BP Change Management
The forces that are driving BP to change are relatively weak compared with the forces that are restraining change. The driving forces are a pending legal action, and the fallout from the Deepwater Horizon disaster. The further that the disaster is from the public consciousness — it occurred in 2010 — the less impactful it will be in terms of sparking organizational change. Change is typically motivated in organizations by crises that take the key players outside of their comfort zone. Deepwater Horizon can still be used as impetus for change, but it would have been more effective had the company immediately used the incident to spark a cultural overhaul back in 2010. To do it today simply demonstrates a lack of urgency, lack of commitment and a lack of leadership. The people within the organization would have reason to doubt that leadership is truly committed to change.
The legal action is also a fairly weak motivator for change, at least relative to the restraining forces. Companies like BP face legal action all the time, and sometimes they will lose a costly judgment. Only when the one legal action sets a precedent for future legal action that will continue to cost the company money for the foreseeable future could there truly be impetus for change. The company is not in that position right now.
As for the job security of the senior management team, they answer to the Board of Directors, and the Board answers to the shareholders. The shareholders are motivated by share price, which means that by agency so is management.. If the company is making money, then job security is not at risk, and therefore is not a huge motivator for BP’s management. Only factors that are linked to the bottom line will genuinely put the company’s management at risk.
This means that the factors restraining change are stronger than the factors driving change. The organizational culture is very firmly entrenched, and most of the senior management team has come up through the BP organization. The company and industry both have similar cultures, and there is little motivation for change within those cultures as long as they are still making money. A strong corporate culture carries with it a lot of inertia that can be difficult to overcome without a critical incident to motivate people to rethink how they run their company, and what kind of culture they want the company to have. If Deepwater Horizon wasn’t enough — and it wasn’t — then there is good reason to suspect that the organizational culture is a restraining factor that will be difficult to overcome, and is instead rather resistant to change.
Poor communication has also been cited as a restraining force within BP. The company is mostly a one-industry company but it operates around the world. It also works in partnership with a lot of other company during different phases both upstream and downstream. The lines of communication do not need to be poor, but at present they are, which means that even if senior management fully committed to change, it would be difficult to execute organizational change. Again, there would need to be a…