BP Crisis Management, PR Misfires — a Case Study
For $7.8 billion, BP has settled with individuals and businesses in the wake of the 2010 Deepwater Horizon oil rig disaster – the biggest offshore spill in U.S. history. You might recall 11 people died in that disaster.
However, the settlement, which is from a $20 billion trust, more damage claims still have to be settled.
The disaster is a reminder — about every 20 years, there’s a major oil-spill disaster. None has been handled well, PR-wise.
On Jan. 29, 1969, an oil spill involved Union Oil off the coast of Santa Barbara, CA. On March 24, 1989, it was the Exxon Valdez oil spill in Prince William Sound, Alaska. And on April 20, 2010, it was the BP oil spill in the Gulf of Mexico.
Dr. Peter Drucker’s quote, “Arrogance is being proud of ignorance,” obviously was not intended for the most-recent public relations debacle facing BP, but it sure is applicable. The results are a case study for worst-practices in crisis management.
BP inadvertently created a PR situation synonymous with herding cats. It’s had to fight to clear up two quagmires – its oil mess and its tarnished image.
It’s important to understand the need for a comprehensive risk analysis. First impressions demonstrating empathy and competence are vital. It didn’t appear BP was prepared to successfully deal with such a catastrophe. A good old-fashioned SWOT analysis of strengths, weaknesses, opportunities and threats with worst-cases scenarios would have sufficed.
For possible insights into BP’s corporate mindset, a former CEO of Royal Dutch/Shell’s U.S. subsidiary, Shell Oil, has some illuminating realities. In the strategy+business management magazine, CEO John Hofmeister’s article, “Why We Hate the Oil Companies,” explained how some corporate oil CEOs dysfunction. He indicates they earn their reputations for arrogance and blow opportunities to create the right image.
“Retailing fuels is basically a secondary exercise from the oil company’s point of view, a way to get rid of the product it has spent so much time and money producing,” he writes. “This makes the retail side the least valuable part of the business, more often a nuisance than a value creator.”
BP’s “Beyond Petroleum” branding has not helped.
Despite BP’s best efforts, the company was not been front and center of the media. And when it has been in the media, it wasn’t a pretty picture, such as offering $5,000 to potential plaintiffs not to litigate in anticipated lawsuits. Nor has BP been seen as compassionate and aware of their social responsibility. Nor did it appear eager to roll up the proverbial sleeves to work with government to minimize the ecological damage.
In responding to a question about BP’s safety record in an interview with ABC’s George Stephanopoulos, BP CEO Tony Hayward said:
“I think we’ve made enormous strides as a company in the last three or four years with a remorseless focus on safe, reliable operations. Ah, this wasn’t our accident. This was a drilling rig operated by another company. It was their people, their systems, their processes. We are responsible not for the accident but we are responsible for the oil, dealing with it and cleaning the situation up.”
However, here are my recommendations:
- Mr. Hayward should have been mindful of all his operations. In the middle of the disaster recovery efforts soon after his interview on ABC, another negative headline was published: “Washington state fines BP $69K for violations.”
- Mr. Hayward’s initial comment should have been a strong note of empathy regarding the need for due diligence in safety.
BP’s Web site mentioned a only minimal number of advisories per day with links to Twitter and Facebook are insufficient. Why?
This is a war – a war to save the environment, the livelihoods of families depending on fishing and tourism, and the company’s reputation. Where were the pictures of a hardworking CEO, in oil-stained work gear, directing crews like Gen. George Patton in World War II? Where were images of him conferring in teamwork-style with government representatives?
Furthermore, published revelations in this typical headline, “U.S. exempted BP rig from impact study,” looks terrible for BP and a federal agency. The article indicated BP lobbied for an exemption in order to avoid an environmental impact analysis. The waiver was reportedly rubber-stamped by the Minerals Management Service of the Interior Department.
The Obama Administration also deservedly received criticism for its initial tepid handling of the accident, including this commentary: “Government scholar Paul Light calls on Secretary Napolitano to step down.”
To minimize the damage, BP should have immediately accomplished five tasks:
- Issue regular, frequent progress reports
- Control the pictures (even some on the Web site appeared to be canned or generic)
- Transparency
- Display empathy as a concerned corporate entity comprised of authentic people diligently making a good-faith effort to solve the problem
- Stop lobbying for environmental waivers
To be sure, BP would benefit from proven crisis management tips. Further, the oil company would also benefit by using a best-practices checklist for green branding and marketing.
From the Coach’s Corner, here are 19 Tips to Protect Your Core Assets from a Disaster.
“We made too many wrong mistakes.”
-Yogi Berra
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
Are You Using Best-Practices in Human Resources for Growth?
With all the cost-cutting – mainly in layoffs and cutbacks in marketing budgets – it’s obvious many companies have struggled. “Duh,” you’re thinking. Unfortunately, many companies have focused on the wrong priorities.
Cutting costs is vital. But operating efficiently with best-practices in management and marketing should be the top goals.
Where to start? The best way to achieve optimum efficiency is a management-performance audit, development of solutions and implementation of best-practices in management.
So, I was delighted to spot the results of a study by RainmakerThinking, Inc. (www.rainmakerthinking.com). The study is entitled, “Increased supervision and management was the #1 most effective business strategy.”
To cope with the adverse effects from the recession, the study shows companies implemented one or more of three strategies in 2009. They included:
- Cost-cutting
- Other innovations, such as processes of production or delivery
- Improved management
As expected, the companies that implemented all three strategies performed the best. And if none was implemented, the financial performance was dismal.
Here’s what happened when businesses implemented just one of these strategies:
- Cost cutting – “…were the most likely to report that their bottom line financial results (at the level closest to the manager’s control) in 2009 were ‘bad,’ ‘very bad,’ ‘worse than expected,’ or ‘much worse than expected.’”
- Innovation “…other than cost cutting’ did better than those who pursued only cost-cutting, but less than half of these managers reported that results were ‘good,’ ‘very good,’ ‘better than expected, or ‘much better than expected.’”
- Improved management – “more than half reported that results were ‘good,’ ‘very good,’ ‘better than expected,’ or ‘much better than expected.’
Not to be sarcastic, but what really brought a smile for me was seeing the results for those companies that did not improve management.
By not upgrading management, here are the reported consequences:
- “too much time” solving “preventable problems”
- “too much time” solving “small problems that got out of control” “
- “too much time” on “salvaging wasted resources”
- Nearly 50 percent reported their employees appeared “demoralized and worried”
- An unspecified high percentage suffered from “increased turnover among high performers”
My comment: Amen. I’d also add some big-picture strategies for how to improve management.
Here’s a typical client case study:
A public agency was regularly pummeled by negative publicity in the newspapers because of a$250,000 embezzlement by a longtime employee. The agency was worried about its poor image from the embezzlement, not to mention many unhappy ratepayers who were alreadydissatisfied with the agency’s customer service.
Of course, the senior manager was apprehensive about hiring a consultant. But she knew her board of directors was restless. To persuade her to hire my firm, I stressed that she would receive full-service, confidential solutions. She agreed to hire me.
A public relations campaign was deemed insufficient. In just walking through the offices, I sensed an inefficient workplace culture. Fear and negativity were rampant. Embezzlements were likely to reoccur and customer complaints would continue.
Because the agency’s budget was problematic, I suggested focusing on the internal issues and the PR would take care of itself.
The agency adopted my recommendations:
- Assess the extent of issues in human resources.
- Solutions included interviewing each employee with open-ended questions.
- We issued a press release containing empathy toward ratepayers, and reassured the public that steps were being taken to prevent future embezzlements and to improve customer service.
- I designed a comprehensive training program for all workers. Many employees were apprehensive and hostile to management. I told them that my dialogues with them would confidential. However, I would provide senior management with a report on the general status of the training, and whether any employees were un-trainable.
- I trained managers in what the non-exempt staff would be learning. Managers were deficient in soft skills, too. Afterward, I taught them how to be good supervisors. In that way, the managers would be able to reinforce my principles as I trained their employees.
- Once managers were trained in the two modules, I trained the non-exempt staff. Because of the negative attitudes, many workers required mentoring.
- Management reports – I notified management of a popular employee who was not trainable.
Management ignored my warning, and a week later my client received a phone from a uniform vendor. My sheepish client then called me. I was told the vendor complained about the agency’s employee in-question – accusing him of sexually harassing a teenage employee.
While it served as a validation for my firm’s process, it was an urgent problem and we immediately developed a strategy. When informed of the accusation, the agency employee vehemently denied sexually harassing the the vendor’s employee. Instead, he blamed me for the problem. But two hours later, the accused employee abruptly resigned and left the state.
As for the training program, it worked and the agency became a model for efficiency and great customer service. But the No. 1 key is always strong management.
From the Coach’s Corner, you might consider other HR strategies.
