Ethics and Leadership: BP Plc Achieving CSR - Case Study Example

Ethics and Leadership: BP Plc Achieving the Corporate Social Responsibility Executive Summary The Corporate Social Responsibility (CSR), ethical values, integrity and culture have become imperative in recent business operations. People judge a company according to these perspectives in existing business environment. They evaluate the company not only on the basis of financial performance and position but also in these parameters. In order to analyse and observe the significance of cultural as well as ethical contingencies related to leadership, BP Plc has been considered. The study will provide a view about BP Plc’s CSR, values, ethics, ethical leadership, their implemented methods of training the members of staffs with ethical values and culture. Subsequently, discussion of attracting the right staff members towards the BP Plc and certain recommendations will be provided. Table of Contents Ethics and Leadership: BP Plc Achieving the Corporate Social Responsibility 1 Executive Summary 1 Introduction 3 Aims / Objectives 3 The Challenges BP Plc Face in Trying to Achieve CSR 5 Ensuring Members of Staff are Being Trained in the Rigours of Ethical Leadership 9 Attracting the Right Staff Members to Work for BP Plc in the First Place 15 Conclusion & Recommendation 19 References 20 Bibliography 25 Introduction In the year 1908, the company BP Plc had discovered the oil fields in the parts of Persia and since then onwards the company started to grow though it has also faced several challenges during the phase of development till now (BP PLC, 2011). BP Plc has numerous pipelines with oil and gases that are being traded in the global market. In the year 2000, the brand was represented through the ‘green, yellow and white sunburst’, symbolising energy in all its dynamic forms. The company BP Plc is a UK based and it was registered as British Petroleum Company PLC just before January 1999 (BP PLC, 2011). Aims / Objectives The study will focus upon the BP Plc’s challenges that they face while trying to achieve corporate social responsibilities (CSR). CSR is provided significant importance in recent times and are also observed by customers, stakeholders and governments. The focus of the study is also upon finding out whether the organisation ensures members of staff are trained in the rigours of ethical leadership. Furthermore, the methods by which BP Plc finds the apt way to attract the right staff members to work for the organisation, in the first place will be evaluated. Cultural and ethical contingencies of leadership will be part of the study in analysing the BP Plc’s approach in achieving the objectives. The Challenges BP Plc Face in Trying to Achieve CSR CSR has become progressively more significant activity to the business that are nationally or internationally operating. As there is growth in the globalisation, several corporations serving globally such as BP Plc have increasingly identified the potential benefits of the CSR program worldwide (ASOCIO, 2004). In the matter of CSR, the oil and gas has been one of the leading industries. This industry has showed its leadership quality towards the CSR in different ways. In the earlier periods too, the industry of oil and gas had shown leadership quality in providing importance towards the social and environment impact with the local community. However, due to such culture the industry has been able to lead globally. BP Plc has become the important player in the category of renewable energy and has been continuously fighting with the carbon dioxide emission to minimise its affect upon globalisation (Frynas, 2007). The challenge that BP Plc face during recent times is related to the boundaries of CSR. The Chairman and Group Senior Advisor of BP Plc states that, the boundaries towards the CSR are abstract and the major responsibility of the company is towards the owners and shareholders (BP PLC, 2011). There has been misalignment in the objectives of the BP Plc between the owners and the stockholders. The alignment of the CSR with the business operations is important otherwise the implementation of the CSR will not be effective (Lukin, 2011). The boundaries of the CSR are ideological according to BP. They believe that BP is not a government organisation; it is not been elected and do not follow ‘accepted mandates’. They should not mislead or confuse the role of others with the BP Plc (BP PLC, 2011). The management believes that the boundaries of the BP Plc are practical and company has limited expertise, limited reach and limited resources. They are also bounded by limitations. Up to a certain extent they can assist the CSR program globally. The limited resource and capacity in nature is the biggest challenge of BP Plc (BP PLC, 2011). The other challenge is the shareholders interest that BP Plc faces. The shareholders interests influence the management decisions to a great extent. It is not possible that all the shareholders’ interests will be towards the CSR policy in a positive direction. There are conflicts in the interest that affect the CSR policy of BP Plc. According to the BP Plc management the CSR boundaries are highly affected by the self-interest groups. They stated that “business thrives if the society in which it operates thrives. To neglect this is to put at risk the interests of our shareholders” (BP PLC, 2011). The challenge that is faced is the changing environment of the CSR globally. Viewing the previous year’s history, the BP Plc CSR was towards the entire local community of Iran, when the CSR was meant for philanthropy. Subsequently, the CSR shifted towards the business-in-the-community stimulating enterprises such as training and many more related activities. Nevertheless, the CSR is now more focused upon the corporate values, policies, corporate ethics and corporate behaviour. The challenge is in identifying the changing CSR towards the society, business and community. The changes of CSR force the BP Plc to alter its management policies and financing policy towards CSR. This is a great challenge in identifying and rectifying the CSR policies to provide benefit to the global society. The fast developments of the CSR towards the society have made it difficult for the BP Plc to implement an efficient and effective CSR policy (BP PLC, 2011). Even though the CSR and the ethical values of the firm are interrelated, the activities of CSR do not guarantee the ethical behaviour of the firm. It becomes difficult for the BP Plc to incorporate values to make it part of an articulated belief system. The cultural context has high influence upon the organisational ethics. This can assist in formulating the effective CSR policy but engaging the shareholders is the biggest challenge. The culture and value that the shareholders hold in the BP Plc business operations affect the CSR policy. Even the culture and ethical value have the ability to influence the CSR, but they are highly subjected to shareholders ethics and values towards the BP Plc culture. The ethical values differ from region to region or it is different in different countries. For the domestic operation the company and the region share the common believes and ethics and there is no problem in implementing better CSR policy. The problem is when the CSR policy is made for the other regions. The assumptions made while drafting the CSR policy in domestic region does not work in another region as the ethical absolutism and relativism are different (SAGE Publications, 2011). The BP Plc is in the energy industry as well. They try to offer energy to the population globally. The problem is that there are more than 2 billion people in the world who does not have the facility of energy. The challenge of the BP Plc is not only to provide the energy facility to these people but to the expected population also which will increase by 50% to 60% in the next fifty years. To develop the energy facility by the BP Plc towards the society is the biggest challenge. BP Plc’s CSR policy is to balance the ecological condition of the planet through their policy of reducing the adverse gas effect and energy saving. The social development rests upon the economic improvement which in turn depends upon the prerequisite of energy. The challenge the BP Plc faces is to offer extra energy as the population grows. However, in offering so there is another challenge in violating the other CSR policies as this will lead to jeopardise the future growth through unbalancing the planets ecological system (BP PLC, 2011). In the earlier periods of the BP Plc growth, the company had received the ‘negative attention towards CSR’ by various NGOs and governments in comparison to Shell and Total FinaElf. However, in the recent years BP Plc has been recognised as a positive contributor towards the CSR. This was recognised by the NGOs and other officials working for CSR in the way the company had showed through leadership and acting as a channel for alteration in the oil industry as a whole (Christiansen, 2002). BP Plc, through their business operations in Colombia, raised the questions of human rights issue. There were lot of debates upon the CSR of BP Plc regarding the human rights policies in Colombia. BP Plc had to face lots of challenges in the human rights issues due to its operation in Colombia. The business operation of BP Plc in Angola was also an issue of CSR practice related to corruption and transparency. The issue of ethical practice and the values of BP Plc seemed doubtful. BP Plc had to face lot of challenges in this particular issue in reflecting a better CSR policy of the company towards the region of Africa. There were problems in establishing CSR policy because the issue of acquisition in the Petro-China related to the human rights were again raised. There have always been problems in the establishment of CSR policy by the company due to its controversial issues in its business operations in various regions of the world (Christiansen, 2002). For these reasons, BP Plc has put great efforts upon emphasising the communication towards the public for the purpose of international CSR agenda. The company had spent more than £135 million for the public relationship program in its efforts to highlight the international CSR policy of the BP Plc. Yet there are problems in developing and communicating the CSR policy and implementing them at different regions. Although BP Plc had spent huge amount of money towards the public relationship in communicating the CSR policy, the previous cases and controversies have always been around and have created a negative impact on the people about BP Plc (Christiansen, 2002). Ensuring Members of Staff are Being Trained in the Rigours of Ethical Leadership The crisis of ethics in the corporate culture demands for ethical leadership. Several corporations believe that the ethical leader is simple with values, integrities and ethics. However, it is actually complex and the stakes are much higher. The ethical leadership considers the leaders as well as his constituents such as major and important shareholders, followers, situations that leaders face, context, leaders skills and processes and the consequences. Ethical leaders represent the vision, integrity, values and intentions of the organisation within the understanding of ethical ideas (Freeman & Stewart, 2006). The BP Plc can ensure that members of staff are trained in the rigours of ethical leadership through the discussion that are presented below in a systematic manner. Articulate and Embody the Purpose and Value of BP PLC Generally the leaders communicate a story that is morally rich and compelling with integrity. However, to ensure the members of staff are trained in the rigours of ethical leadership, the ethical leaders along with these stories should represent and ‘live the story’. This has been a challenging task in the modern corporate culture. CEOs are the real role model in representing the ethical role towards the society (Freeman & Stewart, 2006). Focus upon Organisational Success Rather Than on Personal Ego The ethical leaders within the stakeholders and the large network of constituents of BP can understand the place and communicate better and educate others. The ethical leaders identify the values that are necessary for the success of organisation through the personnel with integrity. There are certain activities of the ethical leader that encourage others to contribute towards the CSR policy and show ethical behaviour towards the society. The ethical leaders will motivate and encourage others to focus upon BP’s success rather than think about their personal ego. This will assist in ensuring the appropriate training facility for the staffs towards ethics and values as well as develop the culture of ethical practice (Freeman & Stewart, 2006). Finding Out the Right People and Developing Them This approach by the ethical leaders assists them in developing the right kind of staff in the organisation that ensures the culture, value and ethics of the BP Plc. The ethical leaders focus especially upon finding the right person and then developing them because they view it from the perspective of moral imperative culture in BP Plc. Recruiting the right person takes ethics and characters into consideration in the process of selection. The right kind of staff will be easily motivated and highly influenced in being trained for the ethical development and functioning of BP Plc globally (Freeman & Stewart, 2006). Developing an Existing Conversation about Ethics and Value That Creates Value for the Stakeholders The concept of ‘compliance approach to ethics’ will solve the ethical problems that had been a misconception, which is evident from the Enron case. Ethical leaders make conversation related to ethics and values in organisation in order to ensure that the staffs are being properly trained. When the ethical leaders of BP Plc will start to communicate the ethical values that generate value to the stakeholders, it is at that time the staffs will gain from the training and integration will be maintained among them. The culture needs to be developed by the ethical leader and should ensure that the communication process of ethics and values are strictly communicated within BP Plc and its effect is seen in BP and towards the society. This approach will assist in developing the knowledge of the staffs about the purposes to stay with BP Plc and will inspire them. The communication process of the ethics and values will ensure the ethical leadership quality (Freeman & Stewart, 2006). Creating Mechanism of Dissent There are several executives who do not realise the power of them by virtue of their position in the organisation. They obey what they perceive most of the times. To ensure the effective training of the staffs, the ethical leaders should develop the culture that will influence the executive’s decisions in an ethical manner and maintain the value of BP. This is possible if BP takes seriously the values and develops the implementation through the ethical leaders. This will help the BP to maintain the ethics and value of BP Plc in practice. The process of developing these ‘mechanism of dissent’ will vary from leaders to leaders within the BP Plc. The UK BP’s approach of ethical leadership and culture are different from the business of BP in the US. The alignment of the culture and ethical practice through the ethical leaders are quite difficult and it is a crucial leadership assignment for ethical value creation in recent business world (Freeman & Stewart, 2006). Taking a Charitable Understanding of other’s Value The ethical leaders of BP can understand the ethical values of others and assist in identifying the different choices that people make. The charitable understanding approach of the ethical leaders develops the knowledge of understanding the staffs appropriately and the training methods and processes that best suit them in developing the ethical practice as well as values and culture. This approach provides the ethical leaders with the view of the staffs lacking ability and knowledge that helps them in developing that particular skill and knowledge towards the ethical practice, value and maintaining culture. The approach of charitable understanding will ensure the members of staff of being trained effectively towards the ethics, values and culture (Freeman & Stewart, 2006). Knowledge about the Limits of Values and Ethical Principles the Employees Live There are certain limitation in implementation of ethical practice and values. They do not work in certain environment and society, which need to be identified along with its implementation in recent global complex business environment. There are conflicts and differences in values, believes, culture and ethics of individuals. The ethical leaders of BP with an attitude of humanity, openness to learning, and commitment towards principles, ethics and values assist in ensuring the effective training of the staffs. The boundaries of the ethics and values can be identified and then according to the environment setting the ethical leaders can provide better ethical program and train them to face the rough conditions of the business (Freeman & Stewart, 2006). Framing Actions in Ethical Terms The ethical leaders view their leadership as an ethical task that needs to be implemented efficiently in organisation. This involvement develops the program seriously that assists the employees to get appropriate right training in the rigorous business conditions. These leaders take responsibility through their moral judgement. It is easy for them to frame the actions of ethical conditions and can be perceived as well. However, the challenge is that the ethical context are perceived as global principles in different ways that make the framing of actions related to ethics more complicated in implementation (Freeman & Stewart, 2006). The Following Needs to Be Adhered to for Effective Practice of Ethical Practice with Values and Culture The code of ethics that are developed should be appropriately evaluated by the ethical leader in implementing the training program of the staffs to ensure that the outcomes are positive (NonProfitPanel, 2007). For the effective practice workplace, integrity should be maintained in BP that will include ethical leadership and right people. This increases the efficiency of training program (OPI, 2009). According to BP Plc “Our code of conduct, which applies to all employees, defines our commitment to integrity, compliance with all applicable legal requirements, high ethical standards and the behaviours and actions we expect of our businesses and people wherever we operate” (BP PLC, 2010). The human rights need to be addressed appropriately to ensure that the ethical practice view the code of human rights according to different business locations (Harker, 2003). Shareholders and customers are the important aspects of BP; if the performance is poor in terms of ethics then there are problems that might affect the shareholders and customers (Hurst, 2004). The ethical leadership promotes the ethical practice and leadership through different tools and techniques such as educating, delivering training secessions and other techniques (University of Texas, 2000). Attracting the Right Staff Members to Work for BP Plc in the First Place The BP is organised mainly into two divisions. These are exploration and production as well as refining and marketing along with other businesses that include the alternative energy. These segments are attractive for the persons searching for these kinds of jobs. To make it more attractive for the right person the structure are well developed with 30 strategic performance units along with specialist support functions that include safety and operations, human resources, information technology and services and finance (BP PLC, 2010). According to BP PLC, “there has been decrease in the professionals such as petroleum engineers and the number of experienced workers retiring is expected to exceed that of new graduate hires” (BP PLC, 2010). Attracting Talent People BP should attract graduates from different technical disciplines and experienced professionals from different industries and energy industries. Graduates are interested in working with big multinational corporations. BP should take the advantage in offering them jobs. Through the internship and scholarship programs, it will offer the BP to create an understanding of the business and its potential in career development. This will encourage and attract them to work for BP Plc. Along with the UK; BP should offer this facility to the US and other regions where there are potential skilful and knowledgeable persons. This procedure will attract many science, engineering, technology and mathematic graduates with other stream graduates from different universities. Attract Through Talent and Succession Plan There are gaps in succession and talent plan. Thus, BP should examine the business capabilities and conduct annual talent and succession plan to deal with any kind of gaps. This strategy will assist in identifying the potential people who are capable of being promoted to senior position and create ‘developmental plans’ for them. This way the employees of BP will remain loyal to the organisation. Identifying the Future Leaders and Maintaining this Culture The people with potential to become the senior personnel, who can lead should be identified. This approach needs to be well communicated in the business world. The culture of identification of potential leaders within the organization gives rise to attract other people and personnel of different organisations to join BP Plc. Partnering with Universities BP Plc should share positive relationship with the universities around the world. They should be in partnership with the universities for the recruitment of new skilful persons in the company. This will increase the scope of recruitment from different places and acquire personnel possessing diverse skills. BP should encourage the students to visit their working place in order to acquire the knowledge about the company’s operations, working culture and many other aspects that will attract them to work with BP Plc. Conclusion & Recommendation In the present business environment, CSR, ethical practice and values are extremely important. BP Plc management should respect the ethical principles that support empowerment of individuals to make choices based upon their values (Macer & Poeth, 2007). The CSR implementation in effective way will not only provide a good image of the company but will also assist in acquiring the right, skilful and knowledgeable persons. To overcome the challenges in CSR, there is a need for better leadership in the organisation. The ethical leadership can guide to implement a better CSR and assist in overcoming the challenges of CSR implementation in changing business environment. CSR, quality ethical leaders with adequate attractive recruitment policy will assist the BP Plc to develop and provide better facilities towards the society. BP Plc should develop the standards for the CSR policies and its achievements. The achievements should be evaluated with the policies to derive maximum benefit and the gaps can be bridged through development programs. The ethical CSR if implemented with proper ethical leaders’ guidance then it will strengthen the relationship between the society and the business (Smith & Nystad, 2006). References ASOCIO, 2004. 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