Bp – When reality sets in

BA Thesis: Marketing, Management & Communication May 2012

Christian Lindberg

BP – When reality sets in

Bachelor Thesis – BA-MMC

May 3rd 2012
Christian Lindberg – 300525
Supervisor – Simon Lind Fischer
Total number of characters – 54.413
Aarhus School of Business, Arhus University
Abstract

The largest environmental disaster in American history to date followed the morning of April 20th 2010 when a drilling rig exploded because of a fire. The energy titan BP (British Petroleum) who was the organization that operated the rig, quickly realized that this accident was no ordinary one. While deep down under sea level the explosion had caused an oil pipe to burst and oil was leaking out fast. The environment around the Mexican Gulf was not the only victim of this horrible accident. BP suffered eleven casualties while several other employees were severely injured. BP became the center of attention in the wake of the oil leak and criticized heavily by the media and public. The organization was accused of handling the disaster poorly.

This thesis has the aim of analyzing how BP managed to handle the oil spill from a crisis communicative perspective. Through various source material i.e. press releases from BP, the thesis will give an insight into how the crisis was portrayed from an outside perspective. BP’s Sustainability Report from 2010 could have been analyzed, however, BP is likely using this report to portray the crisis more optimistically than the actual reality of the crisis. Various articles from credible sources such as Time Magazine will be analyzed together with the congressional trial of BP CEO Tony Hayward.

Two theorists are primarily used to conclude answers; Timothy W. Coombs and William L. Benoit. Coombs’ theory is based on one paradigm ‘Situational Crisis Communication Theory’ (SCCT), whereas Benoit’s theory is based on ‘Image Restoration’. It is through these theories that BP will be measured and conclusions will be drawn, while these theories provide an ideal base for understanding the overall situation and whether BP succeeded in communicating this crisis to the world and their stakeholders.

Table of Content

BP – When reality sets in 1

Number of characters: 54.413

1 Introduction

When disaster strikes they usually come like thunder from a cloudless sky, unforeseen and sometimes unthinkable in size and magnitude. This thesis is about one of these disasters. Scientists and environmentalists have called this incidence the biggest environmental disaster in U.S. history.¹

BP’s (British Petroleum) image possibly changed forever the morning of April 20^th 2010, when a fire occurred on a semisubmersible Deepwater Horizon drilling rig. The fire later caused the rig to explode and resulted in 11 casualties all employed within BP. Many others were injured. The incident did not stop there. A leak in the oil pipe 5,000 ft. below sea level in the Gulf of Mexico had opened, triggering a spill that was bleeding hundreds of thousands of gallons of oil a day.²

As the crisis continued BP was criticized for downplaying the situation in the Gulf and had failed to mention vital facts about the accident. Furthermore, it quickly became clear that the crisis would continue for weeks and even months while BP failed to repair the leak.

While BP is facing clean up and legal bills of billions of dollars it is the damage of their image that can prove to be far more costly. Still the question remains whether BP took the right approach within crisis communication in order to act and respond the best way possible. The unfolding of this severe environmental disaster made BP into a media target and the criticism took no end in the months after the accident. Despite the large task at hand BP aims to succeed and fulfill their goals of closing the leak and clean up the oil in the Gulf of Mexico while restoring their reputation and image as one of the giants in the oil industry.

In relation to crisis communication, BP could be somewhat a “role model” for other organizations that are faced with a crisis in the future. Organizations who operate in field of i.e. petroleum refining have to be prepared for the worst. In other words expect the unexpected. Many could very well view BP as failing greatly in handling this enormous crisis. This emphasizes the importance of being prepared for all large organizations.

2 Problem Statement

From a crisis communicative perspective how did BP manage to handle the oil spill disaster in the Gulf of Mexico?

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  Did CEO, Tony Hayward, manage the crisis appropriately?
  
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  What is BP currently doing in order to repair the damage in the Gulf?
  
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  What have BP done to renovate their image and reputation as an oil company?
  

3 Structure of Thesis

This thesis is structured the following way in order to give the best feasible answers in relation to answering the problem statement and its sub-questions. The thesis takes its beginning explaining the approaches of hermeneutics and constructivists teachings, explaining how human understanding and interpretation is achieved. Moreover, the research method of the thesis will be explained.

Hereafter, the theoretical framework and a short section of the delimitations of the thesis will be explained. These will be followed by introducing BP as an organization before giving a description of Public Relations and Crisis Communication.

This thesis has two main theorists, these will through their work provide the necessary theory in order to answer the problem statement. Coombs’ ‘Situational Crisis Communication Theory’ (SCCT) and Benoit’s ‘Image Restoration’ Theory will be the foundation of the answers concluded. The section of ‘Situational Crisis Communication Theory’ will be supplemented with material from the congressional hearing of BP CEO Tony Hayward to supply conclusions for the thesis.

3 Theory of Science and Theoretical Framework

3.1 Hermeneutics

To understand how people perceive the world and why this thesis is structured the following way it is essential to explain the perception of hermeneutics. Hermeneutics is perceived as a branch of continental European philosophy concerned with human understanding and the interpretation of written texts.

Hermeneutics also offers insights that may contribute to the understanding of meaning, translation, architectures for natural language and understanding (Mallery et al, 1986, p. 1). The reason for including this section in the thesis is as organizations and people communicate there are various ways an action or written/verbal statement can be interpreted, thereby misunderstandings and misinterpretations often occur. Within hermeneutics texts are viewed as organic or coherent wholes, rather than collections of disjointed parts (Mallery et al, 1986, p. 2). In other words, only parts can be understood if the whole is contemplated also. It is the speaker or writer of the text who express his or her words into thoughts and the listener who understands this speech as part of a shared language and as part of the speaker’s thinking. The listener comprehends the words and sentences because they are drawn from the language’s lexicon and follow its grammatical rules, but the listener also recognizes the intentions behind the words by virtue of being in the same situation and sharing a common human nature with the speaker. (Mallery et al, 1986, p. 3).

Understanding (verstehen), the basis for methodological hermeneutics involves tracing a circle from text to the author’s biography and immediate historical circumstances and back again. Interpretation, or the systematic application of understanding to the text, reconstructs the world in which the text was produced and places the text in that world (Mallery et al, 1986, p. 4).

The way BP managed to present the crisis i.e. through various press releases will be analyzed and interpreted in order to develop an overview of the

oil spill. In order to understand the crisis as a whole it becomes vital also to understand the minor details of the BP oil spill. Individuals interpret situations differently because they come from different environments and thereby see the world in various ways.The understanding and interpretation of the crisis becomes subjective. The interpreter’s own values or sense of reality becomes clear and thereby essential for understanding.

3.2 Constructivist Teaching

Closely tied to hermeneutics is the ‘Constructivist Teaching’, which is an approach that proves appropriately also when analyzing BP. This approach shows that individuals construct the knowledge they receive in their own way, hence constructivism is a way of explaining how individuals come to know about their world (Kim, 2005, p. 9). Because knowledge is temporal it changes over time. Therefore, it can be considered a process and not something that is static. The social environment plays a vital part while knowledge is constructed out of sensual and perceptive experiences of the learner in which learning is internalize through the learner’s constructive process in nature. Knowledge is the personal understanding of the outside world through personal experience rather than the experiences of others (Kim, 2005, p. 9).

In relation to BP, ‘Constructivist Teaching’, gives a good idea about how individuals form their opinions about the information they receive about the oil spill. Likely, individuals will perceive the crisis as negative while the damage was so severe. Also the way the media portrays the crisis can worsen BP’s image and reputation, while the media most likely would put BP in a negative light. However, if BP manages to succeed cleaning up the extensive damage they have caused the perception of the organization is subject to change, as this approach is a developing process where individuals understanding can change over time.
3.3 Theoretical Framework

The aftermath of the BP oil spill could hardly have been worse imagined, as the severity of the leak was so extensive. What did BP do exactly in order to communicate the crisis and did they use proper crisis communicative strategies to repair their image?

Years after the oil spill, BP and their stakeholders still feel the after-effect of the catastrophe, while the cleaning of the environment is a continuing process that BP has sworn to restore. This thesis will seek to answer whether BP and CEO Tony Hayward took the necessary steps in communicating this crisis to their stakeholders and the outside world. Seeger & Padgett (2010) defines a crisis the following way: ‘An organizational crisis can also be described as a specific, unexpected and non-routine event or series of events that disrupt the status quo and basic assumptions regarding what constitutes normal’ (Seeger & Padgett, 2010, p. 128). Precisely the two adjectives ‘normal’ and ‘unexpected’ will function as the pillars of the thesis while the crisis obviously was unexpected and the outcome of the leak was anything but normal.

As mentioned earlier the main theorists of this thesis are Coombs and Benoit, two theoreticians who within the field of crisis communication have established themselves as primary researchers. Coombs’ ‘Situational Crisis Communication Theory’ (SCCT) and Benoit’s Image Restoration theory will function as the foundation of answers to the problem statement.

As various source materials have been used to define ‘Crisis Communication’ and ‘Public Relations’ it is also important to analyze the press releases BP issued from the day of the explosion and the following days. Furthermore, information from the congressional trial of CEO Tony Hayward further will be applied. These will support the claims in order to draw conclusions and find answers that connect to the problem statement. Based on this analysis it should be easier to recognize what BP did after the crisis in order to repair the massive damage their image suffered since the crisis.
4 Research Method

This thesis will take a qualitative approach while the main goal is to answer the problem statement by using different theories within crisis communicative theorists, together with BP’s annual report from 2010, press releases from the first week of the crisis and the congressional trial of CEO Tony Hayward. Individuals view the world differently when interpreting in the eyes of hermeneutic and constructivist perspectives; hence individuals will view the crisis contrarily. The findings of this thesis will be collected from a critical discourse analysis. There are two different approaches when working with discourse analysis. Micro-level is the language discourse that is essential within the social order. Whereas power, dominance, and inequality between social groups are typically terms that belong to a macro-level of analysis (Van Dijk, 2003, p. 354). This perspective is a type of discourse analytical research that primarily studies the way social power abuse, dominance, and inequality are enacted, reproduced, and resisted by text and talk in the social and political context (Van Dijk, 2003, p. 352). As ideologies provide the cognitive foundation for the attitudes of various groups in societies, as well as the furtherance of their own goals and interests. Each of these group attitudes can represent an array of ideologies, which combine to create one’s own personal ideology, which conforms to one’s identity, goals, social position, values, and resources (Dellinger, 1995, p.3).

This thesis from a critical discourse analysis will take the crisis (‘reality’) from a media standpoint and thereby draw conclusions by using the second approach namely, macro-level. This is done through press releases, the 2010 annual report, and the congressional trial of BP. The meaning of “reality”, therefore, will depend very much on the way a particular society defines it. All elements of that society’s history, (…) and political balance, will make it unlikely that any two societies, no matter how similar, will look at one issue in exactly the same way (Dellinger, 1995, p. 6). The concept of power is displayed through critical discourse analysis while media such as Time Magazine and the members and chairmen of the Congressional Trial are able to demonstrate more control and influence within the discourse. Also vital for all discourse and communication are those who control the topics and topic change, as when editors decide what news topics will be covered (Van Dijk, 2003, p. 356). This is relevant while i.e. Time Magazine from a media standpoint portray BP in the articles analyzed as the enemy and thereby put BP in a negative light. Topics may influence what people see as the most important information of text or talk, and thus correspond to the top levels of their mental models. If dominant groups, especially their elites, largely control public discourse and its structures, they thus also have more control over the minds of the public at large (Van Dijk, 2003, p. 358). An argument could thereby be made whether media abuse their power within society by being biased, however that is not the concern of this thesis. Still, critical discourse analysis will be the foundation of the conclusions this thesis finds through the various materials analyzed within.

5 Delimitations

Within this topic of crisis communication and Public Relations there are various angles to choose, as the topic is very broad. However, since BP is such a large organization with a current stain on their logo it becomes hard to get in contact with the organization and get an interview from individuals close to the organization. Furthermore, since this oil spill turned out to be the worst environmental catastrophe in U.S. history, countless articles and other material are available for the individual to form his or her own interpretation of the whole situation. Therefore it can be difficult to know what material to select and vice versa. Especially, considering the narrow focus of this thesis and problem statement. Within this crisis it could have been ideal to focus more on the stakeholders of the crisis, but in order to answer the problem statement and the sub-questions the emphasis has been put on these.

6 Introduction to BP

BP (British Petroleum) is one of the largest oil and gas companies in the world providing fuel for transportation, energy for heat and light, which is among their largest interests. The company dates back to 1908 when oil was discovered in rugged parts of Persia (Iran).³
In the early 1900’s an Australian-British mining magnate named William Knox D’Arcy won a concession in Persia that allowed him and his expedition to explore for oil in rugged parts of the country. The biggest discovery came after 7 years when D’Arcy’s expedition found oil atop a sulfurous patch. This discovery was the beginning of BP (Anglo-Persian Oil Company). It turned out to be the largest oil discovery of its time. The company also became associated with the First World War while the British Government was the main stakeholder of the company with the Chief of the British Navy Winston Churchill as the main figure who stated, ”War without oil would be unimaginable.”⁴

Substantial profits were made in the 1920s and 1930s thanks to the petroleum burning automobiles, which spread throughout the Western hemisphere.

However, in 1954 the company changed its name to British Petroleum Company, a company continuously searching for oil in the Middle East and in the meddling West. British Petroleum has had a controversial part within the Middle East over the years within i.e. the 1979 Iranian Revolution. Also BP's oil interests in the Middle East were also curtailed by the nationalization schemes of Arab states — in 1975, it transported 140 million tons of oil from the region, but only 500,000 in 1983.⁵ In the 1980s and 1990s the company felt an urge to expand its operations and successfully moved into areas including off-shore rigs in the North Sea, Papua in the Eastern part of Indonesia and finally acquired a large part of the American market by buying up companies like Standard Oil of Ohio, ARCO, Amoco, and moving into areas of Northern Alaska.⁶

In Alaska BP showed innovative engineering while they figured out how to remote the oil to sites where it could be stored, shipped or refined into gasoline.⁷

This resulted in a 1,200 kilometres long pipeline system, which to this date was the largest civil engineering project in North America. Always an issue for BP was the environmental question. Constantly, BP had to incorporate environmental implications into their operations while several of their operations happened in areas of ecological frontiers. Pressure and debate from the public and Government made BP constantly aware of the responsibility the organization had to sustain. Hence, the environment always had to be deeply considered in relation to protecting and preserve it “BP found within itself a passion for confronting environmental challenges with ingenuity and determination.”⁸

Mergers were formed in the late 1990s because of stiff competition. BP and Amoco joined to form BP Amoco. Later BP’s old rival ARCO also joined together with Castrol and Aral to form a strong oil company worldwide.

As the new millennium began, companies around the world turned their focus on the future. So did BP. While they had focused their energy supply from oil in the 20^th century, the 21^st century seemed to be the same. However, new technology and discoveries from research facilities released new frontiers in the search for fossil fuels.⁹ Many new forms of low carbon energy were manufactured. At the same time BP aimed to reduce their carbon emissions while getting involved in a ‘Clean Cities’ campaign within Europe. Furthermore, they launched an emissions trading scheme and enlarged their solar power business.

This global and united brand identified their company with the green, yellow, and white sunburst that symbolizes energy in all its dynamic forms. “Under this new banner BP took bigger and bigger steps towards addressing climate change. It installed solar panels at its service stations, brought solar power to remote villages in the Philippines, helped bring hydrogen-fuelled buses to London and introduced new, cleaner types of motor fuel. It created a unit, BP Alternative Energy, devoted to making from all the various types of low-carbon energy – solar, wind, natural gas, biofuels – a viable, large-scale and profitable business.”¹⁰

Since the first discoveries of oil in Persia, BP has become an international energy company, delivering large quantities of oil but also aims to find better alternatives to oil. BP had become a company that embodied energy in all its many forms.¹¹ Today, BP is active in 29 countries and has more than 79,700 employees, generating revenues of $297,107 millions.¹²

h would stsppended in areas of forms. ms to finding better alternatives to oil. e sunburst which would stsppended in areas of h would stsppended in areas of forms. ms to finding better alternatives to oil. e sunburst which would stsppended in areas of h would stsppended in areas of forms. ms to finding better alternatives to oil. e sunburst which would stsppended in areas of However, the story of BP also contains stories that have positioned the organization in a negative light. In 2005 an explosion killed 15 workers in a BP refinery in Texas and in 2006 a pipeline caused over 250,000 gallons of oil to spill in the North Slope of Alaska.¹³ Such accidents are damaging, costly and difficult to clean up. Though the worst accident to date and the worst environmental disaster in U.S. history happened in April of 2010 when a Deepwater oil rig exploded under water in the Gulf of Mexico. Even though, BP insists that the world depends on its industry they have a challenging task at hand because the accident caused casualties and extensive cleanup in the Gulf. These cleanups will cost BP billions of dollars. Detrimental damage of their image and reputation might forever be associated with the largest environmental disaster in the history of the U.S.A.

7 Definition of Public Relation

Just as worldviews differs so does the understanding of public relations. Practitioners have different perceptions of the concept while the practice of public relations varies in many countries. However, one definition is “Public Relations practice is the art and science of analyzing trends, predicting their consequences, counseling organization leaders, and implementing planned programs of action, which will serve both the organization’s and the public interest” (Newsom & Haynes, 2011, p. 4). The roles of PR practitioners are to frame, implement, adjust, and communicate the policies that govern how an organization interacts with their publics. Through public relations, the organization acts with responsibility and responsiveness – in policy and information – to the best interests of the institution and its publics (Newsom & Haynes, 2011, p. 4). Within the field of public relations practitioners must be alert of signs of change, while the right polices of today might not be the right policies of tomorrow. Additionally, people’s attitudes and opinions evolve; hence PR practitioners must note trends in public opinion and predict the consequences of such trends for the organization. The spokesperson of an organization is usually the director of public relations, however in situations like the BP oil spill it can also be the company CEO.

Public relations is viewed as a two-way street in relation to interests “Public Relations is not a one-way street in which leadership manipulates the public and public opinion. It is a two-way street in which leadership and the public find integration with each other and in which objectives and goals are predicted on a coincidence of public and private interests” (Newsom & Haynes, 2011, p. 5). Communication must therefore also come from the public view and not just from the organization while the public relations program is designed with the needs and desires of the public in mind, communication channels are thereby opened for the public.

The emerge of mass media is something the organization must be careful to use in our day and age where content can be distributed fast, but also organizations need to be aware of what and where they communicate their i.e. press releases. The channel must be appropriate for the message, therefore the announcement of the BP oil spill on April 20^th 2010 should first be announced in a press release from the organization and on their website before i.e. their Facebook or Twitter profile. Crucial is the communication skills of the PR practitioner or CEO, while he or she must be an expert in communication and thereby be able to write effectively in many different styles and for all media. These persons must understand the principles of good writing and be familiar with the vast body of scientific research on communication, persuasion and public opinion. The goal is to be an efficient, effective communicator (Newsom & Haynes, 2011, p. 11). Because of the scope of your communication, you must command knowledge of publics and their cultures – their corporate or work environment culture, their personal or lifestyle culture and their indigenous or ethnic culture. Beyond that, you must know the international communication networks and media systems and how they operate. No matter what message you communicate, what audiences you communicate with and which media you use to reach those audiences, you have to know which words will work and why (Newsom & Haynes, 2011, p. 11).

8 Definition of Crisis Communication

The purpose of this section is to describe and define the concept of crisis communication in order to fully understand not only the term, but also understanding it in relation to the organization of BP.

Within the field of public relations the concept crisis communication plays an important role. People working within an organization can demonstrate their worth by constructing messages, communicate to stakeholders, and have a clear agenda of how to handle a sudden crisis. In a given situation public relation professionals are usually called upon and furthermore counted on to represent the organization and distribute vital information to the public and stakeholders associated with the organization.

A crisis can be recognized as specific “non-routine events in societies or their larger subsystem that involve social disruption and physical harm” (Seeger et al, 2010, p. 128). Moreover, a crisis can be explained as a specific, unexpected, and non-routine event or series of events that disrupt the status quo. Disasters and crises usually include three defining characteristics: (1) high levels of uncertainty, surprising or unanticipated occurrences, (2) severe threat to high-priority goals and values, and (3) short or very restricted time for a response (Seeger et al, 2010, p. 128).

Communication is a key component within a crisis and has a variety of essential functions before, during, and after a crisis. According to Seeger et al, 2010, ten factors are relevant in relation to crisis communication: (1) clarifying risk and encouraging preparedness; (2) announcing evacuations and issuing warning; (3) providing information to the general public; (4) enhancing coordination, cooperation and logistics among response agencies; (5) facilitating mitigation on the part of the public and affected communities; (6) helping make sense of the disaster; (7) reassuring, comforting and consoling those affected; (8) recreating order and meaning; (9) providing general information to the larger public; and (10) facilitating renewal, learning, and disseminating lessons.

In crisis situations it is usually the representatives, leaders or spokespersons of organizations that are called upon when explaining and accounting for the crisis. This post-crisis communication response will have to be framed as apologia, or a genre of public apologetic discourse (Seeger et al, 2010, p. 129). In the aftermath of a crisis, organizations aim to engage in defense and image restoration. It is therefore crucial for an organization to perform well in post-crisis situations, as their image and reputation is on the line. It is the communication (words and actions) that affects how stakeholders perceive the organization in time of crisis. By communicating the correct way an organization’s image can be repaired, so that they can continue to maintain interests and begin to look forward again.

According to Benoit, there are five image-restoration strategies that also relate to crisis communication. These include denial, evading responsibility, reducing offensiveness of the event, corrective action, and mortification (Seeger et al, 2010, p. 130). Denial could involve refuting responsibility of a crisis or shifting the blame to others organizations or individuals. Evading of responsibility refers to how organizations sometimes claim they were provoked, lacked sufficient information, experienced an accident, or believed they were acting with good intentions. Reducing the offensiveness of the event includes three strategies namely: Bolstering, differentiation, and transcendence. Bolstering could mitigate the negative effects of the transgression by strengthening the stakeholders “positive” feelings toward the organization. Differentiation arises when the communicator attempts to distinguish the act performed from other similar, but less desirable actions. Here the communicator minimizes the crisis, counterattacks the accuser and lastly compensates the victims of the crisis.

In relation to corrective action, one of two alternatives can be followed: restoring the situation to the state of affairs before the objectionable action and/or promising to ‘mend one’s ways’ and make changes to prevent the recurrence of the undesirable act (Seeger et al, 2010, p. 130). Lastly, mortification happens when the accused organization accepts responsibility for its failures and asks to be forgiven. These five strategies presented by Benoit give a suitable overview of the image-restoration an organization goes through in a post-crisis situation. When a severe crisis hits like the oil spill in the Gulf of Mexico, Coombs believes in a strategy declared as a ‘full apology’, which is considered the most ingratiating. A ‘full apology’ appears when the organization publicly takes the full responsibility and asks for forgiveness for the crisis (Seeger et al, 2010, p. 131). In addition, concern for victims, bolstering values, and denying intent to do harm are all factors the organization will try to communicate as well, in order to protect and restore their image and reputation. Furthermore, such apologies should also be of ethical concern from the organizations side, preforming apologies as truthful, sincere, timely, voluntary, addressed to all stakeholders, and contextually appropriate is vital for the organization in order to appear honest and genuine.

Restoring the image of the organization in a post-crisis situation is critical to help possible victims, who might be influenced greatly by the crisis. Examples of this could be financial support, psychological assistance and more. This should help ease the situations of these victims.

As mentioned earlier the role of the crisis leader plays a central role in framing the crisis and it is through the leader’s ability to identify with the concerns and needs of the public. Key purposes will be to restore faith in the organization and believe that they will do whatever it takes to heal the damage they have caused. This becomes the security for the stakeholders and furthermore should help establish a vision for the future in the organization and eventually fix the problem they have triggered. Additionally, the leader who functions as the comforting and guiding spokesperson can through core values of the organization display credibility, honesty, and commitment so that stakeholders feel they can trust the organization to repair all damage within the crisis.

Though a crisis generate huge problems for organizations they can sometimes create room to reemerge, re-envision, or reconstitute the organization. A crisis may occasionally result in a new beginning, a rebirth, or a new point of departure for operations (Seeger et al, 2010, p. 136). But more importantly a crisis gives an opportunity to learn about past mistakes so these never will be repeated. It is possible for organizations to gain strength and come out of the crisis stronger than before the crisis occurred. According to Reierson, Sellnow, and Ulmer (2009) the discourse of renewal is a response to the complexities of a crisis situation and the effort to find some positive meaning and a sense of direction within the uncertainty and loss of a crisis (Seeger et al, 2010, p. 138).

The purpose of this chapter is to give the reader a good overview about the theory of crisis communication. When unforeseen accidents and other types of crises strike it is best for the organization to communicate and deliver a thought-through response explaining the crisis to the stakeholders of the organization and what the organization tend to do about the crisis. This response needs to be fast, honest, genuine, and sincere. Furthermore, it would be a good idea to contact the mass media before they begin to gather their own information so the organization hopefully can avoid being portrayed as the villain.

9 Situational Crisis Communication Theory (SCCT)

Timothy W. Coombs is the founder of this exceptional theory, which is widely known within the world of public relations and crisis communication. Situational Crisis Communication Theory (SCCT) provides an evidence-based framework for understanding how to maximize the reputational protection afforded by post-crisis communication (Coombs, 2007, p. 163). Moreover, the theory claims that whether or not people know about past crises is an important consideration for crisis managers, but also how key facets of the crisis situation influence attributions about the crisis and the reputations held by stakeholders (Coombs, 2007, p. 163). Hence, the SCCT offer a set of guidelines for how crisis managers can use crisis response strategies to protect a reputation from the ravages of a crisis.

Within this theory, the concept of reputation plays a vital part, while a reputation is an aggregate evaluation stakeholders make about how well an organization is meeting stakeholder expectations based on its past behaviors (Coombs, 2007, p. 164). Achieving and maintaining a good reputation is an important part of organizations while it can help attract customers, generate investment interest and improve financial performance. Reputations are based in large part on how stakeholders evaluate an organization’s ability to meet their expectations for treating stakeholders (Coombs, 2007, p. 165). Furthermore, the SCCT implies that information about past crises can shape perceptions of the current crisis; the reputational threat presented by the current crisis, and, hence, should guide the optimal communication responses for protecting the organizational reputation (Coombs, 2004, p. 266). Crises often threaten to damage reputations, while a crisis gives people reasons to think badly of the organization. Therefore if the reputation of the organization is somewhat good before a crisis hits then the organization is likely to suffer less and recover more quickly according to Coombs (2007). Before going into depth with the SCCT, it is important to mention the ethical perspective of the theory. Coombs (2007) states that the first priority in any crisis is to protect stakeholders from harm, not to protect the reputation. This involves communicating information to stakeholders either directly or through news media. A crisis creates a need for information. The uncertainty of a crisis produces stress for stakeholders. To cope with this psychological stress, stakeholders need information about what had just happened (Coombs, 2007, p. 165). Stakeholders wish to know what is being done to protect them from similar crises in the future and what corrective actions are being taken. It would be irresponsible to begin crisis communication by focusing on the organization’s reputation. To be ethical, crisis managers must begin their efforts by using communication to address the physical and psychological concerns of the victims (Coombs, 2007, p. 165).

The ‘Situational Crisis Communication Theory’ suggests that people search for the causes of events (attributions), especially when these are negative and unexpected. The SCCT is used to predict the reputational threat presented by a crisis and to advise crisis response strategies designed to protect reputational assets. What leads the stakeholders to assess crisis responsibility is the negative event. If organizations do not act responsibly their reputation most likely suffers and the stakeholders become angry which can lead to i.e. negative word of mouth and/or boycott. The SCCT suggests that the crisis manager can determine which crisis response strategy or strategies will maximize the reputational protection of the organization by fully understanding the crisis situation. The threat is the amount of damage a crisis could inflict on the organization’s reputation if no action is taken. (Coombs, 2007, p. 166).

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There are three factors within crisis situations that shape the reputational threat: (1) initial crisis responsibility, (2) crisis history and (3) prior relational reputation (Coombs, 2007, p. 166). Initial crisis responsibility refers to how stakeholders believe that the crisis is caused by organizational actions. Hence, the reputational threat to an organization increases when stakeholder’s attribution of crisis responsibility to the organization intensifies. Within initial crisis responsibility is the concept of framing, which relates to how we through communication involve the way that information is presented in a message through i.e. words, phrases, and images. Frames in communication help to shape frames in thought. The way a message is framed shapes how people define problems, causes of problems, attributions of responsibility and solutions to problems (Coombs, 2007, p. 167). Crisis types are viewed as a form of frame, here the crisis manager tries to establish or shape the crisis frame by stressing certain cues. These cues could i.e. include what caused the crisis to happen. This could be an external factor like a hurricane or in this example the result of an accident, which would be considered as an unintentional event of the organization.

Crisis history refers to whether or not the organization has had a similar crisis in the past. If so, the organization will likely be perceived as an organization with ongoing problems that needs to be addressed.

Lastly, prior relational reputation refers to how well or poorly an organization has or is perceived to have treated stakeholders in other contexts (Coombs, 2007, p. 167). Thereby the reputation is going to be highly threatened if prior crises of the organization have been handled poorly in relation to the stakeholders.

Within the SCCT the crisis types are between three crisis clusters: Victim cluster, Accidental cluster, and Preventable cluster. In this example, the BP oil spill will be considered a preventable cluster, which threatens their reputation severely as the organization placed people/employees in danger through inappropriate operations (Explanation will follow later in this section). In time of crisis, it is sometimes easy for stakeholders to feel negative about the organization. Negative emotions can cause negative word of mouth towards the organization; something the organization needs to repair as fast as possible in order to regain their positive reputation.
Summing up the SCCT, Coombs argue that a crisis functions as a reputational threat, which can have a negative effect on the organization if the crisis manager don’t utilize a crisis response strategy immediately after the crisis occur. In order to change people’s perceptions, the crisis manager needs to present new and positive information about the organization, but also remind stakeholders about the good past. Rebuild strategies are the main avenue for generating new reputational assets. Rebuild strategies attempt to improve the organizations reputation by offering material and/or symbolic forms of aid to victims. The crisis managers say and do things to benefit stakeholders and thereby take positive actions to offset the crisis. Offering compensation or a full apology both are positive reputational actions (Coombs, 2007, p.172).
As promised, this chapter will describe how BP managed to communicate the oil spill crisis to their stakeholders seen from the ‘Situational Crisis Communication Theory’ created by Coombs. The first press release BP issued about the crisis was on April 21^st 2010. BP states clearly in this press release that a fire on the semisubmersible drilling rig occurred at approximately 10:00 p.m. central time in the United States Gulf of Mexico. Furthermore, the press release states “A substantial majority of the 126 member crew is safe but some crew members remain unaccounted for at this time”¹⁵. CEO Tony Hayward fails to share information about the 11 BP employees who lost their life, however he states, “Our concern and thoughts are with the rig personal and their families. “¹⁶ On April 22^nd 2010, another press release was issued, this time more in details about the accident, but again nothing was mentioned about the 11 BP casualties. Tony Hayward stated “We are determined to do everything in our power to contain this oil spill and resolve the situation as rapidly, safely, and effectively as possible. There should be no doubt of our resolve to limit the escape of oil and protect the marine and coastal environments from its effects.”¹⁷ Not until the 24^th of April 2010 did BP announce that 11 employees had died in the accident. Despite this massive disaster and the unstoppable oil leak BP waited four days to announce such important information. Besides describing his deepest sympathy, CEO Tony Hayward added “BP will be working closely with Transocean and the authorities to find out exactly what happened so lessons can be learnt to prevent something like this from happening anywhere again.”¹⁸ The press releases issued in April 2010 after the 20^th remains somewhat similar sharing details to stakeholders about the current situation and keeping promises that BP will do everything in their power to stop the oil leak and fixing this complex problem. Moreover, the organization continues to guarantee that they are doing progress, recovering oil that has leaked from the pipeline. Tony Hayward announce in the last press release of April 2010 “We will be judged by the success we have in dealing with this incident and we are determined to succeed.”¹⁹ Another judgment criteria of BP is that they will be held accountable on how their stakeholders interpret past crises of the organization and how BP handled similar crisis like the one they experienced back in 2006, when a pipeline caused 250,000 gallons of oil to spill into the North Slope of Alaska. This situation caused BP to put lots of time, effort, and money into the clean up of the incident and further shows that BP in the past has faced similar accidents. However, this oil spill in April turned out to be the worst environmental disaster to this date within the U.S.A. Hence, individuals from an objective standpoint are likely to judge BP by this present oil spill and past oil spills of the past: This could potentially hurt BP’s image, while the organization thereby will be associated with accidents and environmental disasters.

Turning the focus back to ‘Preventable cluster’ in the SCCT, one might argue that the fire and explosion was caused by what would be considered a human-error accident (Human error causes an industrial accident).²⁰ Within this crisis type, the organization knowingly places people at risk and used inappropriate actions. Crisis occurring within ‘preventable cluster’ is viewed as the most severe reputational threat as mentioned earlier in this section. Evidence of this came out when CEO Tony Hayward was testifying at the U.S. congress back in July 2010. The congressional trial proved to be a hard task for Tony Hayward, while the congressional representatives made hard accusations aimed directly at him and BP. Chairman Bart Stupak accused BP of cutting corners to save time and create a culture of riskier operations. Chairman Stupak in his hearing of Tony Hayward states “Everyone of those key areas Sir, dealt with saving time, saving money, and accepting the risk. So if we use your own words, if you are going to hold BP accountable then we have to manage the risk. Should leadership at BP be held accountable here?”²¹ The trial continues by accusing BP of safety issues; chairman Michael Burgess states “Other companies claims BP of making risky decisions they wouldn’t have made and in particular they criticized your decision to install a long single string of casing from the top of the well to the bottom on April 19^th, the day before the blow out. They said this well design choice provided an unrestricted pathway for gas to travel up the well in the aural space that surrounded the casing and of course it blew out the seal.”²² When information like this comes out in the open for the world to hear, it can be hard for an international organization to protect their image and reputation, while the negative word of mouth spreads like a wildfire thanks to the mass media. When Tony Hayward became the CEO of BP in 2007, he swore that safety was going to be BP’s top priority, which is also stated on their website ‘Safe and reliable operations are inadequate to BP’s success.’²³ Tony Hayward is asked at the congressional hearing whether or not he believes that he has made that commitment? He is demanded to answer yes or no to this question, however he states “We have focused like a laser on safe and reliable operations, that is a fact. One might argue that Tony Hayward fails to answer the hard questions he is confronted with, but nevertheless he has the overall responsibility of the operations and therefore must be held accountable for the risky decision-making the organization had made.

To compensate for the mess the organization have created in the Gulf, BP must take full responsibility and give a full apology to the American people and the stakeholders of the organization. BP have taken this crucial step in the right direction by accepting the tough task of cleaning the environment, but also give financial compensation to stakeholders who have been effected by this disaster. In their annual report from 2010 BP states “BP would do the right thing in the Gulf, and this marked a turning point. Through diligence and invention, our teams stopped the flow of oil in July and completed relief-well operations in September. We have set up a $20 billion fund to show our willingness and capacity to pay all legitimate claims for compensation.²⁴ Despite the disaster BP has triggered, the organization shows that they are willing to fight for their image while they aim to rebuild their reputation through their trust fond and also by the future commitment they have agreed upon in regards to the observation and cleaning of the sea life and environment in the Gulf of Mexico in the coming years.
The idea of including Coombs’ ‘Situational Crisis Communication Theory’ is to give the reader an indication of the importance of how organizations best communicate an unexpected crisis in order to protect their reputation. This is especially important, while we live in a day and age where information travel fast because of the evolvement of mass media, hence an organization needs to be the first source of communication if a crisis happen in order to avoid being put in a more negative light by the media. Maintaining a positive reputation is vital for the organization so they hopefully prevent the harm a crisis can cause.


10 Image Restoration Theory

Another leading theorist within crisis communication is William L. Benoit. His perspectives on crisis communication are on image repair and image restoration. Image is important for organizations while they seek to maintain a positive image and brand within the eyes of the outside world. However, when crises occur, usually surprising the organization needs to be prepared, because as long as the audience thinks the firm is at fault, the image is at risk (Benoit, 1997, p. 178). Within image restoration are five board strategies, which are: Denial, evasion of responsibility, reduce offensiveness, corrective action, and mortification. In other words, what strategy should an organization choose when facing a crisis; what message options will be most appropriate to use?

BP has used several of these strategies in order to protect their image, where the first strategy they used is evasion of responsibility. Here BP claimed that the crisis was caused by accident, hence the explosion. If BP succeeds to convince their audience that the oil spill was caused by accident, then their organization should be held less accountable for the crisis and thereby reducing the damage of their image (Benoit, 1997, p. 180). Also, reduce offensiveness is used in two different scenarios. First, BP tried to minimize the crisis by downplaying the oil leakage into the Gulf and furthermore by downplaying the disaster so much that some people might have missed the news altogether (…) its earnings statement for the first quarter of 2010, with news of the disaster stuffed into three sentences at the bottom of page 4.²⁵ Looking in the rearview mirror of this scenario, it would be fair to say that BP misjudged the crisis by downplaying it, while the magnitude of the disaster was bigger than anyone could have imagined. However, the second scenario BP used within this strategy is compensation to the victims of the oil spill. According to Benoit compensation is the final form of reducing offensiveness. If it is acceptable to the victim, the firm’s image should be improved (Benoit, 1997, p. 181). BP displays this i.e. by their $20 billion trust fund to reimburse victims of the oil spill i.e. fishermen’s loss of income.

Moreover, BP use corrective action while the organization has promised to correct their mistake by cleaning up the oil spill in the Gulf of Mexico. Also this can help BP to restore their image. Lastly, mortification refers to apologizing for the act BP has caused. The final general strategy for image restoration is to confess and beg for forgiveness (Benoit, 1997, p. 181). BP has numerous times apologized for the disaster, one example of this is from their 2010 annual report “The explosion and fire on the Deepwater Horizon rig shocked everyone within BP and we feel great sadness that 11 people died. We are deeply sorry for the grief felt by their families and friends. We know nothing can restore the loss of those men.”²⁶ As mentioned, BP uses several of these image restoration strategies, this is because by using more they are likely to reach out for more sympathy and empathy to their stakeholders, media and the general public.

According to Benoit (1997), an organization should be prepared for a crisis before it occurs, meaning that a crisis contingency plan should be ready. This mean a restaurant should prepare for cases of food poisoning and BP should be prepared for accidents like oil spills and explosions. Furthermore, these plans should be reviewed periodically and plans should be modified as needed. In BP’s case, no one within the organization was prepared for what happened on April 20^th 2010 and because the accident was so severe it took the whole organization by surprise. However, BP have had oil spills and accidents on their hands in the past, so it would be wrong to say that the organization did not have somewhat experience within the field of crisis communication. One might argue that if BP had been better prepared the organization could have reduced both response time and possibly prevented crucial missteps in relation to the response of the crisis.

As a crisis arise it is vital to fully understand both the nature of the crisis and the relevant audiences. A firm must know the nature of the crisis to respond appropriately. Also, it is important to know the perceived severity of the alleged offense. The response should be tailored to the offence (Benoit, 1997, p. 182). Since no one could have imagined the severity of the oil spill, it quickly took the world by surprise. BP did what they felt was right in relation to response, however since the oil leak kept gashing out into the Gulf, still BP downplayed the accident and became a media target in the months following the accident and most likely also in the future when the discussion of oil spills are debated upon.

Another important aspect of image repair is the identification of the relevant audiences. Benoit (1997) suggests that a key part of persuasion is tailoring one’s message (s) to the audience. When accusations are threatening the organization they may wish to assuage the concerns of their attackers, but also the opinions of their stockholders. Furthermore, Governmental regulators can potentially fine the organization or customers may decide to boycott the organization. The interests of these groups differ widely (e.g. stockholders are concerned with profits; environmentalists with the quality of the environment; regulators with laws; local voters with their community) and thus message appeals that might be effective with one group could be worthless with another. An organization facing a crisis may hope to favorably influence more than one audience. If so, it is best to prioritize the audiences, making sure that the most important audience is appeased first, then devoting time and effort to the other audiences as possible (Benoit, 1997, p. 183). As BP responded with their first press release stating that the majority of people injured from the accident are now safe, they failed to mention the 11 employees who were killed, this could be because they at that time did not know or simply because they felt they needed more time to appropriately come up with the right statement. Though BP managed to somewhat suitably inform their immediate stakeholders namely, employees, their families and the media. In regard to their shareholders they use their 2010 annual report to inform these in more detail about the crisis and the projective future for these “Clearly, one of the consequences of the events of 2010 was a substantial loss of value and returns for our shareholders. I am pleased that we have been able to resume dividend payments, and our intention is to grow the dividend level in line with the company’s improving circumstances.”²⁷ Lastly, BP have used an enormous effort to convince other stakeholders like fishermen and other individuals working along the coast of the Mexican Gulf, that they intend to do everything in their power to fix the damage they have caused. Especially these last promises are critical to all stakeholders of BP, while they are a big part of the actors who can help BP repair their image. In the situation of BP it can be extremely important to report plans to correct and/or prevent recurrence of the problem. While people frequently want to know whom to blame, it is more reassuring to know what steps have been taken to eliminate or avoid future problems. A firm commitment to correct the problem – repair damage and/or prevent future problems – can be a very important component of image restoration discourse. This would be especially important for those who admit responsibility (Benoit, 1997, p. 184).

This chapter was meant for the reader to increase ones knowledge towards image repair and image restoration. According to Benoit (1997) BP used several image restoration strategies after the accident occurred. These strategies hopefully helped BP explaining the accident to their stakeholders and the outside world. Moreover, BP have taken full responsibility for the accident by offering compensation to victims of the oil spill and moreover created a trust fund to secure the clean ups in the Mexican Gulf. BP have tried to take vital and necessary steps in order to repair their damaged image, steps that hopefully will help the organization’s restoration of their image in the future.

11 BP – An admired organization?

Organizations that are widely admired throughout the world are often viewed as strong brands. Within the petroleum refining industry BP ranked high for years. According to CNN, BP ranked as high as 5^th of oil companies within the industry.²⁸ However, this was before the oil crisis and in 2011 the organization ranked the lowest of all organizations within the petroleum refining industry. A stunning 16^th place is what BP faced in the year after the oil spill.