The CEO of British Petroleum (BP) was fired yesterday. And so, once again, we see a large and successful organization — when things go wrong — make a change. Send a message. Roll some heads. Can we learn from this as owners of small and midsize companies?
Tony Hayward’s nearly 30 years of service at BP is finished. He began as a geologist in his mid-20s and rose steadily, eventually to CEO, just two years ago. He could have been CEO for another 20 years. Maybe should have. Instead, ousted at 52.
Ironic. It would seem he would have been the perfect man for the times at BP. He climbed the ranks primarily on his technical knowledge and Mr. Fix-It capabilities. But when things go wrong, heads must roll. Why?
- The stakeholders want to be assured that the board is unwilling to accept poor performance. That they’re committed to getting things back on course. The stakeholders are the employees, shareholders, customers and creditors. The easiest way to convey a message of change is to change personnel.
- The leader must have stakeholders’ confidence. If the leader does something to lose their support and confidence, a change must be made.
Hayward made serious gaffes during the hearings before the U.S. Congress. He suffered publicly ridicule. With the U.S. a critical market for BP — and literally billions of dollars at stake from the spill in the gulf — BP clearly needs a leader who is accepted, and acceptable, in the U.S. Not surprisingly, an American reportedly replaced Hayward yesterday.
What can we learn, as owners of private companies? When things go wrong, action must be taken. The strongest way to make a change and send a strong message to customers, employees, creditors and shareholders is to roll some heads.
