Ethics and Governance Relating to BP - Essay Example

Year of Study/Semester: Submitted; Task One a) Issues to deal with compliance to set standards in any area of operation are indeed of paramount importance. The issue of non-compliance to the public health and safety standards by the British petroleum company seems to be an issue that needed to be urgently addressed. Business entities that fail to observe set safety regulations may be doing so on the basis of egoistic leanings (Campbell and Tom 2005, p. 551). This is a clear pointer to the total disregard to ethics, an issue that negatively affects the governance role. It is upon the above consideration that the Safety and Hazard Board chose to carry out an investigation through auditing the safety standards of BP. This audit was called upon after an incident related to BP that led to a fire that took the lives of 15 and harmed 150 people. With reference to the report, the BP was embroiled in cost cutting measures for years. This in turn predisposed the company to catastrophes of this nature. The management of the BP group was the major actor, and the workers, the minor actors. When events of this magnitude (fire tragedy) occur, it becomes the onus of the company to try and polish their image (Mortisheadfsed, 2005, p. 8) b) On the basis of the British petroleum case, there emerge a plethora of consequences that need to be examined. As is the case, companies thrive on good public image. After the tragedy, it was necessary to support an audit into the safety standards and subsequently implement the recommendations. As such, the safety standards were bound to improve considerably. Through the incorporation of such measures, the industry as a whole would thus move towards adopting similar approaches. On this basis, the ethical and governance aspect would get a huge reinforcement. Another consequence could be the harm that the fire tragedy puts on the company. BP was an industry leader and a crisis of this kind was bound to compromise its leadership status in the market. The CSB report released its view on the company indicating that the company was profit oriented as opposed to the ethics and governance aspects. This is a misguided approach that would affect both the government and the public view on the company. On the process, the company directly jeopardises its market position. This shows the net effect of failing to respond to issues that directly impact on business. Task Two The top management of BP is the most culpable of all the actors concerned. It has been found that audit recommendations have not been accounted for. The audit report that arose from the Texas refinery was never implemented as expected. From the report findings, the Texas refinery had failed to meet the minimum required safety standards. For example, the refinery did not have a framework on safety training and maintenance. On this basis, there were red alerts on an impending danger. An additional aspect of culpability comes in the sense that the company had failed to act at an appropriate time. The profit focus may explain why the company ignored the plight of the workers. The above happenings indicate the culpability on the part of the BP management while other actor like the OSHA should also be apportioned part of the blame. The BP and other companies in the industry had collectively failed to come up with a clear policy guideline on safety, but this was so because the OSHA had failed in the above responsibility of offering the same. Harding’s report has also questioned the appropriateness of the claimed investment of one billion US dollars at the Texas plant. This clearly puts the company on the spot in as regards the ethics and governance aspects. The top management of BP had clearly promoted the profit agenda with little regard to the ethics requirement. On the basis of this, I discern that the company management was centred on egoism as the worker interests were secondary to the company’s drive to make profits. In the front, the company did not act on the reports it had at its disposal to improve the working conditions. The OSHA’s inability to offer a comprehensive guide is also put into perspective. It simply abdicated its responsibility and should be held liable. It equally offered a leeway for anti-ethical activities to blossom. I thus find the decision by Mr. Baker to publicly smear the company for failing to meet the safety standards, a commendable act. In his report, the BP was put on the spot for its shortcomings in respect to a breakdown on management-worker relations (Warburton, 2004, p. 37-40). The other issue that emerged was the inadequate allocation of resources to worthy ventures like safety. The company was also questioned for its inaction despite the fact that it was in possession of vital information. Task Three The egoistic approach to issues adopted by the Marks and Spencer group can be a cause for concern. Egoistic tendencies can adversely impact on the ethical aspect of business. The major concern for egoistic people is to reap the benefits of the others’ sweat (Lefkowitz, 2006, p. 95). The aspect of the consequences that may affect the workers is never considered by the management. In respect to this, the management ignores the basic entitlements and deontological theorisation. The Marks and Spencer group took a very ill-advised decision by appointing Sir. Stuart Rose, the overall Chief Executive. This was done by excluding the input of the company’s largest shareholder; L & G. This was captured in the sense that the shareholder was never given adequate time to make their mind. The company interests are hence seen to have taken over the interests of individual members of the company. From this review, the shareholder in question was not given a fair chance as envisaged by the deontological theories. With regard to the above position, the principle of procedural justice appears to have been stepped on. In relation to the deontological demands of the theory, every concerned party must be given a fair chance to exercise their mandate. The selection of people into office should also be based on the free flow of information on the basis of fairness. Failure to provide the necessary fair conditions shows why the ethical considerations of the company should be questioned. The stakeholders premise is also questioned at this stage as all stakeholders have the right to be furnished with all company information within a reasonable time frame. To sum up this, the appointment of Stuart Rose was inconsistent with the requirements of transparency and contemptuous to the legal and general requirements (Tarico, 2007, p. 37). On the basis of the Kantian principle, Marks and Spencer may score highly. The Chief Executive in the name of Rose was a highly qualified figure. In a sense, it is worthwhile to improve the company’s fortunes as opposed to individual gain. The utility principle lends credence to this position by stating that hurting few individuals for the common good is acceptable. On the ethics front, to hurt an individual for the good of a majority is also welcome. But an overriding question here becomes, who determines the common good? At times the common good can be taken as an excuse to exclude other people (Singer, 2001, p. 87). Task four The egoistic approach to issues may be traced to have been behind the hurried execution of activities at the Marks and Spencer Company. This was clearly captured by Lord Burns, the outgoing chairman of the group. Mr. Burns actually felt his action not to allow for sufficient time in order to consult was justified. Mr. Burns’ preparation of a successor without any form of consideration further shows his contempt of procedure (Heather, 2001, p. 125). On a personal scale, I believe that Mr. Burns was focused on getting his preferred person in office. An action of this kind clearly exemplifies the abuse of the ethical aspect of duty. All stakeholders have a right to know the on goings in a company (Hawkes, et.al, 2008, p. 6). The attempt by the chairman to insist that the case was an exception, simply fails to add up to anything. His decision faced great opposition from the rest of the stakeholders and The Legal General. Peter Montanan, on behalf of the Association of British Insurers, also voiced similar sentiments. He singularly pointed to the abuse of procedural justice as the cause of the association’s concerns. Susanna Rust, a research executive at Pirc, has also echoed the same sentiments. She argued that this was a direct violation of governance and ethics standards (Fort, 2001, p. 4). Mr. Stuart also takes the earlier position that was taken by the chairman in an attempt to justify his appointment. By claiming that nobody has forced his appointment as the chairman, it shows that Mr. Stuart holds little regard for procedure, ethics and governance requirements. He further crucifies his sense of ethics by claiming that his appointment was on the basis of the board consensus. Owing to the fact that his appointment was one unilateral decision by the chairman, it beggars belief that a man of his standing does not play by the ethics and governance principles (Harry and Gensler, 2009, p. 136). The realisation that the chairman was an egoist is also reflected in his protégé, Mr. Stuart Rose. His interest was to secure the job regardless of what the other concerned parties felt. Mr. Stuart also goes on to defend his poor performance on the stock market despite the fact that the company was losing ground. This clearly depicts Mr. Stuart as an individual deeply riddled in the utopian enclaves (Windsor, 2009, p. 309). Task Five The use of these rules has a bearing on the kind of ethics that a society seeks to uphold. At times cases of abuse, disregard and total disconnection with the ethics has been reported. Like in the case of BP, there was disregard of rules. In reference to the BP case, it is paramount to institute changes into the structure of the company so as not to continue compromising on the ethical aspect of work. The regulatory agency in the environment also needs to wake up and institute changes so that they provide a wider policy guideline to check the governance and ethics issue in relation to work execution. As an example, the regulation agency should impose a safety kit to serve the interests of workers’ safety (Davies 2004, p. 10). Through the use of these funds, the companies can develop reasonable safety facilities. In deciding the company contribution towards the kit, the working formula should be on the basis of the budgetary levels of the companies in the whole industry. In this regard, the companies are forced to divert focus from the profit motif to human life consideration. The use of appropriate facilities at the work place should equally be addressed. The employer-employee relationship would also be looked into so that the interests of the two parties are taken care of. As suggested above, OSHA, the regulatory agency has this primary responsibility to respond to in the most possible appropriate ways. If rules are to be effective, then OSHA should put in place stiff penalties for all those companies that fail to meet set requirements (Paavola, 2007, p. 98). On the basis of Marks and Spencer, there is a necessity to avoid disregard for set procedures of operation. In the making of appointments, companies in the same league as Marks and Spencer, need to develop a clear structure that shows the procedure to be followed when it comes to important issues. The top management must change and be responsible by observing the rules and requirements. The shareholders as major players need to understand their rights and demand them every time it is necessary. The government also has a major role to play, that concerns the development of a code of conduct to rein in on activities of such companies. And finally, the concept of sound management rests on the strength of virtues. In order to achieve success, it is worthy to place emphasis on their development (Graham, 2007, p. 172). References Campbell, D and Tom, C 2005, ‘’Corporate governance and Business Ethics.’’ Journal Organizations and the Business Environment. Pp. 546-560. Davies, A 2004, Best practice in corporate governance: building reputation and sustainable success, Gower Publishing, Ltd, pp, 10, viewed: 15/12/2009, http://books.google.co.ke/books?id=23sdpmOPsnEC&dq=GOVERNANCE+AND+ETHICS Fort, T 2001, Ethics and governance: business as mediating institution: Ruffin series in business ethics, Oxford University Press US, pp, 4, viewed: 15/12/2009, http://books.google.co.ke/books?id=89Ar4IV4ylIC&dq=GOVERNANCE+A Harry, J. & Gensler, W 2004, Ethics: Contemporary Readings. Great Britain. Rout ledge press, Pp 136, viewed, 15/12/2009, http://books.google.co.ke/books?id=fnbtxGXu39sC&printsec=frontcover Hawkes, S et.al 2008, They have an opinion. We have got an opinion. We won. End of story. The Times and Sunday Times. Heather, D. 2001, Blood, Bones and Spirit: Aboriginal Christianity in an East Kimberley Town, Carlton South. University of Melbourne Press, Pp 125, viewed, 15/12/2009, http://209.85.229.132/search?q=cache:ZW7KuNxD2mIJ:cps Hoye, R and Graham, C. 2007, Team Rules: Ethics and Principles of Good governance. Journal of Sports Management. Pp. 166-182. Lefkowitz, J., 2006. ‘’The constancy of Ethics amidst the changing world of work.’ Human Resource management Review, 16(2), pp. 245-268. Mortishead, C. 2005. ‘’Bank the Savings!’’: A case study on Externalities about the two Reports into a disaster at BP Texas City Refinery in the U.S.A. The Times. Paavola, J., 2007, ‘’Institutions and Environmental governance: A reconcpetualization. Journal of Ecological Economics, 63(1), pp. 93-103. Singer, P 2001, A companion to ethics. Chicago. University of Chicago press, Pg 87, viewed, 15/12/2009, http://books.google.co.ke/books?id=17i10ZZu8O4C&pg=PR2&dq=Singer, Tarico, V 2007, The Dark Side: How Evangelical Teachings Corrupt Love and Truth. S. I. Lulu.com publisher, Pp 37, viewed, 15/12/2009, http://books.google.co.ke/books?id=DLnYtsfZtegC&printsec=frontcover& Warburton, N 2004, Philosophy: The Basics. Great Britain. Rout ledge Press, Pp 39 & 41, viewed, 15/12/2009, http://books.google.co.ke/books?id=X0eEbR2-Xt4C&pg=PA187&dq=Warburton,+N.+Philosophy:+The+Basics Windsor, D., 2009,’Tightening Corporate governance.’’ Journal of International Management. 15(3), pp. 306-316. Read More