Failure to Walk the Talk

By Patrick A. McGee

Copyright 2007

BP’s Chief Executive Officer Lord Browne resigned at the beginning of May over revelations and deceit about his private life. He should have resigned because he failed to walk the talk that “the safety of our employees and contractors along with the integrity and security of our plant and equipment is of paramount importance to BP.”*

Two days after his resignation, an internal BP report on a 2005 explosion that killed 15 and injured 180, was publicly released by court order.  From BBC News**: “Four BP executives should be sacked for failing to prevent a fatal blast at the oil giant’s Texas City refinery in 2005, an internal report said.” It went on to say: “It (the report) added that managers routinely ignore standard procedures, failed to act in the best interests of the firm and management systems failed to perform at the highest level.”

On BP’s website, in a section on the company’s Code of conduct***, Lord Browne is quoted: “Our reputation, and therefore our future as a business, depends on each of us, everywhere, every day, taking personal responsibility for the conduct of BP’s business.”

We know Browne’s fate, but what of the others? Back to the May 3, 2007 BBC News story: “One executive has since left the company, while the other three executives have since moved to other parts of the group.”

While steps may have been taken since the fatal explosion to improve safety in its operations, we can’t ignore that the company claimed safety was important before this tragedy, but it was proved, not only by the explosion but subsequent investigation and reports, that it did not walk the talk.

The BBC had this report in November 2006****: “BP knew of ‘significant safety problems’ at its Texas City refinery well before a deadly explosion in March 2005, according to U.S. investigators. The Chemical Safety Board (CSB) found a catalogue of internal BP reports highlighting maintenance backlogs and poor infrastructure at the site. BP has agreed it was preventable and has allocated $1.6bn in compensation.“

And again on BBC News in December, 2006*****: BP Head of exploration Tony Hayward said leadership does not listen enough to what “the bottom” says and that safety needed more work. Mr Hayward also said in a bid to cut costs, the firm’s “mantra of ‘more for less’ …needs to be deployed with great judgment and wisdom”. “When it isn’t you run into trouble,” he added.

Crisis. Deaths. Injuries. Property destruction. Operations interruption. Reputation damage. These can be avoided and mitigated by walking the talk.

Writing nice sounding Codes of conduct are relatively easy. Walking the talk, consistently and constantly, are very difficult. But necessary if we want to prevent crisis.

   

How difficult?

There’s a Harvard prof named Chris Argyris who says we have mental models that can lead to behaviour that I characterize as not walking the talk.

Professor Argyris, in studying how organizations learn, says we have an espoused theory of action and a theory-in-use .He also categorizes organizations as Model I and Model II.

My take on this is that “espoused theory of action” is talking the talk. It’s what we think we should say. And at the time, we might actually believe it. But when the talk gets in the way of our goals, or threatens us, or is just hard to do, then we might resort to theory-in-use – what we actually do. The walk. Not always in synch with the talk. Argyris says most organizations are Model I, the ones that I claim do not walk the talk. The other, the Model II type, are walk the talk organizations and are a rarity.

So, how to encourage an organization to walk the talk?

Well, we know that not meeting organizational goals that are truly “paramount” is supposed to lead to sanctions – no bonus, demotion, termination. And when it comes to financials, that’s often the case (although we are seeing perverse situations where executives are let go while taking pots of gold with them). One way to ensure the talk is walked is to tie safety performance, in this case, to the same rewards as financial goals.

Complacency is a sure way to kick start a theory-in-use behaviour divergent from an espoused theory of action, especially when the espoused theory is more difficult, slower, etc. We forget the reason for it and take a short cut, sometimes with dire consequences.

Reminders and refreshers on the ‘Why’ of the espoused theory can help to prevent deadly complacency.

Linking one goal so closely to another so that one cannot be accomplished without the other helps. It keeps one from being more paramount than the other.

Decades ago I read an account in Fortune Magazine of how the CEO of Alcoa, I believe, linked lost time accidents to inefficiency in his organization. He surmised that lost time accidents were usually caused by people trying to circumvent an inefficient/difficult/unacceptable process. His direction to the company was to get better at designing processes that prevented accidents and improved efficiency.

In the crisis training world that I often inhabit, we try to defeat complacency and heighten the value of those organizational behaviours that will prevent crisis, such as through preparation, simulations, and response techniques. But crisis communicators really do well financially when organizations have a crisis. It takes a lot of resources to manage and recover from crisis.

Real crisis prevention won’t happen through training. It will happen when organizations walk the talk.

* http://www.bp.com/subsection.do?categoryId=9007559&contentId=7014489

** http://news.bbc.co.uk/2/hi/business/6621725.stm

*** http://www.bp.com/sectiongenericarticle.do?categoryId=9007573&contentId=7014474

****  http://news.bbc.co.uk/2/hi/business/6100938.stm

***** http://news.bbc.co.uk/2/hi/business/6189919.stm

****** http://www.monitor.com/cgi-bin/iowa/ideas/authors.html?record=11

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6 Responses to “Failure to Walk the Talk”

  1. Boyd Neil Says:

    I’ll read yours if you read mine! Welcome to the world of blogging Pat. I am adding your url to my RSS reader and my blog list.

    Cheers,

    Boyd

  2. patrickmcgee Says:

    I’ve been there and will visit again.

  3. patrickmcgee Says:

    A business colleague who wishes to remain anonymous comments on my Failure to Walk the Talk post: “Good work! I think walking the talk only happens when the Board shows the “stick” to the CEO when it gets its fill of poor performance in any area of the business. Usually it takes several changes at the top — they serve short terms with very specific performance targets that they achieve then move on, and the next person takes it to the next level. Seems that’s what happened to some extent at BP as they shifted VPs around. Do we know if Browne improved the safety record there during his term?”
    Below are two Daily Telegraph stories that address his question. Given the pipeline spill in Alaska, it looks like Lord Browne’s environmental talk wasn’t really being walked either.
    By Richard Blackden
    Daily Telegraph
    Last Updated: 12:40am BST 13/04/2007
    Lord Browne, chief executive of oil giant BP, has seen off a potential rebellion over his pay package by shareholders who claimed it wasn’t deserved given the company’s safety record.
    BP said today that of the shareholders who have voted so far, 82.7pc have approved the resolution proposed at today’s annual general meeting – Lord Browne’s last as chief executive.
    A spokeswoman said the final tally, including those who cast their vote at the meeting, may not be known until Monday.
    BP has endured a torrid past two years, with a fatal explosion at its Texas City refinery, two oil spills in Alaska and delays to the start of its Thunder Horse field in the Gulf of Mexico all damaging the company’s reputation.
    Lord Browne told shareholders today that the last two years have been “truly humbling.”
    The build-up to Lord Browne’s final agm was overshadowed by expectations that a small minority of shareholders will reject the company’s remuneration report in protest at the inclusion of Lord Browne in a three-year incentive scheme, during most of which he will already be in retirement.
    Lord Browne could receive shares worth £11m in 2009 if BP meets performance criteria linked to the scheme. He will already benefit from a £21m pension pot.
    The oil giant has faced severe criticism since the explosion at its 2005 Texas City refinery that killed 15 people.
    Lord Browne today said of the incident that “it was the saddest and darkest day in my working life at BP.”
    Pirc, a corporate governance adviser, has recommended its clients vote against Lord Browne’s pay deal for failing to link rewards to the company’s safety record.
    The Association of British Insurers has waved through the report.
    The company’s safety record received stinging criticism in a report by former US Secretary of State James Baker into the Texas City explosion.
    BP said today that is is consulting with the Baker panel on how to best implement its recommendations.
    RELATED ARTICLE
    Daily Telegraph: Browne quits BP to join Apax
    By Russell Hotten, Industry Editor
    Last Updated: 12:39am BST 13/04/2007

    The chief executive of troubled oil giant BP, Lord Browne, has resigned unexpectedly for a job with private equity firm Apax.
    He will go at the end of July – 15 months earlier than planned – to be replaced by Tony Hayward, head of exploration and production. BP shares rose 9½ to 546½p.
    Lord Browne, 58, has become non-executive chairman of the supervisory board at Apax, one of the UK’s biggest buyout firms. He is also considering offers from companies to become a non-executive director.
    The surprise move ends Lord Browne’s remarkable tenure at BP, which he built into the world’s No.4 oil firm by market size. But the past 18 months have been difficult, with boardroom rows and investigations into BP’s safety standards.
    On Tuesday, a report into a fatal explosion at BP’s Texas City refinery is due to be published, and is expected to be highly critical of the company.
    However, a source said yesterday that Lord Browne’s departure had nothing to do with the imminent publication. “I can be categorical in that,” he said.
    Another BP insider said Lord Browne had simply become “weighed down” by recent problems and had decided “to draw a line under some things”. Mark Gilman, an analyst at The Benchmark Company, said: “The deterioration in John Browne’s credibility was becoming an impairment to BP and its shareholders.” Last Tuesday Lord Browne told BP chairman Peter Sutherland of his intentions, and the issue was discussed at a board meeting on Wednesday. He will receive no compensation other than what is due under his contract.
    Moves to find a successor were already underway as shareholders had become increasingly concerned about who would replace him. Mr Hayward has long been seen as the most likely successor, and he was expected to be appointed chief operating officer to work alongside Lord Browne until he retired at the end of 2008.
    Speculation over the succession at BP intensified in the summer amid rumours that Mr Sutherland wanted his chief executive to leave when he hit 60 in February 2008, while Lord Browne was adamant he would stay on. A BP spokesman said of the news: “There are a number of issues we had to deal with, and John [Browne] felt it would be a good time to make a smooth transition.” Lord Browne, who played a role in selecting Mr Hayward, said: “We clearly have important issues still to deal with which I am determined to address.”
    Lord Browne is one of the most admired businessmen of his generation, and is a confidant of political leaders around the globe, including Tony Blair.
    But recently his star waned as BP suffered a major refinery explosion in Texas, large oil spills in Alaska due to pipeline corrosion, and a crackdown for allegedly trying to rig the petrol market. Said one analyst: “Browne doesn’t go out on a high note, but he did a tremendous job and, let’s face it, the business he leaves is not in bad shape despite recent issues.”
    Lord Browne, who joined in 1966 as an apprentice and became chief executive in 1995, took BP to the top league of oil majors by buying Amoco in 1998. He was hailed as a visionary, positioning BP as environmentally-friendly long before it became fashionable.

  4. LeisureGuy Says:

    The real problem is that, lacking candid, clear, and cogent feedback, a person may be totally unaware that his (or her) espoused theory of action does not match the theory in use. He may strongly believe that his actions are completely in sync with his espoused theory. And, of course, the more powerful the person, the less likely he is to get the needed feedback—and if he does get it, there are many around him who will dispute it and tell him he’s doing a great job.

    The result is a kind of blindness. (Cf. Vital Lies, Simple Truths, by Daniel Goleman.) Argyris, in Increasing Leadership Effectiveness describes (including transcripts) his work with six CEOs in a series of sessions in which they provided the needed feedback to each other. It’s fascinating to see how difficult it is for each of them to see the discrepancy between what he believes and how he acts, even when it’s pointed out. But they do finally grasp it.

  5. Judy Burrell Says:

    If it didn’t happen so often, it would be stunning – a highly successful, presumably intelligent company executive with oodles of resources available to them, commits an obviously stupid/illegal/unconscionable thing. (You can pick one but it’s usually all three.)

    There seem to be an endless supply of leaders, corporate and government, devoted to the theory-in-use. Pat, you made such a wise career choice.

  6. Failure to Walk the Talk « CommOn « safety photo Says:

    […] Failure to Walk the Talk « CommOn 16 09 2007 Failure to Walk the Talk « CommOn […]

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