Denise Tan Su-Wen S9051122Z

Individual Term Paper

COMM102 | G2

Memorandum To: CEO From: Vice-President of Corporate Communication Date: 9 March 2011 Subject: BPs communication changes under Lord Browne and crisis communication today From the onset, Lord Browne was aware of how to best communicate with BPs stakeholders- its employees, consumers, investors, media and the general public. He was highly focused on the organisations capacity and the individuals working within the organization. He recognized that as an organisation, there would constantly be changes and this meant that plans had to be modified and refined according to the changing business environment, not the other way around. As such, the changes he implemented within the company were largely people-centric and focused on building up the organisation through this group of key stakeholders. The company underwent two mergers under Lord Browne that changed the structure and identity of the company. The organisational changes put into effect by Lord Browne to counter the large and fragmented company that resulted from the mergers proved to be highly successful in aligning the companys values, performance and symbols. Values Internally, Lord Brownes goal was to have one company with an overall strategic position, one share price and one set of metrics. To achieve this, he moulded BP into becoming a learning organisation and placed employees into different business units with specific purposes. In addition, he looked highly upon the development of individual talent and believed that learning with a purpose was the key to improving performance. Besides attaining better performance standards, these measures helped employees feel more valued within the organisation by allowing them to contribute, challenge and come to a consensus with other employees instead of merely succumbing to initiatives brought about by authoritative figureheads. Employees having the same set of values would further help to instil a sense of belonging and collective sense of purpose to achieve these goals within the organisation. Performance With the mergers in place, BP became one of the top three oil superpowers. However, instead of being a huge environmental polluter because of their status, Lord Browne outlined certain steps for the company to adopt to help in global climate change. As a result, the public saw them as the most explicit and committed organisation with regards to corporate citizenship, being forward-thinking about the environment, human rights and dealing with people and ethics. Therefore, it would seem that without them, no other oil company would be able to achieve the provision of oil to the public while being environmentally safe. Symbols As a leader in the oil industry and one which aimed to address the problem of global climate change in its operations, BP undeniably stood out in an industry deemed by the outside world as being big, powerful, dirty, secretive and grey. Overall, the stand that Lord Browne took with regards to climate change put the company in a distinctive position in the oil industry. There was no misalignment between the companys values, performance and symbols under Lord Brownes leadership. This resulted in the company being able to manage its reputation effectively by giving it a single identity and placing it in a favourable light. The next two changes effected under Lord Brownes leadership were changes in relationships and communication. As an aesthetic leader focused on the workings of the organisation, Lord Browne had a knack for managing the relationships of various stakeholders effectively.

Denise Tan Su-Wen S9051122Z

Individual Term Paper

COMM102 | G2

The organisations new structure required employees to work in small units. By locating business units on the same floor, Lord Browne was able to foster real cooperation and close association between teams. In this scenario, the relationship statement being sent out to employees was that no single business unit would be successful without working with the other business units. By placing them on the same floor, emphasis was put on interaction and this would send out the message to employees that business units have to cooperate and work together to be productive. This would help to foster stronger bonds between employees from different business units and unify them towards a common goal. Having personal assistants or turtles within the company also created new forms of relationships. In addition, having a group of Vice Presidents allowed there to be a sufficient pool of talent to manage the large company and ensure no complacency. The relationship statement sent out by these two relationships would show that the company values employees who work hard and produce results, and that those who do produce results will be duly rewarded. A case in point would be turtles who got rapid advancements within the organisation. Such a statement would spur employees to work harder and produce results in order to attain such career benefits for themselves. Additionally, the use of e-portals to aid employees and employers alike in finding the right job or applicant and having a bottom-up communication approach within the organisation further emphasized upon the relationship statement that BP was distinctly concerned about the well-being of their employees and that the company was involved in catering to the job satisfaction of their employees by providing them with a job which best suited their abilities. With such a portal in place, employees would be more inclined to look within the company for a more suitable job instead of externally, should feelings of job dissatisfaction arise. Yet another relationship fostered would be between the company and its external stakeholders. Members of the companys top team had established network of talking partners across industries and Lord Browne placed much emphasis on dialogues between stakeholders. The relationship statement being put across to stakeholders would show that BP values their external stakeholders and that these stakeholders are part of what makes BP so successful. They would get the impression that their input is highly sought after and they help to value-add to the companys processes. This relationship statement would be highly favourable to external stakeholders as it would make them feel like they have an important role in contributing to BPs success in the oil industry. Thus, they would be more inclined to support the company and have a positive impression of it, further strengthening BPs ties with their external stakeholders. Another key change would be in BPs reputation, which was one of Lord Brownes main focus areas for the company. To the public and the media, BP became a company driven by a different vision. Within the oil industry and beyond, BP became a model for both corporate social responsibility and financial performance. Instead of following the stereotypical mindsets of the public of being a polluting oil company, BP overthrew their mindsets by being an economically driven company. To their competitors, BP could be seen as a role model and a market leader in the oil industry. BP created greater competition for them and set a higher benchmark for other oil companies to follow suit. To their employees, BP was a company which provided countless opportunities for individual learning and development of individual talent and an organisation that allowed for free expression of ideas. In a nutshell, the reputation of BP under Lord Brownes guidance became a highly favourable one in the eyes of its stakeholders, and also one which allowed the company to stand out against its competitors in the industry. This would prove to be beneficial for BP as a good reputation could translate into a higher possibility of attracting better talent and higher stock prices for the company. Relating its reputation to the previously mentioned values, symbols and performance of the company, BP was placed in a highly favourable position in the oil industry.

Denise Tan Su-Wen S9051122Z

Individual Term Paper

COMM102 | G2

However, despite the relative advantages of Lord Brownes implementations, there are certain aspects of it that require some critique. The effectiveness of Lord Brownes implementations relied largely on the internal level of emotional and rational support shown to him. To be effective, he would have to garner both forms of support in equal amounts. Lord Browne was an effective CEO in the sense that he had a clear plan and goal for the company- he knew where he wanted to take the company and had plans on how to get there. Being an aesthetic communicator, he was able to connect and communicate these goals effectively to his employees. It would be easy to garner emotional support from them, as many of his ideas were novel and seemed ideal in helping the company take the next step forward. Lord Browne also knew that such support was important and took steps to build up emotional strength within the organisation. However, without rational support from the internal organisation, these brilliant ideas would be merely visionary. Garnering rational support would prove to be a hard task for Lord Browne as he was by nature, an aesthetic, not a factual communicator. In this sense, another critical point to take note of would be Lord Brownes communication process. Lord Browne emphasized largely on the two areas of optimism and change, which resulted in him overdosing on these two aspects in his communication with employees. He had a very optimistic agenda and goals for BP, but he was unable to balance this optimism effectively with realism. By stressing greatly on the goals and future of BP, he may have neglected looking into the problems that may arise from his initiatives, thus making these goals seem less practical and more visionary in nature. In addition, Lord Browne may have overdosed on the change factor. Under his leadership, many changes were implemented to the companys organisational structure and goals. These changes may have been too abrupt, thus adding to the general lack of rational support. By raising up a corporate brand focused on BPs environmental, good corporate citizen and green credentials, Lord Browne was unknowingly building up a perilous corporate image for the company. After its merger, BPs corporate positioning strategy stressed its environmental activities and expectations for the company in the future. However, this may have come off as disparate from the reality of what the organisation actually was. BP is quintessentially an oil company specialising in deep sea oil drilling and exploration. For it to retain its corporate goals while being green-oriented as well seemed like a long stretch. Promising such standards put the company in a potentially perilous position as any wrongdoing or misalignment between what was said and done could result in their exemplary reputation backfiring against them. This could have been another reason why Lord Browne managed to garner emotional, rather than rational support from his employees. Lastly, managing the expectations of various stakeholder groups would not prove to be an easy task for Lord Browne, especially in the event of conflicting expectations from these groups. For instance, shareholders would primarily be concerned about the rate of returns generated by the company, while the public may be concerned about whether the company is carrying out its green initiatives. Balancing the expectations of various stakeholder groups is no easy feat, particularly when the power of stakeholders sometimes has the ability to trump that of shareholders. In managing the various expectations, one has to be mindful that while the mind of the corporation should focus on the shareholders, the heart should be mindful of stakeholders. Only then will the company be better equipped to manage its reputation. Having duly evaluated the changes brought about by Lord Browne during his term as CEO, we will now move on to examine the decisions that are affecting crisis communication today, a year after the Gulf of Mexico crisis. This will be done by first looking at what Lord Browne did, and then the actions of other parties. The former will be examined by looking at three perspectives: reputation, reality and relationships.

Denise Tan Su-Wen S9051122Z

Individual Term Paper

COMM102 | G2

Reputation As far as reputation goes, a company with a broadly favourable reputation has an edge over one with a narrowly defined reputation, as the former allows room for a wider margin of error, where mistakes made may be met with fewer problems and criticism. Applying this to the context, even though it professes to be on the green wagon, BP is nevertheless a well-known company operating in the field of deep sea oil drilling. The company did not have a broadly favourable reputation as its reputation was largely centred on its capabilities in the field of deep sea oil drilling. Because of this, the company came under fire during the oil spill in the Gulf of Mexico as it was due to BPs deep sea oil drilling in that area. With only a narrowly favourable reputation under its belt, there was no other aspect of BPs scope of operations that could salvage the unfortunate situation. Crisis communication was made even harder by Lord Brownes continual emphasis on BPs quest to Go Green. His speech about global climate change at Stanford University, coupled with his bold move of officially removing the company from the Global Climate Coalition served to increase awareness of their pro-environmental stand and place it in a distinctive position in the industry. The company even underwent rebranding, with its new logo espousing values of being progressive, green, innovative and performance-driven. The media also built up a very good impression of the company by comparing it with other oil companies in the industry. All the abovementioned initiatives placed increased pressure on the brand to perform up to the standards of the benchmark they set for themselves. By positioning itself as an activist for global climate change despite its already narrowly favourable reputation, Lord Browne was setting the standards of the company far too high. With such great expectations placed on the company, BP was put in the precarious position of balancing their corporate responsibilities and could not afford to make any mistakes. Reality Much can be said about BPs widely revered reputation but whether the company can live up to its expectations is another matter. When determining if the reputation of the company is in line with reality, it is of essence to note that corporate brand identity, corporate identity, communicated identity and conceived identity can undermine an organization, sometimes fatally so. This is more so if the companys corporate brand strategy is aspirational but lacks authenticity, which is exactly the position BP was placed in. In this respect, I will once again look at BPs values, symbols and performance after the Gulf crisis, comparing it to the values, symbols and performance discussed in the earlier segment of the memo, to see if these three aspects still align. Perhaps the most obvious misalignments can be observed between the reputed and actual performance and symbols of the companys identity. Being largely an internal factor, the external crisis of the oil spill did not change much of the values of the company. Performance: The first variance can be seen in BPs actual performance. The public saw the company as one committed to changing the stereotype of the oil industry and they were leaders in the market. However, the Gulf oil spill overturned all such assumptions and expectations, when the company proved to be the cause of the worst oil spill in history since the Exxon Valdez tragedy in 1989. Symbols: BP was known for its pro-Green attitudes despite being one of the top three oil supermajors and this was its distinguishing factor in the industry. Thus, it was

Denise Tan Su-Wen S9051122Z

Individual Term Paper

COMM102 | G2

particularly conspicuous when the companys stated symbol clearly clashed with the actual reality during the oil spill. From being communicated as a company bent on countering global climate change, the reality of it as the company that threatened at least 400 species of wildlife and released130 miles long and 70 miles wide of oil slick was in stark contrast to its claims. Therefore, crisis communication was worsened by the fact that the reputation expected of the company proved to be more than it could handle in reality. This was in addition to the fact that corporate brand promises nowadays are increasingly put under the spotlight and are, from time to time, likely to come under intense scrutiny for their veracity. Lord Brownes claims for the company were too optimistic, especially since BPs track record was far from blemish-free in the wake of the two oil spills in 2005 and 2006. By positioning itself as an oil company having a green positioning, Lord Browne was placing itself in a very high, near impossible threshold to attain which made crisis communication all the more difficult during the Gulf spill. Relationships A final point to look at would be the relationships arising from this crisis, particularly, media relations. The high profile corporate strategy could prove to be a bane for the companys reputation with the media as the media would be more likely to jump at the opportunity of having a negative view of the company to report on. This is contrary to the assumption that a good reputation will lend you more leeway in making mistakes, as BP did not have a broadly favourable reputation under its belt. The fact that BP made a mistake on a matter that they made a clear stand for could have been another reason why crisis communication was made more difficult. In deciding which decisions affect crisis communication today, we have to bear in mind that corporate brand catastrophes may be appropriated by governments, politicians, the media and even other corporations to serve their own strategic aims. In particular, this crisis was reported more frequently by the media due to the number of news value items present. 1. Negativity: There was no doubt that the Gulf oil spill was a huge blemish for BPs track record, and one which had many negative implications on the company and their practices. 2. Reference to elite persons: Lord Browne was considered an inspirational CEO during his period of leadership and the next CEO, Tony Hayward, was notorious for his offhand comments regarding the oil spill. The presence of these two media figureheads could have made the media more inclined to report about the crisis. 3. Personalisation: Personal context was very great in this situation. Environmental activists and the public were affected by the devastation caused by the oil spill on wildlife. Investors would be concerned by the stock value of the company. Employees would be concerned over the future of the company. In essence, there were many stakeholder groups involved in the crisis. 4. Unambiguity: The crisis was not ambiguous. The facts were clearly stated and reports showed what BP was doing to clean up the mess. From another viewpoint, the constant flurry of media activity could be due to the media wanting to satisfy the audiences need for an ending to this debacle. 5. Meaningfulness: The media picked up this story as it dealt with many topics which the public may find meaningful, such as endangered wildlife, stock prices, death and unemployment to name a few.

Denise Tan Su-Wen S9051122Z

Individual Term Paper

COMM102 | G2

6. Unexpectedness: There was no warning that there was going to be a crisis of such magnitude happening to BP and this made it all the more newsworthy for the media. There were so many newsworthy values arising from the oil spill crisis, making it difficult for BP to shy away from the media spotlight. To make matters worse, the reactions and decisions of other parties within BP made crisis communication even more difficult. During the crisis, BP attempted to adopt crisis communication strategies of mortification and distancing when it released a report regarding the Deepwater oil spill where it accepted some responsibility for the disaster but claimed that other companies had to bear some of the blame as well. Mortification was further enhanced by their recognition that they were at fault for failing to spot warning signs before the explosion and their agreement to a $20 billion downpayment towards compensation for victims of the oil spill. This could play a part in making crisis communication easier as it showed the public that BP was indeed taking the necessary steps to atone for their mistakes. However, this positive communication was overturned by further mistakes that perpetuated the situation, such as BPs use of Photoshop to exaggerate the level of activity at the Gulf oil spill command centre and CEO Haywards countless insensitive comments regarding the crisis. Such forms of action communicated to the public that BP did not have everything under control and therefore had to resort to such measures to appease the public. In addition, Haywards comments clearly sent out the relationship statement that he did not care at all about anyone or anything other than himself. This served to increase the publics outrage at the company and further worsened crisis communication. In conclusion, BP is having a hard time managing its crisis communication today and is finding difficulty in shedding off its reputation as being the company responsible for the Gulf of Mexico oil spill. This is due to the reputation brought up by Lord Browne under his leadership that could not be delivered in reality, and further complications brought about by the influx of media reports about the crisis and finally, the actions of other parties.