BP Deepwater Horizon Oil Spill Report Assessment
BPs immediate response to the disaster was a rather frantic attempt to coordinate emergency response to curb the oil spill (Macalister 2). This happened in the eve of April 20th (The Guardian 8). Many measures were applied to contain the oil leak but quite a number were unsuccessful in the initial stages.
For example, the company tried to pump thousands of barrels of oil into the well to stop the leak but nothing much came out of it (The Guardian 8). The mitigation efforts were poorly coordinated and rather clumsy, with many of the companys shareholders expressing fear that the company was going to significantly incur a lot of financial damages in the cleanup exercise (The Guardian 8).
This caused BPs shares to plunge by more than 2% (The Guardian 5). However, the shares of the company hit an all-time low after it was estimated that the cleanup costs and litigation expenses were costing the company in excess of $2.35 billion (The Guardian 8). Nonetheless, after subsequent consultations with the company engineers, the oil leak was contained and sealed to this date.
On 3rd June, the company embarked on efforts to carry out major advertising campaigns to boost the companys image among the American public (The Guardian 5). This was undertaken through television commercials that were aired throughout the country.
Soon afterwards, the company embarked on rewarding its shareholders with dividends; a move which was politically criticized because the crisis obviously implied increased financial burden for the company in cleanup costs (The Guardian).
Considering there were a number of fatalities in the disaster, the company decided to pay $20 billion as compensation to the families (The Guardian 5). This translated to 13.5 billion Euros (The Guardian 5).
The above responses implied a number of advantages and disadvantages to the company. Though containing the leak was the first response procedure the company undertook, its lack of coordination showed the companys weakness in dealing with disasters. However, since it undertook efforts to curb the disaster (as a prompt strategic response) the company was perceived to take responsibility for its own misdeeds.
This was a swift strategy the company undertook. Another commendable response that the company undertook was to compensate the families of those who lost their members in the disaster. This was a positive strategy in portraying the company as having a human touch to its undertakings. In other words, the company was easily perceived as caring for its employees, as opposed to solely being driven by the aim of making profits.
The television commercials and advertisements developed by the company to improve its image was also a good strategy in minimizing the negative publicity the company got as a result of the disaster. However, the effectiveness of such a strategy depended on the content of the advertisements.
Bad content or inappropriate advertising would have easily sealed the fate of the company in bad publicity, but if it were carefully crafted, it would have served its purpose. In this case, the adverts were carefully crafted and they served to mitigate the effects of the bad publicity (though not much effectiveness could be evidenced as will be seen in subsequent sections of this study).
Relevance of Tench and Yeomans Statements in BPs Situation
Tench and Yeomans assertions that it was prudent for the organization to be prepared, knowledgeable, calm, controlled and easy in disseminating information applies best to the BP disaster because the responsive strategy that the company undertook lacked specific elements identified above. One of the most important missing elements in BPs disaster responsive strategy was the ability to be prepared.
This failure was easily noticed from the companys uncoordinated efforts to contain the oil spill. Though Tench and Yeomans note that no disaster response offers a hundred percent guarantee of working, it would have been beneficial for the company if it had an effective disaster preparedness strategy for such kind of disaster.
Preparedness could easily have eased the level of stress on the company executives because they were held up in endless meetings to deliberate on how to go about the disaster (a step that could have been easily defined with the preparedness plan) (The Guardian 15).
The Guardian further affirms that some of the executives were complaining that they wanted their lives back (16). This kind of assertion however angered the American public (The Guardian 16).
With regards to knowledge management in crisis management, there were reports that BP was aware that its drilling well was leaking, days before the oil spill got out of hand (The Guardian 15). This was an invaluable piece of information for the company, if it acted on it in good time. Because the company disregarded such information, the disaster was extensively disastrous.
The company exposed some sense of complacency in the way it responded to the crisis, and from the analysis of Taylor (9), such an attempt at disregarding important information is unacceptable and potentially dangerous (just like it was).
Calm, as asserted by Tench and Yeomans is an important ingredient in crisis management when evidenced from the BP disaster. The lack of calmness in dealing with the gulf oil spill could be seen from BPs efforts to try and come up with a quick fix to the problem. This is the reason why there were a number of frantic efforts to salvage the situation and none of them worked for a couple of weeks (The Guardian 5).
A sense of calm in crisis management would have been beneficial for the company because it would have allowed for adequate time to gather data relating to the situation, asses the situation, consult widely and ultimately form a team to deal with the disaster (Bolander 4). A failure to observe calm caused the company executives to freak out and consequently cause the disaster to spin out of control (The Guardian 5).
Communication is also another important crisis management tool advanced by Tench and Yeomans because it helps in the spreading of rumors and perpetration of falsehoods regarding a given crisis. However, before proper communication is carried out, a proper communication structure needs to be in place. Preferably, the communication structure needs to be horizontal and not vertical.
Those to be communicated with include the internal and external shareholders of the organization. BP failed to have a good communication plan in overseeing its crisis management efforts and that it why the company suffered increased financial damages. This kind of consequence is predicted by Schmidt who notes that:
Companies that underestimate the importance of effective employee communication during times of crisis often suffer significant economic damage as the result of, among other reasons, a lack of trust, low morale, and the subsequent loss of their most valuable asset, well-trained and dedicated employees (7).
Lastly, Tench and Yeomans note that control is an important tool in crisis management. Control is often exercised by establishing crisis control centers (Conflict Research Consortium 1). Exercising control in crisis management is important in ensuring information is properly interpreted and the given crisis is availed (Conflict Research Consortium 1).
Also, control enables companies to negotiate crisis reduction steps incase current strategies fail to materialize (Conflict Research Consortium 1).
BP did not fair badly with regards to this provision of crisis management, but such an observation cannot be specifically attributed to the company alone because the American government, through the Environmental protection agency (EPA) helped the company establish a control of the crisis (Gibbs 12).
This can be evidenced through its establishment of the website: www.epa.gov/bpspill which provided the public with information regarding the responses the government and the company were jointly undertaking (Gibbs 12).
Comprehensively, from a personal point of view, BP should put in place an elaborate disaster preparedness plan that encompasses the above elements, just like Tench and Yeomans proposes. This kind of disaster management plan would be beneficial in ensuring most functional areas in crisis management are well catered for.
The assertion by Jeflkins that organizations can potentially benefit from opportunities brought about by disasters is true because crisis management potentially poses a lot of opportunities in the event of a disaster. However, it should be understood that before any opportunities are capitalized in the event of a disaster, proper crisis management should have been first undertaken and all the people who need to be helped, are helped.
This is a pre-condition to taking advantage of crisis opportunities, otherwise, if the above is not observed, the attempt to capitalize on an opportunity from a crisis may prove futile or cause more harm that it can.
However, in coming up with opportunities in the event of a crisis, it should be acknowledged that in the process of rebuilding (after a crisis) people can capitalize on their experiences (after a crisis) to build something better to withstand future crises.
For instance, since the BP oil spill was brought about by structural and human error, during the rebuilding of the damaged well, the engineers can build the well valves in a stronger way to prevent any future spillage. Also, policies can be formulated to correct future human errors of similar kind, say, through increasing human monitoring stages (and the likes) so that future calamities of the same magnitude can be avoided.
Crises can also provide an opportunity for leadership change, in the sense that, leaders can develop better skills at handling their roles. In particular, crisis leadership can be an easily developed skill among a crop of leaders in an organization.
This is probably an opportunity that BP failed to realize because its current crop of executives was up for resignation after the disaster (considering they were perceived as part of the problem since they failed to curb the disaster).
In reference to this development, the US president, Barrack Obama, pointed out that he would have fired the company executive if he was working for him (The Guardian 32). Such sentiments were probably said because it is human nature to find someone to blame.
However, such a strategy would not be recommended when analyzing the opportunities crisis and disasters bring to the organization. This is true because the company executives who were up for resignation were better placed to handle future company calamities (incase they happened) because they had adequate knowledge on how to handle such disasters. This experience is acquired first hand; meaning that it is possibly invaluable.
BPs corporate image should be improved through effective marketing strategies that can restore the companys position in the corporate map. The marketing tools to be used change by the day but the company should consider using a wide variety of channels. This includes, website marketing tools, print media, television and radio.
These tools should all be engaged simultaneously because the public should be bombarded by positive media advertisement regarding the company since it has been 9 months and the company may still continue to suffer from poor reputation and customer skeptism if it does not do something drastic.
Firstly, since the company is currently experiencing a lot of customer skeptism, low customer confidence and confusion regarding the companys ability to handle crises in a good manner; it is up to the company to project a good corporate image with these concerns in mind. Specifically, the company should project an image of dependability, reliability and remorse so that they can win back customer confidence.
More importantly, the company should project an image to portray the fact that it is doing everything in its capability to reverse back the damages it caused to the environment because environmental degradation is one concern which much condemnation was directed at the company.
This involves doing something out of the ordinary, say, sponsor an environmental cause that projects a perception that the company really cares about the environment. Doing the bare minimum (which is cleaning up the oil spill) is not enough to restore public confidence, since many people would think it is only doing so with the aim of restoring status quo.
Moreover, the company should be creative enough to devise ways through which it can communicate reasons why the company should be trusted again. A failure to do so will lead to less patronization of the companys outlets because of a lack of customer commitment and therefore most of its traditional sales will go to its competitors.
These factors should be communicated through print, internet, television and radio because the company needs to reach as many people as possible. This involves the use of an integrated marketing strategy because the more channels the public hears the message, the more effective the message is likely to be, and the more the number of people the company will reach.
An integrated marketing strategy is also identified by many researchers a sure way of boosting the credibility of the company and trust between the company and the public (Optimal Marketing Communications 5).
For example, Optimal Marketing Communications affirms that Keep in mind that the more your target audience sees and hears the name of your organization or business, the easier it will be for you and your associates to sell your products, services, or point of view (5).
Secondly, since the company had already issued a number of press releases regarding the state of the disaster; the company should organize with the local media, and even international media, to carry out media interviews so that the company can explain the improvements it has made so far, and how it seeks to handle such kind of disasters in future (Optimal Marketing Communications 6).
In the same regard, the company will also be in a good position to reiterate its environmental commitment, especially in light of the fact that the oil industry has been singled out to be one of the most visible catalysts to environmental degradation. This kind of public relations strategy should be pushed through television and radio.
Thirdly, the company should push its positive image agenda through editorials and guest columns (written by either the company itself or its associates).
In this kind of marketing strategy, the company should embark on resonating the companys commitment in environmental preservation, but most importantly, the company should consider reiterating its past record of good environmental practices and how it has been mindful of its employees welfare.
This will be in light of the number of employees the company lost in the disaster and how it responded to the same. A good record of disaster preparedness, environmental practices and employee welfare would instill a perception that the oil spill Disaster was a secluded case and probably an accident.
Lastly, considering the company experienced a bad reputation not only among the public but also the company stakeholders; it is advisable that the company undertake a public relations exercise to restore the trust its stakeholders had with the company (and more especially with its management).
This ought to be done through workshops and seminars where the company will communicate its position regarding the measures it has taken after the disaster and how it seeks to improve its image in light of the same. This strategy is important because company stakeholders support the management and operations of the company; so if the company cannot be guaranteed of internal support, it would be fighting a losing battle.