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BP's next CEO: The joy of filling Tony Hayward's shoes

Tony Hayward is about to get his life back. According to multiple news reports, the embattled CEO is expected to step down after the board discusses and approves his exit in a meeting today. One of the biggest questions many will be asking: What took them so long?

After all, Hayward's departure has been practically inevitable for weeks now. First, of course, there was his seemingly unrivaled propensity, at least among corporate CEOs, for public relations gaffes. His comment that "I would like my life back" and his logic that the Gulf of Mexico's large size meant the spill was "relatively tiny" were nearly insurmountable amidst the politically charged atmosphere.

Then, there was the overwhelming evidence that BP's safety culture left plenty to be desired. An academic advisory panel of scientists concluded earlier this month that the spill could be attributed to "an organizational culture and incentives that encourage cost-cutting and cutting of corners -- that reward workers for doing it faster and cheaper, but not better."

No matter, it seems, that this profit-at-whatever-cost culture was initially fostered under Hayward's predecessor, Lord John Browne, or that Hayward had vowed to reverse it. He had made inroads since he ascended to the CEO job in 2007 and earned the respect of analysts, who cheered his turnaround in progress. Still, BP continued to be fined for safety violations, including, in 2009, receiving more than 700 violations at its Texas City refinery that exploded in 2005 and led to a record $87.4 million in proposed fines.

In the end, three years may not be enough time to turn around the company's culture, but it is enough time, rightly or wrongly, to be blamed for it. That's especially the case for Hayward, who was hardly an outsider to Browne's culture. Rather, he was head of the company's exploration and drilling efforts before succeeding Browne, and therefore presumably played a big role in it.

Hayward's successor will be taking on troubles of extraordinary magnitude. On top of the billions of dollars in clean-up costs and claims to pay, there are asset sales and potential takeover bids to fend off. Long before the most recent public relations problems surfaced--BP has now come under fire for doctoring pictures of its command center--the board was under pressure to take some kind of action.

It had an opportunity to hit the reset button on BP's leadership more than a month ago, when it named Robert Dudley, the BP managing director who is expected to replace Hayward, to run its Gulf clean-up operations. Rather than simply starting fresh, the move made BP's CEO seem even further removed from the company's biggest and most important problem.

One argument goes that BP's board was waiting until the well was mostly contained to name the CEO for the future, so as not to associate the new chief with the current disaster's stigma. Given that repairing BP's reputation will be the biggest of all of Dudley's many challenges, making sure he doesn't start before the well was capped allows him to rebuild from the beginning rather than start with more repairs.

Still, waiting as long as the board did may have had the opposite, and unintended, effect. Every week that went by without action at the top may have only served to dig the hole deeper for Hayward's inevitable successor. He may start with a clean slate, but at what cost?

By Jena McGregor

 |  July 26, 2010; 7:29 AM ET |  Category:  CEO watch Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Weekend Reads: The refudiate edition | Next: Tony Hayward: When disgraced CEOs have a bright future


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Hayward will send now good gaffes from Russia

Posted by: rivenq | July 26, 2010 10:29 PM

If there ever was a case that demonstrates what ails 21st century boards still stuck in the 20th century, then the naming of Robert Dudley as worldwide CEO of BP more than qualifies. Here's why:
1.) While Dudley deserves major credit for leading during the worst ever corporate disaster in U.S. history, his tenure will be marked by the same legacy culture that gave rise to the current role. Dudley worked for Hayward, which means he's inextricably linked to previous strategy. That never leads to innovative change yet somehow boards have convinced themselves that it does.
2.) Boards under pressure never make good leadership decisions. While they may think Dudley is the right answer for right now, the fact that the board hasn't been transparent or even visible in the remotest way will continue to leave lasting questions about what they signed off on under Hayward without adequate dilligence. Those questions, combined with no sign of shared vision and values, means more of the same until Dudley can re-position the brand. That process will take infinitely longer than if an outsider came in to mix things up in what amounts to a complete repuational rebuild.

If Dudley is cagey on governance, he'll move quickly to consolidate his power and replace a few board members with stronger, more crisis-proven leaders from within industry. Surely there must be a few out there somewhere who would be willing to serve in a new regime?

Posted by: jgarlington | July 26, 2010 3:26 PM

Hayward does need to go. He lead in a corporate culture that took too many chances, broke too many rules, like turning off safety devices.

The danger to workers obviously did not mean as much to him as the chance to bring in bigger profits.

Do we see now why regulations are needed and why people sue big business for mega-millions? It is because many big businesses do need rules because we cannot rely on their good sense. We do not need less regulation, althought we may need smarter regulation. And, we do not need tort reform that prevents people from suing businesses that ignore worker safety.

All you Rethuglicans out there. We not only need good regulations and better enforcement, we need jail time for some decision makers who put their profits above their workers safety.

Posted by: amelia45 | July 26, 2010 1:09 PM


For sure!

The new guy not only gets to blame the guy before him but was in charge of the operation which finally capped the well. He'll be good as gold until some investigative reporter digs up his involvement with the failures that led to the rig explosion.

Posted by: magellan1 | July 26, 2010 10:46 AM

I wonder how obama would handle the situation.

Maybe, he'd blame the last guy.

Posted by: docwhocuts | July 26, 2010 8:51 AM

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