British Petroleum: Leadership Case Study Research Paper

Length: 12 pages Sources: 11 Subject: Leadership Type: Research Paper Paper: #72070093 Related Topics: Bp Oil Spill, Environmental Scan, Dialysis, Complacency
Excerpt from Research Paper :

¶ … leadership is crucial for organizational success in a competitive marketplace. Gaps in leadership or conduct that could be interpreted as ineffective could have adverse effects on the reputation and overall competitiveness of a company. One company that suffered the adverse effects of poor leadership was British Petroleum, during and in the years leading up to the 2010 explosion and oil spill in the Gulf. Research has since shown that dysfunctions in the company's organizational culture had a hand in the entire crisis. This text explores the events that led up to the disaster, and the specific weaknesses in leadership and organizational culture that had a hand in exacerbating the crisis.

Introduction

From a general perspective, organizations have a responsibility to serve the common good of the communities within which they operate. This they do through a range of standard business practices that include giving towards charity and environmental-conversation programs, protecting the environment, supporting communities, providing goods to consumers, sustaining retirement plans and pension funds, developing technology and research, and creating employment among a host of other practices. All these practices are beneficial to stakeholders and contribute to the concept of corporate sustainability. However, when an organization does not operate according to the ethics of the 'common good', it becomes broken and the mutual trust that sustains stakeholders drops, leading their belief in the company to dissipate. The organization then becomes unable to serve the interests of stakeholders, and its overall ethical purpose is abandoned. The BP Gulf oil spill presents a perfect example of how lack of corporate sustainability (occasioned by negative organizational behavior) can lead to leadership failure, and consequently, failure to serve the interests of stakeholders. At the center of the BP issue is dysfunctional crisis leadership -- this text demonstrates how leadership failures and negative organizational values at BP exacerbated the situation at the height of the oil spill disaster, and suggests the possible changes in organizational behavior that could be implemented to prevent a repeat of the same. Before embarking on the main discussion, however, it would be prudent to first present a brief overview of the BP oil crisis.

Brief Overview of the BP (British Petroleum) Oil Spill Crisis

BP is one of the largest petroleum companies in the world, with a history dating back to the very early years of the 20th century. Since its formation in 1903, the company has committed itself to satisfying man's need for petroleum by extracting natural resources from beneath the surface of the earth (Heller, 2012). It commits itself to delivering value over money through the core values of courage, excellence, respect, and safety (BP, 2015). Offshore oil drilling was introduced in the 1930s in the Louisiana coast, and later moved to the Gulf of Mexico, where oil deposits were pursued up to over 3,281 ft below the surface of the ocean (Heller, 2012). The deep-waters exploration investment seemed to yield sufficient returns for the company, up until the night of 20th April, 2010, when a gas surge occurred within the company's semisubmersible Deepwater Horizon oil drilling rig, causing a large explosion that burnt up the drilling platform, and claimed the lives of eleven workers (Heller, 2012). The drilling rig, which had been leased to the company by Transocean Inc., sank, burned, and tore from the sea floor the pipe that sank down to the large Thunder Horse Field oil Deposit (Heller, 2012). Four days later, it became apparent that oil was leaking from the ruptured oils well drilled into Thunder Horse (Heller, 2012).

The company embarked on a mission to cap the oil leak, but by then, investigations had already been initiated against it by the Department of Homeland Security. The National Oil Spill Commission, which was put in place by President Obama in the wake of the crisis to identify the roles and contributions of the various parties to the same, found that lack of communication between the company and its contractors, and poor management had led the company to take unnecessary risks that significantly compromised the safety of the public (Arnold & McKay, 2013). The commission...

...

And BP had made judgment and communication errors that increased the risk of a large-scale disaster occurring. However, since the latter had experienced other accidental oil spills before, it took all the blame as many interpreted Transocean as a simple case of collateral damage (Arnold & McKay, 2013). The ill management of the issue by BP's leadership only worsened the situation, leading to a public outcry that literally forced the CEO, Tony Hayward to resign. This study is not focused on the technical aspects of the tragedy, but on the dysfunctions of the company's leadership at the height of the crisis.

Leadership at BP

Simply stated, leadership is the art of using people to get things done by exercising social influence and charisma. A leader is someone who is able to inspire people to perform their duties enthusiastically, competently and willingly, which he does by motivating them, implementing plans, and providing direction. The specific strategy that the leader uses to achieve this is their leadership style (Daft, 2014). Three different leadership styles are evident in BP's leadership. For purposes of brevity, we will focus on the company's leadership over the last two decades (John Browne (1995-2007); Tony Hayward (2007-1010); Bob Dudley (2010-present).

Participative Leadership

Daft (2014) defines participatory leadership as a leadership style where the opinions of subordinate parties are considered in the decision-making process, and subordinates, therefore, get an opportunity to develop their own professional and leadership skills. Decision-making is decentralized, and subordinates are given the autonomy to make decisions and take actions on behalf of the organization, although they are held fully accountable for the same. Evidence has shown participative leadership to be a crucial component of leadership at BP. Employee participation often takes the form of delegation of authority -- John Browne, for instance, delegated authority to his managers, and gave them autonomy and independence to maintain control over their respective departments (fiefdoms) like min-CEOs. As a way of increasing accountability in decision-making, however, he had the managers sign a performance contract that helped to ensure that all decisions made by managers were in the best interests of the organization. The primary benefit of participative leadership in the organizational setting is that it assists in the grooming of new leaders, which basically goes to ensure that there are no talent gaps in the organization once the current breed of leaders leaves.

Tony Hayward does not, however, appear to be so much of a participative leader -- he is seen to lead mostly through directive leader behavior. Unlike John Browne, who makes the company's goals, vision and expectations known to employees, and then grants them the independence to choose their own way of getting the job done, Hayward leads by making the goals known, giving direction and guidance, and scheduling work for his subordinates (Griffin, 2011). Such a case was witnessed during the oil spill, when Hayward, despite having no knowledge in crisis management, and the American way of doing things, relocated to Houston and took personal control of the crisis situation, instead of delegating the same to Bob Dudley, who had been responsible for overseeing the company's activities in the United States for a year and who was, therefore, more familiar with crisis management in the American context (Lahiri, 2010). Whilst it is rather understandable that as the company, CEO, he needed to be visible to the watching public, the decision to locate himself in Houston, field media interests and do all the communication with the U.S. media, rather than leaving the same to Dudley was an uncalculated move; and most Americans actually felt that he talked too much, and listened very little (Lahiri, 2010).

Transformational Leadership

Transformational leadership is the use of a shared vision to drive performance. A transformational leader develops a common vision and then uses their self-discipline, competency, wisdom, and passion to get his followers to identify with that vision, and work voluntarily towards its achievement (Daft, 2014). Both John Browne and Tony Hayward exercised transformational leadership at BP. Browne, for instance, articulated a vision to reduce the level of greenhouse emissions at BP and the oil industry as a whole (Cooper, et al., 2007). He introduced the 'Beyond Petroleum' campaign, which advocated for the use of responsible approaches for limiting the amount of environmental damage caused by the company (Cooper et al., 2007). Well, obviously, this would increase the company's overall costs and reduce its competitiveness in the industry considering the fact that the campaign was the first of its kind; however, Browne used wisdom to drive his vision -- he reasoned that the campaign aligned with the moral conscience of society, and would obviously have the approval of the greater community (Cooper et al., 2007).

Worryingly, transformational leadership may not always be beneficial to society. This is particularly so if it gets to the point of blinding the leader from evidence that things…

Sources Used in Documents:

References

Arnold, DH & McKay, R. (2013). Sustainable Enterprises: Crisis Management and Culture Transformation for BP. Business and Management Research, 2(3), 16-24.

Bali, V. (2011). Leadership Lessons from Everyday Life. Leader to Leader Journal. Retrieved August 13, 2015 from http://www.leadertoleaderjournal.com/sample-articles/leadership-lessons-everyday-life.aspx

Cooper, B.K., Sarros, J.C., Santora, J.C. (2007). The Character of Leadership. Ivey Business Journal. Retrieved August 12, 2015 from http://iveybusinessjournal.com/publication/the-character-of-leadership/

Daft, R. (2014). The Leadership Experience (6th ed.). Belmont, CA: Cengage Learning.
Edersheim, E.H. (2010). The BP's Culture Role in the Gulf Oil Crisis. Harvard Law Review. Retrieved August 11, 2015 from https://hbr.org/2010/06/the-bp-cultures-role-in-the-gu
Garvin, D.A. (1993). Building a Learning Organization. Harvard Law Review. Retrieved August 13, 2015 from https://hbr.org/1993/07/building-a-learning-organization
Lahiri, R. (2010). Leadership Lessons from the BP Oil Disaster. Vincero. Retrieved August 13, 2015 from http://vincero.co.uk/leadership-lessons-bp-oil-spill-disaster/


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