Four reasons Tony Hayward is apparently out as BP chief
BP’s board of directors looks set to replace Chief Executive Tony Hayward after a series of missteps during the Gulf oil spill crisis. But the move is about more than Mr. Hayward’s gaffes.
It wasn't just the gaffes like "I'd like my life back." Tony Hayward appears to be on the way out as BP chief executive because of a range of leadership failings, management experts say, and the company's board is moving to set his departure date.
Mr. Hayward is set to leave his post in October, according to news reports that cited officials within the company as BP's directors met Monday evening in London. His expected successor is Bob Dudley, another senior BP executive who's been charged with managing oil spill response in the Gulf of Mexico in recent weeks.
Although Hayward became a focal point for public criticism, not everyone seems to think he had to go. As of Monday afternoon, for example, 61 percent of online responders were saying "no" in response to an online poll question from CNBC, "Should BP CEO Tony Hayward be sacked?" (And 39 percent of the nearly 2,000 resonders said, "yes.")
But at a time of corporate crisis, a CEO needs to be part of the solution, not part of the problem. Some management experts say that his performance crossed a critical line, leaving the board little choice but to seek a change in leadership.
Here are four tenets of management that, to these critics, Hayward violated.
1. In a disaster like the oil spill, tell the truth and tell it fast. That's the first rule of crisic management, says Kellie McElhaney at the Haas School of Business at the University of California, Berkeley. Instead, she says Hayward sought to downplay the magnitude of the problem. Estimates of the spill's scale grew steadily – and vastly exceeded the initial estimates BP put out. In one interview, Hayward described the spill as "tiny" in comparison to the "big ocean" of the Gulf.
2. Without responsible behavior, profits are on shaky ground. When he took the helm of BP, a self-announced priority for Hayward was to improve the firm's safety record. After a 2005 refinery explosion in Texas and other problems at BP, "Hayward came in on a promise to change the culture," Rosabeth Moss Kanter of the Harvard Business School wrote last month. The Deepwater Horizon blowout is serving as evidence that those efforts weren't effective.
Now, the stakes for BP include not just the cleanup costs but also the firm's ability to get regulatory approval for future drilling opportunities. "I think they underestimated how much corporate responsibility gives them, or takes away from them, the license to operate," says Ms. McElhaney, whose research often focuses on corporate responsibility.
3. The buck stops with the CEO. Yes corporate endeavors are team efforts, and a top executive can't oversee all the details of a far-flung energy company. But the buck stops with the CEO, who sets the tone for a company and must rally his or her troops in a crisis. Management experts fault Hayward for too often seeking to shift blame onto others within the firm or onto BP's business partners.
4. Emotional IQ matters. A vital part of the job description of a CEO, especially when responding to a disaster, is not just competent decisionmaking but also conveying the right emotional tone at the right time. Authenticity is often a good thing, but when Hayward said he wanted his life back, that was "probably not the best time to be authentic," McElhaney says.
Similarly, when Hayward went back to the British Isles for a "glitzy yachting expedition in crystal clear waters, [it] conveyed an uncaring attitude about those coping with the effects of the fouled Gulf," writes Maxine Mitchell, an account coordinator at the PR firm Pro-Media.