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The Times: Browne’s successor aims to strip bureaucracy from BP

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July 13, 2007

Carl Mortished

Tony Hayward, chief executive of BP, is planning to strip out bureaucracy and complexity from the oil group in the wake of the departure of Lord Browne of Madingley earlier this year.

The drive to streamline the head office, in St James’s Square, is part of a cultural shift in which the new chief executive is trying to play down Lord Browne’s emphasis on the environment and refocus BP on profits and operations. Symbolic of the change in mood is a decision to move the office of Peter Sutherland, BP’s chairman, from the sixth to the fifth floor, opposite Mr Hayward’s office. During tense periods in relations between Lord Browne and Mr Sutherland, company executives shuttled up and down between the two offices, relaying messages between the two men in what was widely seen as a symptom of dysfunction at the top of BP.

Mr Hayward has also transformed Lord Browne’s old office suite, designed for the former BP chief by Viscount Linley, into a meeting room. The bespoke desk and chairs designed by Lord Linley, the son of the late Princess Margaret, have been replaced with standard office furniture.

The efficiency drive will shift resources from head office to frontline personnel. Sources close to BP say that Mr Hayward wants to stimulate more internal debate and make BP’s leadership more collegiate. The aim is to make the running of the organisation “less silodriven”.

The heads of BP’s business units are being encouraged take part in discussion of parts of the business other than their own at top executive meetings. The new management style is an attempt to break down a remote, top-down culture that was pervasive during recent years and inhibited the upward transmission of bad news.

BP’s failure to create a trusting and open environment was criticised in the Baker Panel report on its US refineries and was cited as a contributing factor in the Texas City disaster.

According to one source, Mr Hayward has told colleagues: “Bad news told early enough to do something about it is good news.”

Mr Hayward and other directors have discussed the corporate mantra “Beyond Petroleum”, but decided against dropping it. The aim was to shift market perception, concerned that the company’s new emphasis on cost savings and operational safety was still eclipsed by Lord Browne’s message about the environment.

One company official said: “There are many questionable activities which have grown up inside the company in recent years, which are only peripherally connected to making money. We have become like a social organisation. Tony wants to get back to business.”

Mr Hayward will be under pressure from investors over the underperformance of BP shares against those of the rival Royal Dutch Shell. The head office cost cuts are intended to signal that he will remove bureaucracy described by one insider as “the arteriosclerosis you get from high oil prices”.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2067266.ece

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