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XYZ Limited is the largest power generating and Navratna Status firm of India. Forbes Global 2000 for 2008 ranked it 411th in the world (Datamonitor, 2009). It was formed in 1975 as XYZ Private Limited to fasten power production in the nation. Being a wholly owned firm of the Government of India, XYZ has become a truly national power firm, with power generating facility in all the important parts of the nation. XYZ's core business is construction, engineering and operation of power generating plant. It provides consultancy also in the arena of power plants construction and power generation to firms within India and outside. It is giving power at the cheapest cost in the country. With its expertise and experience in the power sectors, also XYZ is giving consultancy service to many organizations in the power businesses. This company is listed on the Bombay Stock Exchange although at present the Government of India holds 89.5% of its equity (Datamonitor, 2009).
A world class integrated power major, powering India's growth with increasing global presence.
Develop and provide reliable power related products and services in competitive price, integrating many energy sources with innovative and Eco-friendly technology and contribution to the social sector (Datamonitor, 2009).
INNOVATE: XYZ has compelling and unique solutions worth to the customer and are in line with the brands creating competitive advantages and different shareholders values.
OPERATIONAL EXCELLENCE: It is process for solving issues and continual augmentation of product & process by acquisition, pursuit and usage of information by important thoughts and planned experimentations helping it to get operational excellences (Jha, 2009).
CUSTOMER EXCELLENCE: Knowing the customers' expectations by the brands, company, its product and service which is a 3-step method. The 3 steps are: Be a client, Know a client, Serve a client.
Knowing customers help to know who the customer is, how to treat him, how he adds value and whatÂ the driver of brand loyalty is. This information is taken from the customers' database history. Thus the company is better able to customise goods for them and tell the correct products to solve problem. Being a client is imperative to give client information and insight, do action based on customers insight, be passionate for the brand and customers' loyalty and give a positive voice to the brand. XYZ has empathy for customer and look to solve the issues by making a consistent client touch points, with its effort always being to give unique solution to the customers (Jha, 2009).
XYZ is the largest power generation company of our country with an installed capacity of 29144 MW (Including JVs) as on 31.03.2008 with an expansion plan up to 50000 MW by the end of XIth Plan and up to 75000 MW by the end of XII plan. Almost 80% of its capacity is coal based with the remaining 20% being contributed by Gas and Hydro. It also plans to make its presence in nuclear sector during the XII plan period (Datamonitor, 2009).
Over 30 years of presence in power generation and expertise in the sector is reflected in the performance of the company. The operating performance of XYZ has been considerably above the national average. The availability factor for coal stations has increased from 85.03 % in 1997-98 to 92.12 % in 2007-08, which compares favorably with international standards. The PLF has increased from 75.2% in 1997-98 to 92.24% during the year 2007-08 which is the highest since the inception of XYZ. It generates 30% of total power of the country with capacity share of only 20% (Datamonitor, 2009).
The Company is venturing in new areas of engineering and equipment manufacturing for which it has made JVs with BHEL and Bharat Forge. It is also planning to enter into coal mining. Once these ventures get operational, they will add to the bottom line of the company. For example, with coal mining getting operational, the fuel availability and its price risk will reduce to great extent (Datamonitor, 2009).
XYZ thinks of getting organization excellence by Human Resource and has "People First" way to use the force of its 24,500 workers to use its business plan. Human Resource functions have made an integrated HR process that has on 4 building blocks of HR of Commitment building, Competence building, Systems building and Culture building(Jha, 2009).
All HR objectives are used in the wide model to form the HR goal of "making the workers to be a group of committed world class professional forming XYZ a learning firm." To take talent and make them into a dedicated group of power professional "Executive Trainee" process was brought in the 1977 for making in the discipline of Electrical, Mechanical, Control & Instrumentation , Civil and now has Chemistry, Computer Science, Finance and HR disciplines (Jha, 2009).
Apart from a holistic 1year training having theoretical input and on-the-job trainings, the new recruit is attached with senior executive in a formal and systematic 'Mentoring Process' in the firm to make them into the culture of the firm. As an element of post employment trainings and development opportunity, systematic training plans have been made for making minimum 7 man days training per year per employee compulsory and have calculated intervention in stages made to ready employess for getting positions of larger accountability and particular need-based intervention linked to scientific training need analysis.
XYZ has set up 2 simulator training centers, 15 project training centers and an apex institute namely 'Power Management Institute' (PMI). While the project training centers (Employee Development Centers) have majored in giving technical skill and information, PMI gives focus on management's development. Also chance for long term education is given by tie up with big institution like MDI Gurgaon (Executive MBA program), IIT Delhi (M.Tech in Power Generation Technologies), BITS Pilani (B.Tech) (Datamonitor, 2009).
In order to realize the HR Vision of making XYZ a learning Organization by giving opportunities to continually learn new capabilities a number of initiatives have been taken. XYZ Open Competition for Executive Talent (NOCET) is arranged each year in which groups of executive compete yearly by written and oral presentation on topical themes. On the same lines "Professional Circles" is arranged in each department where each department's executives meet after every 2 weeks to share the experiences and knowledge and talk about major problems. For tapping the latent talent amongst non executives and do utilization of their potential for innovation and creativity, Quality Circles are made in many units/offices in XYZ (Datamonitor, 2009). Also, a management journal called "Horizon" is published every quarter to make employees share their experiences and ideas throughout the firm.
Showing its major concern on people, XYZ has made strong health and well-being, social security system and employees' welfare resulting to high stages of commitment. XYZ gives best comforts of life by good colonies with all facilities like medical, education and relaxation opportunity for workers and the family members (Jha, 2009).
The encouragement to do and go ahead is augmented more by a holistic XYZ recognition and rewards process. In order to institutionalize a good habit based on Values a number of initiatives are taken to actualize the Vision and Core Values (BCOMIT) throughout the firm. A habit of celebrating awards and a major stress on excellence are a part of life in XYZ. XYZ has made "Development Centers" of the firm to systematically estimate the likely competency requirement of the workers with the aim of enabling their building in a systematic phase (Jha, 2009). The Centres provide a good insight to the workers about their strength and weakness, the gap in the competencies that they could make by apt support from firm. Because of innovative people management practice there is a superior stage of commitment and pride among workers as shown in the various external surveys including Great Places to Work for in India in which XYZ was rated third Great Place to work for in the country in 2005.
Source: Datamonitor, 2009
This is the structure of the organisation. At the top is Chairman and Managing directors who has directors of each function reporting to him.
XYZ Limited has three categories of employees namely Workman, Supervisor and Executive (Jha, 2009).
This class of employees consists of ITI professionals. These employees work at plant equipment locations. They have been trained over a period of time through various means and made proficient for doing clerical jobs. In technical sections these employees are placed near the equipments to monitor the smooth running of the equipments. The company has stopped recruiting people at workman level for some time now. Theses people retire as workman only.
This category of employee is generally polytechnic qualified. This category of employee works as facilitator for executives. These people have acquired good functional expertise over a period of time. The company has made a policy of upgrading supervisors in to executives over a period of time as per requirement. The company has stopped recruitment at this level also for some time.
This category has eleven level hierarchies starting from assistant engineer to executive director. This stream is the backbone of high performance of the company. The recruitment procedure adopted by the company has facilitated it to tap the best of talent from the market. The executive trainee induction programme has given leaders to run and lead the company for better future.
There are 9 levels of hierarchy in the executive category:
SWOT analysis is a planning method in strategy utilized to assess the strength, weakness, opportunity and threats linked in a business venture or in a project. It includes giving the objectives of the business ventures or projects and seeing the internal and external factor that are usable and unusable to get the objectives.
XYZ has a broad client portfolio throughout the country and the largest market share in domestic power generation.
It has impressive track records of performance in project implementations and plant operations.
It has diversified thermal generation portfolios - multiple size and fuel type.
It has hugely experienced and skilled human resource aware of the latest state-of-the art technology in power generation and project execution.
XYZ has got Maharatna status from Navratna i.e. more decision making powers and more autonomy.
It has large brand equity amongst shareholder.
It has good financial track records with net profit after tax at Rs 82013 million and total assets base at Rs 945362 million as on March 31, 2009 and with the strong balance sheet it is able to take low cost debts.
It has superior engineering knowledge in project configurations and package designs.
Its turnaround ability is high for old plants as in the takeover plant of Tanda, Talcher and Unchahar.
It has high credit ratings which are signs of the trust of lender.
It has in-house training facilities CENPEEP, PMI and R&D etc which help in the making of the sector.
XYZ has thrust on lessening social cost of capacity growths - good working of rehabilitation and resettlement plans.
It has less risk-diversification of business portfolios consisting mainly of generation asset.
It has functional orientations inhibiting cross-functional perspectives in decision taking.
It has long and many level procurement processes resulting in long lead time and method delays.
It has gaps in HR system such as performance overlooking, reward and incentive and career building.
It has less usage of strong knowledge management systems that can help in augmenting efficiencies and applicability in various forms of the businesses.
It has hierarchy for decision taking which impact responses.
There is role ambiguity and dilutions in various departments of the firm.
The fate of India is based on nuclear power that is in its initial stages. Because it has knowledge in power making and has large financial strengths too, it could use this option
Apart from BHEL, no other firm in the nation had knowledge in power tool manufacturing
XYZ can expand generation capacity by making up hydro and thermal capacities and make the slab of major generating utilities in the Indian power sectors.
XYZ has wide base fuel mixes by having imported gas, coal, nuclear power, domestic coal, etc with a vision to lessen fuel risk and have long run competition.
It can enlarge the services for R&M, EPC and O&M methods in the domestic and foreign market.
It can integrate backward into fuel management to have larger understanding and control of supply economics.
It can lead the making and commercial usage of non-conventional energy source mainly in the distributed generation modes.
Many multi-Commodity Exchanges has asked for approval to give electricity future market
It can augment collections by direct sales to bulk customer trading and play an active part in allocation in new plant.
It can have more power plants that segregate for Mega Power Project position, thereby lessening the costs of the project and power generated.
It can forward integrate into the distribution businesses by increasing the intensity of its current channels in India.
New players in the nation like Reliance, Tata, Jindal, Adani etc are evolving after liberalization and they are seeing to go in a huge manner.
It is estimated that the main component for thermal power generation which is coal would not be needed after four decade.
There are no independent regulators for coal industries and the delays in private investment lending are adding to the risk of low presence of coal in the future.
The joint venture of foreign player with Indian firms to get help in power equipment manufacturing and power generation.
Redirecting power might be difficult by inter-regional linking.
There downward competitive and regulatory pressure on tariffs.
There is strict environment processes in the future and those might add to the costs of generation.
XYZ is having its operation since 1975 and has taken a major part of nation's total electricity generation (Datamonitor, 2009). The challenges for XYZ will be to continue to have its huge share in power generation sectors. As a result, XYZ strategies will fall in star in the BCG matrix. There is also a challenge as to how XYZ would continue to control the power and energy generation sector in near future. XYZ will have a high growth rates since it has a large presence in this sectors. It has countered the surge of time and other pressures to make itself as a major power maker in India.
XYZ has a tall hierarchy which is a characteristic go highly vertically differentiated organization. It has 9 levels of hierarchy. High level of vertical differentiation establishes a distribution of authority between levels to give the organization more control over its activities and increases its ability to create values.
They have a clearly defined hierarchy of authority which dictates who reports to whom and hence coordinate various organizational goals. So, high differentiation then leads to a higher level of integration as well. Integration is a process of coordinating various tasks, functions and divisions so that they work together and not at cross purposes and people do what they are supposed to do (Jha, 2009).
The need for communication between 2 sub units is fulfilled by liaison roles. In this, one or few members from each subunit are often given the primary responsibility to work together to coordinate the activities. The people who hold these liaison roles develop in depth relationships with people in other sub units. A specific manager is given the responsibility to tackle the liaison roles.
Since it has a tall hierarchy, the employees constantly look towards their seniors for direction. When some new or unusual issue arises they prefer to pass it on to their superiors rather than assume responsibility and risk of deal with it.
In XYZ, it was found that it has a high locus of decision making and the degree to which referrals for policies and operating decisions are required are also very high. This implies that the managers want to discourage risk taking and want to maximize control over subordinates' performance (Jha, 2009).
Taking all these points in consideration, we can clearly see that the organization has a mechanistic structure which is designed to induce people in a predictable and accountable manner (Jha, 2009).
PROBLEMS FACED BY XYZ AND THE SOLUTIONS PROVIDED
There are many problems faced by XYZ Limited during its tenure. It is important to solve each issue thoroughly since it has long lasting impact on the well being of the organization and any deficiency could result in problems for the firm.
It is evident that majority of the employees believe that the company has less focus on intense rate of innovation of new and better product/service in the industry. This may be due to the reason that once the plant is set up there is little scope of innovation in terms of the product improvement. However, innovation can only be brought about in the process. So the majority of employees agreed that the company focuses on rapid / intense rate of increase in labor productivity in the area of operation which is very well reflected in the ever increasing PLF (Average PLF increased from 88% in 2006-07 to 92.5% in 2007-08) (Datamonitor, 2009).
The increase in productivity can be achieved by imparting proper training to the line executives. This was well supported by the employees as everyone felt that the jobs are quite specialized. This need is also well understood by the organization as there is a heavy reliance on formal management training programmes. XYZ Ltd. has development centers which provide training programs to the work force.
It is seen that the group or democratic decision making in the firm's operating philosophy is not encouraged very much. This was mainly supported by the lower management employees. However the survey also revealed that this was not the case for the middle management employees. This may be attributed to the fact that XYZ Ltd. being a public sector undertaking has a long hierarchy.
Further, the firm's operating management philosophy is strongly individualistic, and decision making by the formally responsible executive. This shows that the organization has a highly functional structure. Thus the organization is polarized in decision making. This has led to lower level of empowerment and hence slight dissatisfaction amongst the lower executives.
In the area of long term strategy formulation the decision making is highly centralized. This may in a way, help the organization in having a focused and aggressive approach especially after the Electricity Act 2003 which has allowed the entry of the private players.
The company having mechanistic structure gives little room for innovation and flexibility for managers. Most of the managers in the survey felt that their operating style was formal and rigid.
It was evident that the information flow in XYZ Ltd. is unlike most of the public sector organization as it allows important financial and general information to flow freely throughout the organization. This type of information includes the latest technologies in the sector, initiatives by the organization in the sector, employee welfare activities, inter organization information sharing etc. This flow of information helps the units to compete against each other and it is very important as XYZ Ltd. as an organization far exceeds the performance of its competitors (Datamonitor, 2009).
However the functional information channel is highly regulated and affected by the long hierarchy which some times becomes a deterrent to fast decision making.
XYZ Ltd. gives strong emphasis on acquiring the latest, sophisticated plant & machinery. This is a very healthy sign for a company which is going to face strong competition from private and foreign players. This has also played a major role in the increase in availability of its units (Jha, 2009).
Since this company operates in highly technology intensive environment, technical competency of human resource is the area which needs most attention and it is well identified by the personnel. Given the condition of poaching of XYZ employees done by new players the competency level of employees becomes even more important for high growth in future. Further since most of the units are located in remote areas retention of quality manpower becomes even more difficult for the company.
Despite remote locations of the units most the employee morale and commitment level is high in company as compared to competitors and it is a good sign for the company. Company makes friendly accommodation with union and employee representatives. There are hardly any strike by unions in any of the plants which is remarkable considering today's volatile employee relation scenario in the market. XYZ was rated third Great Place to work for in the country (Jha, 2009).
Power sector being a deficit and vital sector, the growth opportunity is immense. Hence the environment is quite predictable. Though there have been technological advances in this field, XYZ has been able to take care of it in all their new units. This view was well supported by most of the executives in the organization (Jha, 2009).
XYZ being a public sector company has some inherent deficiency due to the government intervention and politics. Recent episode of taking back the allotted coal mines from XYZ Ltd and giving to Reliance Infrastructure is a relevant example. Despite being a Navratna company, most of the senior and middle management executives feel that government regulations are still the main constraints or bottlenecks affecting the growth of the organization (Jha, 2009).
Since the power plants are land intensive hence local factors play a very important role in setting up of new plants. Most of the employees in the survey feel that XYZ has been able to adapt quickly to the local demands.
LEADERSHIP AND MANAGEMENT
XYZ is changing into a wholly customer-centric firm where the customers lie in the core of each of its function. This stress has got as a direct result of its core competencies of customers excellence. It makes them build customer loyalty. The change is made up of 5 parts:
Market leadership by customers loyalty
Diversity and inclusion of core competencies
Passion for customers excellence
The parts of the change hold the promise of building XYZ a growing firm and thereby raising value for its shareholder. The 5 parts are the basics for telling its aim internally and make the building of its plan and initiative.
XYZ has quickly moved from being a world class manufacturer to a world class marketer by the brand-building model. They are for making a unique brand solution which make customer loyalty and get brand excellence.
To improve innovation, a separate R&D department can be used to form a Parallel Structure
Combination of mechanistic and organic structure
Leverage knowledge management and information technology
Reliance is poaching talent from XYZ, so try to increase benefits for working in XYZ.
They need to increase interaction among the three divisions, so that the products are manufactured and designed as per customer requirements.
There should be a Matrix Structure to have employees' rotation among product divisions.
Best practices of one division should be communicated to other and so on.
The company should try to learn from the companies acquired rather than grooming them as different business altogether.