Wednesday, July 28, 2010

The New CEO

Michael Krasny's Forum this morning began with a discussion of the change in CEO at BP, with the hapless Tony Hayward shuffled off to Siberia (well, Russia - but I love that!) and replaced by an earnest, blond (has to be a blond) American - he even grew up in Mississippi.  The question was, does the CEO make a real difference in the corporate culture?

Speaking from many years working well below the CEO level in American big business, I'll say he does.  I've always argued that the tone in any organization comes from the top.  What the CEO says, and does, and expects, sets the example for the rest of the organization; this form of "trickle down" actually trickles down.  What I heard from my bosses about work expectations was a reflection of what they heard from theirs, and on up the line to the top guy.  When the CEO changes, the expectations change.  The question is, how do they change?

There's an old saying in the tech world:  you can have it good, fast, or cheap - pick two.  BP's disastrous safety record, the worst in the oil industry as reported by ABC News, implies that BP management, starting with CEO Tony Hayward, regularly chose "fast and cheap."  "Good" wasn't on the agenda.  Will Robert Dudley change the corporate culture and move expectations toward "good and cheap" (but not fast) or "good and fast" (but not cheap)??  We'll find out.  If his expectations don't include "good," BP workers will continue to die. 

Yes, the oil spill is terrible, but this company kills people regularly.  Thirteen died in this incident.  Thirty more died in two incidents before this one.  And on it goes; check the ABC News article for the awful details.  I worked in the financial industry, where a focus on "fast and cheap" may have meant that someone would lose money; but nobody died.  In the oil industry, people die when quality and safety aren't on the checklist.  Is Mr. Dudley up to this?  We'll see.


  1. The tone of an organization starts at the top.

    But with an industry which consumes, exploits, extracts--the measure of its behavior is better gauged by the kind of regulation it must deal with. Under Bush, petroleum leases and monitoring were allowed to go slack. Want some immediate confirmation? Check out the pollution releases at the oil plants in the Bay Area between 2001 and 2008--they were given carte blanche.

    BP's behavior is a measure of what the federal regulators allowed. A company like BP will do whatever it can get away with, up to and including paying relatively small fines for countless "little sins". BP ruthlessly ran through a series of cheap possible fixes in the gulf, before it finally committed to doing what it hoped it wouldn't have to spend in the end. It fought every step of the way, while pretending to be "on top of everything" to the media.

    BP's leases in the Western Hemisphere should all be summarily terminated, and put back up for bid to American petroleum corporations; and the new leases should be ironclad with guarantees of fail-safe precautions against this kind of disaster.

    Or--if we have the will--we should simply stop this continental shelf drilling forever. In the long run, the tiny amounts of oil to be extracted won't amount to a hill of beans--the price-breaks which these "alternate sources" will facilitate will only be significant to the corporations, which might hope to make a few hundred millions more, while the actual "difference" at the pump would just be pennies to the consumer. But, what the hell, the Supreme Court says big companies deserve to buy whomever they want, and our Congress-people come relatively cheap. What's a vote cost these days? --very reasonable.

  2. You're perfectly right about the regulatory issues, Curtis. However, while researching this post, I found an article stating that over a multi-year period where BP racked up safety violations literally by the score, Exxon Mobil (subject to the identical regulatory regime) had one safety violation. So it isn't ONLY the regulators.

    I agree with you about what should happen to BP but question whether anyone has the will to make it happen. I definitely question whether anyone has the will to admit that we can't continue to rely on oil, no matter where we drill.