Bonus system to encourage safety improvements at BP

After the disastrous events they have experienced since the summer, due to the Deepwater Horizon drilling rig leak in the Gulf, you can quite see why BP would want their staff’s chief focus to be on safety at present. On Monday Bob Dudley, the UK oil group’s new chief executive, told staff that bonuses for the fourth quarter for BP staff will be based solely on how employees perform in terms of safety and risk management. Mr Dudley has vowed to improve BP’s safety culture, saying he is committed to ensuring that “a low-probability, high-impact incident” such as the Deepwater Horizon accident in the Gulf of Mexico never happens again. The FT reported the change in the article here.

A spokesman for BP told the BBC that the majority of staff usually received bonuses, although there was a big disparity in the amount paid, and Bob Dudley’s email to staff at the beginning of this week said that existing bonus arrangements, linked to other aspects of performance, would be honoured for the first nine months of the year. How successful will he be in driving through a complete change in organisational culture? We know that this is one of the major challenges facing new managers when they step into organisations facing problems, as BP certainly is doing - but perhaps the move to waive a legal cap on liabilities arising from the oil spill in the Gulf of Mexico that limits its exposure to $75 million plus clean-up costs is indicative of the desire to signal the extent of the change. BP has set up a $20 billion compensation fund. According to the BBC the total bill for fighting the spill and compensating victims currently stands at about $11. 2 billion (£7bn), and it faces several hundred lawsuits - so it looks absolutely right that the organisation has to convince staff of the need to focus on safety, and the stakeholders that such a problem will not happen again.