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The Times: BP halts the managerial merry-go-round to improve its safety and performance

May 7, 2007
Carl Mortished, International Business Editor

The grasshopper manager, the executive who hops from job to job leaving a trail of destruction behind him, is under attack at the big oil companies.

Jeroen van der Veer, Shell’s chief executive, has imposed a job-tenure rule of four to six years for all but the most junior staff. Last week BP followed the Dutch company, signalling that the here-today, gone-tomorrow culture of the globe-hopping oil executive had to come to an end.

In his first speech as chief executive after the abrupt departure of Lord Browne of Madingley, Tony Hayward told a staff meeting in Germany that he wanted to stop the rapid circulation of managers, which prevented them from gaining on-the-job experience.

Typically, a BP manager running a refinery or an oil platform would stay in the role for 18 months or two years. Mr Hayward wants that tenure to rise to three to four years.

Criticism of the rapid turnover of BP managers emerged in the Baker panel’s report on the safety culture of the company’s refineries in the United States after the Texas City disaster in 2005. The panel found an extraordinary level of senior management turnover at Texas City, with nine plant managers since 1997.

Shell now expects mid-career and senior executives to spend four to six years in a post, but when Mr van der Veer joined the company in 1971, rapid job movement was the rule. In a recent interview with The Times, he said that the industry had changed over the past two decades and needed much greater professionalism.

Referring to his own early career, he said: “I was a maintenance engineer for two years, then a frontline salesperson for two years. You had a great life, working for two years in a country and then moving on. No way can you make a good professional doing that.”

Mobility at work is on the increase, but there is less evidence that it improves the performance of the individuals or the companies for which they work.

Jonathan Cohen, director of Iddas, an executive mentoring and recruitment consultancy, said that the trend for job-hopping has its origin in London’s Square Mile: “In financial services, staff turnover has become a business risk in its own right. It goes back 20 years to Big Bang, when the ties that linked people to banks and brokers were severed.”

Mr Cohen argued that the City gained fresh blood and new ideas but lost the benefit of long-term loyalties. Furthermore, he pointed to the contrasting culture of City law firms, where the practice of partnership and lock-step promotion still exists. “Those law firms have been around for a long time and are very successful,” he said.

However, the flip side of having a powerful corporate culture is that it may act as a deterrent to hiring outsiders, leaving a firm vulnerable to stagnation from within.

Short-termism is increasing at the top, too, where the average FTSE chief executive lasts three to four years. That contrasts with the risk of a chief executive who overstays, another problem that BP has had to grapple with. Mr Cohen believes that there are many boards that fail adequately to address the issue of succession until it becomes a problem, both for the company and the individual.

“Very few people who are not succeeding are happy in their roles,” Mr Cohen said.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1756114.ece

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