BP's Dudley Makes Safety Pledge With Few Specifics

BP Plc.’s incoming CEO (NYSE: BP) Bob Dudley knows that the public is skeptical about his company’s plans to create a Safety Division.  After all, the oil company has made these promises in the past and not kept them.

When Tony Hayward took over as head of the company in 2007 in the wake of a deadly explosion at its Texas City, Texas refinery and leaks at its Alaska pipeline, he vowed to focus on safety “like a laser.”  That never happened, of course.  Instead, government investigators probing the Deepwater Horizon disaster found that BP repeatedly put profits first and safety a distant second.  BP, which has rejected this characterization as unfair,  means to show that this time it is really serious about safety.  Here is how it’s described in the company’s press release:

The Safety & Operational Risk function will have authority to intervene in all aspects of BP’s technical activities.

It will have its own expert staff embedded in BP’s operating units, including exploration projects and refineries. It will be responsible for ensuring that all operations are carried out to common standards, and for auditing compliance with those standards.

The company describes the new organization — the size of which is unclear — as “powerful” without really explaining why.  It will be headed by Mark Bly, who will report to Dudley.  Bly’s work overseeing the company’s investigation of the Deepwater Horizon was sharply criticized by many experts.   Dudley would have made the organization seem far more credible if he had named an outsider to head it. BP also announced the departure of Andy Inglis, the head of exploration and production who oversaw the sealing of the leaking well in the Gulf of Mexico.

BP has several options in how to run Safety & Operational Risk. It might take a page from the nuclear power industry, where managers are required to investigate all safety concerns raised by worker even if they seem trivial.  Then there’s the government auditor model where workers investigate issues and management responds to the concerns that were raised. They write reports which usually end up gathering dust.  Given BP’s history, it seems that the second route is more likely because it’s easier.

Changing the corporate culture of any enterprise — ranging from a deli to a multinational — is difficult.  It takes a real leader to be able to convince workers that it is in everyone’s  best interest to do things differently.  Yelling and screaming are not enough. It sure didn’t work at BP where Hayward’s predecessor, John Browne, was reputed to be a mercurial micromanager.

So far,  Dudley seems  is saying all the right things about change including “The changes are in areas where I believe we most clearly need to act, with safety and risk management our most urgent priority.”  Dudley is far more personable than the arrogant Hayward, which is helping restore the company’s reputation.  Dudley has gotten a free ride from the media because he is not Hayward and is an American.

Slowly, Dudley’s honeymoon is ending.   He will no longer be able to get away with mouthing platitudes about safety.  The public and shareholders will demand results.

–Jonathan Berr