Exxon Valdez Case Study

The Exxon Valdez oil spill occurred in Prince William Sound, Alaska, on March 24, 1989. The Exxon Valdez, an oil tanker bound for Long Beach, California, departed from the Trans Alaska Pipeline terminal at 9:12 pm March 23, 1989. William Murphy, an expert ship's pilot hired to maneuver the 986-foot vessel through the Valdez Narrows, was in control of the wheelhouse. At his side was the captain of the vessel, Joe Hazelwood. Helmsman Harry Claar was steering. After passing through Valdez Narrows, pilot Murphy left the vessel and Captain Hazelwood took over the wheelhouse.

The Exxon Valdez encountered icebergs in the shipping lanes and Captain Hazelwood ordered Claar to take the Exxon Valdez out of the shipping lanes to go around the icebergs. He then handed over control of the wheelhouse to Third Mate Gregory Cousins with precise instructions to turn back into the shipping lanes when the tanker reached a certain point. At that time, Claar was replaced by Helmsman Robert Kagan. For reasons that remain unclear, Cousins and Kagan failed to make the turn back into the shipping lanes and the ship ran aground on Bligh Reef at 12:04 am. Captain Hazelwood was in his quarters at the time.

The captain was seen in a local bar, admitted to having some alcoholic drinks, and a blood test showed alcohol in his blood even several hours after the accident. Hazelwood remained insistent, however, that he was not impaired by alcohol. The oil tanker spilled approximately 11 million gallons, or 257,000 barrels, of crude oil. It is considered to be one of the most devastating human-caused environmental disasters.

The Valdez spill was the largest ever in U.S. waters until the 2010 Deepwater Horizon oil spill (more commonly known as the BP oil spill), in terms of volume released. However, Prince William Sound's remote location, accessible only by helicopter, plane, and boat, made government and industry response efforts difficult and severely taxed existing plans for response. The region is a habitat for salmon, sea otters, seals and seabirds.

The oil eventually impacted 1,300 miles of shoreline and 11,000 square miles of ocean. Then Exxon CEO, Lawrence G. Rawl, shaped the company's response. Many problems can be found with how the company handled the crisis. There was a two-week delay before clean up even began, and for the first few days the CEO refused to be interviewed.

After six days, Rawl finally made a statement to the media and eventually went on TV, but he was unfamiliar with the latest Exxon cleanup plans. He also claimed that, as CEO, it was not his responsibility to read such reports and blamed the media for making a big deal of the spill. After more than two weeks, Rawl finally visited the site of the oil spill. Another troubling issue was that Exxon’s claims were contradicted by eyewitness accounts.

The key issue presented in the Exxon Valdez case study is that Exxon communicated in an unethical manner when its crisis contingency plan failed (McGill & Seeger, 2000, p.177). Inadequate communication, along with the absence of an effective plan, minimizes trust. This is exactly what oil companies need to avoid if they want to uphold a respectable company image. Companies that work with highly toxic substances often have spills that can be seen as normal accidents (Cleveland, 2008, par.1).

However, if “the company is ill-prepared to handle the situation, it becomes a considerable crisis” (Waddock, 2008, p.23). The crisis worsens when companies provide false statements and does not take responsibility for their actions. When the Exxon Valdez spilled millions of gallons of oil into Alaska’s Prince Williams Sound, Exxon management blamed the Alaskan Coast Guard and the captain of the tanker for the failure of the crisis contingency plan (Cleveland, 2008, par.1). Rawl also evaded any responsibility when addressing the crisis in the media.

The plan did not fail because of irresponsible stakeholders; it failed because Exxon management had a disorganized plan. Exxon blamed others for the mistakes made by its management and gave false statements stating the Coast Guard did not complete their part of the plan and that the captain drove drunk, thus firing him (McGill & Seeger, 2000, p.180). Lying and irresponsibility are two examples of unethical behavior, and these behaviors led to poor trust and miscommunication between stakeholders.

“Incorrect and misleading statements is helpful to no one,” (McGill & Seeger, 2000, p. 180). It only makes Exxon’s management appear untrustworthy and worsens the crisis. Exxon needed to truthfully communicate with the Alaskan Coast Guard and its employees so that all emergency plans could be carried out efficiently. With a more thorough plan, Exxon would have been more prepared and the oil spill could have been effectively handled so that the company maintained an ethical and positive image. Exxon management needed to develop ethical communication skills to truthfully communicate with stakeholders.

One way that Exxon management could approach the situation would be through the lens of a philosophical perspective called Deontology. Deontology is the “study of moral obligations or duty”, and “deontologists evaluate acts regardless of their consequences” (Murphy, Hildebrandt, and Thomas, 2008, p.312). Exxon management would uphold the truth if they followed this philosophy.

If the management stressed being truthful, the rest of the company would do so as well because “others in the organization would observe and model their behavior” (Murphy et al., 2008, p.321). In the event that Exxon were to experience another crisis, the management should practice Deontology, allowing them to immediately take all responsibility for the crisis, and not lie or blame others. With the new philosophy, there would not be any miscommunication, stakeholders would trust Exxon, and Exxon could uphold its image as a respectable and responsible company. Another way that Exxon can build trust with its’ stakeholders is with the Stakeholder Alignment model (EBM, n.d.).

This model views a company’s relationships as life-long partnerships that are achieved with continuous communication. Exxon needs to show “regard to the interests of all its groups of partners to built trust,” (EBM, n.d.). Once trust is built, Exxon can effectively and truthfully communicate with the Alaskan Coast Guard and its employees. When companies have common objectives, there is no need for lying or blaming others. If stakeholders come together on behalf of the company facing a crisis, they can help rather than getting in the way to resolve the situation (Waddock, 2008, p. 23). Since ethics is often a communication issue, Exxon needs guidance to ensure honest communication.

Exxon could work closer with The National Oceanic and Atmospheric Administration (NOAA), which is a “federal agency focused on the condition of the oceans and the atmosphere” (OR&R, 2005). NOAA has a division, called The Office of Response and Restoration (OR&R), that specifically responds to “oil and chemical spills in U.S. waters and helps the On-Scene Coordinator make timely operational decisions” (OR&R, 2005).

OR&R would assist Exxon by leading the team at the spill and working with management to organize a press release including the company’s ethical values. Press releases “frequently follow an organizational crisis when the crisis calls the organization’s values into question” (Murphy et al., 2008, p.320). OR&R would help Exxon improve its crisis contingency plan and would work as a leader to ensure that the plan runs efficiently, so there is no miscommunication or unethical behavior.

The Chrysler Corporation behaved unethically when the company committed mail and wire fraud by disconnecting odometers on cars for personal test drives and selling them as new (Gordon, 1987, par. 3). Top Chrysler official Lee Iacocca immediately arranged a news conference and apologized for the tampering. He believed “selling damaged cars that had been repaired as new was dumb'' and that Chrysler had “nobody but themselves to blame” (Holusha, 1987, par.14). By quickly addressing the issue, Mr. Iacocca made the right ethical decision regarding corporate wrongdoing.

This allowed Chrysler to retain strong trust and communication with its customers, therefore upholding the company image. The course of action that Exxon should follow is to adapt the philosophy and values of Deontology and follow the Stakeholder Alignment Model, so all communication is continuous and truthful.

Exxon should also work closer with NOAA to ensure its crisis plan runs efficiently. It is important to respond quickly when a crisis occurs. Chrysler was able to employ this notion and if Exxon does so in the future, the backlash will not be nearly as great. These solutions will allow Exxon to maintain ethical behaviors and be seen as a respectable company. References

Cleveland, C. J. (2008). Exxon Valdez oil spill. In The encyclopedia of earth. http://www.eoearth.org/article/Exxon_Valdez_oil_spill EBM. (n.d.). Stakeholder alignment. http://www.ebml.co.uk/html/stakeholder_alignment.html Gordon, A. (1987). Chrysler image in for repairs. http://www.algordon.com Holusha, J. (1987, December 15). Chrysler enters no contest plea over odometers. The New York Times, pars. 1-16. http://query.nytimes.com

McGill A. D. & Seeger M. W. (2000). Ethical Issues in Exxon’s Response to the Valdez Crisis. In G. Peterson (Ed.). Communicating in organizations: A casebook (2nd ed.). (pp. 177-181). Boston, MA: Allyn and Bacon.

Murphy, H.A., Hildebrandt, H.W., & Thomas, J.P. (2008). Business communication and the ethical context. In S. Hamula, K. Kalman, M. Kish, K. Komaromi, & W. Ressler (Eds.). Introduction to strategic communication [custom text] (pp. 306-327). Hightstown, NJ: McGraw Hill Primis Online.

OR&R. (2005). OR&R across the U.S. In Emergency. http://response.restoration.noaa.gov/ Waddock, S. (2008). Stakeholders: The relationship key. In S. Hamula, K. Kalman, M. Kish, K. Komaromi, & W. Ressler (Eds.). Introduction to strategic communication [custom text] (pp. 1-39). Hightstown, NJ: McGraw Hill Primis Online.