The rules and safety regulations of BP
The rules and safety regulations of BP were ignored, because they have been too complicated. As a result the operators then established their own rules and regulations to make things easier for them. They also had unsufficient training and no face to face meetings provided.. Furthermore there was understaffing, because of cost cutting (USCSB, 2008). The operators had to work 'in 12-hour shifts for 29 days', so they became fatigue (BP case, p.5). Also the working spirit was missing, because there wasn't an identification with the company. Guidelines were not followed up and corrected. It also came to human errors by lacks of communication as well as miscommunication, because verbal communication was too fague, brief and unclear, also written notes were too short , incomplete and often not recognized. Due to the fact of poorly designed screens in the control room, they didn't know how much liquid was inside the tower. The equipment was also on outdated design and broken material was not replaced. Key actors had a lack of adequate supervision and leadership, because there was no training on hazard of overfilling for the operators. They deviated from written procedures during start ups. Cost reduction also negatively effected the work for the people in the control room and the safetyness of the whole facility. There also was no training of critical decision making under pressure. For the trailers, no safety area was created (USCSB, 2008). There also have been audits that showed 'serious safety problems', 'including lack of maintenance'. The results were shown to executives, also to the board director in charge of the refinery.They did nothing, because of 'cost-cutting and budget pressures' (BP case, p.4). Local managers had pointed out the safety risks, but the senior BP officials in London tried to 'point it to local failings of the staff at Texas City' (BP case, p. 7). 'Production targets and budgets were the priority at the US refinery of BP, but not safety' (BP case, p.9).
b.) Possible consequences
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This lead to the consequences of a lack of safety. The alarm at 3 am was not recognized in the control room. The machinery wasn't maintained regularly.
There was no alert of people in the too close area, because of the tiredness of the workforce. The trailers got destroyed, because they were too close to the dangerous parts of the facility. Furthermore due to the lack of communications, the different shift operators didn't know what happenened in the other shift (USCSB, 2008). The company 'relied on personal injury rate statistics', that were a failure to provide safety (BP case, p.5). To sum it up 15 BP workers were killed and 170 people were injured (BP case, p.1). This disaster also lead to a bad reputation for BP.
1. Culpable decisions No shift operator felt responsible for his duties. The transmission of responsibility was handed over from one person to another. Unappropriate leadership style and decentralized management headed, that the information chain was broken. BP management had for many years overlooked warning signs of a possible catastrophic accident. None ot the accident reports were handed in to the senior management Incidients, which happened several throughout years, were not reported and investigated. Convenience was more important than safety ( position of the trailers). There haven't been any fatigue prevention policies.
The operating procedures were out of date (USCSB, 2008). According to Mr Baker, the management of BP has failed to "establish effective safety processes" (BP case, p.8).
2. Praiseworthy decisions
A few days before the disaster Texas City Refinery Manager pointed out the danger of the workers (USCSB, 2008). Lord Cullen pointed out, that risk should be minimized (BP case, p.3).
Worker trailers were too close to the refinery, so there was no possibility to escape in emergency cases. BP didn't effectively use leading and lagging indicators. BP's pay plan rewarded managers primarly for cost controlling (USCSB, 2008). The takeover of Amoco and Arco had negative impacts, the costs were reduced and as a result the safety standards for such facilities were not observed (BP case, p.9).The only safety metric used to calculate bonuses was the personal injury rate. Preventive maintenance and testing proceeders were inadequate. Required saftey studies of pressure relief systems were years overdue (USCSB, 2008). There was no learning culture, because the focus of BP management was not "to refine oil" anymore. They wanted to go "beyond petroleum" (BP case, p.10). The focus of BP was "short-term" (BP case, p.1). They had created a"decentralised management and an entrepreneurial corporate culture, which gave BP the possibility "to increase its market capitalisation" (BP case, p.8). They had high costs of governance to meet the expecttions of their stakeholders, which lead to a lack of safety (Artikelstakeholder 338). According to the stakeholder theory BP is responsible for the well-being and safety of all parties involved, which have a legitimate interest in BP (Crane, 57, 58). The stakeholders have an "incentive for safeguards for their stakes and therefore endogenous safeguards must be devised" (Artrikelstaekholder354). The managers of BP should have been "value-creators, rather than value-cheats", so that the interests of their shareholders are best served (Global str 210). Such practices have to be critized from a "deontological perspective", in that those with power have a duty not to abuse it (Crane, 363). So the business ehtics and the corporate social responsibilty of the company can be safed. The board is responsible for the direction and oversight of BP on behalf of shareholders and is accountable to them, as owners, for all aspects of BP's business. http://www.bp.com/sectiongenericarticle.do?categoryId=9021628&contentId=7041215
To sum it up BP management failed to guarantee safety.
1. Praise for key actors
Stuart Rose wanted to end the lack of leadership by challenging the culture of meetings, reports and poor accountability which he believed led to a lack of focus on efforts to deliver better products to the customers. (Understanding str ma, 386).
The corporate governance has improved. The board has now half non-executive directors with experience who can exercise their independent judgement on key issues.
This essay is an example of a student's work
We have to do the right thing for investors. Combined code of corporate governance, the alternative investment market says the "comply-or-explain" approach allows companies
Some partners are gone under pressure from foreign competitors
fundamental and serious concerns for (our) members
Blame for key actors
According to A.2 no individual should have "unfettered powers of decision" (Combined code 6). They should avoid a "box-ticking approach" to assessing the corporate governane of Marks and Spencer. They should "bear in mind in particular the size and complexity of the company and the nature of the risks and challenges it faces" Secftion 2 E.2,21).
It appaers that LG is only interesetd in wether a company complies with the core principles of corporate governance .This is about risk , not box-ticking
Justification of key actors
According to the shareholder value perspective, it is obvious that companies belong to their owners and therefore should meet the interests of their owners. They are instruments whose purpose it is to create economic value on behlaf of those who invest "risk-taking capital" in the enterprise (Stragb 601).
Acording to the combined code Marks and Spencer should act flexible. The management of M&S justify themselves that it is not possible to adopt a "one size fits all" approach to corporate governance codes, because M&S subject to the codes " differ materially in therms of the size, strucutre and organisation" For M&S the performance of the share price is a factor that is relevant in "justifying non-compliance and the extent to which investors appear to rely on this indicator rather than engage in the more difficlut task of judging the relative merits of the Code provisions against alternatives.(Combined article 486). The effect of "comply or explain" is to distance shareholders from compliance decisions and to strengthen to role of the Board by comparison with the operation of a default rule (Combined article 494).
We have to do the right things for investors, they will probably welcome this decision
New boardroom structure was in the best interest of the business
Sir Stuart Rose blamed a marked deterioration in consumer confidence
Four years ago M&S was a weak business in a strong market. Today it is a strong business in a weak market.
Blame of key actors
LG didnÂ´t accept the explanation for why Sir Stuart is getting the dual role
We do not accept the argument that M&S is a strong business in a weak market.
Combined Code: There shouldnÂ´t be a concentration of power at the head of the company, because of previous governance failures.
The shareholders have been informed to lately that Sir Stuart Rose will become executive chairman. That's a form of egoism (M&S case, p.1).
L&G, the second-biggest shareholder stated that they believe strongly in the separation of the roles of chairman and CEO (M&S case, p.1).
Criticism in the corporate governance of Marks and Spencer, that there is a lack of sufficient independent non-executive directors. So the board lacks a real balance between executive and non-executive directors.
It came to protests of the shareholders against Sir Stuart to become the executive chairman of Marks and spencer, because they believed a violation of the corporate governance guidelines (Telegraph).
A growing recognition that executives' long-term compensation needs to be more closely tied to returns to shareholders (Strategyb 611).
Combined code on corporate governance istnÂ´t executed
Criticism for moving too far down-market
dispute with shareholders about bonus
Significant risk to investors due to the election of Sir Stuart Rose
Group would miss profit targets
Board of Directors must exercise their duty to ensure that the high standard of safety are met.
Interpersonal relationship is important.
Avoid cost killing.
Value workers>make feel them part of the whole company, that they are part of the community and that their work contributes as well as it is honoured to the well beeing of the company and social environment.
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Motivation seminars and trainings.
Regularly maintenance of machinery.
Update of safety regulations.
Maintain an open and trusty safety culture
Ensure that non essential personal and work trailers are located a safe distance from hazardous process areas
Ensure equipment and procedures are maintained and up to date
Carefully manage organisational changes and budget decisions to ensure that saferty is not compromised
Monitor process safety performance using appropriate indicators and invest sufficient resources to correct problems
Analyse and correct the underlying courses of human errors
Including fatigue and miscommunication5
.2 the role of virtue ethics
According to Immanuel Kant, "among moral attributes true virtue on its own is sublime." "Everything good that is not based on a morally good disposition, is nothing but pretence and glittering misery." (Kantartikel, 473). virtuous So BP has to take care of human rights and its business ethics. As a "global player" BP has enormous power. It has no democratic legitimacy, but has actually more power to lead on the social dvelopment of the planet than national governments. So it has to deal with it carefully. (CSRBPWEBSITE). They have the moral responsibility for their actions, but they are also responsible to safe the interests of their shareholders(Friedman) It is their duty to fulfill both aspects. So companies have to be more than just 'economic machines'. They should be networks of people, working together towards a common goal (Strategy, 598).
M & P
5.1 M&S has a lot of work to do to persuade people. This is the right approach.
They have to talk to shareholders early enough. Furthermore they have to consider to manage organizational changes early enough. They also have to do better succession planing.
The structure of the board and the governance frameworks have to be changed contiously to maintain the stability of Marks and Spencer and to keep the balance of complexity and responsibility. While annual reports are certainly a dubious source for information about the actual workings of the board, it is necessary to redefine the standards for the performance of the board. There have to be created new approaches to corporate governance in a global context (Strageb 628).
"By becoming a virtuous person, we will by nature reach correct moral decisions. We have a virtuous character. The moral decisions are what society considers as good or bad and it defines the personnel character. A virtuous person considers not only turnover but also the well being of staff & the regular maintenance of machinery as positive and good acting is the goal. Moreover, virtue is also applied in the good interacting of staff as they learn it by training. (Crane, 110).
There was a good test of young managers. They should define ethical issues and should try to find a solution for them. In this way they should have learned to deal with ethical problems on the "basis of personal reflection and individual values" (Trench).
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