Friday, November 12, 2010

Time for BP's Hayward to Fade Away

So now he’s back.

Tony Hayward, former disgraced BP chief, agreed to be interviewed for a BBC2 documentary that aired on Nov. 9. And to think we thought we had heard the last of one of the biggest corporate punching bags in the past 20 years.

Check out these gems from his first major interview since the Gulf debacle: “…I’d have done better with an acting degree.” “You know it’s difficult to hate a company, it’s much easier to hate an individual.” “…the company’s contingency plans were inadequate and we were making it up day-to-day.” “BP was not prepared to deal with the intensity of the media scrutiny it faced.”

These fresh quotes from the man who botched Crisis Management 101 with earlier comments like: “I want my life back” and “The amount of oil which leaked into the Gulf was relatively tiny compared with the very big ocean.”

Maybe it was the relative comfort of speaking to a London journalist that prompted Hayward to get back into the fray. After all, he was demonized and vilified in the United States and abroad until he resigned back in July. So why speak to any reporter? It just relives a very ugly chapter in BP’s corporate history.

Personally, I find Hayward’s latest remarks about as off-the-wall as his earlier statements. Does he really think “acting lessons” are necessary to manage a crisis or that a company can’t be hated as much as an individual? He is living on another planet.

Even worse, admitting that the company was unprepared for a disaster is outrageous for an organization the size of BP that explores and drills for oil and gas in some of the most adverse environments on the planet.

Once again, this points out the need for contingency crisis communications planning. Remarkably, despite all the environmental catastrophes in recent years, major companies around the world seem completely unprepared to effectively plan for and manage a significant crisis. They spend most of their time and energy focusing on financial performance and operating results, which is what they get paid for.

However, in my view, fiduciary responsibility goes far beyond the numbers. A company has a moral obligation to ensure that its top executives use best practices in corporate governance…and that includes crisis management.

Top communications executives (and even trusted outside counselors) need to be part of the senior decision-making process. From many years of experience, I have come to realize that the strategic communications team often “gets its marching orders” after major corporate decisions have been made. This thinking is fundamentally and strategically flawed.

Questionable Communications Skills

A geologist by training, the former BP CEO has a strange knack for off-the-cuff quotes. At his last board meeting, he reportedly said his experience “…was like stepping out from the pavement and being hit by a bus.”

At the time, he also described BP’s response to the oil spill as a “model of what corporate social responsibility is all about.” Tell that to the people of the Gulf who suffer the consequences of this massive leak and will continue to find oil in their vast ecosystem for decades.

One has to wonder if BP has ever heard of presentation and media training. For years, this training has been widely available for CEOs and senior executives willing to invest the time and energy in the process. Communications skills “can” and “should” be taught to executives at companies, both large and small. It’s not rocket science.

Ever since the Deepwater Horizon killed 11 workers, knocked billions in value off BP’s share price, and brutalized a corporate reputation already tarnished from previous accidents in the U.S., hundreds of thousands of words have been written to scrutinize and analyze the company’s crisis response.

Some of the best minds in communications and academia have argued that, because of the nature of the calamity, no crisis plan could have saved BP. Having practiced crisis management for more than three decades, I disagree.

One needs to remember that BP already had a questionable industry track record, including a deadly 2005 explosion at its refinery in Texas City (15 dead), the near-sinking of one of its flagship rigs a few months later, and the huge oil spill from a ruptured pipe in Alaska in 2009. If these problems at the operating level had been appropriately addressed, the Gulf incident may have never occurred.

The Gulf disaster also sits juxtaposed against BP’s decade-long rebranding campaign to position itself as a public-spirited, environmentally sensitive, green energy enterprise. Hayward, who took over as head of exploration and production for BP in 2003, stated in earlier interviews that he “promised to refocus the company and change the culture, emphasizing safety.” In more recent years, many ads depicted BP as “safe and competent.”

BP simply blew it. The company was unprepared to communicate effectively in today’s frenzied media environment. As a spokesperson, Hayward failed the basic tests of crisis management. He did not take responsibility (not to be confused with blame) for the company’s actions. He then magnified the continuing onslaught by developing the communications strategy on the fly and allowing the crisis communications process to manage him instead of taking charge, developing an agenda, establishing goals, and bringing the situation under control.

In my mind, there is no legitimate excuse for Hayward’s poor performance. If you’re an international oil company, you must have a CEO and senior management team that can effectively manage a disaster and steer the company’s public comments in a direction designed to mitigate the inevitable negative consequences. This is not acting or reacting, but working from a disciplined approach to strategic communications and crisis management that can and will make a difference in protecting an entity’s brand and reputation before irreparable damage occurs.

Management Expertise is Key

Why is it that Bob Dudley, the American who took over for Hayward, had much better luck in implementing a communications strategy and has at least been able to calm the waters? Part of the reason is that he does not shoot from the hip or try to be flippant and cute. Instead, he’s taken a more thoughtful, measured, and strategic approach.

Even before he officially took over, Dudley was quoted as saying, “If we continue to meet our obligations, then over time people will say this was a good corporate citizen responding to an accident that has been a wake-up call to the entire oil and gas industry. If we ensure this does not happen again, then maybe we can restore our reputation in the U.S.”

In an October 2010 story on the website, Dudley was described as “….intelligent and unflappable. Nothing, nobody could get him angry. He never said anything bad about anybody. Bob can keep focused on the issue at hand when mayhem is breaking out all around.”

Sounds like a new tune from a distinctly different breed of corporate executive. Perhaps BP should have let Dudley manage communications in the U.S. from the beginning instead of parachuting Hayward in.

It will likely take years before we can accurately assess the true damage done to BP’s brand and reputation. Earnings have suffered and the long-cherished dividend has been suspended. But these are financial benchmarks. Only time will tell if the damage, mostly self-inflicted, will heal so that BP is once again viewed as a responsible company practicing good corporate governance and citizenship.

BP’s ongoing nightmare began with its decision to put the wrong person out front from the beginning. It is clear that, by his own admission, Hayward was simply unprepared. His latest interview proves once again that hubris and unbridled arrogance will continue to cost BP dearly, both on and off the balance sheet.

In my view, if Tony Hayward is prudent, he should quietly fade into the sunset.

Richard E. Nicolazzo is Managing Partner of Nicolazzo & Associates, a strategic communications and crisis management firm headquartered in Boston, Massachusetts.
Joe Grillo, Partner, and Linda Harvey, Director-Client Services, contributed to this blog.


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