Suchman 1995, as cited in Matejek & Gössling 2014, p.571).
The question here lies in BP’s moral legitimacy in building its values and norms pertaining to the construct of corporate social responsibility (CSR), the other types of legitimacy being pragmatic (pertaining to the importance of oil and gas to society), and cognitive (pertaining to its accessibility as an organisation).
Legitimacy emphasises organisation and community relations and the ethics in business.
According to this concept, organisations lose legitimacy if they transgress culture and mores while organisations that promote culture and beliefs of the community are rewarded. Organisations that have trouble with civil society and environmental organisations have problems with their legitimacy (Palazzo & Scherer 2006, as cited in Matejek & Gössling 2014, p. 572).
Case study analysis
BP has a moral obligation to acquire environmental legitimacy. Some experts have commented that if BP encounters another oil spill with the scale of the Gulf of Mexico spill, it will not only lose legitimacy, it will become bankrupt and will not have chance to recover.
After the Deepwater Horizon accident or negligence, it is under pressure by its ‘corporate stakeholders, the media, including social media, NGO watchdogs, and governmental regulators’ to bear ‘corporate environmental responsibility’ (Matejek & Gössling, 2014, p. 572). BP has to strive to walk along this line of operations, and work to maintain ‘environmental legitimacy’ (Matejek & Gössling, 2014, p. 572).
Corporate environmental legitimacy refers to society’s general observation or assumption that an organisation’s environmental programs are attractive, right and fitting, and generally approved by the public. This definition emphasises that environmental legitimacy is provided by stakeholders through their awareness according to their perceptions (Matejek & Gössling, 2014, p. 572).
CSR refers to the moral and ethical practices and organisations that malign social institutions lose their legitimacy status. What society might do is boycott the company’s products and services, including shares of stocks, and employees withdraw their commitment and lose motivation to work (Gössling 2011 as cited in Matejek & Gössling, 2014, p. 572).
Corporate social responsibility (CSR) reporting is usually done to attract investors (Spence 2009 as cited in Mobus, 2012, p. 36). If you look at BP website, you will be amased with their CSR programs and recovery efforts, particularly on restoring the lives of those affected by the oil spill. But websites are websites. They are always painted ‘green’ and any attractive color to attract investors.
The introduction of change management
‘Deepwater Horizon’ was a large ocean rig that sank at the bottom of the ocean when the Macondo well exploded.
This was one of the wells BP acquired. By 2010, BP successfully acquired several growing companies, making it one of the world’s largest corporations in terms of revenue, with a daily oil production of more than four million barrels. The Gulf of Mexico provided approximately 10 percent of BP’s oil output (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drill 2011, p. 2).
Before the Macondo well blew up, BP had a corporate brand positioning pictured by its management as highly ethical and environmentally emphatic. When the Deepwater Horizon accident occurred, these ethical and environmental standards were questionable.
BP’s previous ethical standards were not supported by an ethical distinctiveness and philosophy, but it was trying to picture to the public that CSR was a common practice and that it cared for the public and its needs. BP’s corporate behavior did not reflect that of its purported mission. There was a misalignment in BP’s ‘identity modes’ (Balmer, Power, & Greyser 2011, p. 7).
After the environmental debacle, BP faced a class action lawsuit and an allegation that it ‘misled investors’ by purporting to show that it had the capability for safety operations in the Gulf of Mexico (Amernic, Craig, & Tourish 2012, p. 6). Two years before the disaster, the health and safety goals were only 80% attained, and environmental risk management was said to be ‘gold plated’ (Verschoor 2010, p. 13).
BP’s management change was aimed to regain the trust and confidence of stakeholders, particularly its investors.
Robert Dudley essentially introduced his brand of management with a vision of safety in the operations, placing great power and responsibilities in the hands of the safety division, now under Mark Bly, who has the authority to stop the operations if he and his team deemed that operations are not following the standards.
Bly and his team directly report to Dudley and recommendations are immediately acted upon (Chazan 2010, para. 3). Dudley had been in the oil business for years and was with Amoco before he joined BP just eighteen months before the environmental disaster. The merger of Amoco and BP in Russia was termed a mega-merger but Dudley had to return to the United States after Russian authorities refused to renew his visa (Macalister 2010, para. 5).
Dudley’s “new” brand of management was regarded a rehash of Hayward’s programs when the latter was appointed as CEO some years back to take over Lord John Browne who was involved in a personal scandal. Hayward proposed for safety programs during his initial years but still, BP experienced major environmental disasters resulting into some deaths of workers (Bryant & Hunter 2010, para. 3).
The U.S. Occupational Safety and Health Administration (OSHA) has recorded more than seven hundred violations of refineries attributable to BP and the violations were ruled intentional (Bryant & Hunter 2010, para. 6).
The pipeline corrosion in Texas that caused an oil spill, costing approximately $2 billion in suits and damages, was the result of cost-cutting measures introduced by Hayward who had to impress investors asking for positive gains for their money.
However, some commentators have tried to give Dudley a chance. Dudley’s safety programme was a welcome development, according to Nigel Bowker (as cited in Bryant & Hunter, 2010) who once worked for BP, but he argued that the new measures must be accompanied with management support, resources and cooperation from everyone in the company, and it must not only to appease the BP investors.
BP under Dudley has introduced the technology-enhanced ‘Well Advisor’ that assists drilling teams in different countries to check the progress of oil and gas explorations with novel clearness through consoles connected online, to strengthen safety and security in the explorations.
BP has relied on digital technology that gathers and analyses data and other variables. Although this is still in its pilot stage, BP is going to that point where the data could be transformed into valuable information to provide safety and competence.
Meantime, BP is on its way to providing the capability for its engineers, scientists and contractors to put together all these data and the various points produced by the data to influence decisions in the field. The data points are fed to a software, to be transformed into fine graphics and made available to engineers in the field. (BP: Trusted advisor 2014, paras. 1-4)
Notwithstanding BP’s thrust for corporate social responsibility, CEO Dudley has been able to introduce green marketing philosophy, which is not just about consumers but about the environment, a rallying cry for BP’s organisational culture. BP is building a culture that respects the environment.
Another principle it has applied is internal green marketing which aims to ensure that the organisation’s employees integrate the ecological factor into their programs and activities (Zaharia & Zaharia 2012, p. 162). BP has ensured that that top management and HRM functions collaborate to enforce green business strategies.
BP revenues before and after the change
Before the management change, i.e. before the oil spill, revenues were up, $120 billion. It went down after the spill but with the new management, revenues rose 5%, which meant it climbed to $98 billion in October 29, 2013, from $94 billion (£58.4 billion) the year before. After the oil spill, BP has sold some $38 billion of assets and has plans to sell about $10 billion this year.
The company’s replacement cost profit rose to $3.7 billion for the last quarter of 2013, from the previous $2.7 billion. BP also wanted to buy back its shares worth $8 billion, but has started with $3.8 billion. (Haslett 2013, paras. 3-6)
Figure 1 is a listing of the shares prices for the period from 2009 up to 2013. It is shown here that the shares prices before the Gulf of Mexico oil spill were high. In 2009, ordinary shares cost 613.40 high and 400.00 at low; for American depositary shares, high was 60.00 and low was 33.70.
There was slight difference for the next year 2010 and prices slid down after the oil spill with new management, which attained low prices for BP shares and gradually slid down up to 2013.
For the different quarters from 2012 up to the first quarter of 2014, shares prices have not fully recovered but are slowly going up: i.e. 49.63 high and 45.83 low for American depositary shares, and for the first quarter of 2014, from 48.65 high and 41.30 low for the last quarter of 2013. This is supported by their advertising published Wall Street Journal (see appendix).
BP stock prices in the market before and after the change
Fig. 1: Stock prices before and after the management change.
Conclusion
It is understandable that Dudley’s new administration is trying to paint a better picture, but obscuring the real risk BP is facing may not do any good for the company. Organisations aim their ‘propaganda,’ i.e. CSR reporting, at their employees as they try to relay messages about their image.
Is BP ‘greenwashing’?
Greenwashing is a form of ‘information propaganda’ by a company or organisation for the purpose of portraying that it is following the standards of environmental benchmarking.
By greenwashing, a firm tends to improve sales or enhance its brand image through ‘environmental rhetoric, but at the same time either pollute the environment or decline to spend money on the environment, employee welfare, or otherwise honor its commitments to other constituencies’ (Cherry & Sneirson 2011, p. 985).
This can be perceived as fooling the public, particularly the stakeholders and the shareholders. According to Mobus (2012, p. 37), it can be viewed as such if there are no ways to verify the truth of the company’s CSR programs. BP’s environmental programs can be verified and, at first instance, there seems to be no fraud in their application of restoring the sound environment before the spill.
According to investigation (the Commission Report or CR), the Macondo well blowout where Deepwater Horizon sank, was the result of management’s indecision, lapses in the communication processes, and risk management failure) leading to incontrollable situations on the Macondo well (Mobus 2012, p. 38). In other words, safety measures, a primary requirement for oil explorations and one of BP’s so-called pride, failed.
Management failed in those instances, along with failure of communication (CR 2011 as cited in Mobus, 2012, p. 38). Engineering and well design were approved by regulators but were not followed. Execution of the design and processes were opposed to BP guidelines and industry benchmarks.
Moreover, there were lapses in communications among those working in the downstream and BP managers allowing for a possibility of a blowout (Mobus, 2012, p. 38).
BP must prove its worth and the sincerity and expertise of the new management. After being prohibited for a year from bidding U.S. federal contracts, it has now won 24 new bids but one of the conditions is to implement stricter safety rules, including a remodeling of its governance principles. BP will be audited by an independent auditor chosen by the U.S. EPA. (Toor 2014, para. 2)
It seems, however, that BP has gained the trust and confidence of the U.S. federal government. Before 2010, it was the country’s largest oil supplier and fuel for transportation but was suspended for one year due to the oil spill. Four years after that worst oil spill, BP won 24 bids to explore oil and gas over the Gulf of Mexico once again.
Recommendations
The three divisions focusing on upstream operations should have effective and coordinated management. BP should have trained organic personnel to focus on upstream operations, instead of hiring contractors.
One of the flaws of the old system is that most upstream operations are performed by contractors who are not BP personnel. During the critical minutes when the Macondo well was about to explode, there was no more effective management, prompting the personnel (who were working for a contractor and not for BP) to decide by themselves.
The thrust of new management to focus on contractors is a good sign but works to be assigned to contractors should be minimal and not major tasks.
BP’s CSR practices should not be mere practice for advertising but have to be given focus. Many giant firms practice CSR for the purpose of enticing investors to the detriment of the organisation. This was one of BP’s mistakes that might lead to its loss of legitimacy.
References
Amernic, J., Craig, R., & Tourish, D. 2012, ‘Reflecting a company’s safety culture in fairly presented financial statements: the case of BP’, CPA Journal, pp. 6-10, via ProQuest database.
Balmer, J., Power, S., & Greyser, S. 2011, ‘Explicating ethical corporate marketing. Insights from the BP Deepwater horizon catastrophe: the ethical brand that exploded and then imploded’, Journal of Business Ethics, vol. 102, no. 1, pp. 1-14, via ProQuest database.
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Brymer, E. & Gray, T. 2006, ‘Effective leadership: transformational or transactional?’ Australian Journal of Outdoor Education, vol. 10, no. 2, pp. 13-19, via ProQuest database.
Cherry, M. & Sneirson, J. 2011, ‘Beyond profit: rethinking corporate social responsibility and greenwashing after the BP oil disaster’, Tulane Law Review, vol. 85, no. 4, pp. 983-1038, via EBSCOHOST, Academic Search Complete database.
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Appendix
The gradual BP recovery after four years of Gulf spill. SOURCE: The Wall Street Journal: BP Plc ads (2014).
