I for one am the disappointed that BP CEO Tony Hayward has been fired. From press reports about his response to the oil-spill disaster it is hard to argue against cause. Clearly overwhelmed by the emergency, Hayward committed numerous personal and corporate miscues during BP’s efforts to deal with the human, social and environmental fallout of the oil well explosion. He must have been a smart guy to earn the top-job at BP, however, when it counted most in crisis, he displayed much more insensitivity than intelligence. While I’m all for the principle of accountability, I can’t help feeling that firing Tony Hayward was too easy, and in some ways a missed opportunity.
First, the problems leading to the Gulf oil-spill precede Hayward’s tenure as CEO. If anyone is responsible for BP’s dismal record of safety and environmental violations, it is the board that first hired Hayward, and now fired him. Previous executives adopted ‘the cult of efficiency’ which allowed BP to squeeze enormous profits from operations. Cutting costs to the bone led to cheap technology fixes, sloppy upkeep of plant, and elimination of those managerial capacities for forward-thinking and contingency planning. Making one executive the scapegoat conveniently deflects those responsible for corporate governance from having to own the larger accountability for long-term direction and culture.
Second, although Hayward demonstrated questionable judgment, we must also assume that he would have at least engaged and absorbed a few invaluable lessons from the crisis experience. All that investment in imposed wisdom is now gone. All the hard-won insights from mistakes now walk out the door with him. Hayward may not have done it well, but his experience as leader confronting multiple and contradictory claims under such pressure makes him uniquely qualified to understand what is at stake, and what is needed going forward. The board may have lost faith in Hayward. Certainly many others had come to question his leadership long before BP’s board acted. However, by opting to wipe the slate clean the board has also wiped away important assets of memory, context and consequence.
Third, we should be honest and acknowledge that no human being has the ethical wherewithal to rise to the enormous moral challenges posed by such a catastrophic problem. Hayward at times seemed like a deer caught in headlights. The truth is that very few of us would have been much better at dealing with the situation. We expect corporate ethics to be in exemplary in the most trying circumstances. But it just doesn’t work that way. The only way to be ready for the gravest tests to corporate integrity is by everyday attentiveness to small ethical questions and dilemmas. BP did not do that. And they are not alone. Few companies and managers actually dedicate themselves to the daily exercise of ethical responsibility that creates the moral muscle for dealing with those rare-yet-inevitable moments of truth. Hayward and BP were not ready for ethical prime time, however his firing does nothing to improve moral foresight or commitment in the organization.
Fourth, firing is so un-imaginative. BP looked doubly foolish, paying millions in severance to an executive who as CEO cost shareholders and stakeholders billions. Similarly, Hayward emerged doubly tarnished, paid to stay away from a problem that he compounded. Why not write another script? One potential innovation would have been to replace Hayward as chief executive, while promoting him to a new CEO function – that of Chief Ethics Officer. Clearly the expertise most required for BP in the decade ahead is ethics-based: rebuilding reputation; restoring trust with employees; re-earning integrity with investors and stakeholders; and embedding systems of responsibility throughout BP’s managerial levels and across its many disciplines. As C-Ethics-O Hayward would continue to report to the board, immediately elevating the role and its responsibilities. As C-Ethics-O Hayward would have the opportunity to apply lessons from the crisis, both to work out solutions, and to embed those proactive skills for avoiding future ethical pitfalls. It will likely take a half-decade or more for BP to address the financial, social and environmental damage from the oil spill. Hayward’s previous role makes him an important conduit for coordinating the strategic, investment and human resource response to restoring the health of the Gulf and the company’s reputation. Hayward would get a chance at redemption. And BP would model a new governance structure in which ethics gets the profile, corporate commitment, and board imprimatur that it deserves.
Most companies with ethics officer have this function report to the legal department. Focused almost exclusively on compliance, very rarely will ethics officers get involved in strategic planning, shaping executive performance, or participating in board deliberations on long-term investments. Promoting someone like Hayward’s to become chief ethics officer would be cautionary and exemplary to organizations that have reduced ethics to a lower tier corporate function. Having set a very high bar for ethical incompetence, creating a new ethics function at BP that reports directly to the board would have set a progressive model for other companies across sectors.
We do need to hold organizations accountable, not only chief executives, but also boards, mid-level managers, and persons at work throughout corporate operations. It may mitigate outrage to see high-flying leaders fall or be fired. But this theatrical response to crisis means that we sometimes lose hard-won expertise. Hayward’s departure may have been inevitable. What is not yet clear is whether this removal corrects or compounds the ethical absence at the heart of this crisis.
Tags: CEO, Chief Ethics Officer, lost wisdom
This entry was posted on Friday, July 30th, 2010 at 10:20 am and is filed under In the News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
