Thursday, September 07, 2006

Proof that Management Style More Important than Organizational Form

The private sector is consistently portrayed as more effective than government by the current administration. Yet, the VA healthcare system outscores the private sector in patient satisfaction. The leader responsible was just hired away by HCA.

A contrary example showing the burden of poor management comes from British Petroleum. While this may seem an indictment of the individual, it’s an indictment of the company’s systems that allow such a thing.

The former head of pipeline-corrosion monitoring for BP in Alaska refused to testify under oath Thursday as outraged lawmakers grilled company officials over the causes of a massive oil spill earlier this year.

Richard C. Woollam, who was transferred to BP's Houston offices in 2005 amid concerns that he intimidated potential whistleblowers, invoked the Fifth Amendment of the Constitution in refusing to answer all questions from a House subcommittee.

Steve Marshall, the president of BP Exploration Alaska Inc., conceded that Woollam's "abrasive nature" and "intimidation" may have silenced workers.

In 2004, BP hired the Houston-based law firm Vinson & Elkins to conduct an internal investigation of alleged workplace harassment and pipeline-corrosion data falsification. The law firm concluded that some pipeline inspectors experienced "fear of retaliation" for reporting safety concerns and other issues, but said there was no evidence that BP employees or contractors were explicitly told not to raise red flags. Vinson & Elkins also found no proof that pipeline corrosion data was falsified.

The company could have taken relatively inexpensive measures to prevent the pipeline corrosion, but it chose not to do so. However Prudhoe Bay pipelines are not BP’s only concern. The company faces victim’s lawsuits over the explosion at a Texas City refinery. It also is under investigation for illegally manipulating propane prices, crude oil and gasoline markets.

Regardless of government or the private sector, ethical management is a great place to start. That so many American business practices actively work against ethical leadership should concern the world. That the U.S. government is subcontracting most of its work to the private sector means the line between business and government has blurred substantially.

Lawmakers nailed home the point regarding ethical leadership with their grilling of BP executives.

Lawmakers repeatedly hammered BP executives about allegations that the company failed to adequately address concerns raised by its own pipeline workers over the past five years, in part because of an atmosphere of fear and intimidation under the supervision of Woollam.

Now what other leaders do we know who operate using fear and intimidation? Any mountain bikers come to mind?

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