Question:
Case Study Essay: Big Energy
Sally Johnson is a member of the management team of XYZ Energy, a major government-owned energy company. Following a high-profile corporate sales process, XYZ Energy was bought by one of its private-sector competitors, Big Energy, for a record price.
XYZ Energy was successful company that had established strong, efficient and robust processes and systems to manage its business and risks. It had also innovated new processes in areas, which gave it significant competitive advantage. The company had a loyal staff with relatively low turnover. The XYZ Energy management team was well respected by employees. A large majority of staff worked hard throughout the lead up to the sale to support the process and support each other. Although morale was not high, it was better than had initially been envisaged when the sales process was announced, the staff were extremely proud of the value they had built up for the company, and it was felt that Big Energy must see significant value in the existing processes and systems of XYZ Energy, as well as in their customer base.
The core business structure of both companies was similar, not surprisingly given they both operated in the same energy retailing market. For example, both companies had marketing, commercial, operational and trading department, and each one of these areas was represented on the companies’ management teams. XYZ Energy also had a strategy department, which Sally Johnson managed.
At the point of the sale, the chief executive and functional business members of the management team were immediately made redundant prior to any integration of XYZ Energy’s operations into Big Energy. Sally was retained post sale to facilitate parts of the integration or operations. With the removal of the core management team, it quickly became clear that Big Energy wished to remove the majority of the remaining staff as rapidly as possible once the essential integration of core operations was completed.
Instantly the morale with the XYZ Energy staff plummeted as they realized that, like the management team members, they would not be allowed to compete for their jobs based on merit. Morale continued to decline and frustration arose as Big Energy failed to leverage innovative processes and systems for its own competitive advantage, focusing on the speed of integration rather than its quality and the long-term benefits. Big Energy’s senior management rarely came to the remote office to engage with their new team, and staff numbers dwindled as people elected to leave and more redundancies were occurred.
Sally felt a strong loyalty towards the staff that had supported the growth of XYZ Energy, and therefore, immense anguish for them as their fate became clear. She attempted to argue to senior management that Big Energy should revisit its integration model and priorities in-order to preserve and leverage the competitive advantages and key skilled staff it had acquired.
Questions 1
The rapid rate, at which Big Energy has opted to absorb XYZ Energy into its existing business model, has had an adverse impact on the employees that originally came from XYZ Energy. Discuss the impact of this integration model on the overall the attitudes, values and behaviours of the remaining XYZ staff members.
Question 2
Based on your analysis in Question 1, you are required to provide management at Big Energy with some recommended strategies for dealing with the identified issues.
Organizational behavior is the study that analyses and examines the organigram or the organizational structure that has an effect on the organizational behavior and also related to the other organizations (Bauer and Jenny, 2013). Because of the merger of Big Energy and XYZ Company, employees of XYZ Company faced several issues. This study aims to evaluate the issues faced by the employees in terms of attitude, behavior and values. Before going into detailed study of the case, however, there should have a clear about the scope of the organizational behavior:
1. Attitude is the state of mind which is developed through experience and is always ready to exercise an active impact on a person’s response to any circumstances to which an individual can be aimed at (Locke, 2009). As the chief executive and the functional business members were made unneeded employees of the XYZ Company felt demotivated and anticipated that they would be allowed to struggle for their job based on their merit. Thus the attitude of the employees started to change and the attrition rate of the organization started to rise high.
Behavior of the employees towards the organization has changed because their morale was dwindling. Loyalty towards the growth of the company was the value of XYZ organization which was now diminishing due to the impact of the integration model. The employees were frustrated because the management did not look after the welfare of the people and only focused on the process of integration rather than quality of work and long-term profits. There are two theories on which organizational behavior can be based:
Values are beliefs that we hold and which are under our control. It varies from one individual to another and one organization to another. It lays the foundation of attitude and motivation (Ujjainia, n.d.). It influences attitude and behavior. The values of Big Energy and XYZ organization did not “harmonize” between the supervisors and the employees which eventually had an impact on the interpersonal relationships on the effectiveness of the managerial leadership. The integration of the companies had a severe effect on the employees as their growth and development was at stake and encouragement was at its least thus when Sally tried to argue it was of no use and people started to leave one by one. The managerial skills of the management of Big Energy are to be questioned. The management lacked in human relations skills, where they lacked the ability to interact efficiently with employees of the acquired organization. The study of this particular paper is based on the second theory, i.e. macro organizational theory. Another key point of organizational behavior is culture. Organizational behavior depends greatly on culture (Schermerhorn, Osborn and Hunt, 2000). Company or corporate culture is hard to characterize but it is very much significant on how the organizations behave. Following is given the Schein’s behavior model which emphasizes the three essential factors of an organizational culture.
The case study depicts that XYZ organization had their own culture and all the employees have adapted themselves to it. The top management team was respected by all the employees because there was no autocratic leadership (Bloisi, Cook and Hunsaker, 2007). Every decision of the employees were encouraged and appreciated. The culture of XYZ organization can be illustrated with the help of the above model
After Big Energy bought XYZ energy, things have changed for XYZ not in a very good way. It is always seen that during mergers and acquisition the culture and behavior of two organizations are added up to create a business ambience that can strengthen or demoralize the success of an organization. In case of Big Energy and XYZ Energy, functioning from within company’s technique, both the employees (of XYZ Energy) and the management (of Big Energy) are having difficulty to recognize the models of behavior and also how deeply the patterns can have an impact on the performance of the company. The mission of Big Energy should have been to make a positive influence and help the employees of the acquired organization to take hold of the significant of the behaviors of the organization so that every employee gets involved in making the company’s future better and recognize and outline the internal setting of the company (Buelens, 2011). The essential component of an organization is human resource or the people because they make up the inner societal system of the organization (BOTTOM and KONG, 2010). They are the ones who created the organization and it exists to attain their objectives. The organizations exist to serve these people. The employees are the one vital resource that needs to be carefully managed. The employees of XYZ were not given much importance which decreased their morale and enthusiasm to work under the name of Big Energy. The root cause of the problem in the merged organization is that Big Energy could not relate to the scope of the organizational behavior.
2. It is noted that Big Energy failed to (a) recognize the sentiments of the remaining employees (b) evaluate and assess the outcomes of the integration taken and (c) inspect the concepts by which the attitude and behavior of the employees could be changed. The top management severely lacked in conceptual skills. Certain models are given by many theorists of organizational behavior, which were not utilized by the management of the Big Energy (Middleton, 2002).
Thus we see that there are many issues in the integrated organization which had a negative impact on the people that made them leave the company. Big Energy wished to move the rest of the employees just after the integration of the core operations were complete.
The integration model of Big Energy only focused on the competitive advantage of their company for earning long-term profits. It focused on the pace of integration rather than quality; they were not successful in acquiring innovative process of operations and system which demotivated the employees of the remaining organization. It is recommended for the Big Energy to go back to the behavioral model of organizational efficiency, which assesses the application of the knowledge and managerial skills to the people to examine behavior of group an individual. It is the employees and their value system and confidence on the leadership which makes an organization. The management of Big Energy needs to describe, understand, predict and control the behavior of the remaining employees in the organization. Following explanations are given for the same:
Inter-dependence and management of processes is crucial for an organization to gain higher productivity and high job satisfaction of the employees. So Big Energy should ensure that the morale of the employees should always be high. They should use managerial sayings and dictums. After integration the morale of the XYZ organization was going down, the management of Big Energy should be transparent and uphold high level of value system and portray right behavior. By doing this they would be able to build a culture for its current integrated organization and bind all the employees to mutual cultural relationship. The fundamental of management is the integration of other resources with human resource so as to achieve desired goals of the organization. With not only concentrating on integration process Big Energy should also look after the human resource of the organization so that the morale of the employees are intact and keeping the attrition rate low.
Big Energy should understand the nature of the organization and then take decisions (Lee and Pai, 2003). Also they should investigate the environment during change and as well as the employee needs so that they can use the model which is best suited for the organization to get better result. Some recommended models which are best suited for the integrated organization are:
Big Energy is also recommended to follow McGregor’s Theory Y, relating to the case study with this theory, the remaining employees are self-motivated and ambitious but their capabilities and talent is underused in the integrated organization. So Big Energy should give right conditions to the employees so that they get motivated and work well. The management should build the potential in the employees and assist them in achieving their professional goals as well as the organizational goals. They should create an atmosphere of trust and encouragement for the development of the employees so that they can communicate well and reducing the disparity between the superior and their subordinates (Robbins, 2001).
Conclusions:
The major challenge of Big Energy is to choose the best model and examine its effectiveness which would be best fit for the integrated organization. These models will provide fulfillment of the employee needs. The management needs to observe, consider and interact with the employees to get best results from them (Middleton, 2002).
References
Bauer, G. and Jenny, G. (2013). Salutogenic organizations and change. Dordrecht: Springer.
Bloisi, W., Cook, C. and Hunsaker, P. (2007). Management and organisational behaviour. Maidenhead: McGraw-Hill Education.
BOTTOM, W. and KONG, D. (2010). Normative Models for Strategic Decision Making in Industrial-Organizational Psychology and Organizational Behavior. Industrial and Organizational Psychology, 3(4), pp.417-420.
Buelens, M. (2011). Organisational Behaviour. London: McGraw-Hill Education.
Lee, G. and Pai, J. (2003). Effects of organizational context and inter-group behaviour on the success of strategic information systems planning: An empirical study. Behaviour & Information Technology, 22(4), pp.263-280.
Locke, E. (2009). Handbook of principles of organizational behavior. Chichester: John Wiley.
Middleton, J. (2002). Organizational behavior. Oxford, U.K.: Capstone Pub.
Robbins, S. (2001). Organizational behavior. Upper Saddle River, N.J.: Prentice Hall.
Schermerhorn, J., Osborn, R. and Hunt, J. (2000). Organizational behavior. New York: Wiley.
Ujjainia, G. (n.d.). Personality, Attitude, Power and Politics Affecting Organisational Behavior. SSRN Journal.
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