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Saturday, June 19, 2010

BP: Safety vs Profit

BP has been in the hot seat for their safety record for much longer than just the Deepwater Horizon disaster.  Yet, we hear the management of BP talk about how they have been striving for at least the last few years to instill a corporate culture that places a high priority on safety.  How can there be such a disconnect between what management says it wants and what happens in the day-to-day operations in the company?

BP is a corporation.  Corporations exist to make a profit.  Some would argue that the only reason they should be allowed to exist is to maximize the return to the shareholders.  If they are not making a high enough profit, the shareholders will desert them and the stock price will fall to a level that makes the company a takeover target.  So BP must make a profit to continue to exist.  But profit that comes with too much risk from civil or criminal sanctions or from lawsuits from aggrieved parties is not in the long-term interest of the company.  Safety and corporate citizenship fall into the category of activities that protect the corporation.  No matter how good it looks or how much companies like to tout their citizenship, in the end this is all corporate self-interest.  As consumers and citizens, we understand the bargain because we want the company to prosper to create jobs, support communities, and pay dividends to us as investors.

BP surely has - and always did have - a corporate safety program.  No company of their age and scope could be without one.  There are employees at BP whose only job is safety monitoring and training.  BP facilities world-wide have safety signs on employee bulletin boards and some level of safety training is a part of every technical employee's job requirements.  I don't know this for a fact, of course.  I have never worked for BP.  But I worked for a large multinational corporation for thirty years and I know that we paid a lot of attention to safety because we had to.  The price of not paying attention to safety was risking the corporation's existence.

Employees are not stupid.  They know that accidents are bad for the company and bad for them personally if they are involved.  But employees also know that the next pay raise or the next promotion - or even keeping your job - is based on performance.  Delivering the goods faster and cheaper is always viewed as a positive on the next performance appraisal.  Safety is a box to be checked.  As long as things are going well, there is nothing to be gained from putting safety ahead of profit.  Accidents by their nature are unpredictable.  If people knew there was going to be an accident, they would never cut the corner they are about to cut or take the cheaper, faster route rather than the safer but more costly route.  Employees know all of this.  Every day, people make decisions calculated to maximize their own gain, either in terms of pay or position.  Most of the time, people are not even aware of making the decisions consciously.  They just know that their last performance appraisal wasn't so hot and they feel the pressure to get more work done or they saw a colleague get promoted for taking the faster route.

Somewhere I read that airline safety is built on the graves of the crash victims.  That is true of all safety.  Until we experience the full force of an accident's outcome we cannot know just how bad it is really going to be.  Lots of organizations perform risk analyses on their operations.  NASA certainly did it before the Challenger and Columbia disasters.  But every major accident has a series of unique events leading up to the disaster and each of those events is in itself a small, almost trivial, event.  "For want of a nail... "  

I am not defending BP here.  I am just trying to point out how these things happen.  The thing that matters here is that senior management makes safety a real priority and does not treat it as something that is costly and a nuisance but needs to be done.  BP is experiencing the costs of not just the Deepwater Horizon accident but a culture that goes back years, maybe decades.  It will take a lot of work to change it.   Today is a good day for them to begin taking it seriously.

1 comment:

troutbirder said...

**** happens. Is a rationalized flimsey excuse. For deregulators degregulations. For Bush II drill at any cost paid hacks, especially Cheney. For a corporate culture that figured cleanup costs for little accidents would be a lot cheaper than rigorous expensive safety measures that the Feds would wink at when skipped. Yuk!