This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.
Remember Dick Cheney? He hasn't emerged from his spider hole since shooting his buddy in the face at a quail hunt. But last time I was in Washington, I was walking along the street near George Washington University Hospital and suddenly all the cars disappeared and an armada of police cars and black suburbans whizzed by. I was later told that it was Cheney getting his stent checked up.
Prior to his stint in the administration of the 43rd president, It turns out that Cheney's heart beat for Halliburton (NYSE: HAL). In 2004, for example, taxpayers provided Halliburton's KBR subsidiary with $7 billion to provide services in Iraq while it took hundreds of millions of dollars in improper charges. With its 2% profit over costs, the more taxpayer money Halliburton spent, the higher its profits. Fortunately, Halliburton spun off that pesky KBR subsidiary in April 2007.
But it has other problems. The SEC is investigating Halliburton for paying bribes in Nigeria; its KBR subsidiary did a lousy job replacing bolts on an undersea pipeline that will cost Halliburton up to $220 million; the SEC investigated Halliburton for bogus contract revenue accounting; it settled asbestos litigation; a competitor of Hallburton accuses it of antitrust violations; and it received a $108 million judgment for dumping hazardous waste.
Halliburton needs a good cleaning and if Dick Cheney leaves office in January, it will lose a powerful protector. How should Halliburton clean itself up? It could sweep out its current management team and replace it with a team of oil services executives who have a strong ethical compass and a deep knowledge of the industry. These executives should replace the people responsible for the problems that resulted in the lawsuits and then move quickly to settle all this litigation and put it behind the company.
Then the new management team should create a set of values that encourages ethical behavior and excellent customer service. These values should become part of Halliburton's culture. How would that work? The executive team could teach these values to Halliburton's people; they would model those values in their behavior; they would promote people who exhibited the values and sideline those who did not. And they would pay the biggest bonuses to the value carriers as well.
Halliburton is a player in an industry that's important to our energy production. But it needs a makeover when it comes to ethics. If it takes the steps I mentioned, I think it will be a better company.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
Does Halliburton need a makeover? What would you suggest? Be sure to check out the other makeover posts.
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Reader Comments (Page 1 of 1)
10-23-2008 @ 9:26AM
Ray said...
Funny, as usual, while you media people demonize an American company that pays its employees good money, you forgot to mention that B. J. Clinton was the one who put Haliburton in charge of all these military contracts................By the way when do you call for the ethics make over in the media???...Funny how your filter only sees problems on one side of the aisle.
10-23-2008 @ 2:04PM
Jack Dorf said...
As soon as I read about VP Cheney emerging from his "spider hole", I knew this was another hit piece, and stopped reading.
A string of unsupported allegations and assertions isn't an argument.
Screw you, Peter Cohan. You're a hack.
10-23-2008 @ 5:09PM
Ed said...
What else would you expect from Mr. Cohen?? With Daily Kos links on his web site you might get your first clue.
10-23-2008 @ 7:37PM
Dow said...
Dick Cheney and Halliburton are two of the best examples of greed and the ME ME attitude which is destroying this country. Dick Cheney is a jerk.
10-24-2008 @ 2:58PM
Ms Sparky said...
As I blog nearly daily about KBR in Iraq and Afghanistan I forget at times it is Halliburton who is the proud parent of this evil spawn.
I agree it is time to throw a little bleach into the KBR and Halliburton Exec gene pool! It's also time for some KBR exec's to enjoy a little "behind bars" time out.
Ms Sparky
http://mssparky.com/
10-26-2008 @ 12:08PM
Rocky said...
Haliburton used to stand for something as well as Brown and Root did until two things came into play one is that Lady Bird bought into B&R and than sold wells drilled in Saudi to the Saudi's so she could build the Johnson deal in Texas to celebrate his time in office, which he was crooked and on his rise to power actually either had people killed or threatened and stole from to get there. Second Cheney came along as head of Haliburton and ruined it with his shady dealings. To revamp it get Cheney out of it completely and put Haliburton and B&R back together under the control that was original when they were together when Mr. Bown and Mr. Root actually owned the entirity of it.
12-26-2008 @ 6:00PM
Researchguy10 said...
I am amazed at the lack of accuracy in articles like this. Mr cohan said "...Halliburton's KBR subsidiary with $7 billion to provide services in Iraq while it took hundreds of millions of dollars in improper charges. With its 2% profit over costs, the more taxpayer money Halliburton spent, the higher its profits."
The more spent, higher the profits comment is absolutely wrong. 1st-no guarantee of 2%. 2nd-not based upon what is spent; based upon target budget. 3rd-given the cost of money, unalowables, and fees of less than 3%, (not 2%) from start to finish KBR will have LOST MONEY on this project! I sure wish the "experts" would do a bit of research every now and then.