BP’s LAPSE IN LEADERSHIP
A 374 page report on the cause of the fatal 2005 BP refinery explosion in Texas City was issued yesterday by an independent safety review panel headed by former US secretary of state James Baker. The accident claimed 15 lives and injured 170 people. At the time it was considered to be the worst US industrial accident in nearly a decade.
Although the goal of the report is to make recommendations concerning all of BP’s US refineries, the report is noteworthy for what it says about the relationship between corporate policy and leadership:
While BP has an aspirational goal of ‘no accidents, no harm to people’ BP has not provided effective leadership in making certain its management and US refining workforce understand what is expected of them regarding process safety. The panel believes that BP has not proved effective process safety leadership and has not adequately established process safety as a core value.
In other words, the panel believes BP has put profits ahead of safety.
BP top brass vehemently deny they put profits over plant safety, saying they never turned down a request for safety funds. But the real question BP leadership needs to ask itself is whether the corporate culture encouraged legitimate requests for safety funding or whether it had a chilling effect. After all, if employees are afraid to ask, the question doesn’t get raised, and the request doesn’t get “denied.”
No news is not the same as good news. Pent up safety needs do not evaporate. They grow and fester in a reservoir of unmanaged legal risk. If you look at the video re-enactment of the accident you see that there were multiple safety failures. And that’s the problem with any unmanaged legal risk — it evenutally reaches a tipping point, a point of no return. For BP it was a fatal explosion.
Employees will generally do what they are told and what they are rewarded for:
- How often was the cost cutting message sent?
- How often was the safety message sent?
- Which message was louder? More frequent?
- Which message ruled when the two collided?
For better or worse it is leadership that fills the white space on an organization chart and determines what is between the lines of corporate policies and mission statements. THAT’s what creates corporate culture. Policies are not enough.
How is your company’s corporate culture? Could it use more transparency? More consistency between policy and performance?
For more information about the reservoir of unmanaged legal risk and the role of leadership see chapter 12 of The Business Guide to Legal Literacy: What Every Manager Should Know About the Law (Jossey-Bass, 2006).