Hayward, who is looking to get the former stock market darling back into investors’ good books, said the BP behemoth had become ‘too complex’. He wants to simplify the business and make it more consistent by reorganising its structure, chopping out management layers (as many as four in some parts of the business) and slashing costs. Which sounds good – unless you’re a middle manager, of course.
Lord Browne has left behind a chequered legacy, and not just because of the tawdry circumstances of his departure. The so-called ‘Sun King’ hardly put a foot wrong in his first 10 years in the chief executive’s chair, quadrupling the company’s market value with a series of bold acquisitions. But his last two years were marred by the Texan refinery explosion and the Alaskan oil leak, both of which did significant damage to the company’s reputation (and are still to be fully resolved).
As a result, BP’s performance has lagged behind its rivals for the last three years, Hayward acknowledged on Thursday – it is much less profitable than its main rival Shell, for example, which he thinks is due to an ‘unacceptably high’ cost base. And the company’s quarterly results (due out later this month) are expected to be the worst for many years, so it’s not surprising that heads are going to roll.
For now, Hayward looks to be in a bullet-proof position. Having taken the job when BP’s stock was low (in every sense), he has pretty much free rein to implement his reforms, while blaming any problems on his illustrious predecessor. And with various new drilling projects about to come on stream, the group’s fortunes are likely to get better before they get worse.
On the other hand, he is launching the company into a massive organisational change – only time will tell whether he’s the right man to transform these green shoots of progress into a fully-fledged recovery…