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The History Of British Petroleum Management Essay

Globally, the oil and gas industry has already established major accidents within the last 25 years. In August 1884, 36 employees drowned in an explosion and fire on the Petrobras platform in the Campos Basin off Brazil. March 1980, saw the death of 123 people during the breakup of the Alexander Keiland oil rig in the North Sea. In September 1982, US oil rig Ocean Ranger keels over in the North Atlantic, killing 84 people. The world's worst oil rig disaster which happened on July 1988; sees 167 people killed when Occidental's Piper Alpha oil rig explodes in the North Sea after having a gas leak. Then in January 1995, 13 individuals were killed and many injured within an explosion over a Mobil oil rig from the coast of Nigeria and in March 2001, an explosion hits the world's greatest offshore oil platform, owned by Brazil's state oil firm Petrobras. (Ngoil&gas. com).

The dangers in the oil and gas industry have not changed much because the first oil well was drilled and the first barrel of oil refined.

This paper analyses the "Organizational behaviour issues at BP that contributed to the 2010 Deepwater Horizon disaster". The introduction provides brief history of BP and its operations. The issues identified in cases like this study can be grouped into two (2) categories namely; immediate causes as well as remote causes. An instantaneous cause that caused the disaster was the desire by BP to cut cost as against the safety of its members. This however led to poor culture that BP had, insufficient proper Structure, communication breakdown and bad Decision making for its Management team as well as negligence. Remote factors leading to the disaster were the Gamut of the operation and the failure of government regulatory bodies to modify BP. For the purpose of this I will limit myself to the immediate factors resulting in the disaster and further use my findings to generate and evaluate some solutions and make some recommendations.

INTRODUCTION

According to the annals of British Petroleum, exploration of oil started dating back to 1901 through to the new millennium era which moved through different phases and stages. The Company provides its customers with energy for heat and light, lubricants and the petrochemical products used to make everyday stuff like plastic bottles fuel as well as for transportation.

The business model of BP is to create value across the complete hydrocarbon value chain. This starts with exploration and ends with the supply of energy and other products that are fundamental to everyday activity (Reuters. com). The table below shows the cycle of this model.

Integrated model graphic

www. bp. com

As an organization that started off with a brief history of safety in its initial stages; deviated from its safety conscious nature and turned its entire attention towards money. Immediately when the focus of attention shifted to profits and market share increased, safety was left to lapse and the accidents started turning up. BP's espoused value was first monetary before that of the safety its personnel and this resulted in lower safety standards as well as poor maintenance. Various groups had criticized the cost-cutting as "risky" and employees were extremely critical and concerned about the safety standards at the refinery.

Looking back at the annals of the company, it can be said that the business that were a comparatively sleepy oil company had been transformed chiefly through aggressive mergers and cost-cutting. Majority of BP's CEO all pursued an identical agenda that was pushing for higher income and slashing safety budgets. The cause of this disaster concerns not only the immediate factors raised in the abstract but also concerns business ethics, leadership and corporate responsibility which goes as far back, to a point of which executives of BP simply wanted to reposition and redefine the business this they did chiefly through strict cost cutting measures.

On April 20th 2010, the Deepwater Horizon oil refinery exploded, spewing at least 3 million barrels of oil in to the Gulf of Mexico, killing 11 and injuring 17. This is the best environmental disaster ever recorded in American history. A disagreement could be made that coal and oil disasters like the deepwater explosion can happen to any oil company and since the time the first oil was drilled till date that occupation remains a risky and dangerous one to be sure. BP for quite some time publicly claimed to be highly focused on health insurance and safety; but it was evidently centered on cutting cost at the trouble of safety inside the company. The pressures from executive managers of the BP Group further aggravated the procedure of safety performance which made them take drastic actions to implement strict cost cutting measures.

BAD LEADERSHIP AND BUSINESS ETHICS BP's horrible mishap following the Deepwater Horizon rig exploded according to the Ivey Business Journal were almost predictable, given the amount of arrogance and deceit that executive actions had encouraged as well as its bad leadership style for managing disasters. BP might have avoided further damages to the image of the business if only it had respected guidelines for managing a crisis. Its leader lacked leadership qualities and were ineffective in handling the problems due to the disaster tactfully. According to Buchanan and Huczynski (2010), leadership appears to be a critical determinant of organizational effectiveness. If any organization wants to grow and succeed; then that company will need to have an efficient leader for taking good decisions for the betterment of its company. In modern studies of organization and management there is acknowledgement that power alone cannot secure compliance, unless it includes resonance with shared values, it is unlikely to blossom into sustained leadership. On this context, there exists the need for inspiration which is as important as perspiration; but to sustain change, BP must balance its vision with a realistic analysis and a determination to make things happen. To have the ability to lead, one will need to have a following who should have shared values. BP's leadership style was so weak this was evident in the CEO wanting his decisions to be studied at all cost without objections.

According to the United States Occupational Safety and Health Administration (OSHA), out of 761 citations it issued to refineries for what it labels "wilful and flagrant violations" of safety and health standards, BP was named 760 times out of its total. It described BP as having "demonstrated either an intentional disregard for the requirements of the Act or a sheer indifference to employee safety and health or. BP have been cited Occupational Health and Safety Administration far more often by the for safety violations than any company even before Deepwater Horizon. The leadership of the business had no regard for business ethics and didn't care about the sort of corporate image they released there to the extent that BP was named a "serial environmental criminal. " by Scott West, a former EPA official is absurd.

While oil companies like Exxon responded to the 1989 Valdez spill by tightening safety and bringing more businesses in-house, BP let safety lapse by outsourcing more and more of its work. Any business with a good leadership as well as business ethics will need responsibility because of their actions and not seek to all or any companies associated to them down with it like BP tried to do. BP tried to shift blame onto companies like Halliburton (HAL) and Transocean (RIG) which was totally out of place. To an extent we can blame the drilling services corporation Halliburton and the shipping company Transocean as well as for not doing what was right, but most of the responsibility eventually falls on BP. The management of BP failed to act wisely.

ORGANIZATIONAL STRUCTURE

Having a formal arrangement of task, communication and authority that influences and control how people co-ordinate and conduct their work is good in organizations to permit them achieve their objectives. Structurally integrating these differentiated actors and their activities and implementing mechanisms to permit constructive co-ordination and control is a challenge (Jones, 2004). Bp had a problem differentiating the tasks that various individuals and groups in specific subunits with particular levels had to perform. Looking at BP; there was not really a formal organizational structure and employees found it difficult to learn who they officially was required to report to in different situations and it was also unclear exactly who had the final responsibility for what. Organizational structure should improve efficiency operationally to employees whatsoever levels by giving clarity in their way of life but this was not evident in BP.

Developments in the early 20th century in scientific management associated with names such as F. W. Taylor (1911), L. Urwick (1929) and Henry Fayol (1916), gave great support for bureaucratic systems of organization for their efficiency, stability and the elimination of waste. BP had a tall Organizational Structure where there have been numerous layers of management in the structure, and frequently inefficient bureaucracies. In such a tall structure, managers were making the majority of the operational decisions, and authority must be gained from several layers up before taking action which slowed up the process of getting things done where as lots of decisions were stopped dead in its tracks. Information flows were generally one-way in BP'S tall structure - from the most notable down. The top and complex organizational chart and structure of the company did not help them achieve their goals effectively. Power was a lot vested in minority groups which managed to get problematic for proper cohesion among members in other groups or units. BP used the mechanistic approach which was centralized with strong hierarchical structure of authority although, at a point the CEO tried to decentralise the already centralised structure in BP and introduce the organic approach. Even with clear goals and effective leadership as well as positive mission statement, a corporation is heading for failure with a bad organizational structure.

ORGANIZATIONAL CULTURE Generally in most contemporary organizations, corporate culture receives a lot of attention and is seen as crucial. However, even in those cases where top managers have a solid awareness of the significance of culture, there is often a lack of a deeper understanding of how people and organizations function in conditions of culture (Alvesson 2002:1). Deal and Kennedy (1982) argue that culture is the single the very first thing accounting for success or failure in organizations. They determined four key dimensions of culture: Values - the beliefs that lie at the heart of the organization culture, Heroes - the individuals who embody values, Rites and rituals - routines of interaction which may have strong symbolic qualities along with the culture network - the informal communication system or hidden hierarchy of power in the organization. Deal and Kennedy cite the Tandem Corporation in Silicon Valley as an example of an company with a strong culture. The company ethos is that people are hugely important. That is conveyed in several slogans that the employees are of and have confidence in. BP in the Deep water disaster failed to exhibit the four key dimensions of culture mentioned by Deal and Kennedy. The BP Board of Directors didn't provide effective oversight of BP's safety culture.

According to Gordon and DiTomaso, strong culture is thought to exist where staff react to stimulus for their alignment to organizational values. In such environments, strong cultures help companies operate like well-oiled machines, participating in outstanding execution with only minor adjustments to existing procedures as needed. Conversely, there is certainly weak culture where there is little alignment with organizational values, and control must be exercised through intensive procedures and bureaucracy (Gordon and DiTomaso, 1992). BP's had a weak culture which imposed rules strictly on the employees and created diversity between employee's personal objectives and organizational goals. BP's weak culture resulted in management putting profitability and good business performance ahead of the safety of its workers. The downside of these weak culture led to unbalanced types of power, which excluded individuals and teams from decision-making.

To grasp this is of culture, Schein, (1999) characterizes organizational culture as comprising three levels. The first level, the behaviour and artefacts level represents the most visible level, which is seen as a our behaviour and artefacts around us. This observable level of culture includes behaviour patterns and outward manifestations of culture. These cultural characteristics can be viewed in the gown codes, and levels of technology, the attitudes and behaviours of the folks as well as the physical layout of the work environment. The second level the espoused values of an organization to a huge extent determine behaviour and the 3rd level the essential underlying assumptions -the overlooked assumptions Schein, (1999). These values aren't observable as our physical behaviours and artefacts. BP's espoused value was to make profit at all cost.

BP's reaction to their disaster, speaks much about their organizational values, norms and culture. Crises situations in the organization tend to draw out the organizations core values. Schein, (2004) opines that "when an organization faces crises, the way in which where leaders as well as others deal with it creates new norms, values, and working procedures, and reveals important underlying assumptions. BP's disaster generated a great deal of attention and emotional involvement for those from the organization, particularly when it threatened the survival of the organization. In BP'S situation, the meaning of the deeper levels of culture - artefacts (the level where culture becomes clear and has immediate emotional impact), espoused value - (what the organization's values are), and the basic underlying assumptions - (the overlooked assumptions) of the business were truly exposed.

COMMUNICATION BREAKDOWN AND BAD DECISION MAKING Communication is the procedure where people convey and receive information to and from one another. Decision making has been described by Martin and Martin (2010) as an activity which represents a way of selecting a particular plan of action from among options available. Both communication and decision making processes are crucial for organizations. Kar (1972) estimated that between 40 and 60 per cent of work amount of time in a typical US manufacturing plant involved some phase of communication. In BP because of its tall organizational chart; there is no free flow of communication and this made information that went around lack accuracy, reliability, validity, adequacy as well as efficiency. There is no clear cut communication line in the business. The people in the field weren't being paid attention to by those in the boardroom. It really is clear that decision making is of fundamental importance for organizations but in BP individuals were over worked and managers were distracted and decisions that needed to be made were not recognised as unique and requiring active attention. Individual managers as well as groups or units fell back on individual or collective standard routines and responses rather than active and reflective considerations. BP used more of bounded rationality approach a behavioural model of decision making which describes the ways that both internal and situational factors limit human decision makers' effort to behave perfectly rationally (Simon, 1957). This made it difficult for them to do something as maximizes or optimizers in their work.

LEARNING Lorenzoni and Lipparini (1999) consider the power of organizations to gain access to and utilize knowledge that is situated both within and beyond your organization as a distinct capability that underpins an organization's quest to attain a more sustainable competitive position. Kanter (1994) refers to this organizational capability as its collaborative advantage which is acknowledged by Limerick et al. (2000) as a core competency of the learning organization.

BP's various disasters must have offered the organization Learning Opportunities and created a window of opportunity during which changes may appear. But BP did not about its problems which further culminated into series of disasters. Thus, organizations giving an answer to disasters learn in leaps -crisis by crisis- rather than smoothly over time (Carley and Harrald, 2008: 107). Crisis seen as the result of a series of accidents and disruptions that will be the necessary conditions for transformation. In such a context crises may be an interesting angle to review changes and organizational learning in the organization (Forgues and RouxDuffort, 1998: 18). To avoid similar crisis, which can occur near future, organizations should learn the lessons from past crisis. By learning from experience, you can make sure the same mistakes aren't made (Strategic Direction, 2007: 28).

Learning requires feedback in theory. Organizations figure out how to boost the accuracy of the response and enhance their performance through feedback. In every learning theories, feedback that enables performance improvements is of an application which allows a determination of "how close are we to the target?" The greater accurate feedback, the faster feedback, the better organizational performance (Carley and Harrald, 1997: 107). BP lacked a learning culture and they didn't create an environment conducive enough to aid learning. Numerous surveys, studies, and audits recognized deep-seated safety problems, but the response of BP managers at all levels was typically "too little or too late. "

RECOMMENDATION In recommendation, the poor safety culture at the refinery should be improved by periodic testing of machines. An effective working arrangements should be exercised to avoid fatigue. Safety training at the refinery should also be addressed. More hands should be used and when possible a shift system be introduced.

Furthermore, when there is communication breakdown in an organization, things are left hanging. Employees look to the structure of the company to steer their production and their everyday tasks. If they aren't told about changes because of inaccurate or missing information, every department is affected. An appropriate chain of command, defined systems of how information is passed on through the company and effective tools for getting information out are vital to maintain the flow of business that brings about profits.

Again, BP lacked Organisational learning so that Senge (1990) puts it; there exists the need for corporations to give attention to "generative learning" which is about creating and developing new ways of looking at the earth as well as "adaptive learning" which is approximately coping. Having that learning environment makes a company easily adapt to different situations.

Finally, you can find the need to create a strategy that encompasses and connects all the processes of work between all the organizational functions of the company. When one aspect of the organization is not working, it destroys the complete body. A complete organizational structure takes into account placing the right people in the right jobs, providing incentives that work, effective business controls and having sufficient resources to fulfil its obligations.

CONCLUSION BP engaged in weak organisational practices. These were too occur their ways which made them mechanistic. The organisational structure that existed managed to get very difficult to allow them to deal with unexpected expediencies. For any company to be successful and also to gain competitive advantage over other businesses; there should be a mixture of structure, culture, communication and decision making, good leadership as well a good learning culture.

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