BP and the Oil Spill: What CEO Tony Hayward is Telling His Employees

Last Updated May 20, 2010 4:16 PM EDT

It's rare to get a peek into the inner workings of a company during a crisis, let alone one of the largest oil companies in the world. But a recently leaked e-mail from BP CEO Tony Hayward to employees does give a glimpse into how the company is holding up as it grapples with the Gulf of Mexico oil spill. The e-mail also gives outsiders a snapshot view of Hayward's management style.

This isn't some fly-on-the-wall moment where we get a chance to see Hayward candidly talking to a small group of employees at the local pub. This e-mail was sent to all employees -- that is, more than 80,000 people. Instead, this is a scripted communication meant to fight two diseases that often crop up when a company is in crisis: Bad morale and attrition.

Hayward has stumbled -- much to the chagrin of his public relations team -- many times with the press and has come across as a CEO focused on shifting blame to the other companies involved in the Deepwater Horizon oil rig explosion and subsequent oil spill in the Gulf of Mexico. (Although Transocean (RIG) and Halliburton (HAL) have taken a similar tack.) His e-mail to employees is far more successful because it takes a more responsible stance and uses Hayward's reputation for candor to BP's advantage.

Hayward explaining why BP is doing the right thing:

I have said all along that we will be judged by how we respond, and that remains the case. The strength of the BP balance sheet allows us to take on this responsibility.
Job security:
I know that many of you have questions about how this incident will impact BP, your jobs, pensions and our future plans. We have demonstrated robust cash flow generation over the past few quarters and at the end of 1Q our gearing ratio was below our 20 to 30 percent target range, at 19 percent or some $25 billion.
Yes, we can afford this:
We can therefore afford to do the right thing, and we will do just that -- our financial strength will also allow us to come through the other side of this crisis, both financially secure and stronger as a result of what we have learned from this tragic incident and how we have responded.
A dig at the media and Congress = morale boost:
There are more congressional hearings this week, and there will no doubt be yet more media attention. It is easy to get distracted by this -- I am determined that we will resist this temptation and stay focused on the job in hand.
The e-mail had at least one major misstep. Hayward tries to reassure employees that they work in a safe environment and takes aim at media reports that say otherwise. This ordinarily would seem like the right thing to do. But with the Transocean rig explosion, which killed 11 people, including BP employees, still fresh in everyone's minds, Hayward is fighting a losing perception battle.

And there's the one other minor detail: BP clearly has a problem with safety. Two of its refineries account for 97 percent of all willful violations found in the refining industry over the past three years. Questions also have been raised about the safety of BP's offshore oil rig Atlantis. And one OSHA official has described BP as a company with a systematic safety problem.

The e-mail does strike the right notes in other areas. Hayward begins with details about what the company is doing to fight the oil spill and outlines plans on its "next major intervention next week to completely seal the well," which is gushing oil some 5,000 feet under water. From there he tries to reassure employees while pushing the "we're the good guys because we're responsible" message.

Employees working for any company want to know three things: are we doing the right thing; is my job safe; and can we afford this? And the CEO answering those questions has to come across as genuine and unwavering in their stance. In short, their employees have to trust the answers.

Hayward's e-mail, which is reportedly part of regular updates to employees, answers all of these questions in the blunt fashion that has both won over and totally turned off people in the past. More importantly, he gives details -- the single best way to put employees' worries to rest. There's nothing worse than a manager or CEO telling the rank-and-file that everything's fine, and providing zero detail to back up those claims.

Photo of BP CEO Tony Hayward from BP Related: