Leadership Issues at BP that Led to Deepwater Horizon Disaster

Introduction

There has been increased complexity of organizations, which has led to more interests in the leadership styles adopted by various leaders, especially in businesses. A leader plays important role in an organization and he or she largely determines success of an organization. However, a leader may still lack efficient and relevant information that he may use to arrive at an effective decision in the rapidly changing world and cannot single handedly handle all the issues in an organization. Therefore, the current leadership styles calls for collaboration and inclusivity of all stakeholders in decision making and running of organizations.

There are a number of models that explain various leadership styles and contexts. The most common leadership models include transactional, situational, transformational, and autocratic models. Leadership models have evolved overtime and currently the model that is most common is transactional due to changing context of leadership, even though other models are also applied in some context (Hermann, 2005). Each theory focuses on the behavior and styles of a successful leader.

Deepwater Horizon disaster that occurred on 20th April, 2010 raised a lot of leadership issues, especially on how the BP leadership handled the situation before and after the disaster. Investigations done by various bodies blamed BP leadership for the disaster because they failed to act accordingly to prevent the disaster that claimed the lives of 11 workers and injured 17 others (Norse and Amos, 2010). In addition, the disaster left huge economic and environmental impacts that will have a long term effects on both humans and wild animals. The essay, therefore, analyzes the leadership models and leadership context in relation to Deepwater Horizon disaster by focusing on BP leadership.

External Context

Leadership Models

There are both traditional and leadership models that define the behavior and characteristics of various leaders. However, the traditional leadership models are different from the modern leadership models due to the changing circumstances and working environments (Miles, 2007). The current leadership models do not focus on the personal characteristics and attributes of leaders as in the traditional models (Bolden et al., 2003). There are three main assumptions of the current leadership models. The first assumption is that leadership involves many actors who collaborate to play leadership roles. Secondly, leadership role is distributed in various levels in and not centralized in one place or position. Finally, leadership should not focus only on personal attributes and behavior, but also in leadership practices and organizational interventions.

Contingency Leadership Models

Contingency leadership model that is associated with Fiedler was designed to address workplace issues that are associated with various situational factors. The proponents of the model argue that autocratic leadership approach is more appropriate in mechanistic organizations while participative is more suitable organic organizations or dynamic working environment because such organizations require some flexibility (James, 2011). Contingency leadership model gives rooms for leaders to manipulate the working environment to suite their leadership styles. According to the contingency leadership model, there are two types of leadership approaches and they include task motivated and relationship motivated (Vroom, and Jago, 2007). Leaders who are task oriented are more suitable in organizations with clearly defined tasks while relationship motivated leaders can use their interpersonal skills to fit in any working environment and can solve complex issues that require quick and rational decisions.

One of the advantages of contingency leadership style is that it provides various leaders with appropriate tools to establish effective group by modifying the environment variables. The model states that there is more than one successful leadership approaches and that every leader can succeed in the right working environment (Albritton Jr, 2007). Another advantage of the model is that it gives a business a relatively quick method of identifying leaders that can suite a particular group. The model is also flexible and can be applied in various situations and organizations.

However, the model also has some of the limitations that may affect its successful application. The major limitation of the model is that it is reactive and not proactive, which may be challenging to various leaders (Albritton Jr, 2007). The model is also relatively complex because determining the situation where management actions are required involves the analysis of many variables. Therefore, the complexity may lead to leaders taking shortcuts, which may negatively affect the outcome or the rationality of the decision.

Situational Leadership Model

Proponents of the situational leadership approach argue that there is “one size fit all” approach to leadership style of leadership. Therefore, the leadership approach taken by various leaders depend in the situation and the working environment (Luna, and Jolly, 2009). The model states that leaders must first identify their priority task and the readiness level of their subjects by analyzing their ability and willingness. The types of situational leadership model include directing, coaching, supporting, and delegating.

Directing as a leadership approach is most appropriate in a situation where the subjects have low willingness and ability for the assigned task (Vroom and Jago, 2007). A situation where the workers are not willing or are afraid to of the assigned task requires a leader to give clear directive to get the work done. Consequently, a leader must define the role and the tasks of the worker and then supervise them closely. For the task to be performed effectively a leader must make his or her own decisions and communication should also be one way (McCleskey, 2014). In addition, directive leadership approach is mostly applied in a situation where the issue at hand is very serious or can lead to fatal consequences if the task is not successful.

Coaching leadership approach, on the other hand, is more appropriate in a situation where the workforce has high willingness but relatively low ability to perform the task at hand. The approach is almost similar to directing approach because in both cases a leader must clearly define the task (Hersey and Chevalier, 2000). However, in coaching, a leader must seek ideas from the workforce or followers and communication is also two-way. Despite involving followers, decision-making still the prerogative of the leader. The workforce or followers in this situation needs coaching because of the little experience and they also need to be supported to develop their self-esteem and increased commitment to the task and roles that they play in ensuring success.

Supporting as a leadership approach is mostly relevant in a situation where the workforce has low willingness but their ability to perform the assigned task is high. A leader, therefore, should use this leadership approach when there is lack of commitment among the followers or if they are refusing to perform the assigned task. It is therefore the responsibility of a leader to identify the reasons causing lack of commitment and then encourage them to cooperate by motivating and building confidence in them. A leader using supportive approach should listen to the followers and constantly praise them to enhance their commitment.

Finally, delegating is most appropriate where the followers are both willing and have the ability to perform the assigned tasks. A leader should be encouraged to delegate roles when the followers are motivated to do the job, when there is high level of trust, and little supervision. In this leadership approach a leader still makes decision and solves problems, but the execution of the task lies on the followers ((Vroom and Jago, 2007). Even though such followers do not need frequent praise, it is important to recognize their efforts to encourage them.

Full Range Leadership Model (FRLM

The components of FRLM include transformational leadership, transactional leadership and Laissez-faire (non-transactional) leadership. The three leadership approaches are adaptive and they can be modified to fit in any leadership situation. However, the most current leadership style of the three is the transformational leadership approach, which is about transforming subjects into leaders.

Transformational Leadership Model

Transformational leadership approach is geared towards changing individuals and social systems. It is aimed at developing positive change in the workforce with the primary objective of transforming followers to leaders (Thomson, 2007). It motivates and enhances the morale and performance of followers through a number of mechanisms. The first mechanism is to connect the sense of identity and self of followers toward the goals and objectives of the organization. The second mechanism is for a leader to be the role model for the followers to inspire them and challenging them to take greater responsibility and ownership of their roles and the assigned tasks. At the same time, a leader must understand the strengths and weakness of the workforce to enhance their productivity.

There are four dimensions of transformational leadership and they include idealized influence, individualized consideration, inspirational motivation, and intellectual stimulation. Idealized influence is about developing trust and confidence among followers while at the same time play the role of a role model for them to emulate (Thomson, 2007). Building confidence and trust is important because they enable followers to easily accept the organizational change.  Inspirational dimension, on the other hand, motivates the entire organization by enabling followers to see the meaning of their work and strive to embrace high standards.  A transformational leader encourages follower to be part of the organization by embracing organizational culture and the working environment (Bragg, 2008).

In addition, intellectual stimulation is about stimulating and transforming followers’ awareness of the possible problems and their ability to solve such problems. Transformational leaders encourage followers to be creative and be dynamic in solving various problems that they face (Hall et al., 2008). Individualized consideration, on the other hand, is about being sensitive to the needs of followers by. The dimension encourage leaders to treat followers individually and not as a group because they have different strengths and weaknesses.

Transactional Leadership

Transactional leadership style assumes that followers are mainly motivated by rewards and punishments and that social system is most effective when there is a clear chain of command. In addition, it also assumes that main purpose of followers is to do what their leaders tell them to do. The leadership style, therefore, is based on the contingency because the reward and punishment determines the performance of followers. However, punishment is rarely mentioned by the leaders even though it also applies. Therefore, in a transactional leadership approach, the relationship between leaders and followers is transactional as leaders and subjects exchange one thing for another.

The dimensions of transactional leadership approach are contingent reward and management-by-exception (MBE). The former focuses on the reward where a leader assigns the tasks to the followers and rewards them for the work done upon completion.  MBE is further sub-divided to MBE-active and MBE-passive where the former focuses on the deficiencies and the latter is about the corrective measures. Transactional leadership style is more applicable in mechanistic organizations.

The above leadership models apply to different situations and in different organizations. Leaders in BP could have used applied one of the above leadership models to arrest the Deepwater Horizon disaster that caused a massive damage. The above models show that leaders should understand the environment and the situation in which they operate for them to be successful in their endeavors.

Internal Context

Before the Deepwater Horizon disaster, the BP management and leadership created the image that the company is environmentally friendly and that it is different from other players in the oil and gas industry. The leadership went ahead to change the name from British Petroleum to BP (Beyond Petroleum), a logo the company is using to demonstrate to the public that it also focuses on other green energy like solar and wind energy. The BP logo was used to convince stakeholders that the company is different from any other company in the industry.  However, Deepwater Horizon shows the inconsistency of the management, as it proves that BP is a profit-first company. Cost-cutting and culture of every dollar counts, therefore, led to the Deepwater Horizon disaster.

The disaster that happened even before the Deepwater Horizon shows that BP leadership is reactionary and not proactive as they ought to have been, especially in the industry where there is a lot of risks. Two disasters that happened in the span of 12 months indicates that the leaders who were involved did not learn of the mistakes. It is also apparent that the culture of cost-cutting is rooted in the company (Engersoll, Locke and Reavis, 2012). For instance, in 23rd March, 2005, the BP Texas City Refinery had a disaster where 15 were killed and about 180 people were injured. In addition, the company also incurred a loss of about $1.5 billion, which could have been saved were it that the BP leaders were proactive and heeds the advice of other players in the industry. The report showed that the disaster occurred because due to poor maintenance of the refinery equipment, as the company was striving to cut the cost in order to maximize their profits.

The 2nd disaster followed on March 2006 at its plant at Alaska Prudhoe Bay where about 200,000 gallons of oil poured into the bay due to another negligence. The investigations revealed that several miles of the pipes that were being used to transport the oil was corroded to a dangerous level (Engersoll, Locke and Reavis, 2012). Another report also revealed that the management was emphasizing on the importance of personal safety at the expense of process safety, which is the most important in the oil industry. The leadership failed to effectively communicate the importance of process safety to the employees, which created false confidence that the company was doing well in terms of safety measures. Therefore, two disasters happening in a span of 12 months shows that the BP leadership was only reacting to the situations rather than taking strategic and proactive measures to enhance the safety of its investments, employees, and the environment. They were driven by the desire to make money, which raises some ethical and social responsibility issues.

However, it seemed the management was striving to ensure that the company was profitable because it almost collapsed. The environmental-friendly campaign by the management was more of public relations issues, but the main agenda was to maximize the profit (Engersoll, Locke and Reavis, 2012). Initially, the company was bureaucratic, which made it difficult to make quick and rational decision because a long chain of command had to be followed. However, some of the BP CEOs tried to change the structure of the company to enhance its efficiency.

Tony Haward became the CEO of BP in 2007 where he replaced John Browne. He found out that the company had several layers of management, which curtailed decision making. He tried to eliminate the bureaucracy in the company by reducing the headcount in all levels in the company and he also instilled the risk averse culture (Engersoll, Locke and Reavis, 2012). Some of the CEOs that came before him like Robert Horton and John Browne also tried to use the same strategy that Haward was using. However, it seemed the culture of bureaucracy was deeply rooted in BP and removing it was a difficult task (Engersoll, Locke and Reavis, 2012). At the same time, for a long time, the company has been striving to reduce the cost of operation in order to optimize the profit. Therefore, the problem of decision making and irrational cost-cutting are the undoing in the company, leading to the disasters the company is facing, especially the Deepwater Horizon disaster that occurred in 20th April, 2010.

The investigation revealed that the Deepwater Horizon Disaster could have been avoided only that the BP top management was in the mission to reduce the cost and save time. In addition, there were large number of organization and individuals who were involved in decision-making and inexperienced workforce (Heller, 2012). Consequently, there was problem in deciding the well casing to be used, the number of centralizers, and the use of circulation. Some of the key BP leaders were involved in decision-making regarding the above three issues included Morel, Hafle, Cocales, and Greg Walz. The four BP leaders made decisions that showed that they were only interested in cutting the cost and not ensure the safety of all stakeholders and the environment.

For instance, there was uncertainty on the type of well casing that was to be used, as the decision kept on changing until BP internal communication favored long string casing instead of linear casing that ensured safety (Haller, 2011). Brian Morel, BP drilling engineer, chose long string casing because it could save time and money. They estimated that using linear would lead to addition cost of about $7 million. The decision to use long-string was made even after the BP Forward Plan Review had cautioned the company against the use of long-string, which was more risky. Marc Gagliano also recommended that the company should use 21 centralizers to guarantee safety, but the likes of Morel questioned his finding and they ended up using 6 instead of 21 centralizers. Walz, the lead drilling engineer failed to use 21 centralizers, a decision he made to save the cost.  In addition, the company also chose not to use cement bond log in order to reduce the cost by about 7%. Therefore, it can be concluded that the leaders who were involved in key decision-making did not put safety first, but instead, they chose to save time and money, which led to the disaster (Haller, 2011).

Leadership Issues

BP is operating under the principle of operating management system (OMS), which ensures that leaders involved in any operation task are competent, skilled and purposeful. However, the principle was not used at Macondo. The leaders who were involve Macondo showed the confusion and lack of rational decision to ensure that the operation was successful. The leaders made decisions that cost the company economically and socially because it lost its reputation.

Therefore, the first leadership issue n this case is decision-making. Even before the company was involved in the Deepwater Horizon, already it had a problem with its decision-making mechanisms. The company was bureaucratic because it had several levels of management and individuals who participated in decision-making. The same problem featured at Macondo where many individuals and companies were involved in decision-making. At the same time, the decision-making systems at Macondo were centralized because leaders like Morel and Walz made the decisions without even consulting the technical personnel onsite. Bureaucracy and centralization of decision-making, therefore, is one of the key leadership issues at BP.

Morality and ethics are other leadership issues that can be associated with the BP case. Even though the primary objective of any business is to optimize the profit by reducing the cost, this should not be the primary focus, especially in the oil and gas industry that is very risky (Mejri, and Daniel, 2013). However, leaders chose to focus only on the profit and they ignored the safety issues, which was very important. Therefore, the leaders did not act morally and ethically, which led to the disaster that caused massive damage to both human and wild animals. The morality of the leaders involved is also in question because they did not care about the workers who were on the site.

Another leadership issue is experience and expertise of leaders who were involved in the key decision making. For instance, Brian, Rich, and Kaluza had only taken 3 moths, 6 moths, and 4 days respectively in their positions. They, therefore, required some support from the experienced experts in their field to support and guide. However, this did not happen, which shows the failure of the BP management.

Finally, there was ineffective communication between leaders themselves and between the experts who were in the field. Leaders who were making decisions were not always communicating with the site leaders (Haller, 2011). They also failed to communicate with various technical experts who were on the site, which made them to make decisions without having proper information. Therefore, lack of proper communication partly contributed to the deepwater disaster.

Change Issues

Leadership has evolved overtime as a result changing working environment and the behavior of the people. The most current leadership style is transformations where the main objective of leaders is to transform followers into leaders (Hall et al., 2008). Consequently, there is reduced centralization of organizations, as organizations are increasingly becoming decentralized. Many leaders are now involving employees in key decision-making for them to feel part of the organization (RA, 2008). Even though some of the key BP leaders tried to reduce centralization, it seems the culture was never internalized in the organization because leaders like Morel and Walz did not implement it at Macondo.

Another change issue is increased concern about safety of workers and environmental conservation. The public, therefore, expects companies to socially responsible, especially towards environmental conservation. The change forced BP to pose as a company that values environmental conservation. However, the company did not live to its principle, as it continues to give profit a priority at the expense of environmental conservation.

Conclusion

The main leadership models include contingency, situational, Full Rage Leadership Model (FRLM), which comprise of transactional, transformational, and non-transactional leadership styles. However, there is increased campaign for the increased adoption of transformational leadership model because of its immense benefits to both organizations and the individuals. It is important for leaders to consider the situation and the environment in which they lead for them to be successful. The desire reduce the cost and to save time led to Deepwater Horizon disaster, as leaders were making decisions by only focusing on the profit and not the safety of the process and individuals who were on the site. The decision on the well casing to be used, the number of centralizers, and cement bond log led to the disaster. Key leaders in the company like Morel and Walz only focused on the cost and time when they were making their decisions. Times have changes and leaders should learn to involve all stakeholders when they were making any decision.

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