“I’d Like My Life Back” — a lesson for CEOs in building an organization that listens to warnings

advised yet memorable lines in corporate
history. The world’s largest man-made environmental disaster had taken place
one week earlier when BP’s Gulfwater Horizon rig exploded, killing 11 workers
and spilling millions of gallons of oil into the Gulf of Mexico. BP’s CEO at
the time, Tony Hayward, stood on the beach in Louisiana, clearly unprepared for
the disaster that had occurred and trying to fend off multiple questions from
authorities and the media, when he said “I’d like my life back.”

For the employees who worked on the
rig, their families and friends; they wanted those 11 lives back. The
citizens and businesses along the Gulf shore, the environment — they wanted
their old lives back too. Clearly, Hayward’s declaration was stupid,
thoughtless, and it rightfully cast him as arrogant and insensitive. Oddly
however, the picture of Hayward prior to the oil spill was decidedly different.
Before the 2010 disaster, Hayward was described as “unassuming and
modest.”¹ He had succeeded John Browne in 2007 as CEO following
Browne’s prostitution and perjury scandal, along with leaving BP with a checkered
safety record. Hayward promised an improved culture and safety record for BP,
yet here he was less than three years later with a horrific disaster on his
watch, and ending up departing BP under a cloud of controversy; worse than the
departure of his predecessor John Browne.

How many leaders and managers of
large corporations watched Hayward implode on television and thought to
themselves, “I never want that to be me”! I’m guessing that many
senior executives felt that way as they watched, since it is every business
leader’s nightmare to have a disaster such as the BP Oil rig explosion occur on
their watch. Their hard work over years climbing the corporate ladder comes
undone by a single event. But what makes the event even more tragic is that
it was avoidable. There were multiple fair warnings provided to BP by
oilrig employees that were ignored. Multiple BP documents, e-mail messages,
engineering studies and other company records shed light on the extent of
problems long before the explosion, including an internal report from a senior
drilling engineer that warned of a loss of “well control” and
collapse of the well casing and blowout preventer.² At some point,
Hayward must have regretted that his company didn’t act on those warnings, save
11 lives and avoid the unprecedented environmental damage.

But how do we implement and maintain
a culture of listening? Here are seven critical elements of an effective
program to both identify and act on warning signs:

1. High-level
   oversight – does your company have an organizational structure
   led by senior management that oversees issues such as compliance, quality
   and safety, while being able to respond quickly and appropriately to
   credible warnings?




2. Training
   and education – How do you train employees to identify and report
   concerns?




3. Auditing/monitoring
   and risk assessment – risk assessment is the “radar screen” of
   threats to your company. How are risk assessment, and more specifically —
   enterprise risk management (“ERM”) implemented in your
   organization? How and when are audits performed that “kick the
   tires” on key activities?




4. Open
   lines of communication –
   Does your company have a hotline that operates 24/7/365 and is staffed by
   competent individuals who know how to properly intake and triage emergency
   reports or concerns? Yes, in these many reports will be false alarms and
   non-emergencies; one CFO told me that someone actually ordered a pizza on
   his company’s hotline. But somewhere within these hotline reports will be
   a pearl of information that just may save the company from disaster.




5. Written
   policies and procedures
   – Does your company have written guidelines that make reporting concerns a
   job requirement, as well as non-retaliation for doing so?




6. Investigating
   reports of concerns – Does your
   company thoroughly escalate and investigate reported concerns?




7. Enforcing
   standards – is your company prepared,
   culturally and otherwise, to both set and enforce standards related to
   issues such as safety, quality and compliance? I’ve often used a phrase
   with clients that I refer to as a “stop the presses” issue. Is
   your company prepared to “stop the presses” if and when a
   credible warning comes in?