BP Case Study
The Deepwater Horizon oil spill by BP PLC illustrated a weak management approach to the issue of safety for both the company’s workforce and the environment. The corporation’s failure to run test referred to as the ‘cement bond log’ during the cementing of its oil well in the Gulf of Mexico is showing the lack of commitment toward the whole aspect of safety. Another relevant symptom of the necessity of change within the organization is the inclusion of only one health and safety value in BP’s 18 Group values. According to the case study, the company hired a consultant to solve the problem of exposure to further life-threatening disasters such as the Deepwater Horizon disaster of 2010. With a score of 28, it is assumed that BP is highly committed to change in terms of its decision-making systems and planning for safety in the future. More so, it is assumed that employees would be more involved in the process of setting out safety standards within the organization, which is one of the major players in the oil and gas industry. This report aims at offering a solution to BP’s safety problems through analyzing external and internal environment, formulating strategies that would help resolve the problem, creating a proper implementation plan, evaluating the change, and considering the ways of sustaining the plan.
Several external factors in the form of opportunities and threats would influence change as it relates to the BP Deepwater Horizon disaster of 2010 case.
Opportunities. The first relevant opportunity that would impact the change in terms of the safety standards of the organization is the availability of superior technology relating to gas and oil.According to Mishin (2013), this has been defined as an opportunity because the presence of gas related technology is an advantage since it would ensure that potential changes are made in the system of risk mitigation and safety enhancement for both employees and the environment.
The second key opportunity for the company is the potential to invest in alternative energy solutions such as wind energy, solar, and shale energy that are less risky compared to its main product, oil. This is a chance to ensure that such spills are being staved off.
Threats. According to Heller (2012), a key threat impacting the change in terms of BP’s health and safety standards is the increasing environmental regulations that put pressure on the company to produce eco-friendly products. This has been included as a threat because it would go a long way into increasing the costs of production and potential losses in the market.
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The above external factors are specifically important to the company because they illustrate how much it needs to adjust to its external environment to remain competitive in the long-run. Opportunities and threats could be summarized as in the table below.
Analysis of External Factors
Strengths. One of the key strengths that would impact the change in the direction of health and safety standards is the geographic expansion and diversification of the company in terms of its business and areas of operation.Ingersoll, Locke, and Reavis (2012) affirm that apart from North America, BP has operations in more than eighty countries around the world and this would set it on the road toward effective change. This has been included as strength because it signifies the power of the brand and the need to change to represent the brand in the wider market.
Another key strength is that the company remains one of the largest producers of oil in the Gulf of Mexico. This can influence the change positively due to BP’s strong position in the US with the defined refining and distribution channels that would set the pace for better safety standards.
Weaknesses. The notable weakness impacting change at BP in terms of health and safety standards is negative publicity, especially, concerning the oil spill in the Gulf of Mexico.Flourno, et al. (2010) explain that this is automatically a weak point because consumers are the primary stakeholders and they would influence the corporation’s profitability if changes are not made.
The second relevant weakness impacting the change at the company is the increasing cost of environmental hazards including elements such as dumping in the sea. It has been included as a weakness because of its effect on the public and the forced need of the corporation to relocate to other areas.
The strengths and weaknesses relating to BP PLC would be summarized as follows.
Analysis of Internal Factors
|Research and development||
The above analysis means a lot of BP PLC in terms of changing its approach to the matter of health and safety. It offers directions on what would be considered in both the external and internal environment hence leading to the required steps in terms of introducing and accepting the change in the future. This analysis offers a clear indication of what would need to be evaluated from the environment before proceeding with the change at the company.
From the excel table, it is clear that a score of above +10 is reflective of the readiness to change. In this case, BP PLC has a score of +28 meaning that it is ready for the change in terms of its approach to health and safety in the course of its operations. Therefore, there is positivity about this change and its influence on the operations of the organization into the future.
The Cultural Web
The cultural web makes it easier for individuals to map the organizational culture of a particular company.According to Bevan (2011), the first relevant element of the cultural web that relates to the BP case study is stories. They basically entail the past events that people talk about inside and outside the company. For instance, at BP, most people discussed the safety standards through employee grievances, but less attention was paid to this.
The second element encompasses rituals and routines that highlight the daily behavior of individuals within the organization. The common conduct of employees at BP is to keep working and interacting with each other through safety communication.
The third element comprises symbols that come out in terms of the visual representations of the company through logos and dress codes.Ingersoll et al. (2012) affirm that with its strong brand image, BP has tended to be in the oil and gas industry for a long period merging with other companies such as Amoco and extended its brand throughout the world.
Another element associated with the cultural web is organizational structure that is basically defined by the organizational chart. According to the case study, a hierarchical organizational chart with the bottom-up flow of information can be identified at BP, as employees always have to pass through their supervisors in the course of their communication.
Control systems are also part of the cultural web and entail the manner in which the organization is controlled.Flourno, et al. (2010) opine that BP is mainly controlled by the CEO who is in charge of its overall activities and to whom all employees are reporting.
The last element comprises the power structures. The senior executive is the CEO who holds the highest position at BP hence controlling a large part of the company’s activities.
Diagnostic Model that Fits the Problem
The relevant diagnostic model that fits the BP Deepwater Horizon disaster of 2010 is McKinsey 7-S Model.According to Bevan (2011), the choice of this model is justified with the fact that it actively examines the probable effects of future changes within the company. In this case, it will help in the examination of the outcomes of future changes adopted by BP PLC.
The first element of the model that directly relates to BP is strategy. It basically points out the plan devised to build and maintain a competitive advantage in the oil and gas industry. In the case of BP, the strategy entails such elements as the merger with Amoco.
According to Bevan (2011), the second element of the model is the structure of the organization where employees are supposed to report to the managers at BP. Leaders are primarily in charge of the overall process of making different decisions.
The third element of the model is systems. This entails the daily procedures and activities undertaken by employees to accomplish particular tasks. In the context of BP’s case, it is clear that personnel are guided with workplace policies to accomplish the set objectives. This means that there is a defined approach to the whole process of working.
Fallik (2013) points out that another critical element of the model is shared values. According to the case, BP has ‘Group values’ that govern the operations of its employees. For instance, it is believed that the personnel have a shared vision to communicate about safety in their areas of work.
The style of leadership adopted is also a key element of the model. The democratic style is used at the company as seen from the commitment of management to gather reviews from employees. With the appointment of the retired United States District Judge Stanley Sporkin, they had the opportunity to address their safety concerns.
Staff is one more crucial element of the model. The number of employees at the company has been dropping over the years. For instance, Ingersoll et al. (2012) highlight that it dropped from 97,000 to 80,300 between 2006 and 2009.
The last element of the model is skills. Employees at BP possess diverse skills such as management and refinery skills hence leading to the company’s top-quality performance.
From the in-depth evaluation of the above aspects, it becomes clear that BP needs to cover the health and safety standards of its employees more by including more aspects in the ‘Group values’.Mishin (2013) observes that out of the 18 values, the company has only one element associated with health and safety. This is basically recommended for first-order change because of the understanding that values and modes of operation keep changing within the organization and this would make everything easily adjustable in the near future. Therefore, the management would need to review the ‘Group values’ and address the full problem of safety by adding employee concerns to the statement.
More so, it would be appropriate for the company to make the safety communication function being a role of every individual in the organization. The function is currently performed by particular individuals in Texas City and this would be more appropriate if every employee would be endowed with a right to communicate directly, as this would go a long way into preventing further disasters in the future. This is recommended as a second-order change since it would have a long-term impact in terms of the improvement of health and safety management within the organization.
Next,Ingersoll et al. (2012) assert that the company is supposed to be keener to carry out the ‘cement bond log’ test during the cementing of its oil well in the Gulf of Mexico in the future to ensure that strong construction is put in place. A stronger oil well would guarantee that more oil spills are avoided in the course of its operations. More so, this is recommended as a second-order change because the organization needs to pay a thorough attention to its oil wells in the future from a different angle hence leading to prevention of any potential disasters.
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The model below should be embraced in the implementation of the suggested changes at BP PLC.
Stage 1 People, skills, and organizational structure. The strategic initiative must be implemented by 28th October, 2015. This is not a flexible date because changes should be embraced within the shortest time possible. The management of the company should do this through attracting employees with the right skills. The key qualifications needed in the area would include oil well construction, refinery and safety management skills. Affected employees understand their roles and should be offered an opportunity to explain an effective approach to health and safety.Fallik (2013) agrees that at this stage, BP will not need to hire or lay off people because it already has qualified personnel with proper skills base at their disposal. The firm should be organized in a way to make employees able to report directly to the top management. Therefore, the top leadership structure that connects directly personnel and leaders should be implemented in the organization to facilitate its successful management of health and safety issues. This should be done to ensure that employees air their grievances about safety and health standards to the top management.
Stage 2. Organizational culture. The current organizational culture does not differ from the one that is required to implement the change. The only thing BP needs to do is to incorporate employees more in its decision-making structure to avoid a situation where only leaders make decisions about safety standards.
Stage 3. Reward system. The current reward system at the organization is based on the performance of employees.Bevan (2011) states that the significant reward structure that needs to be introduced into the organization to facilitate successful change implementation is the non-financial reward focused on the prioritization of personnel safety. Employees will be more motivated with this kind of reward system in the organization.
Stage 4. Resource requirements. All the needed resources in terms of technology, management, and human resources are in place. Therefore, they would only need to be activated to lead toward the attainment of a better health and safety system.
Stage 5. Supporting activities. The key issue that needs to be implemented is the decision-making policies related to safety and health within the organization. Information Technology (IT) support is not required in the process. With the current manpower, BP does not necessarily need external help because the present system is already strong.
Stage 6. Strategic leadership. The firm has a strong base of strategic leaders in-house hence there is no need to get others from outside.According to Heller (2012), only levels of commitment among these leaders need to be improved within the next four months to ensure they do the best for the organization. The managers should be trained using the facilitation approach within the next month hence creating a strong team of strategic leaders.
Plan to Address Resistance
Resistance to change will be addressed, first of all, by educating members of management on the significance of the intended change in terms of safety and health benefits to employees.Bevan (2011) points out that this would ensure that they appreciate the value of change in the organization and understand the need to accept it. This approach will be critical in introducing the change without any potential problems. More so, employees would also be involved directly in the change process hence eliminating any chances of resistance to the change in health and safety standards within BP PLC.
The communication plan will have to change from the current one where employees have to pass their safety messages through their supervisors before reaching top management. The new communication plan will involve a direct communication between personnel and the top management hence improving response levels to any potential sources of hazards.
Evaluation of the Change
|Which action is measured?||The response to employees’ concerns over health and safety standards.|
|When is it due?||It is due the next three months, by November 30, 2015 specifically.|
|Who collects the data and is responsible for reporting results?||Supervisors are responsible for collecting and reporting data.|
|To whom is the data reported?||Supervisors are reporting to line managers.|
|When is the outcome expected?||The outcome is expected immediately.|
|How will the outcome be measured?||The outcome will be measured in terms of steps taken toward the promotion of health and safety standarts to both people and the environment.|
|Was the outcome met?||Yes, the outcome was met.|
Sustaining the Change Plan
As explained by Flourno, et al. (2010), the above change plan will be sustained through continued consultations on the issue of changes in the approach toward health and safety in the course of the organization’s performance. It should also be supported through regular reviews and improvements in its different aspects, especially, at the implementation stage.
In conclusion, the case of Deepwater Horizon oil spill is a relevant study indicating the areas of weakness at BP, especially, concerning the issues relating to health and safety. The problem of health and safety standards would be changed through involving employees in the course of making appropriate decisions. Overlooking personnel’s views would only be disastrous for the future of the organization. The construction of new oil wells should be thoroughly monitored to ensure that they do not pose a potential threat to environment and people in the future.