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Organizational energy is the force with which a company pursues its work. The degree of organizational energy shows, to the extent to which an organization, utilizes its emotional, mental and behavioral potential in order to pursue its goals. Organizational energy is expressed through intensity, vigor and pace in processes of work, change and innovation.
Organizational energy is related but not identical to the sum of the energy of individuals. Individual energy, especially of leaders, influences organizational energy, and the energy state of the organization affects the energy of individuals. Companies differ in both intensity and quality of energy. Intensity refers to the strength of organizational energy as seen in the level of activity, the amount of interaction, the extent of alertness and the extent of emotional excitement. Quality is that organizational energy that can be characterized as either positive energy (for example, enthusiasm, joy and satisfaction) or negative energy (fear, frustration or sorrow). In fact, it is the intersection of intensity and quality that determines an organization's energy state.
In most organizations one of the four typical energy states or zones are seen:
Corrosion Zone: In the state of corrosive energy, companies experience negative internal tension. Units devote their high energy negatively to internal issues such as conflicts, rumors or counter-productive activities, all of which ultimately takes away the company's vitality and stamina.
Productive Zone: Companies with high productive energy show intense, positive emotions and strong activity levels which are oriented towards attaining common core goals.
Resignation Zone: Resignative 'inertia' (disinclination to motion, action or change) is seen in the form of weak negative emotions such as frustration, disappointment, and sorrow. Large parts of companies show cognitive absence, disinterests or emotional distance toward company goals, or even show lethargic behavior.
Comfort Zone: In the state of comfortable 'inertia', companies are characterized by low animation and relatively high levels of satisfaction. With weak but positive emotions such as calm and contentedness, these companies lack the vitality, alertness and emotional tension necessary for significant change.
If organizational energy is managed unwisely, however, it can degenerate into three energy traps: the Acceleration Trap, the Inertia Trap, and the Corrosion Trap.
The inertia trap exists when companies' ability to leverage their resources have weakened. In an environment that calls for change, such organizations would then find it hard to break their existing behavior.
The corrosion trap exists when the company faces external threats or opportunities at the same as it confronts internal discord.
Some companies speed up so fast, often with initial success, and then remain at such a high pace of development, that then leads to overworked and now demoralized employees. What began as an exceptional burst of achievement becomes chronic overloading, with dire consequences. Continuous high exertions therefore, lead to a lack of energy and manifest themselves in symptoms of weariness of change and organizational burnout. This phenomenon is otherwise better known as the 'acceleration trap'.
The trap is a result of corporations taking on more than they can handle, increasing the number and speed of activities, spiking performance goals, slashing innovation cycles and continuously introducing
new technologies and systems. Employees work under elevated time pressures, in situations where priorities are constantly changing. Organizationally, this acceleration results in a lack of focus, misalignment of activities, confused customers, and exhausted employees.
Three core destructive patterns of behavior have been identified:
Overloading the organization with too many projects and activities.
Multi-loading employees by asking them to do too many different kinds of activities.
Perpetual loading in which there is no opportunity to regroup before the next burst of frenzy.
In a research conducted by Bruge and Menges in 2009, half of the 92 companies that were investigated suffered from the acceleration trap and were unaware of it.
ASEA Brown Boveri Ltd
ABB Ltd (ABB) is a global provider of power and automation technologies to utility and industry customers.
It was founded in 1987 in a merger between the Swedish ASEA group and the Swiss Brown Boveri group.
One of the world's largest engineering companies, it is also one of the largest conglomerate companies.
Has its operations in more than 100 countries and has offices in 87 countries with approximately 117,000 employees as of 2009.
ABB is traded on the SIX Swiss Exchange in Zürich, the Stockholm Stock Exchange in Sweden, and the New York Stock Exchange in the United States.
The company grew rapidly through acquisitions of several well-known companies including some not related to industrial automation.
Has won several business honors
ïƒ "Corporation of the Year"
(R&D Magazine, 1993)
ïƒ "Most Admired Companies in the World"
(Fortune Magazine, 1998)
Divisions of ABB Products and Services
The Acceleration trap at ABB
Between 1988 and 1995, under CEO Percy Barnevik's radical restructuring, costs were reduced, acquisitions were integrated and new markets entered.
The company's revenues hiked from $17.8 billion to $36.2 billion.
After a series of bold acquisitions in the 1990's, the company got into serious trouble in 2002.
Huge quarterly losses were reported and market cap plummeted by 25% overnight.
This was the time when the company started showing signs of excessive acceleration.
Acquisitions were no longer well-integrated; different parts of the company were competing for the same customers. Due to this, internal conflicts generated in the power-generation sector.
ABB was both, an overloader and multiloader; giving employees too much workload and had implemented restructuring plans that called for too many actions.
As a result, field managers were working with little focus and achieving little effective change.
In September 1998, CEO Goran Lindahl called for a drastic reorganization; employees worked for young, aggressive business-area executives resulting in over-exhaustion; it reached the limit in 2002.
Managerial attention became fragmented and employees' found it increasingly difficult to prioritize work.
ABB's situation only improved when a new CEO, Jurgen Dormann took the reins.
He instituted a number of measures to relieve employee from change and frenetic activity.
A multi-year program was launched to "right-size" and re-focus.
The HR department then took the initiative of implementing training programs such as
time management and maintaining work-life balance for the employees' at ABB.
Clarified business strategy.
The question asked was "What should we stop doing?" and was implemented by terminating non-essential tasks.
The option was to keep or cut the hinges on whether an activity directly supports the company's strategy even if it meant consolidating the firm i.e downsizing.
Dormann rearranged ABB's core businesses into two groups; one for electric power related products and the other for automation.
The Group Processes division set up by previous CEO was scrapped and other non-core processes were divested.
No longer aspired to be "all things for all customers"; battle for market share is less important and focus is on core competencies.
Declaring that the turmoil is over
In one of his weekly messages to employees, Dormann declared that the reorganization crisis was officially over.
He said, "What we see today is more than just light at the end of the tunnel, this is the end of the tunnel"; boosted employees morale who felt relieved.
Corporate culture change
'Ivory tower' approach of forcing decisions from corporate headquarters was abolished. The ivory tower approach meant getting preoccupied with lofty, remote or intellectual considerations rather than focusing on practical ones.
Meetings were held at key operating locations that gave the management an understanding of the situation at that particular division.
The management interacted with employees, taking into account their best practices and giving them a stake in the decision-making process.
ABB executives and managers praise employees who persevered when times were tough.
Rewards, recognition and development programs were incorporated in the company at every level.
Managers were encouraged to set more realistic and achievable goals for the employees (MBO) and the aftermath statistics showed that employees were able to achieve target goals and were indeed satisfied.
Incentive bonuses for most managers were initiated, that were linked to timely completion of employee performance appraisals.
Acceleration trap faced by other companies
Crisis Management at Phoenix Contact
The German maker of industrial electrical and electronic technologies sensed employees being overloaded. But, reductions in workers' hours resulted in lower company capacity. Then executive vice president, Gunther Olesch asked managers to classify all current and future projects as (A) Necessary for the company as a whole (B) Important but can be postponed for a while (C) Can be delayed for two years or cancelled. Each of the projects was then further classified in order of importance such as A1, A2 and A3. In Olesch's words, "We have to cancel activities-otherwise we burn out and we will not come out of the crisis in fit shape".
Decision-making at Otto Group
When the leading international trading and services corporation with 53,000 employees restructured, managers found them burdened with 20% to 30% more work. So, in 2007, the company initiated a stop-action review. Each executive was asked to select a single project that he or she wanted to complete by all means. The list was further halved based on the project's required investment, value-to-cost ratio and in certain cases, symbolic value for employees. For example, the final list included a redesign of reception areas and staff restaurants which increased pride and performance. According to Thomas Grunes, the then head of central services, though the economic value of the redesign was not obvious, it was an important initiative.
Recommendations: Slowing the 'acceleration'
Capping annual goals and filtering new projects
Placing a cap on the number of goals set each year is crucial to preventing a plethora of activities. The management should consider that the point of setting goal setting isn't just about piling up projects but to give people an orientation and to focus their attention, action and energy in a positive way. The company should also ensure that projects are filtered and prioritized according to the resources held by the company.
Time-outs are periods that allow for creativity and exploration. They basically prepare workers mentally and emotionally for the next phase of high performance thereby, increasing the company's productivity. For instituting time-outs, the management must specify the length of time-outs. For instance, Microsoft announced that it wouldn't introduce any more changes for a full year and this helped employees recover from the immense restructuring that took place in 2004.
Slowing down to speed up
Companies can also alternate periods of calm and regeneration between high energy phases. This method has helped Switzerland-based Sonova group, the world's leading hearing-aids manufacturer. Since 2002, the company has committed to launching two products a year. The company however, does ensure that these products are launched
without any hiccups, but, after each successful launch there is a lull in activity allowing the teams to recharge and be prepared for the next set of activities.
Executives should serve as role models for effectively renewing energy and commitment. Bill Gates took a week off, or as its popularly known "think week", every spring and fall taking with him ideas submitted by Microsoft employees; allowed him to focus on crucial business task. Dozens of Microsoft's big thinkers follow that pattern and "think week" has now become a Microsoft institution.
Introducing a burying culture
Terminating a project can be disheartening not only to its sponsors' but also to the lower-level employees who have been toiling on it. In a company that values commitment and reliability, managers and employees are likely to feel ashamed at being told to stop working on a project that they have put their energy into. By introducing a burying culture, managers should thank the employees for their dedication and should emphasize the project's good points. This is particularly important for highly innovative companies that have the tendency to start a lot of projects together to see which of it will thrive.
We are greatly inspired by the article 'The Acceleration Trap' written by Heike Bruch and Jochen I. Menges published in the April, 2010 issue of Harvard Business Review.
Excerpts from the same have been incorporated in this report.
The following websites have also helped in providing ample information:
[Accessed 9th April 2009]
ABB Corporate Culture
[Accessed 9th April 2009]
Knowledge on the topic Organizational Energy
[Accessed 9th April 2009]