Introducing organizational change in Energy Companies

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Outline of this work introducing organizational change with innovation on "Energy resource" company. Change management process is essential to modern companies not only for maintain.

Modern companies need to increase their competitive abilities with innovation to succeed in today's rapidly changing business environment. Thus, one of the Mongolian companies named "Energy resource" Coal mining company is changing their activities into energy plant industry. I believe that it's profitable and Mongolian national security, and it is bring more independent economy into Mongolia. I think most of organization need to make some changes unless they will be left behind the competition and fail. Let's look at an example. One unfortunate example on "Wool worth" company, which is very long time ago started running over a hundred year ago unfortunately it is closed door. Because of poor management, they had not refreshed their administration system.

Now I can say one successful example. "Apple" has been most successful running company on the earth. They have been improving organizational change with innovation. Latest their innovation "I phone" with innovation of touch screen, slim, latest application mobile phone. It has been succeed as soon as came out on market.

Let's back to pay attention on "Energy resource" coal mining company. Recently, They are mining coal and export to world market 1,000,000 ton per year. Now they started using innovation, which is coal to liquid fuel (chemical industry). This project invested by Mongolian government, about $1bn.

There are numerous factors affecting organizational change, including Environment, Organization structure, Politics, Leadership etc. For "Energy resource" Company, it need to change their organization with new computer software, training employees to ready to work on the new technology, cultural change, to charge with new force. But in this work I will focus on the culture of an organization and how that is central to the organizational ability to change, adapt and maintain itself. Culture is not merely "how things are done around there", but culture is the set of values, beliefs, customs and systems that are unique to the organization. Burnes, B. (2004) 'Managing Change'.

BRIEF DESCRIPTION OF THE INDUSTRY

The Mongolian "Energy resource" company adopted CTL chemical plant industry. Initial Coal-to-liquid technology invented 1920s, when Franz Fischer and Hans Tropsch two German chemists, convert coal into liquid fuels. www.futurecoalfuels.org/technology,(23.02.10). But this innovation(CTL) couldn't succeed because of oil was cheaper. Coal-to-liquid (CTL) technology first used by South African government, in Sasolburg in 1955. When oil prices soared in the 1970s, Sasol built two more plants in Secunda with a $6-billion government loan.

SECUNDA, SOUTH AFRICA, 160,000 BPD

www.MediaClubSouthAfrica.com (23.02.10)

The Secunda chemical industry split out something extraordinary: 160,000 barrels of oil a day

WHAT IS AN INNOVATION OF "CTL" TECHNOLOGY

Indirect Coal Liquefaction Process

Maximizing the Value of Coal

www.engineeringnews.co.za(12.02.10)

ENERGY RESOURCE, MONGOLIA, 10,000 BPD(TAVAN TOLGOI PROJECT 2015)

Genden, U.(23.02.10) "Tavan Tolgoi" project

Mongolian government is investing $1billion on "TAVAN TOLGOI" project. It would bring 10,000 barrel liquid fuel every day in Mongolia.

ORGANIZATIONAL CULTURE ON "ENERGY RESOURCE"

"Energy Resource" company is ready to transform their activity into Chemical industry. That is challengeable, profitable, economical and risqué business. If this project would be succeed, it is bring economic increases into Mongolia.

This project is bringing a lot of changes into Energy Resource. In order to it make huge change in their management process. My suggestion is they start to change organizational culture. Because new project requires all the existing employees ready to take new working environment, which will be changed a hundred percent different than old management system. First thing they need to do organizational culture for change management.

Organizations structure effects on Culture

"Energy Resource" company organized with Matrix organization structure. Its resources are shunted around the organization to meet the demand for attention that tasks require. Employees work less in fixed groups for long periods and so no pockets of different cultures can grow, but rather if Employees are unhappy with their work, the chances are that they can be easily moved, so as to maintain good working culture.

Factors forcing Change

Organizations face huge pressures to change, from both internal and external sources, internal forces to change often as a result of long-term external forces. For example, Biggest Coal Mining companies internal pressure to expanding their activities to Coal mining and Energy plant Chemical industry, as a result of more and more other similar companies interested to engage with chemical industry.

Internal Factors forcing change

The factors internal to an organization that force changes can be identified through a formal analysis method. Most common among these methods is S.W.O.T. analysis.

Strengths

An organization's strengths, which help identify a competitive advantage or unique selling point, are of vital importance when deciding on changing the focus of the company.

Weaknesses

An organization's weaknesses are a real motivation to change. Weaknesses identified internally in a company's product or service, will require immediate attention and changing. The weakness would be resolved by a cultural change.

Opportunities

Opportunities that present themselves, like new contracts on other continents will force changes in the company, sometimes as simple as new working hours. With the differences in different customer expectations, modern companies need to remain flexible. Flexibility is a major cultural change that needs to be introduced.

Threats

Threats to an organization, usually in the form of competitors and substitution products force a company to react. To react effectively companies have to react quickly, which is a cultural change in a company.

External Factors forcing change

The factors external to an organization that force changes can be identified through the PESTELI acronym.

Political

Political factors would include the current and potential influences from political pressures such as unions and national pay agreements.

Economic

The local, national and world economy impact can force an organization into changing their work practices or even product prices.

Social

Changes in lifestyle absolutely force changes in organizations, but at a cultural level, socially changing attitudes towards work or ethical issues can also have effects on the culture inside an organization.

Technical

The ever-changing technical world in which we live has probably the most profound effect on organizational culture of all external factors. Technical improvement that allow employees to work from home, working teams to be separated by great distances and for customers to be located on the opposite side of the world from their suppliers. Anything that changes the day-to-day work of the employees has a profound effect on the organizations culture.

Ecological

The local, national and world ecological and environmental issues that have effects on culture at national levels filter down into the organizational culture within a company.

Legislative

The legal issues both locally and at an EU level, such as taxes and working time regulations also have effects on culture at a national level, filter down into the organizational culture within a company.

Industry

Industry changes have a huge effect on national culture. The move away from agriculture into industrial and now information economies has greatly changed the national working culture.

Who can change culture?

Changing the culture of an organization is an extremely difficult task, but it might be necessary to get the results required. If an organization were thought of as a restaurant, and the employees as the waiters, content and well looked after waiters would go about their jobs in a pleasant manner and as a result tips would be high and the restaurant turnover would be high, as customers would enjoy eating there. However, on the other hand, if working at the restaurant was made difficult for the waiters, with an unpleasant working environment and impersonal culture, they might not go about their jobs with such enthusiasm, a lack of motivation would become obvious in their demeanour, tips would be low and restaurant business would suffer. So it's in an organization's best interests to maintain a healthy and productive working culture.

Changing an organizations culture can be done at the three distinct levels with an organization: Executive Management, Middle Management and regular employee level. Lets look at them in turn and consider two very different football clubs (Manchester United and Arsenal) as differing organizations.

At an Executive Management level

Executive management are the group that direct the organizations goals. So, in order for them to effect cultural changes, they may have to change the organizations direction. The organization may need to be streamlined in order to make provisions for the desired changes. Inspiring and motivating staff through vision and mission statements as well as overall policies would be a common approach taken at this level.

Changes introduced at the executive management level are the most difficult changes to resist, because employees are largely powerless against them. In the terms of the football clubs, the executive management would be the boards of directors, who can release certain amounts of funding for the operation of the team and/or make performance goals for league finishing positions.

At a Mid-Management level

Middle management is the level from which most organizational change comes from. These changes can take the form of new operations rules (e.g. Forced timesheet logging). Changing the working practice for employees, by making their working life more strict or more lenient, pushing more responsibility onto the individual employees or smaller changes like more frequent or earlier meetings. However, changes enforced or imposed by the mid-management are the most resisted. In the terms of the football clubs, the middle management would be the team managers. The managers can effect change by shouting at players and demanding results, as done by Alex Ferguson at Manchester United, or by talking through the current issues are working for a solution together with the players, as done by Arsenal Wenger at Arsenal.

As a regular employee

Regular employees can change the culture in an organization in the most effective manner. Through an observed work ethic or levels of professionalism or levels of "completeness" in their work, employees can pressure other employees to change how they work and this will filter around the organization, effecting the change.

Now there are two types of motivation that people respond to. One, the people who are shouted at and told what to do and told there will be consequences if they do not perform. This was the kind of tactic employed by Roy Keane at Manchester united. Two, the people who like to be told that they are doing a great job and encouraged to do a little more, but encouraged by someone who was obviously performing better. This was the kind of tactic employed by Patrick Viera at Arsenal.

Guidelines for changing culture Burnes, B. (2004) 'Managing Change'

1) Formulate a clear strategic vision.

An organization needs a clear vision with a well define strategy and values in

place in order to be effective.

2) Display top-management commitment.

Cultural change needs to be managed from the top down. Executive management need to agree to the plan and stick to it.

3) Model culture change at the highest level.

Cultural changes need to be communicated through the actions of executive management. Management need to lead by example.

4) Modify the organization to support organizational changes.

Cultural changes need to be reflected in organizational changes in order to back them up, if at all possible.

5) Select and socialize newcomers and terminate deviants.

To really effectively change organization culture, those who resist the change may need to be let go. People stuck in their ways that cannot adapt are of no benefit to the organization going forward, sometimes this will manifest itself in the form of early retirement. The hiring of new people will be done with the new organization culture in mind.

6) Develop ethical and legal sensitivity.

Changing a culture then radically changing all the staff in a company may not only send out the wrong message, but actually be illegal or in breech of union regulations. Such plans need to be enacted very carefully.

PERFORMANCE MANAGEMENT FOR "ENERGY RESOURCE" COMPANY

Performance on "Energy Resource"

Energy Resource company's managers always seek to review an individual's past performance and assess strengths, level of effort and areas where further development would be useful for them. They always focus is on what the employee has actually done in the past, and they try to attempt to build employee's strengths and make improvements in other areas so that the Energy Resource's employee can perform more effectively in the future. The managers claim that they give this sort of feedback all the time informally, and if they do this well there may indeed be no need for formal appraisal scheme. However, it is unlikely that all managers in the Energy Resource will appraise their staff constantly and effectively.

Potential and development on Energy Resource

Energy Resource's managers take examination twice every year and from an examination of past performance Energy Resource's employers wish to identify as part of their human resource planning process, or for individual career development, individuals with potential to take up new or more responsible or challenging positions within the organization. The concern here is not just with what the person has done in the past, but with trying to predict the level and type of work that employees will be capable of doing in the future, and then helping them to reach their full potential, so that the Energy Resource can also benefit fully form their talents and abilities.

Reward for Energy Resource's employees

Energy Resource's performance of reward scheme and the managers trying to reward employees for their past work, while hoping that the incentive of a reward will encourage other employees also to strive to work harder in the future. In recent Energy Resource has sought to motivate their employees by linking rewards, using a system like performance-related pay, to excellent performance at work site.

Conclusion

The TAVAN TOLGOI project bring a lot of change with innovation(CTL) into "Energy Resource". CTL technology brings benefit and cost of capital. Coal to liquid technology requires $1billion of facility of Chemical industry for 10,000 barrel liquid fuel per day. Current issue says we have oil resource of almost 40 years in the world. But we have over 150 years of coal resource. Thus, I believe this is best investment Mongolia has last 100 years. CTL profitable and Mongolian national security, it is bring more independent economy into Mongolia.

According this project requires change in "Energy Resource" company employees by organizational culture. Changing culture is equivalent to changing peoples thinking, which is a non-trivial exercise. The intricacies of culture and office politics are potentially huge and the initially obvious culture may just be the tip of the iceberg as regards the culture at large.

The culture of an organization does indeed determine its ability to change effectively, but this is a good thing. Energy Resource is large organization which have matrix structure (e.g. Financial Institutions), take time to change effectively.

Initial Investment of CTL technology is very high and it's long term project. That's why this chemical industry needs minimum 30 years of coal resource which means few countries can use it in world because of resource of coal. CTL promote domestic economy, enhance national security, create job etc.

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