Safety Management Guidelines among Oil Companies - Assignment Example

ASSESSMENT: ETHICS AND GOVERNANCE: - MODEL A Task1 From the outset, it is imperative to note that the decisions by all the key actors in this case study were for the urgent need to ensure for compliance to the safety management guidelines among oil companies. This can be attributed to the fact that the country was faced with a series of oil fires over time. These oil companies seemed to be more concerned with profit maximisation at the expense of public and employee safety. Reamer (2006, p. 139), argues that organisations which blatantly overlook the need to operate under acceptable business ethos are overwhelmed by their egoistic tendencies. In most cases, this is brought to the fore by lack of effective governance among the affected organisations. On a positive rejoinder, Lefkowitz (2006, p. 256), holds the view that business ethics usually lay the foundation upon which rational decisions within these organisations are made on a range of issues. From the case study, it is clear that the decision by the Safety and Hazard Investigation Board (CSB) was informed on the apparent need for the government to audit the safety standards among America’s oil companies. In particular this decision was taken in order to address the actual or probable cause of the fire at BP which resulted to the death of its 15 workers; and injured 170 others. At the same time, this decision was to help the government through the CSB board to use BP’s fire tragedy as an ideal platform to address the underlying issues as far safety management among oil companies is concerned. A closer look at the history of Texas oil refinery reveals that BP had ignored to put in place a comprehensive safety management program for a very long time. Indeed, the Baker report observed that the management was plagued by several challenges in addition to its principle focus on cost cutting. As a result, this increased its vulnerability to such catastrophes. From this case study, the other main actor is the management of BP. The firm’s management decision to set aside funds to be used for a safety management program was based on the need to redeem its image in the wake of reducing support by the customers. Also, this decision was brought about by the inevitable truth that oil companies could no longer uphold the importance of safety management. It is apparent that the decision by CSB to conduct a safety audit helped to address some of the pertinent issues affecting BP and others as well. In this regard, this would lead to compliance by oil firms in the country to stipulated safety standards. This is evidenced by BP’s management decision to devote some funds towards the establishment of a safety management program. This shall set precedence for other companies to comply with such standards for the greater good of all their workers and the general public. Task 2 The action by BP’s management to ignore the audit recommendations conducted for its Texas City refinery is culpable. The findings by the audit team were that the plant had serious safety management issues which required to be addressed sooner rather than later. The findings by the Baker team that BP was facing budget pressures which in turn led to the firm to ignore safety management aggravate its culpability. To add to that, the theory that the company had apparently failed to learn from its failures in the past further aggravates its culpability since it had been faced by similar incidences. Furthermore, the decision by the Texas City plant manager to object to the idea of the company investing in a comprehensive safety program aggravates its culpability. Though it was done at a relatively low management level, it can be surmised that this decision originated from the top levels of management. Against this backdrop, it is questionable as to whether the firm invested the $ 1 billion into safety management as it had indicated. On the other hand, the inability by OSHA to effectively discharge its mandate in terms of ensuring that all the oil firms within the country adhered to the stipulated safety standards reduces the culpability of BP’s management. In this regard, the steady increase in the number of oil fires can be attributed to the apparent absence of a proactive and holistic safety management policy by OSHA. From an ethics perspective, the continued lack of commitment by the management of BP to address the pubic safety issue aggravates its culpability. This is justified since the management has been captured as to have had placed a lot of emphasis on profit maximisation as well as cost cutting. Reamer (.2006, p.157), argues that the management is egoistic since it considered its needs above those of its workers despite the fact that it were they who generated the much protected profits. Contrary to the utilitarian theory, this company opted to ignore OSHA’s recommendations as it were. Although these recommendations were not as effective as they ought to be, they pointed towards the need by these oil companies to put in place a safety management program. BP’s Texas City refinery plant was no exception. At the same time, OSHA is culpable since it failed to enforce these regulations. Baker’s action of salvaging BP in relation to this fire is praiseworthy. This helped to bring to the fore the various challenges facing BP. Task 3 The need for corporate leaders to uphold ethics in the present 21st century competitive world can not be understated. Ethical standards are very useful since they help to establish the corporate culture. The action by Lord Burns to appoint Sir Rose without giving sufficient time for consultation is culpable from the standpoint of the theory of deontology. According to Beauchamp and James (2001, p. 276) this theory holds that vital aspects of man are actually controlled by some moral rules which can not be broken. Such rules are not supposed to be broken irrespective of whether they might result to an improvement of a situation or outcome. It was therefore necessary for M&S to follow the right procedure in appointing Stuart irrespective of whether he was qualified to lead the firm or ensure for continuity within the firm or not. M&S can also be blamed basing this on the virtue theory. The fundamental principle of this theory is doing the right thing when faced with real-life situations. This theory normally calls for the use of sound personal traits such as wisdom, justice and faith among others. Under the circumstances, it was expected that Burns would be wise and do the right thing by consulting M&S’s shareholders on Sir Stuart’s promotion. This is what a good person or leader would have done as it is required by this theory. It is note worthy that this theory calls upon people to be guided by the principles which have been created in the society within which he or she operates. Therefore, Lord Burns was supposed to be guided by the corporate ethics within M&S operates (Dugger and Howard 2003, p. 348). Closely related to this theory is the rights ethical theory. According to this theory, rights which have been set by a given society are supposed to be protected as presented by Reamer (2006, p. 173). According to Sweet (2003, p. 258), they are supposed to be accorded the highest priority since they are usually endorsed by the majority in the respective society. Thus M&S was expected to protect and give priority to the business ethics set by the corporate world. In this context, Lord Burns was expected to uphold business ethics and thereby allow for sufficient time for consultations on Stuart’s appointment. Opponents of Burns’ move are on the other hand praiseworthy from the utilitarian theory perspective. Having a strong belief on business ethics, they did not shy way from condemning Stuart’s promotion. According to Velasquez (2005, p. 286), this theory holds that people should be guided by the need to come up with results which benefit the majority within the society. Through their condemnation, they helped to sensitise M&S on the importance of corporate ethics for the greater good of the business community. Task 4 From the case study, it is evident that Sir Stuart Rose was bent on assuming power through this promotion. In his defence for the decision by Burns to appoint him unilaterally without giving sufficient time for consultations, Rose argues that no gun was placed on Burns to appoint him. Through these words, he alludes to the idea that perhaps he merited for this job in the first place and that the outgoing Chairman had acknowledged this. The other key actor in this case also says that he had been talking to Stuart about succeeding him for the past one year. With this in mind, it is unreasonable for Sir Rose to imply that he was selected on merit and neither was Burns forced or coerced to do so. In an apparent attempt to justify this decision, Rose states that this was necessary as it would ensure for continuity and stability in M&S. Furthermore, there is also confusion from Marks and Spencer’s top management when it says through the spokeswoman that they had indeed consulted half of the other shareholders on this issue before appointing Sir Stuart Rose. This confusion is further aggravated when L&G, one of the major shareholders condemns this move a few hours after this announcement was made. L&G through Mark Burgess condemned this move by noting that these two posts were actually not any different. Hence, this alludes to the idea that perhaps it was not necessary for Sir Rose to be promoted in the first place. The spokeswoman’s idea that the company had consulted widely is put into doubt by Schroders’ Richard Buxton. Buxton argues that it is extremely difficult for one to believe M&S when it says that more than half of its investors had reached a consensus about Stuart’s appointment. In his condemnation of this promotion Buxton notes that no one had been able to identify the so called supportive shareholders as alleged by M&S. George Dallas also joins in to condemn the lack of ethics by M&S in the manner in which it handled Stuart’s promotion. To this end, he argues that it was not expected of a company of M&S stature to act like it did as it did not set a good precedent within the corporate world. Peter Montagnon also condemns this move by pointing out that it lacked procedural justice which would have allowed for sufficient consultations among all the stakeholders allied to it. Task 5 The use of the regulations of is quite instrumental in terms of creating the ideal atmosphere for the application of ethics both in the business community and the wider society. In particular, regulations serve to reinforce ethics and professional standards which in turn regulate the overall behaviour of people. With this in mind, one of the possible regulations which can be put in place by OSHA is to come up with a policy specifically targeting Oil companies such as BP. Such policy shall make it mandatory for the said oil companies to allocate a given percentage of their revenue or profits towards the safety management program. Suggestively, this can be implemented by demanding for all the oil companies within the United States to come up with a safety management framework as a requisite for their licenses. The said policy should not only be limited to the employees but also to the general public. This recommendation is informed from the events within the case study whereby the oil companies have been plagued by a series of fires throughout the history yet none of them has taken the initiative to ensure safety for both the public and the workers. Instead, a lot of emphasis has always been placed on cost-cutting and profit maximisation. Additional issues which might have to be addressed by the policy include; use of sound technology by the oil companies, hiring of technically and competent workers, appropriate staffing levels and enhancement of healthy employee-employer relationships. This policy regulation shall require that OSHA becomes very committed in ensuring that companies abide by the stipulated regulations for the greater good of both the public and employees of such firms. Due to the inherent tendencies by organisations to violate such regulations, the use of stiff penalties shall be desired. With respect to M&S case study, one of the possible regulatory changes is for the country to come up with a corporate body oversight. This body shall then be mandated to develop acceptable code of conduct by business organisations on issues such as leadership. Through this body, the companies should be provided with a conventional guideline for carrying out of appointments especially in companies with a structure similar to that of M&S. Furthermore, the question of just how much power the parent company relative to its shareholders would have to be addressed to avoid confrontations. Also, firms should be required to come up with their own code of ethics which is open to investor scrutiny. Taking a closer look into both cases, it is apparent that there is need for change of management or radical reforms which would help to address the issues raised. According to Shaw (2005, p. 178), ethics help to shape the corporate culture as they form the basis upon which rational decisions are made. References Beauchamp, TL and James, FC 2001, Principles of Biomedical Ethics. 5th ed. Oxford University Press, California. Dugger, WM and Howard, S 2003, Evolutionary theory in the Social Sciences. Taylor and Francis, London. Hawkes, S et al. 2008, They have got an opinion. We have got an opinion. We won. End of Story, The Times and Sunday Times. Lefkowitz, J 2006. ‘’The constancy of Ethics amidst the changing world of work.’ Human Resource management Review, 16(2), pp. 245-268. Mortishead, C Bank the Savings: A case study on externalities on about two reports into a disaster at BP’s Texas City refinery in the U.S.A, The Times. Reamer, F 2006, Social Work Values and Ethics, Columbia University Press. Sweet, W 2003, Philosophical theory and Universal Declaration of Human Rights, University of Ottawa Press, New York. Shaw, WH 2005, Business Ethics, Thomson/Wadsworth, London. Velasquez, M 2005, Business Ethics: Concepts & Cases, Person Prentice Hall, New York. Read More