A change of culture at BP

Article 30 May 2007 admin

As Tony Hayward stepped up to become Chief Executive of BP, media attention focused on Browne’s dramatic departure. But what does the Hayward era promise? – This article was first published in platform’s Carbon Web Newsletter, Issue 7.

Hayward, like Browne, is a driller. With a PhD in geology, he spent 22 years in BP Exploration, mixing engineering, finance, and international politics. He played a key role in developing BP’s position as President of BP Venezuela from 1995 to 1997. Ironically, President Chavez ‘nationalised’ BP assets in Venezuela the day Hayward took over from Browne.

Despite Browne’s fall, Hayward is keen to emphasise continuity. As he announced at BP staff meetings in March, “Any of you who are expecting a radical change are going to be disappointed.” Hayward is very much Browne’s pupil, describing working under him in the early ’90s as “A tremendous learning opportunity. He really opened my eyes to business.” This was in the period that won Browne fame for lobbying government to slash BP’s tax bill in the North Sea.

Browne was supremely well networked, in the British establishment and in global political elites. Russia’s president Putin was reputedly headhunting him for a post-BP role, and many public figures signed a ‘Friends of John Browne’ letter that appeared in the Guardian and FT after his fall. But these connections accrue less specifically to the person of Browne, and more to the role of CEO at the UK’s largest corporation. Browne’s successor will inherit much of his network.

Alongside these continuities, there will be change. Each CEO has an opportunity to stamp their style on the corporation and Hayward set out his stall back in December when he accused the current leadership of being “too directive”, saying that it “doesn’t listen sufficiently well.” These remarks were widely seen as directed at Browne.

Hayward faces an uphill struggle, especially in the US where he will grapple with continuing fallout from the 2005 Texas City explosion, Alaskan pipeline leaks and the recent shutdown of Whiting refinery in Illinois. Within a week of taking up his new position Hayward met with President Bush, inaugurating a new era in BP-US relations. However, Congressman Bart Stupak of the House Energy and Commerce Committee has demanded that Hayward testify at a hearing, since corrosion problems in Alaska stem from his time as head of BP Exploration

One hallmark of the Browne era was a dramatic increase in outsourcing. By the mid 2000s BP had three contracted staff to each direct employee. Hayward claims he will break from this trajectory, declaring that more functions will be brought back in-house, in part to address the challenge of safety and reliability.

The fact that Hayward’s rise has received so little coverage in contrast to Browne’s fall, is not incidental. Hayward had effectively been running BP for four weeks, since the BP AGM. Yet BP’s press department has kept the new CEO out of the limelight, a policy that is set to continue. For example, the CEO will no longer present each quarter’s results to analysts and press.

A vital question of corporate culture revolves around ‘Beyond Petroleum’. Will Hayward retain Browne’s slogan and determination to be a green brand leader, or will the contradiction between the brand and the pressure to find reserves lead to the demise of the motto?


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