Leadership Lacking in BP Oil Spill Crisis - Report Example

BP OIL SPILL The management of accidents in oil drillings has been a major issue for corporate managers in firms operating in the particular sector. Commonly, a series of measures are developed for ensuring that the chances for such accidents are minimized. Also, alternative plans of action are usually prepared so that the effective handling of such crises to be guaranteed, as possible. In the case of the oil spill in Gulf of Mexico the above terms were not met. In April 20 2010, an explosion took place in the oil drilling of BP in the Gulf of Mexico (Edwards 2010). About 11 people were immediately killed while many others were injured (Edwards 2010). The flow of oil that followed has caused severe environmental damages (Edwards 2010). In fact the company delayed in controlling the flow of oil, a fact that was used as the basis for the legal proceedings that followed (Edwards 2010). Another point at which the firm was found responsible was the following one: even if the flow of oil would have been controlled in its beginning, the firm’s workers failed in proceeding to the relevant process (Edwards 2010). The lack of training of employees for managing such accidents, as revealed through the accident in the case of Mexico, has been another argument used for justifying the allegations against the company in regard to the specific accident. A strong criticism has been made in regard to the ways in which the crisis was handled. According to Owen (2012) the response of the firm’s CEO to the crisis can be characterized as quite inappropriate. For example, in the 14th of May 2010, the firm’s CEO stated that the oil spill could be considered as not of major importance if taking into consideration the size of the oil spill and the size of the ocean (Owen 2012). In the 18th of May 2010, the CEO also noted that ‘the damage is very modest’ (Owen 2012). The above statements reveal a clear misunderstanding of the problem caused. At the same time it shows that the firm’s top management team has not adequately reviewed the causes of the crisis, probably underestimating the environmental damages that could follow. Moreover, the above statements show the lack of willingness for taking immediate action so that the problem is effectively controlled early. An issue of insensitivity would appear in regard to the above accident, if considering the statement of the firm’s CEO in June 4th, that ‘I’m a Brit, I can take it’ (Owen 2012). Questions should be also developed as to if the leader’s actions for handling the particular crisis have been the appropriate ones. The statements presented above show that the firm’s leader has not been appropriately informed on the accident since the first moment; neither there was an intention by his side for getting involved in the case with no delay. According to Bindra (2010) the important leadership mistakes related to the specific crisis have been the following ones: a) in the first place, the firm’s CEO underestimated the accident, making statements that indicated his lack of awareness in regard to the accident; in addition, the firm’s CEO has showed from the first instance that he would like to avoid the firm’s exposure and for this reason he hasn’t ordered the involvement of all the firm’s available resources in the management of the crisis, b) the firm’s CEO has showed that he has not sympathy for the victims of the accident or the people who are negatively affected by the oil spill; and c) the firm’s CEO tried to accuse the contractor for the accident denying the responsibility of his firm for the development of the accident and the expansion of the crisis (Bindra 2010). In regard to the oil spill in the Gulf of Mexico concerns have been stated as to whether the firm would use alternative methods for handling the crisis. From the moment that the accident took place, there was just one option to the firm. To ensure that the damage is effectively controlled before the oil is expanded at an extremely wide area (CNN News 2010). The above target was not achieved since the damage on the firm’s infrastructure was more severe than initially estimated (CNN News 2010). As a result the efforts to control the expansion of the oil were proved particularly challenging (CCN News 2010). At the next level, the firm was asked to use appropriate dispersants, so that the damages on the environment are not increased since these chemicals can also cause environmental damages (CNN News 2010). The alternative use of nuclear energy for controlling the damages caused by the oil spill was also reviewed by the firm’s managers (Edwards 2012). The particular method was not finally used in the specific case, even if it had been tested successfully in other similar accidents (Edwards 2012). At this point, the following issue should be made clear. Were ethics respected by the organization? In a form that the firm submitted to ‘the US Minerals Management Service in 2008’ (Fitzgerald 2010), the firm was able to handle an oil spill 10 times bigger than the one actually caused in the Gulf of Mexico (Fitzgerald 2010). In practice, the above statements were proved not fully justified (Fitzgerald 2010). Instead, it was revealed that the company has underestimated the risks involved in the particular project, especially in regard to the environmental effects of a potential accident (Fitzgerald 2010). Moreover, through the oil spill in Gulf of Mexico it was made clear that the company has not aligned its practices with ethics, otherwise it would not give promises that would be opposite to the firm’s actual potentials to manage such crises. The effects of the accident on company have been significant. Because the oil spill has excluded coastal residents from a series of economic activities, the firm has been asked to provide appropriate compensation. According to Johnson and Brubaker (2012) coastal residents in the greater region of the Gulf of Mexico have suffered losses in regard to their businesses, related to tourism, food industry, the oyster trade and so on (Johnson and Brubaker 2012). In November of 2012 the firm has accepted to pay a sum of about $4.5 billion as compensation to those who suffered financial losses or those who suffered human losses from the particular accident (The New York Times 2012). Moreover, a temporary exclusion of BP from federal contracts has been ordered by the court (The New York Times 2012). In other words, the firm has suffered a major damage in the form of compensation payable to those affected by the accident. Also, the firm’s financial stability in the future is threatened as a result of the exclusion of the firm from federal contracts, even for a short period of time (The New York Times 2012). The exact effects of the accident on the firm’s operations will be clearer in the years that follow. An important issue in regard to the BP oil spill has been the involvement of social media, as a means of communication. In general, in the case of the particular accident severe communication problems were reported (EastWest 2012). Apart from the failures in informing on time the stakeholders, top managers in BP failed in employing appropriate communication tools for responding quicker and more effectively to the particular crisis. Moreover, in the above crisis, media has been used not only for informing the public for the progress made on the management of the crisis but also for alternating the level of the firm’s responsibility (Freeman 2012). From this point of view, the role of communication and of media in the particular accident has been considered as critical. The management of the crisis in the Gulf of Mexico, as resulted from the explosion in the oil drilling of BP in the particular area, has been proved to be extremely problematic not only in terms of the quality of the machinery used but also in terms of the readiness of employees to handle such accidents. In addition, the decisions of the firm’s leaders in regard to the management of the crisis have been considered as inappropriate, promoting personal and corporate interests rather than the public interest. In practice, it could be stated that the accident in the oil drilling of BP in the Gulf of Mexico has been primarily the result of leadership failures, as related to failures of processes and infrastructure, such as the IT systems involved in the particular project (Krigsman 2010). The final settlement between the firm and those affected by the accident cannot limit the effects of the accident but it can just offer a financial relief for covering economic damages related to the particular event. The key lesson of the particular crisis has been the following one: the assignment of critical projects to multinational corporations would be based on a series of criteria. Documents, such as the firm’s oil response form, cannot be the only basis for securing the effective control of risks related to such activities. More effective measures should be developed, such as continuous and extensive inspections on the relevant sites, so that the chances for the development of such accidents are eliminated. Works Cited Bindra, Sunny. “Leadership lacking in BP oil spill crisis.” THE CITIZEN. 12 July 2010. Web. 12 December 2012. . “BP wont change dispersant used in oil spill -- for now.” CNN News. 22 May 2010. Web. 12 December 2012. . Edwards, Tim. “Deepwater oil spill: will BP take nuclear option?” THE WEEK. 5 May 2010. Web. 12 December 2012. . Fitzgerald, Alison. “BP Had Prepared for Oil Spill 10 Times Gulf Disaster, Permit Plans Say.” Bloomberg. 31 May 2010. Web. 12 December 2012. . Freeman, Emily. “BP, the Gulf Oil spill and the business media.” College Biz Journalism Organization. 2012. Web. 12 December 2012. . Johnson, Allen, and Brubaker, Laurel. “BP Spill Victims Still Feel Economic Impact as Trial Nears.” Bloomberg Business Week. 24 February 2012. Web. 12 December 2012. . Krigsman, Michael. “BP oil spill: Leadership and IT failure.” ZD NET. 11 June 2010. Web. 12 December 2012. . Owen, Jo. “BP Oil Spill Crisis Management: How Not to Do it.” CBS News. 11 June 2010. Web. 12 December 2012. . “Settlement on Spill.” The New York Times. 29 November 2012. Web. 12 December 2012. . “Social Media Crisis Management: The BP Oil Spill.” EastWest 26 June 2012. Web. 12 December 2012. < http://www.eastwestpr.com/2012/06/social-media-crisis-management-the-bp-oil-spill/>. Read More