British Petroleum is a public limited multinational oil company listed in the New York stock market. It opened its doors in 1901 when William Knox got permission to find oil in the centre East. On discovery of oil wells, the business grew over the past century from a one-man business enterprise to today's BP, a multinational organization. This was accomplished through mergers and acquisitions in the United Kingdom. It operates in the vitality sector where it offers energy sources in form of oil and gas as well other alternative sources of energy such as solar technology ( it manufactures solar power panels). They have its operations in britain, America, and Africa as well as in the Middle East. Due to the global nature of BP's operations, the organization operates in an environment where in fact the stakeholders include various governments from various nations, its distributors, direct consumers, and shareholders. Due to the sensitive nature of its essential products, the public also forms a significant part of the organization's stakeholders (Verschoor and Curtis 13)
By close of year 2009, the organization recorded sales of around 239, 272 million dollars. This higher level of sales can be attributed to its diversified products including its heavy investment in geothermal as well as solar energy that culminated in the purchase of Lucas Energy Systems in 1980(s) and later the purchase of sloarex in year 2000. Suchalternative resources of energy indicate and communicate to the relevant public shell's efforts to handle business through eco friendly means. This is further demonstrated in year 2004 where the company launched a project whose intention was to lessen sulphur content in diesel fuel, which is principally meant for professional use. This worked well in improving their pr as demonstrated by the way the federal government and environment management bodies welcomed the move (Verschoor and Curtis 14).
Oil spill issue
BP oil currently faced an effort that is very costly not only in terms of lost production but also in the management of all concerned stakeholders effectively. In April 2010, the organization's deep water drilling horizon exploded. This explosion in the Gulf of Mexico left eleven people dead and injuring 17 others, while at the same time leading to uncontrolled gushing of oil from underneath into the ocean putting aquatic life in danger. Though it was hard to measure the actual flow of oil to the ocean, experts estimated the flow to be at least 35000 barrels of oil each day. The consequences were likely to spread if the spill went unchecked. These tremendous effects led to a call by the United States of America and also other governments internationally for BP to use responsibility and devise ways about how to stop the flow (Blackmon, Connel and Berzon 17).
In responding to this, the organization spent almost $20 billion, something that adversely affect its capital expenditure as well as issuance of dividends. Having put each one of these efforts, the business managed to design tighter fitted caps for its three oil pumping openings thus blocking further flow of the oil to the ocean. Nevertheless, this left the BP brand highly dented. BP formed a team that was necessary to gather the reality surrounding the oil spill, then analyze the accessible information to identify likely causes and recommend on how similar accidents can be avoided in future (Verschoor and Curtis 15).
Several task forces which were set up to investigate the accident discovered that to some extent the decision process of the company was to blame. For example, one team figured there have been weakness in the cement design, quality assurance, and risk assessment. The BP site leaders and the Transocean rig had reached an incorrect decision that the pressure test was a success which integrity of the well was established. They are good examples of effective decision-making management principles (Blackmon, Connel and Berzon 18).
Bp leaders were without doubt to be blamed for that accident, the accident evidently shows that BP CEO Tony Hayward headed an organizational culture that approved extreme risk taking, disregarded expert advice, failed to disclose facts and ignored warnings on safety issues. This flawed culture was clearly shown by failure by the business to respond to the accident immediately (Casselman, Gold and Russell 15).
The other problem was evidently shown by the business using its pr and media advisers to get its way to avoid it of the crisis rather than taking responsibility and tackling the problem. The organization must have noted that some crisis can't be spun. By endeavoring to disrespect these leaders did much injury to the business's reputation. According to the task forces such an accident is predictable and therefore preventable. They figured had the organization taken necessary steps to enhance the oil spill wouldn't normally have occurred, if not the outcome wouldn't normally cause a whole lot damage (Blackmon, Connel and Berzon 19).
The culture of accountability was a major problem in the business. It is clear that as opposed to the organization taking the responsibility it was quick to issue blames. The highlighted problems show that there is a need for the organization to improve its management principles if it really wishes to reduce the risks of future disasters. The principles that want immediate revision are the management leadership, planning and organization, controlling, decision making, and innovation and overall change. These principles are why is effective high performance organizations that are sustainable. If one of the principles is missing or is overlooked then the business will underperform, or even find itself in a position similar compared to that of BP.
Management principles define the role of the managers in exercise their daily work in an organization. In management of organizations large or small, private or public, service oriented or product oriented there's a general framework used. These principles are organizing, leadership, controlling, organizing, creativity, change and innovation and decision making (George 201).
Many people believe that leadership is the vision to take hold of your day and change lives. Although this is actually the case generally the leaders are faced by many constraints that they make no impact at all. The role of leadership in virtually any organization ought to be to support adaptive or useful changes. Leadership is the aspect of influence the particular one gets that makes others do what he wants. Leadership can be formal or informal. High performing organizations such as BP will require new leadership perspectives. Leadership mainly directs visitors to accomplish something in the organization. This means that the leader must motivate the employees if the set objectives should be achieved. There are many ways to motivate employees to contribute in reaching the organizational goals leaders should use the most likely in their cases. Leaders also encourage powerful teams in their organization; however these teams must be managed effectively.
Leadership in an organization must also encourage communication. Individuals within an organization communicate to influence, inform or enquire within the course of their daily operations. Functions of communication are to see, regulate, interrogate, manage, persuade and socialize (George 186). Opportunities to give feedback and question are incredibly important in bettering the potency of communication. Leaders may decide to visit every employee and make clear any new change in the procedure process, although this may guarantee that every employee understands what's expected of him/her this may however, be very expensive in terms of their time.
Firms' success largely depends on the daily decisions made by the members. The excellence of the decisions determines the long-term success of an organization and its day to day image in the eyes of employees, customers, and community most importantly. The existing challenging environments also call for even more strictness and creative imagination in the decision-making. New products and service processes are as a result of ideas. Firms must provide for decision making that allow the free flow of new ideas and present support to the efforts of employees who wish to make their ideas real (John 265). People employed in a business should make right decisions with the right time. Managing your choice making process calls for collection of some at the expense of others. This selection involves which decision for taking, which employees or stakeholders will be involve and how they'll be involved.
The current business environment has generated difficult in the organizational decision makers. The work place trends which include business ethics, technology, and culture create more complexities in the decision making process. Technological advancement has caused changes in the original organizational decision making process. Cultural diversity determines by whom, when, how, and why decisions are created. Ethics is nowadays involved with every step of the process
This principle involves identifying the business targets and deciding how to attain them. Planning involves selecting work that must definitely be done, how so when they'll be done. Planning shows how the organization hopes to achieve success. It needs time, experts, coordination and objectivity (Gray and Larson 325). For planning to be effective it then has to take a lot of effort and the ability take a broad objective. Decision making is also partly contained in planning in selecting what must be done in order to succeed. Successful planning is an activity that involves several steps that is stating the organizational objective, listing the alternative ways available to achieve the organizational goals, developing a ground on each alternative, choosing the right alternative, come up with a intend to execute the chosen alternative and put that plan into action.
This involves assigning work to various employees to be able to achieve the goals, executing the plan. Mainly organizing involves using the available organization resources to achieve the set goals. It involves the manger knowing the organization fully and the employees as well. There are several steps involved managers must always remember the plans and objectives and should act as their guidelines, managers should know what are the main tasks, they have to then subdivide them into smaller tasks, allocation of resources is also vital to succeed and finally managers should evaluate the results of the strategies (Leban and Stone 156)
In management context it involves ensuring thing happen as planned. It really is a continuous process which involves monitoring the progress created by the employees. Mangers should play a role in seeing to it that the business enterprise is performing as expected which goals will be achieved. This principles demand gathering of information and performance measurement. The performance is measured against set standards. The managers must take corrective action where necessary to get back on the right track.
When Tony Hayward took the helm in the year 2007 as the CEO he promised a reorganization plan. Further he promised to simplify the business structure so that performance would improve. The CEO had promised to reduce the BP organization structure by firmly taking out four levels. The CEO was ambitious in that the business really needed change (Casselman, Gold and Russell 15).
Reorganization of businesses should however, be studied cautiously. Using the case of BP when the CEO simplified the organization structure, the company improved it profits and developed a record for safety violations. However as latter noted oversimplification of management structure can cause major problems available for example, management conflicts are bound to occur. In the case of BP this is obviously depicted through the incompetent efforts to avoid the spill, poor immobilization of resources that was based on inaccurate information, complicated claims procedure, laying blames, and inadequate equipment to completely clean up the spill.
BP's reorganization was liable to the accident. It considerably abridged the company's ability to make good decisions. Reorganizing only improved the organizations capacity to communicate these more and more bad decisions. In any high performing organization, leaders make decisions, and then communicate them. Hierarchies then need to put on both: a capacity for complex decisions that are communicated down the shortest possible paths. In the bid to communicate better Bp went on flattening is structure (Casselman, Gold and Russell 16). This helped to expand the size of the teams. However, it has been argued, that for a company to make better decisions it should increase the number of levels and make smaller teams. The danger a business faces by eradicating levels particularly if it's manufactured in a one-size fits all way like what BP did, is that it'll harshly damage its ability to control convolution. Moreover, reality is multifaceted. With regards to decision-making, any widespread importance demands organizations to flatten and demands teams to enlarge in size in spite of local circumstance is not prudent.
Planning principle is key if the organization is to succeed. Planning shows the way the organization sets to attain its goals. Planning must therefore be achieved with utmost intelligence if disasters in organizations are to be avoided. BP failed in planning from restructuring its organizational structure. Plans to flatten the business weren't well researched. Although company improved performance and profits increased the disaster was awaiting. Poor plans are also depicted by the organizations reaction to the disaster, the ineffective trials to stop the oil from spilling. Planning requires experts and coordination BP neglected experts' advice leading to the disaster. Planning involves making good decisions at the right time.
Best practices in organizing involve assigning tasks to different employees to be able to accomplish specific goals. Shrewd managers should wisely use the available resources to achieve their goals. The mangers should know their organizations and the people in and out. This will help them know when a disaster is awaiting and take necessary action to avoid them from occurring. Regarding BP the CEO sometimes appears to get overlooked this principle on lots of occasions, for example, failing to effectively use the available resource to react to the accident. To achieve success the managers must first develop organization structure that is pertinent to the organization. Strategic management is also part of organizing that can effectively be used by managers to succeed in business.
This principle demands measuring the results and progress of the plans that have prior been made. Measuring involves ensuring that set goals are realized by the business. Mangers must have a benchmark against that they measure their performance. Managers also needs to develop a continuous monitoring process that ensures that all the actions taken are checked and appropriate corrective actions taken
This paper has discussed organization design and decision making management principles. A research study of British Petroleum is used where it starts by clarify the annals of the oil company. The oil company has undergone several organizational changes for example with the appointment of Tony Hayward the business flattened its organizational structure eliminating four levels is the structure. All of this is welcomed by many as a prudent move especially due to increase in profits and safety violations measures. However by doing this the first choice welcomed a big disaster than anyone would have expected. The oil spill accident claimed the lives of eleven and injured seventeen.
Having discussed this issue and that was caused by poor management principles the paper then examines the relevant management principles that needs to be applied. It explains how BP ought to organize its decision process to minimize the risks of future disasters. Relevant management principles that can be applied in such a case are outlined. Leadership, planning, controlling, organizing and decision making are examined conclusions made about how each is vital in the entire process of management. It is further noted that no matter how well a few of these are put into use, overlooking a single principle will have devastating effects on the organization all together as depicted by the BP company.
Each of the management principle is then analysed and its application well explained. Having analysed these management principles it is then recommended that for the business to achieve success it must put all the practices into use. Neglecting either will have implications on the entire running of the institution. Companies that use these principles wisely will improve performance and minimize risks of disasters.