BP boss to weild the axe

The new boss of oil giant BP vowed to strip out layers of management today as part of a "fundamental shift" in the way the company works.

Tony Hayward, who replaced Lord Browne earlier this year, said the complex structure of BP was at the root of the company's recent poor performance.

He warned redundancies were inevitable in some parts of the company, but stressed that front-line operations would continue to be strengthened following his strategy review.

Issuing a message to staff worldwide, Mr Hayward said he wanted "operating managers freed from corporate bureaucracy and the burden of unnecessary overheads".

In parts of BP up to four layers of management will be shed, while in future the company will comprise just two business segments, exploration & production and refining & marketing.

The moves follow a six-month review of the group's operational performance which identified wide-ranging duplication, overlap and excessive organisational complexity.

Mr Hayward said: "It is clear that BP's overall strategy remains robust. We have great positions in many of the major hydrocarbon basins of the world as well as in the markets of key economies and we are preparing for the longer term by building a new, low-carbon energy business.

"Our problem is not about the strategy itself but about our execution of it. BP's performance has materially lagged behind our peer group in the last three years. It has been poor because we are not consistent and our organisation has grown too complex. At the root of all this is a need to change our behaviours."

BP has been dogged by a series of production problems since the start of the year, with unplanned maintenance stoppages at its refineries and lower output.

The group said at its last set of results that operational performance and production output were "not good enough".

Mr Hayward's admission that the structure inherited from Lord Browne was not working was a further blow to the previous chief executive.

Once credited with turning around BP's fortunes, his tenure at the firm came to an abrupt end in May when he was forced to resign ahead of his planned retirement after lying to a court over his relationship with former partner Jeff Chevalier.

His last few months at the oil giant were also tarnished when BP was heavily criticised for safety process failings at its US oil refineries following a report commissioned in the wake of the 2005 explosion at its Texas City operation, which killed 15 workers.

Mr Hayward added: "What we are doing represents a fundamental shift in how BP works. Managers will be listening more acutely, particularly to front-line staff. We will make sure individuals are fully accountable for things they control. We will respect professionalism and excellence as key to the success of our businesses - something we have not always done.

"Continuous improvement is what will drive performance, as opposed to short-term, unsustainable initiatives."