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How BP blew crisis management 101

By John R. Kimberly, Special to CNN
  • John R. Kimberly says there are lessons to be learned from how BP has flubbed handling of spill
  • He says leaders must seem to know their company's business, project calm, be reassuring
  • Execs must be trained for crisis; BP seemed to lacked empathy, let anger grow, he says
  • Kimberly: CEO Tony Hayward's exit may be only option; firm's future seems precarious

Editor's note: John R. Kimberly is the Henry Bower Professor of Entrepreneurial Studies and professor of management, health care systems and sociology at the Wharton School of the University of Pennsylvania. He and Hamid Bouchikhi coauthored "The Soul of the Corporation: How to Manage the Identity of Your Company."

Upper St. Regis, New York (CNN) -- The crisis in the Gulf keeps getting worse. And as senior management at BP struggles to find the solution to the daily discharging of thousands of gallons of oil, it also is struggling to deal with the worsening damage that is being done to the company and its reputation -- damage that threatens its very existence.

What can we learn about how companies and their top management should, and should not, respond to crises?

Leadership is, among other things, about projecting an image of being cool under fire, acknowledging where the buck stops, being knowledgeable about the company's business and being realistically reassuring about the future. People both inside the company and outside need to believe their leader is in charge and in control.

BP was slow to acknowledge the problem initially. It consistently underestimated the magnitude of the spill by confessing to being "out of the loop" about decisions and processes on the rig, as CEO Tony Hayward did before a House panel last week. And the company failed to empathize with the plight of those most immediately affected by the spill -- the families of those who lost their lives and those whose livelihoods are threatened. In these ways, senior management unintentionally dug itself a huge credibility hole. And as a consequence, it has attracted an extraordinary amount of outrage.

A certain amount of anger about an incident of this magnitude would be expected. But the way it has been handled has made things much worse.

All of this is relatively easy to see after the fact. What can other companies do to make sure they don't get similarly blindsided and that they handle the public relations dimension of a crisis more effectively?

1. For starters, recognize that the CEO is the public face of the company and that the person in that job needs to know how to deal capably with the public relations dimensions of a crisis.

Some people are "naturals" at this, but most aren't, and because the stakes are so high, the most sensible step is to provide training to senior managers in how to deal with a part of their job that is critically important but that they may never be called upon to put into practice.

With the benefit of hindsight, one can see an escalation of hostile reactions by the media and by politicians as a consequence, in part, of missteps by senior management in its handling of its public face. Those missteps were at some level all too human: We all can remember times when we did something "bad" and tried first to duck our heads and hope that no one noticed, then to deny that it was our fault and then to downplay how bad it was.

Companies need to get beyond these human tendencies and react swiftly and empathetically in times of crisis. The glare of media attention is unforgiving, and any sign of weakness may be pursued relentlessly. Rigorous training can help minimize the possibility of a feeding frenzy.

2. Be sure to be knowledgeable about the basics of the company. No CEO can possibly be on top of everything in his or her company. Most companies, like BP, are simply too large and too complex for any single person, no matter how gifted or brilliant, to understand in a detailed way.

However, the success of the reality TV show "Undercover Boss" provides a potentially useful lesson for companies of all sorts: Make sure your CEO has an idea of what's going on on the front lines, whether it is picking up trash, packing and moving boxes, or hiring help. In that way, the CEO will, at least symbolically, be "in the loop" and can project that image.

I've often wished that the CEO of every major airline would make at least one flight every six months as a cabin attendant or baggage handler, although frankly I'm not too optimistic about how much difference that would make.

3. When a crisis begins to escalate, and when the CEO becomes the flash point for criticism and, in this case, outrage, it may be that a carefully timed exit is the only real option. The Japanese have a deep understanding of the symbolic importance of a CEO stepping down and taking responsibility for a situation that may or may not have been of his own making. It allows the organization to move beyond the heat of the moment and to signal that a new direction is being taken.

BP's Hayward is undoubtedly a superb executive in many respects, but his continuing as CEO of the company now carries so much baggage that it may be time to make a change. Recent statements by the chairman of the board seem to be pointing in this direction.

Years will be spent piecing together the various factors that led to the explosion on the Deepwater Horizon, just as in the case of the space shuttle Challenger in 1986. Lax regulation, pressure from Wall Street to maintain quarter-to-quarter performance, the technological challenges of deepwater drilling and a host of other factors ultimately will be shown to have played a role in this event; the way the company has handled the PR piece is only one part of the story.

Interestingly, BP has done a better job in its print messages, acknowledging responsibility and committing to "making things right." Through its print advertisements, it has begun to show compassion for those whose lives have been profoundly touched by the explosion and spill. Time will tell whether this is too little too late.

As my colleague Hamid Bouchikhi and I have argued in our book "The Soul of the Corporation," every company has an identity, a way it is perceived by those inside and those outside. This identity can be a huge asset but can also become a huge liability and lead to the company's demise.

In the case of BP, I would have to say that the company's future is precarious. Can it forge a new identity for itself in the way it responds to the rest of this crisis? Perhaps, but the odds seem to be pretty long.

The opinions expressed in this commentary are solely those of John R. Kimberly.