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BP to link pay to safety

Author : Amy Hollamby

19 October 2010

Following the Gulf spill, a refinery blast in 2005, and Alaskan oil spills in 2006, the reputation of BP has suffered dramatically with many people accusing the oil major of putting profit before safety. Although BP denies this claim, the recent structural changes highlight that the company recognises that safety improvements are needed.

Bob Dudley
Bob Dudley

Bob Dudley, chief executive, has stepped up his battle to restore trust in BP, declaring safety is so core to the group that it would be the sole measure for staff bonuses in the last quarter of 2010. Performance will be judged solely on improving safety by reducing operational risks and achieving excellent safety and compliance standards. The company will also carry out a full review of whether its executive bonus scheme puts sufficient emphasis on its safety record. According to BP's last annual report, "key safety measures" accounted for 15% of bonuses, but financial and operational targets accounted for 70%, perhaps forcing executives to chase profit and efficiency targets rather than encouraging them to improve safety.

However, this safety incentive is by no means innovative, Rival Royal Dutch Shell has long linked staff bonuses to safety, while Exxon Mobil is famous in the industry for insisting upon compliance.

This move does show that Dudley is acting on his promises to improve the safety culture of BP and will perhaps start to restore some of the public’s faith. But, it is important to note that the pay initiatives discussed only apply to one quarter and a full review is still pending.

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