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British Petroleum (BP) has grown very fast operations in more than 100 countries (BPRef1) hence building and utilising a lot of resources in a short time of reinvention of the company (ProPublica, 2010).
BP's strategies have direct effects on the employees due to the link between the human assets and the strategic needs of the organization. The HR creates structured planning based on SHRM models to ensure the company strategies are followed and put into practice by people (Beardwell, 2010).
BP Organisation and Business Strategy
From the three SHRM Models described in 4 Appendix A - Strategic Framework, Best Fitargues that HR strategy is more effective when business goal and employee's objective are aligned (Latham, 2010).
In author's opinion 'Best Fit' is the primary adopted model by BP, where HRM would align employee's goal and performance with business strategy. Within each strategy responses illustrated in the figure 1, it is clear that external pressures have affected BP and their responses are directly related to current problems.
Figure 1 - BP's strategy responses towards business pressures
One of the strategic behaviors is identified as 'Prospector' (Innovation focused) where staffing and development strategy is 'Buy' (recruitment) (Miles and Snow (1984) cited Latham, 2010)
BP's main goal is to be different and innovator stating "To meet that goal, our organisation is progressive, responsible, innovative and performance driven" (BPRef3, 2010).
Based on evidences found, BP as a Prospector business, constantly search for market
Opportunities and innovate. This requires extensive facilities and resources (using Buy approach) to innovate, research and awareness of any emerging environmental changes; hence such businesses like BP are creators of changes, competing with rivals.
Linking HR Practices to Competitive Strategy
Figure 2 - Linking HR practices to competitive strategy
(Source: Adapted from Schuler and Jackson (1987), (cited Latham, 2010)
Human Resource Issues
One of the disadvantages of using Best Fit by firms such as BP is that the employees' interest is normally overlooked, where BP leadership put profit before safety,
The key issues can be summarised as:
Poor Leadership - which has direct effect on people management, motivation and performance
Lack of Risk Management and Risk forecasting - this has led to the deep-water disaster where employees lost their life and many injured
Lack of Employee Contribution - as people felt they are not part of the company
Limited Training - unqualified inspectors' failure to identify issues with the safety and protection tools (ProPublica ,2010)
Lack of Communication - in many cases employees believe that they couldn't communicate and be heard when they needed to ProPublic(2010).
Lack of Safety - due to the recent incidents employees do not feel safe and this affects performance and behaviour toward BP.
Broken Psychological Contract - caused when employees don't feel motivated, valued and heard
BP strategy and changes are vital in rebuilding the leadership and culture to gain internal and external confidence and trust. It is important that HR strategies support the organization's values and objectives by motiving and investing in the employees.
BP Gulf oil spill has been known as the worst accident in US history, as oil spill flooded to ocean affecting many people's life, killing wildlife and damaging fishing industry, has remarked how ineffective BP's leadership is. For leaders in different industries and the government there are a lot of lessons to be learned from this accident.
It is evident that after number of disasters and mortalities such as Texas City Refinery explosion, before gulf oil spill disaster, BP should have realised that there is a vital need to strengthen and improve culture management and safety, but still continued to ignore.
Poor Leadership is one of the main HR issues, as it would affect every aspect of the business. The most important essences of a good leadership is having self-awareness, confidence, self-control, being a good listener and companionate person (Buchanan,D., Huczynski,A., 2010) these elements create an ability for a leader to motivate ,empower and engage management and people, bringing high performances, leading to high profitability and success of the business.
In BP's early days, John Brown an engineer with excellent Mathematical skills was well respected across the BP management board. When he became the CEO of the BP, cutting costs became his main priority.
Due to constant pressure to cut cost from the management board, profitability was valued higher than safety. Operation became an easy target and budget reduction plans were introduced to cut cost on research, engineering, maintenance, training and development, safety and security; as the result an unsafe working environment became a major issue and accidents and fire were reported every week (ProPublica, 2010).
The budget reduction plans, directly affected employees' performance and their view of the company. Trust in the management team's abilities and strategies disappeared among employees, leading to a negative impact on the employees' psychological contract.
In author's opinion, John Brown was proven as being academically intelligent; however being emotionally intelligent is a vital characteristic of a successful leader.
Poor Leadership, an Important HR Issue
Poor decisions made by the BP leadership and management on how and where to apply the budget reduction plans and taking uncalculated risks without considering the consequences, had direct negative effects on the employees. The good sense was lost when profits was put before people.
According to ProPublic(2010) employees didn't feel proud of the company they worked for. In author's opinion this created negative effect on employees day to day work, their voice weren't heard and within such an environment employees wouldn't raise their problems as they would be concerned about losing their jobs. It is very clear that BP has systematic problems that require major improvement and restructure in companies leadership strategies and objectives.
The Managed Approach
Employee trust approach
One of the main leadership necessities is to gain the trust of the employees by being approachable, listening to and considering employee's voice, to be able to understand and meet the baseline requirements of employees whose skills are crucial to business survival.
A possible approach to manage this would be provision a system where employees could communicate and raise safety concerns anonymously, this would enable the individuals to openly, address their issues without any concerns about jeopardising their position.
According to Landau (2010), BP as an organisation is not appealing to potential employees, at the same time a large number of employees could leave the organisation.
Following the deep water disaster, the employees have been asked to not to wear their company uniform and be wary of revealing their work place. This creates a negative mentality towards the company where employees will not feel proud of their workplace and consequently break their psychological contract.
There are two types of rewards and praise; monetary and nonmonetary: (Latham, 2010)
The nonmonetary rewarding has the longest motivation effect on employees. Sometimes a well-done or a tap on a shoulder gives employee the confidence and satisfaction with a longtime affect.
To restore the sense of pride within the organisation and the community, BP needs to ensure that the employees are recognised and praised for their contribution, by providing constructive feedback on individual performance through structured performance review meetings as well as direct informal interactions.
An effective leadership is to empower, inspire and train managers to influence the culture and gain employees' trust. It is also crucial to clearly define roles and responsibilities to help to create an easy communication route where employees can easily and effectively raise issues and risks at early stages, to the right people, to avoid small risks becoming major disasters.
Lessons learned approach
The second approach is lessons learned. BP has restructured the leadership and replaced leaders; however the company has still been suffering from the same issues. Changing leadership is not just bringing new people, changing the attitude; approach and strategy are integral factors. Texas City Oil Refinery disaster, oil rig in the Gulf of Mexico (MOUAWAD, 2010) has proven this point by illustrating that the new management team followed the same strategy and focused on cutting costs and ignoring the employees' and the environment's safety.
The lessons to be learnt are embedded within the company, stakeholders, incident reports and records of outdated technologies that are required to be replaced.
It is reported that prior to the accident, no necessary actions were taken to address the failures highlighted during the inspection (Cappiello, 2010). In authors' opinion this indicates that there was no structured process and standardised system to identify the importance of the reported issues and failures and most importantly no means to measure, track and manage the associated risks.
Lack of such systems and processes forced employees to make decisions in an unstructured and inconsistent manner.
Cost Management and Efficient Quality and Safety Culture Alignment
In addition to what has already been discussed, another approach would be to align cost management processes with an efficient quality and safety culture.
According to Guardian research (2010), the main reason for the BP incidents are reported to be caused by cutting corners to save more money, BP was clearly not prepared for the oil spill disaster; the spill began in April and BP managed to stop the spillage in August; it is reported that before the disaster people working on site had received warnings; however no necessary action was taken (Cappiello, 2010).
Based on the above information it is clear that the company culture encourages risk taking, however lack of risk management, risk tracking, inappropriate cost cutting plans to save money and ignoring the important safety matters are evident leadership shortcomings. Any approach to introduce any changes, requires the leadership to look at risks management differently.
It is important to ensure that the structured processes are followed; however an effective leadership requires regular process strategy overview to avoid deviation from the end goals and objectives and preventing people to get stuck in the processes so that the procedures become goals themselves.
On the day of the oil spillage accident, could it be that employees on site had incorrect focus and diverted from the original objectives, resulting into false positives, ignoring the failed test result?
Could it be that the issues have been identified but not reported to the right people?
Could failure caused by employees where their responsibilities weren't clear?
These are just some of the questions that may remain unanswered as tragically people involved in the disaster lost their lives!
It is easy to blame BP for poor risk management and lack of an effective cost management solution with safety in mind; however there is no evidence that BP risk management framework is any different from other oil industries and other global companies.
In Oil and Gas industry, it is particularly important to focus on risk and safety management, where relying on general risk management practices might not be applicable in different environments.
HR requires to nurture and train people to be aggressive thinkers to the questions "what is normal?" and "Is it still valid?" and be prepared for unexpected.
Beardwell (2010) has described that linking business goal to individual performances would make the result more accurate and aligned to the business strategy.
Following the oil spillage disaster, to address the identifies issues, BP has put resource bonuses on hold, except for performance rewards, which are only based on measures related to safety, compliance and operational risk management (Wong, 2010).
Based on these information author's observation is that "Best fit" approach by HR is being applied to ensure that resources are focused on safety factors to improve and strengthen the business safety, reliability and efficiency.
Utilising this approach, HR is sending a consistent message to the employees to change their attitude towards risks, to take safety more seriously. This would also help measuring and monitoring the performance quality.
Based on Lustgarten report (2010) "BP's Inspectors may not have been qualified" This has lead to low efficiency of safety and risk management, this shows BP's systematic and culture management problems, where correct procedure and audit weren't in place. By using "Best Practice" (Latham, 2010) where high involvement and commitment is involved with correct supervising and trainings, employees would retain high performance practices.
It is reported BP will have safety division run by Mark Bly which will be reported directly to the CEO (BPRef4), this will be using expertise to make sure operations and auditing are up to standard. It is important that safety checks are driven by the leadership and not only from the health and safety department.
Employment Strategies to Local Condition Adoption
It is important within international companies to adopt employment strategies to local condition.
As discussed in lectures OPP, Latham (Oct 2010), the Disney World model implementation in France was not successful and the most important failure factor was due to the fact that the local conditions and cultural needs were not considered.
Similarly BP as a global company needs to understand and take into the consideration the local and cultural conditions. An example would be the Alaska work environment; during the winter, sun never rises and in the summer it never sets. HR is required to create a system that aligns with local conditions and employees' needs, with flexibility for a desired work environment.
Transformational and Transactional Leadership Approach
According to Latham (2010) the Transactional leadership focuses on objectives, control and aims are more focused around and in line with management activities; however the Transformational leadership focuses on bringing people together and sharing the same vision.
It is understood that BP leadership theory of being commandant and controlling, is more aligned with the transactional / management theory. This is required to be changed into a transformational / relationship theory, by being an inspiring leader. This would bring more harmony to the organization, creates positive engagement and encourages employees to follow the same vision.
Leaders need to understand that an integral part of their responsibilities is to serve the company, employees and society and not just the shareholders. When important structural and process changes are introduced by the leadership, it is important that HR drives consistent practices and management, delivering the right message to employees.
Change brings resistance and it is always difficult to obtain the right purposes throughout the process. To ensure successful implementation of changes, the employees need to be motivated and committed. This can only be achieved by an inspired leadership to introduce the corporate, cultural and strategy changes as appointed in the question one.
Corporate culture portrays organization's values, attitude, knowledge, experience, psychology and beliefs.Â It illustrates what people and teams experience and feel within the company, which controls how they collaborate and work with each other both internally and externally.
Continuing developing body of knowledge and constantly learning from mistakes are main drives for strategies and approaches
The question that remains unanswered is, has BP got the leadership to make these changes happen?