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LEADERSHIP IS A PROCESS OF SOCIAL INFLUENCE, WHICH MAXIMISES THE EFFORTS OF OTHERS TOWARDS THE ACHIEVEMENT OF A SHARED GOAL.

Wednesday, May 05, 2010

BP Boss Needs to Do More

As a result of the Gulf of Mexico oil spill, BP faces huge clean-up and compensation bills, a barrage of lawsuits, and a political backlash against the deep-water drilling that has become an important part of its business. When Tony Hayward took the top job three years ago, he made safety his main priority. By all accounts, there have been considerable improvements, but that hardly matters now.

Mr Hayward's reputation depends on how rapidly BP brings the spill under control, even though this is out of his hands, and could take days or weeks or months. But whatever happens, the chief executive sets the tone. We judge organisations now on whether their leaders seem suitably humble and sincere and decent.

In particular, the crisis-stricken boss must weigh up the dangers of defiance against the perils of penitence: Toyota was disastrously slow to acknowledge its recent safety failings, just as Gordon Brown was reluctant to accept any responsibility for Britain's economic woes. 

And even though Hayward promised to cover the costs of the clean-up, his early insistence that the oil slick was "not our accident", since the rig was run by another company, was not what the fishermen of Louisiana wanted to hear. Greater eagerness to shoulder responsibility quickly ensued.

The central problem is that, for most of their careers, executives and politicians are drilled by lawyers and advisers to avoid admitting liability for anything. Yet when things get really bad, taking a hit to next quarter's profits may be less dangerous than the longer-term impact of punitive legislation or regulation (especially in the US, where a political backlash is the inevitable consequence of any crisis). 

Whether you call this the growth of a blame culture, or a greater holding to account of those who mess up, it is an increasingly powerful force – and should prompt bosses to spend more time worrying about the consequences of excessive risk, and less time lobbying for fewer restrictions.

Does anyone remember the late Sir Ian MacGregor and the plastic bag during the 1983 miners' strike in the UK?


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