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Yoshikami: BP, CEO's, and Accountability

Looks like Tony Hayward will have his life back after all. British oil giant BP has replaced him with Bob Dudley, an American known for diplomacy. This move that might soften U.S. criticism of the way BP has been handling the oil spill in the Gulf of Mexico.

It's pretty clear that Hayward was not the best in public relations, and has inevitably become a lightning rod for all criticism aimed at the oil spill. In the corporate world today, when perceptions can make or break a company, PR is an important part of an executive's role (particularly in times of crisis). A CEO sets the tone for the whole company, and unintentional missteps and communications are negatives for a firm's external image, as well as for its internal morale.

But that's not the only way CEOs impact companies.

A CEO is the leader of the organization and no matter what they claim, they are ultimately responsible for what happens in the company. The effectiveness of senior management within an organization reflects the quality and capabilities of the CEO. Hayward implied at a Senate testimony last month that the oil spill wasn't his responsibility. Democrat Henry Waxman told Hayward he was simply "kicking the can down the road". The buck stops with the leader.

It might not be fair but that's reality.

It has often been said that a CEO's microphone is always on and in my experience as a leader of an organization, that is certainly the case. Tone and values are largely dictated by the attitude of leadership and major shifts can occur in organizations when CEOs are replaced.

"One should not underestimate how morale and internal perception of the mission of the company can be impacted by culture that is driven by leadership." -YCMNET, Michael Yoshikami

One should not underestimate how morale and internal perception of the mission of the company can be impacted by culture that is driven by leadership. One only needs to look at the example of former CEO of GE, Jack Welch, when he managed the large conglomerate . There was certainly a culture of performance in that organization that helped drive GE to great success. The current CEO, Jeff Immelt, appears to be moving down that same path although with a slightly different style.

Home Depot , according to some employees and news reports, struggled under the leadership of Bob Nardelli. Of course, Nardelli was brought in to transform the company from an informal collection of stores to a more cohesive and organized business. By many accounts he succeeded in the structural issues but did not do well from a cultural standpoint. And culture matters when one is looking to succeed in today's market place.

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As the story unfolds at BP , keep in mind that CEOs do matter.

Often one cannot fully gauge the effectiveness of the leader until a crisis plays out (as in BP's case).

It seems that the board of BP believes that it makes sense to adjust leadership now and move forward with a new culture and public image.

Someone needs to take the fall for this disaster, as well as the poor handling of the public relations related to this disaster.

Hayward seems like the candidate.

Editor's Note:In an earlier version of this post, we mistakingly referred to Rep. Waxman as a Republican, we have corrected this error.

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Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). He oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. Michael and YCMNET were ranked as one of the top 100 investment advisors in the United States for 2009 by Barrons. He appears regularly on CNBC and CNBC Asia and can be reached directly at m@ycmnet.com.