BP Plc gets its succession planning wrong
Choosing chief executives from a pool of internal candidates with decades of experience at the company may look like good succession planning but BP Plc (LON:BP) has proved yet again that it does not always work. Tony Hayward is the oil company’s third chief executive to tick all those boxes but who has been forced out.
Tesco is lauded for promoting from within, selecting CEOs who have spent their career with the company and thus know its culture and practices. But while that has worked spectacularly well at the supermarket group the same policy has proved disastrous at BP.
Hayward has been forced to quit for his handling of the aftermath of the blow-out in the Gulf of Mexico. His predecessor Lord Browne had to go because lying about his private life undermined the trust put in him in his corporate role. David Simon briefly headed the company before Browne became CEO in 1997 but left to become a government minister; he however had replaced Sir Robert Horton who was forced out because of disputes over his management style and the dividend policy.
Each of those ousted bosses had spent their working lives at BP, clocking up around 30 years each.
Horton doubled as chairman and BP has had similar problems with that position too. Peter Sutherland clashed publicly with Browne for many months before the incident that forced out the chief executive, but the oil group spent 17 months trying to find a replacement for him – and there is clearly now dissatisfaction with Carl-Henric Svanberg too.
BP has yet again turned to its pool of long-serving internal candidates in appointing Robert Dudley to replace Hayward but perhaps it should be questioning the policy of recruiting from its own ranks. The policy risks an in-breeding that prevents new views and cultures being brought into a company and can preserve bad practices.
The promote-from-within policy works well at Tesco because that company nurtures middle-managers with the intention that at least one will be suitable to rise to the top. It is not obvious that BP did that. Hayward may have proved his loyalty and been an expert geologist, but he clearly failed on important aspects of the CEO role, most notably on communication with press and politicians. If he had been groomed for the job, he would have been practised in those roles.
If BP takes succession planning seriously it should be running a nursery of executives who can become future chiefs. If Dudley has not been trained in all aspects of being the boss he will have to learn fast.
July 27th, 2010 at 6:12 pm
It is unfortunate that you have your facts wrong, perhaps to purposely to make it fit the point you are trying to make? Lord Browne left BP because he had reached retirement age. This was publicised at the time. Yes he has a personal issue that prevented him from fighting harder with the board to work beyond retirement age, but at the end of 10 very successful years for BP he retired. Haywood on the otherhand had been very succesful, improved profits and the culture within the organisation. He has alot of support with investors and internal staff alike. His performance has been exceptional, however he is now the scapgoat for an irate american market, who aren’t prepared to wait for the investigation before finding Haywood and BP guilty.
If you look at the facts, internal succession planning at BP has worked very well. The outsider (Svanberg) is the one who has failed dismally and he is an outsider hired in.
July 30th, 2010 at 7:35 pm
Browne had no wish to leave BP, retirement date or not. He and his chairman were in open dispute about this. A compromise was reached whereby he stayed on longer - but not as long as he wanted. But those plans were overtaken by the relevations about his statements about his private life which led to him leaving prematurely, immediately and in disgrace. None of that suggests smooth succession planning.