Yesterday on CNN I made the point that CEOs are responsible for the decisions their organizations make. This seems surprising to many, including BP’s outgoing CEO Tony Hayward. He has the attitude that he wasn’t responsible; in fact he characterizes himself as a “victim” in an odd way. Others even question whether he is being used as a scapegoat.
Let’s be clear: a CEO is responsible for the decisions his company makes. He is responsible for setting the tone at the top. He is responsible for making sure that the appropriate decision processes are in place throughout the company. He is responsible for designing the appropriate incentives that lead to the right decisions. He is responsible for making sure organization structures (functional and cross-functional) are in place for the best decision making. He is responsible to put the right people in place to make major decisions, and to ensure that they are trained and skilled in making these decisions. He is responsible to identify what decisions expose the company to major risks, and ensure that these risky decisions are contained. Tony Hayward failed on many of these.
And this responsibility for decisions is also replicated throughout the organization. The VP of manufacturing is responsible for all of the manufacturing decisions. The VP of oil drilling is responsible for all of the drilling decisions. The VP of finance is responsible for all of the financial decisions. However, this does not mean that those above are relieved of their responsibility as decisions flow down through the organization. They share the responsibility, but it always rises to the top. That’s where the buck (or pound) stops.
In my 2009 book, Business Decisions, I discussed the importance of business decisions and how they should be made. Lately, I’ve been talking about what I call the Decisive Corporation – businesses that consistently make the right decisions. BP is not an example of a Decisive Corporation; they are a case study of what can happen when the CEO abdicates his responsibility for the decisions of his company.