In this case study, the failure of management was seemingly liable to the mistakes, lapses, and the consequent disaster in the Gulf of Mexico. The role of management includes organizational planning, leading, controlling, and organizing, which are carried out to set and attain certain objectives with the utilization of resources and people. The failure of management jeopardizes the attainment of a company’s goals and objectives and exposes a business to the risk of failure. In the case of BP oil spill, there are aspects of management failure before and after the crisis, and the company suffered the consequences. The following are the incidents that reveal the possible failure of the management.
Poor monitoring
The case reveals that at the time of the crisis, the Minerals Management Services (MMS) was the federal agency charged with oversight in the drilling and oil operations. The agency was responsible for environmental protection, promoting energy production, and collecting revenue for the U.S treasury from the oil businesses. These were mixed priorities. The MMS lacked resources, experience, and technical knowledge in the field of offshore oil drilling, which means it lacked the capacity to regulate and monitor the operations of the oil businesses against some set standards or objectives of the project and especially the effects on the environment (Walker, 2011). It could have been impossible for the MMS to perform regulatory roles in regard to safety and environmental oversight and possibly it became complacent due to the amount of revenue collected from the drilling operations.
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Crisis management
The management of BP Company mishandled the oil spill crisis. According to Ponis & Koronis (2012), crisis management is a critical organization function and the failure of management to effectively handle a crisis can lead to adverse effects on an organization and its key stakeholders. BP lacked a functional crisis management plan to either handle a possible leak, rescue operations, or communication (Walker, 2011). The case records that BP and Halliburton made cost compromises in the planning stage of the project to maximize gains. For example, cement of a less than usual amount was used to seal the ring (Walker, 2011). It is possible that BP management failed to conduct a contingency planning for crises. One of the critical areas BP managed failed in was the response phase. Rather than handling the recovery and clean-up operations immediately and taking care of the victims, BP’s CEO gave contradictory statements in the media regarding taking responsibility of the incident and released the company’s impressive annual reports of their earnings, which appeared as if he downplayed the impact of the accident. BP’s chief operating officer also downplayed the effects of the spill and made a statement that provoked the victims.
Communication error
BP’s CEO seems to have initiated a goodwill media campaign, but mistakes in communication made these efforts self-destructive (Walker, 2011). The initial communication of the CEO appeared genuine as if to show concern and commitment of the company to corporate responsibility especially in the oil crisis, but it later was rocked with embarrassing mistakes, which ruined the reputation of the company. The CEO used social media sites to present the initial communication, a channel that was not appropriate for such a case. Information on social media sites reach a big audience and since people are likely to post negative comments in crisis times, the image of the company is affected ((Tebeaux & Dragga, 2012). In the attempts to give public apologies, the management only made the situation worse with insensitive and arrogant messages. According to Walker (2011), BP management was insincere in their communication, and portrayed an arrogant behavior, which created an impression of disregard of the extent of the effects of the spill to public and especially to the victims of the accident. According to Walker (2011), the company revealed details of a significant investment (50 million dollars) on the social media campaign while justifying it with the need to keep the public updated with the recovery operations. The priority seemed to be misplaced because such money would have been used to support the victims who suffered effects from the oil spill disaster.
Recommendations
Effective crisis management is critical for an organization in times of unforeseen events. First, the planning phase of a project should not have any compromises in order to save costs. It is important in the planning stage for a company to prepare a contingency plan to handle a crisis without compromising its financial position and reputation. Second, it is crucial to uphold transparency. The management of an organization has the ethical obligation to provide the stakeholders with transparent details of the extent of the damage and issue progress reports on the way the crisis is being addressed. Reports of social responsibility should be focused on the image of a company, and the good faith of ethical obligations. Third, a company’s management should not downplay the extent of a disaster at any time. It is important to evaluate situations and pay attention to all crisis details that pertain to all stakeholders including financial, environmental, and social. This way, with relevant issues taken into account, the urgency and amount of efforts to respond to crises can be determined conveniently. Lastly, it is important to have a communication strategy that delivers genuine and relevant messages. The tools and channels of communication need not be informal because the public takes different impressions based on the severity of a situation (Tebeaux & Dragga, 2012).
References
Ponis, S. & Koronis, E,. (2012) A knowledge management process-based approach to support corporate crisis management: Knowledge and Process Management , 19 (3), 148-159. http://dx.doi.org/10.1002/kpm.1390
Tebeaux, E. & Dragga, S. (2012). The essentials of technical communication New York: Oxford University Press.
Walker, R. (2011). Strategic management communication Australia: South-Western Cengage Learning.
