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 shouldrevisit its integration model and priorities in-order to preserve and leverage the competitive advantages and key skilled staff it had acquired.
(Source: Wood, J. Zeffane, R. Fromholtz, M. Wiesner, Morrison, R. &Seet, P 2013, OrganisationalBehaviour: Core Concepts and Applications, 3rd Australasian Edition Wiley, Brisbane; pp. 75).
Students are required to address both of the following questions in their essay:
Question 1
The rapid rate, at which Big Energy has opted to absorb XYZ Energy into its existing business model, has had an adverse impacton the employees that originally came from XYZ Energy. Discuss the impact of this integration model on the overallattitudes, 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.