BP Leadership Gets It Wrong: How Ivory Towers Have Their Risks
April 14, 2016
Chris Roebuck
Delivering success in a challenging world
BPs leaders have today suffered a very embarrassing defeat at the hands of its own shareholders. The attempt raise the CEOs pay by 20% to £14.2m has been rejected by 59% of shareholders. Any way you look at this it is a failure – either a failure of the remuneration system to to accurately reflect real performance or a failure of a justified pay increase to be properly explained plus a complete lack of consultation or understanding of the perspectives of those outside the elite leadership group at the top of BP – from investors to wider society. With the pay the individuals concerned are getting, and asking for, this is symptomatic of the fact that executive pay is now in a fantasy world devoid from the reality that the rest of humanity has to live with. Senior leaders need to understand that contractual entitlement might also have been moral entitlement in 1976 but its not 2016.
The problem is that once the board room clique convinces itself that its right it has a tendency to ignore perspectives it doesn’t want to hear – look at Kodak, financial crisis, the UK National Health Service and other events globally – even BP itself in the past. My advice to CEOs wanting to know if something is a bad idea or a good one is not to ask people who are paid to agree with them but ask a simple common sense man in the street. They will give you an honest answer, not a career driven one. And look outside your organisation to society at large and its perspectives not just inside where you all believe your own hype.
Chris is interviewed by BBC World as the shareholders meeting started and poses some of the key issues that were subsequently raised in the meeting.
In the end large corporations and their leaders must be more aware that like it, or not, they are still part of society and have to act as such. There are example of CEOs who have had their pay cut at their own request – see the previous blog on Co Op – or given their bonus away. The BP incident just shows how inept seemingly highly intelligent business leaders can be. The danger is that behaviour like this calls into question the leadership brand of BP and their partnership with employees and wider society. That can have serious long term implications unless a little humility is shown and some serious thinking about how pay is calculated and how much it is.
Source: Chris Roebuck
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