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Ideas & Debate

What CEOs should learn from former BP chief’s gaffes

Mr Hayward inspects the oil spill. The retiring  BP CEO’s life changed forever after the Deepwater Horizon drilling rig exploded. Photo/FILE
Mr Hayward inspects the oil spill. The retiring BP CEO’s life changed forever after the Deepwater Horizon drilling rig exploded. Photo/FILE 

You know you’re famous when Wikipedia, the online encyclopedia, has a whole profile page on you.

You know you’re famous when the President of the US waxes not-so-lyrical about you and your suitability as an employee.

You know you’re famous when it makes headline news that you have taken a short vacation with your son to participate in a yacht race.

Tony Hayward knows that he is famous.

On April 20, the retiring BP chief executive’s life changed forever after the Deepwater Horizon drilling rig off the Gulf of Mexico exploded, killing 11 people and leaving a ruptured well that for the next three months spewed hundreds of thousands of barrels of oil into the ocean threatening marine life, tourism and the fishing industry along the Gulf coast.

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Call it hubris or naiveté, but the first thing Hayward should have done was to call in a public relations firm to train him on how to handle the media and the proceeding US government and congressional backlash that followed.

Tony Hayward simply put his foot in his mouth more than once and gagged himself out of a job.

His public relations gaffes form case studies on how chief executives should not behave when faced with an enormous corporate disaster that has environmental and public safety ramifications.

Speaking about Hayward’s gaffes, President Obama in a TV interview said that Hayward “wouldn’t be working for me after any of those statements.”

Here are a few examples of the chief executive’s PR gems:

May 3: Two weeks after the accident, in an interview with American TV station NBC, Mr Hayward insists that BP was not at fault for the explosion on the Deepwater Horizon on April 20 and the subsequent oil spill.

“Well, it wasn’t our accident, but we are absolutely responsible for the oil, for cleaning it up, and that’s what we intend to do… the drilling rig was a Transocean rig. It was their rig and their equipment that failed, run by their people and their processes.”

May 14: In an interview with the Guardian newspaper: “The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.”

May 18: In an interview with Sky News, Mr Hayward says he is not overly concerned by the amount of oil that is flowing into the Gulf of Mexico.

“I think the environmental impact of this disaster is likely to be very, very modest.” But the cherry on the icing on the cake was the statement he made on the May 30, by which time he had been in the glaring limelight for about five weeks. Asked what he would tell people in Louisiana, where oil had begun to reach parts of the state’s south-eastern marshes, Mr Hayward tells reporters: “The first thing to say is I’m sorry… We are sorry for the massive disruption it’s caused their lives. There’s no one who wants this over more than I do. I would like my life back.”

Well, the media and the politicians wiped the floor with Hayward’s seemingly unrepentant prevarications immediately thereafter.

When summoned before the US Congressional Sub Committee thereafter, he was grilled at a hearing which lasted more than seven hours and visibly angry Congressmen from both the Democratic and Republican parties questioned BP’s safety record in the past.

“We are not small people but we wish to get our lives back,” was the terse statement from Congressman Bart Stupak, playing on a comment made the day before by BP chairman Carl-Henric Svanberg about how BP sympathised with the “small people” of the Gulf, and Hayward’s recent remarks about wanting his “life back”.

Everything thereafter became a focus on Hayward’s attempts to getting his life back, including a seemingly innocuous sighting at the JP Morgan “Island Race” which sees hundreds of yachts race off England’s south coast in mid-June.

White House Chief of Staff Rahm Emanuel tore into Hayward’s appearance at the yacht race in an interview with ABC TV network, “Well, to quote Tony Hayward, he’s got his life back, as he would say… and I think we can all conclude that Tony Hayward is not going to have a second career in PR consulting.”

It cannot be easy being the focus of such inordinate and sometimes malevolent media and political attention for any person. In fact it has to be downright difficult as to lead a monk to drink.

It makes one wonder then, what was going through the minds of the BP board of directors during this whole brouhaha and why Mr Hayward was being allowed to be the face of the company in an ever spiralling public relations disaster.

It is noteworthy that his declared intention on becoming chief executive in 2007 was to adopt a lower profile than his predecessor, Lord (John) Browne of Madingley.

Lied to a UK court

Mr Hayward took over from Lord Browne who resigned having lied to a UK court about his relationship with a male escort. So as it is, the BP board was no stranger to having scandalised chief executives.

The board had to come to a decision quickly.

The 11 deaths and the massive oil spill were being reduced to a parody of the chief executive who seemed blissfully immune to the collective anger of a nation.

In mid June 2010, 58 days after the explosion, BP executives committed to pay $20 billion into an independently managed fund over four years, suspend dividend payments for the rest of the year and pay $100 million to workers idled by the six-month moratorium on deep-sea drilling that the Obama administration imposed after the spill.

According to Reuters, the $20 billion figure is roughly equal to BP’s average annual profits over the past four years.

As for Mr Hayward, he got an $18million soft landing.

He will receive severance pay of a year’s salary (about £1m, or $1.6m) and the right to start drawing from a pension pot conservatively valued at $16.5m).

On July 27, the company announced that Robert Dudley, an American, would be taking over from Mr Hayward in October.

On July 27 the firm also announced a record loss of $17 billion, the consequence of a one-off charge of $32 billion to clean up the oil spill, compensate its victims and settle fines.

The firm will have to sell more than a tenth of its assets to cover this, but it will survive.

As for Mr Hayward, he has about 18 million reasons to keep smiling now and forever more. Amen.

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