BP has reiterated its determination to improve performance by simplifying how the company is structured and run, ensuring that resources are increasingly shifted to the front line, with operating managers freed from corporate bureaucracy and the burden of unnecessary overheads.
CEO Tony Hayward said: While the process would yield some medium-term cost reductions, the major benefit would be the revenue boost expected from greatly improved operational efficiency over the longer term.
BP will in future comprise only two business segments: exploration and production and refining and marketing. The current third segment, gas, power and renewables, would be incorporated mainly into the other two. A separate division, alternative energy, will handle BP’s low-carbon business and future growth options outside oil and gas.
The two segments will be made up of a series of strategic performance units. These will become BP’s main operating entities, each effectively a profit center, with closely defined remits and rigorous business objectives.
Corporate infrastructure will be rigorously reviewed, with some previously centralized functions slimmed down and redeployed into the business segments. In parts of BP, up to four layers of management will be shed. Greater standardization of process, including safety, has already been introduced and will be applied consistently across the group.
The moves follow a six-month review of the group’s operational performance which identified wide-ranging duplication, overlap and excessive organizational complexity.