BP calls in Bain to simplify structure

Date: 04-08-2007
Source: Financial Times

British Petroleum (BP) has called in Bain, the strategy consulting group, to find ways to simplify the complex organisational structure that the oil major blames in part for its recent problems.

In an e-mail to staff this week, seen by the FT, Kenny Lang, senior vice-president of BP's Gulf of Mexico operations, said: "It's not difficult to find examples where our complexity has driven inefficiencies, negatively impacting performance in one way or another, and I am sure each of you could cite specific examples."

Mr Lang said Bain, a global consulting firm that specialises in helping companies improve their performance, will develop recommendations on how BP should streamline its approach. Consultants will conduct in-depth interviews with staff, gathering organisational and financial data, with the goal of completing the analysis by November.

"Many of you will agree that complexity has often reduced BP's efficiency and diluted our focus on delivery of the core business," Mr Lang said. "That's why I welcome having Bain's help." While there was no mention of staff cuts, the aim to curb inefficiencies is likely to result in a streamlining of operations.

Mr Lang said his e-mail followed recent observations by Tony Hayward, BP's new chief executive, that the company had become increasingly complex in recent years. Mr Hayward was given the top job after Lord Browne retired. BP had been hit by serious safety lapses in its US operations that took place after "red flags" were not seen orrecognised by managers. BP declined to comment yesterday but said it did employ consultants "from time to time", including Bain.

BP's biggest refinery, in Texas City, exploded in 2005, killing 15 people and injuring 500. Yet malfunctioning or outdated equipment and poor safety training that government investigators cited in the accident had been acknowledged for years by staff. In 2006, BP's Alaskan oilfield, the biggest in North America, was shut down for "severe corrosion" following the field's biggest-ever spill. Again, staff had complained for years about corrosion building within the Prudhoe Bay oilfield. Smaller safety lapses have been recorded in different states.