BP and the Deepwater Horizon disaster Essay

Title The Analysis of BP and the Deepwater Horizon Disaster of 2010Due Date 5/5/13Word Allocation 2193 excluding executive summary, headings, tables, references and appendicesExecutive SummaryThis report provides an examination into British Petroleum (BP) and the Deepwater Horizon disaster of 2010. It looks specific on the wholey at the available ara of organizing from POLC and the framework from how converse and communication networks effected the decision making process on the oilrig.The psychoanalysis starts by providing a history of BP and what major decisions end-to-end cartridge holder contri thoed to the organisational structure when the disaster occurred.Findings show that the asset federation representative adopted in 1995 in any casek away state from BPs regional trading trading operations and subsequently rewarded each individual site for its proceeding. This meant the managerial decision making process for each site was geared to time and cost efficiencies rat her than that of safety.The establishing of a revolve communication network on Deepwater meant that any proposals put for from line staff, with safety as a priority, were being overwritten by the senior team attraction as they were passed on.After the disaster occurred, BP established a prophylactic and Risk division and instil guide staff members on each of its rigs to ensure that the safety message was reenforce on its sites. confuse of Contents1. IntroductionManagers are obligated for arranging and structuring work to assist in achieving brassal goals (Robins et al. 2012, p. 14). It is determining what tasks are to be completed, who is responsible for them, how the tasks are to be grouped, who reports to whom and at which level decisions are to be decided (Robins et al. 2012, p. 14).This report analyzes the area of communication and communication networks, from that of the organizing function in POLC (Robins et al. 2012, p. 13), indoors British Petroleum (BP) and specifical ly the Deepwater Horizon disaster. It looks at the communication on safety procedures from senior BP authoritatives down to BP sites, the type of communication on key decisions that ultimately led to the sinking of the oilrig and what control measures were put in place to ensure the sustainability of the company. 2. History of BP and the Deepwater HorizonIn 2010, BP was one of the United Kingdoms largest corporations and a world attractor in the production of energy (Andrew 2010, p. 7). They supplied consumers with fuel for heat, light, transport, petrochemical production and much more (Andrew 2010, p. 7). However in its early years, success and profitability proved quite touchy to obtain (Ingersoll 2012, p. 2).The company that would eventually turn into BP was established in 1909 as the Anglo-Persian Oil Company (APOC) after William Knox Darcy found oil in Iran after an extended search (Ingersoll 2012, p. 2). consequently in 1914, the British Government felt they needed a dedi cated oil supply and purchased 51% stake in the delimitation bankrupt corporation (Ingersoll 2012, p. 2). They heldonto the 51% share until the Thatcher government period of prioritization occurred between 1980 and 1990 and this led to the final stake being sold in 1987 (Andrew 2010, p. 7). At this point, serveance was still declining and in 1992, after a loss of $811 million, the company decided to take severe cost conservation measures (Ingersoll 2012, p. 3).Focusing on a contour workforce and portfolio of activities, BPs status started to change significantly in the mid-1990s (Ingersoll 2012, p. 3). 1998 bought the merger with Amoco and in 2000, the acquisition of Arco (Atlantic Richfield CO.) and Burmah Castrol plc highlighted an aggressive growth strategy (Andrew 2010, p. 9). With the renewed instruction on growth, BP also began repositioning itself as a more environmentally friendly company and this lead to a new tagline Beyond Petroleum and an official name change to BP ( Ingersoll 2012, p. 3). This lead to the launch of an Alternative Energy division and between 2005 and 2009, BP invested $4 billion into this area with a total company investment funds of $982 billion (Ingersoll 2012, p. 3).In May 2007, Tony Hayward was appointed Chief Executive Officer (CEO) and his focus was to stem the company growth and reduce production targets (Ingersoll 2012, p. 3). Between 2006 and 2009, BPs workforce fell from 97,000 to 80,300 and four levels of management were cut as Hayward felt too many people were making too many decisions leading to essential cautiousness (Ingersoll 2012, p. 3).However, BP has had a colorful history when it comes to safety within its structures (Andrew 2010, p. 14). In 2005, 15 people were killed and an other 180 injured when the BP Texas City refinery exploded (Andrew 2010, p. 14). Then in 2006-2007, BP had to shut down its operations in Prudhoe Bay, Alaska due to over a million liters of oil spilling into the North Slopes via corrode d pipelines (Andrew 2010, p. 14). Alaskan state regulators had been type BP since 2001 that management protocol was out of sync with state regulations and that critical equipment needed to be better sustained (Andrew 2010, p. 15).On the 20th April 2010, a floating semi-submersible boring Unit named the Deepwater Horizon, exploded and sunk off the disjunction of Mexico killing 11 people and injuring another 17 (Andrew 2010, p. 16-17). BP had leased the Deepwater Horizon rig from Transocean, an oil ground industry support company that specialized in deep water drilling (Ingersoll 2012, p. 1). The rig was hired to complete work on the Macondo well, which BP owned the rights too (Ingersoll 2012, p. 1). Of the 126 on board, 79 were from Transocean, seven from BP and the rest from other firms (Ingersoll 2012, p. 1).As of 2010, the Deepwater Horizon disaster was the biggest marine oil spill to transpire in United States amniotic fluid with nearly five million barrels of oil leaking int o the Gulf of Mexico (Ingersoll 2012, p. 2). Decisions made on the type of well casing, the number of centralizers used and the decision to not perform a cement bond log may have contributed to the well blowing out (Ingersoll 2012, p. 1). However, regardless of the ultimate causes, it is worth examining the communication networks within to obtain merely where the caution over cost message broke down. 3. Managers and dialogue Networks TheoryEffective internal and external communication is seen as a requirement for organizational success (Ruck & Welsh 2012, p. 1). Organizations need to constantly assess and enhance communication especially in increasingly difficult economic times (Ruck & Welsh 2012, p. 1). talk can be broken down into two diverse areas formal or informal (Robins et al. 2012, p. 405). Formal communication follows a mountain chain of command that typically takes place within the organizational work arrangements (Robins et al. 2012, p. 405). Informal communication do es not take place within the organization hierarchy and typically allows employees to satisfy their sociable interaction needs along with creating an alternative channel to communicate (Robins et al. 2012, p. 405). However this information can fly the coop in a number of different ways. conference within an organization can move by the following means downward, upward, lateral and diagonal (Robins et al. 2012, p. 406-07).Table 1 explains how each type and its definitionTable 1 Types of information flow(Adapted from Robins et al. 2012, p. 406-07)Reinforcement of information flow encourages employees to speak out and adopt a participative approach (Ahmed 2010, p. 122). Mutual dialogue within an organization contributes to the foundations of shared value and trust (Ahmed 2010, p. 122).Both the vertical and horizontal communication flows within an organization can be combined into a number of different patterns labeled communication networks (Robins et al. 2012, p. 407). Researchers ha ve recognized that basic networks of communication can be classified into different types of interaction (Eunson 2012, p. 116) like those shown in table 2 and 3 below habitus 1 Eunson Types of conference Networks(Source Eunson 2012, p. 117)Figure 2 Robins Three Common Organizational Communication Networks(Source Robins et al. 2012, p. 407)When examining the theory listed within this paper compared to the types of communication, flow and communication network structures within BP, we can greater understand exactly what lead to the sinking of the Deepwater vessel. 4. Analysis of Communication Networks between BP and Deepwater BP Senior ManagementIn the late 1980s, BP had several layers of management that fell within a matrix structure that made it problematic for anyone wanting to make a decision cursorily (Ingersoll 2012, p. 4). As business and overall performance at BP was floundering, Robert Horton decided to cut $750 million form BPsannual expenses (Ingersoll 2012, p. 4). Horto n, who was appointed BPs CEO in 1989, removed several managerial layers with the intent of speeding up the decision making process and the pace of business (Ingersoll 2012, p. 4). The business was transformed into smaller, more on the table teams with the vision of maintaining open streams of communication (Ingersoll 2012, p. 4). Horton transferred decision-making authority to the upstream and downstream business divisions and employees at all levels were encouraged to take responsibility and exercise business enterprisingness (Ingersoll 2012, p. 4).During the 1990s, John Browne was heading up BPs Exploration and Production division, BPX (Ingersoll 2012, p. 4). He wanted to create a spirit of entrepreneurship amongst his employees and extended the decision-making responsibilities to further levels within the organization (Ingersoll 2012, p. 4). Decision making authority and responsibility was no longer held with BPs regional operating companies and was now completed by the site ma nagers (Ingersoll 2012, p. 4). The amaze was known as Asset Federation and was applied company wide when Browne took over as BP CEO in 1995(Ingersoll 2012, p. 4). The asset federation model compensated employees for the performance of their individual site so there was little incentive to share best practices on risk management amongst various other BP exploration sites (Ingersoll 2012, p. 4). Deepwater CommunicationThe benefits of an all channel network or matrix structure are that the leaderless group has constant information flow between all members within the work team (Robins et al. 2012, p. 407). The potential for brainstorming and exchange of information is great within this type of model (Eunson 2012, p. 118). However information overload and inharmonious differences due to no emergence of a leader can be a downside (Eunson 2012, p. 118)Figure 3 Deepwater Chain of Command(Source Ingersoll 2012, p. 20)However, when flavour at the chain of command on the Deepwater Horizon ( see table 4), it could be seen to form a wheel network rather than that of amatrix structure (see table 3). Typically, wheel communication flows form an identifiable leader at the top of the wheel (Eunson 2012, p. 117). The leader serves as the hub and the flow of information is typically one way but can be two way, dependent on the leaders willingness to accept information (Eunson 2012, p. 117). This can cause the satisfaction of team members to be low compared to that of chain, dance orchestra and channel networks (Robins et al. 2012, p. 407). Wheel networks have the disadvantage of being prone to message distortion (Eunson 2012, p. 118). As the message gets passed from one individual to another, or from one level to the next, the message is edited or mangled by the sender in each interaction (Eunson 2012, p. 118).The distortion in the wheel network is visible when looking at the decision making process for the type of well casing and number of centralizers. Decisions in these tw o areas were relayed by the engineering team leader, Greg Walz (Ingersoll 2012, pp. 10-11). Greg received insert from the engineers in the operations unit on what they thought were best safety practices, however final decisions on the projects were ultimately made due to the cost and time savings (Ingersoll 2012, pp. 10-11). The decision makers on the Deepwater had only been in their positions for a minimal amount of time (Ingersoll 2012, p. 9) and this meant that the lessons learned at Texas City and Prudhoe Bay had not reached the Gulf of Mexico site (Reed & Fitzgerald 2010, p. 156). It could be seen that the safety communication message had flowed downward from senior managers to line manager and staff however line managers felt a greater influence to reward cost and time savings. Control MeasuresOn July 27, 2010, BP announced that Bob Dudley would succeed Tony Haward as BPs Group Chief Executive on October 1, 2010 (EHS right away 2010, p. 17). In light of the Deepwater disaste r and to ensure sustainability of the company, BP leadership announced plans to create a new safety division to oversee and audit the organizations operations worldwide on September 29, 2010 (EHS Today 2010, p. 17). The Safety and Risk function has the authority to intervene in all technical aspects of BP activities to ensure that operations are carried out to that of stated common standards (EHS Today2010, p. 17). Staff will be imbedded in all of BPs operating units and will report directly to wampum Bly, head of safety and operations (EHS Today 2010, p. 17). Mark reports directly to the CEO, Bob Dudley to ensure the safety message from senior BP officials filters down into each site (EHS Today 2010, p. 17). 5. ConclusionCommunication is continually attributed to a vital variable in determining organizational success (Hargie & Tourish 2009, p. 419). Many business issues stem from poor communication procedures and early action and intervention in this area can avert a disaster at a later date (Hargie & Tourish 2009, p. 3).By conducting analysis into the communication and communication networks at BP, we can ascertain that a number of different factors may have contributed to the BP disaster. The asset federation model took away responsibility from BPs regional operations and subsequently the companys safety message. The rewarding of each site and its managers for its individual performance further contributed to the dilution of importance on safety. A wheel network with key decision makers who had not been in their roles for very long, meant that lessons learned from past incidents werent filtered into the Deepwater Horizon and decisions were made with the view of saving money and time compared to safety.The establishment of the Safety and Risk division immediately after the disaster ensured that the safety message from senior management would be perceive within each site and limit the opportunity for a disaster of this magnitude to occur in the future. 6. R eference ListAhmed, Z 2010, Managerial Communication The Link Between Frontline Leadership And Organizational Performance, Journal Of Organizational Culture, Communications & Conflict, 14, 1, Health Business Elite, EBSCOhost, viewed 5 May 2013, p. 122EHS Today 2010, BP Creates New Safety and Risk Division, 3, 11, Health Business Elite, EBSCOhost, viewed 3 May 2013, p. 17Eunson, B 2012, Communication in the Workplace, e-book, accessed 05 May 2013, p. 116-118 .Hargie, O & Tourish, D 2009, Auditing Organizational Communication A Handbook of Research, Theory and Practice, e-book, accessed 05 May 2013, pp. 3, 419. .Ingersoll, C, Locke, RM & Reavis, C 2012, BP and the Deepwater Horizon Disaster of 2010, MIT Sloan Management, pp. 1-4, 9-11, 20Reed, S & Fitzgerald, A 2010, In Too Deep BP and the Drilling bucket along That Took it Down, e-book, accessed 26 April 2013, p. 156 .Robins, Bergman, Stagg & Coulter, 2012, Management, 6th edn, Pearson Australia, Australia, pp. 13-14, 405-07Ruck, K & Welch, M 2012, Public Relations Review Valuing internal communication management and employee perspectives, Volume 38, Issue 2, June 2012, p. 1 7. List of FiguresFigure 1 Eunson Types of Communication NetworksFigure 2 Robins Three Common Organizational Communication NetworksFigure 3 Deepwater Chain of Command8. List of TablesTable 1 Types of information flow