In April 2000, Saudi Electricity Company was established as a Saudi joint stock company with a paid-up capital of forty-one billion six hundred and sixty-five million nine hundred and thirty-eight thousand one hundred and fifty Saudi Riyals. The merger of all Saudi electricity companies in the Central, Eastern, Western, and Southern Regions in addition to the other electricity operations managed by General Electricity Corporation made it possible to make this amalgamation of multiple entities into a single joint stock company known as Saudi Electricity Company (se.com.sa). However, when the merger took place, there were a number of issues that led to risks and challenges, and some of these included motivating the various groups of employees in the merger, difficulty in training personnel, operational difficulties, and team building. Since the merger of all Saudi electricity companies in the Central, Eastern, Western, and Southern Regions ended in the creation of the Saudi Electricity Company, the management had to face risks of employees leaving, certain employees revolting, and certain employees abstaining from work. The new management had to devise a strategy to counter this.
Description of the Project
The objective of this research proposal is to understand the risks and challenges faced by the Saudi Electricity Company in the wake of its merger with a number of other major Saudi electricity companies, and provide solutions to these problems
Current State of the Problem
Once the merger was completed, the management restructured the company’s business lines to ensure that the mergers did not conflict with the interests of their customers. They had to ensure that continuity of supply of electricity remained, while credibility and reliability remained. In the beginning, when the mergers took place, the Board of Directors approved of a new transitional organizational structure that was based on functional business lines for specialized activities. Planning ahead, the Board of Directors considered the future prospects of the merger and introduced certain strategic business functions. Generation, Transmission and Distribution, and Customer Service functions were given impetus. As the company began to grow, in 2012, the National Grid SA; a limited liability company wholly owned by the Saudi Electricity Company was established to handle the electricity transmission in the Kingdom of Saudi Arabia in addition to the operation, control, and maintenance of the electrical grid (se.com.sa). The same year, the Engineering and Projects Management, and Supply Chain business lines were also established. In March 2014, the Board of Directors introduced the Energy Trading & New Ventures business line to supervise the trade relations organized for the Saudi Electricity Company with electric power producers and major consumers. The Board of Directors initiative to bring strategic partners of world-class service experiences in the field of electric power production and distribution is commendable, but there are risks and challenges associated with this initiative.
In order to understand the thinking behind the Board of Directors initiative to provide a world-class organization that can handle just about everything that provides a smooth and efficient service, it would be prudent to study the organization’s ethics and values. The Saudi Electric Company’s work ethics document is divided into two sections; the first is the Company’s principles and values that aim to preserve the Company’s reputation, performance, and efficiency, and the second; is the work ethics for the Company’s employees that aims at upholding the organization’s standards of honesty and integrity, and the avoidance of unethical behaviors (se.com.sa). How was the management going to adhere to these principles? This is an area that had to be researched to understand what the possible solutions to the problem were.
In order to protect and enhance the company’s reputation, the management, aware of the expansion of its operation, had to consider the complexity and diversity of regulations that had to be complied with to raise the level of challenge to maintain that reputation and performance efficiency level. Therefore, the management, in their Principles and Values document, cites that all employees must practice honesty and integrity in accordance with the applicable rules, regulations, and resolutions in the Kingdom of Saudi Arabia. These principles and values include the commitment to ethical and strong business practices, where performance forms the base for sound business practices with guarantee that all shareholders receive their fundamental rights; avoidance of concealment and cover-up of important facts and information, and using fake state of deficit in order to influence prices (se.com.sa).
The challenges and risks that can cut across the management’s reputation and growth plans include areas such as performance, employee development, developing team spirit, development of trust, and the care about the social surroundings. If the company’s mission, vision, and goals are studied, it is obvious that the Saudi Electric Company is committed to provide their customers with “safe and reliable electric services, meet the expectations of their shareholders, care for their employees, and ensure optimum utilization of available resources” (se.com.sa).
There are a lot of cultural and social differences between the people of Saudi Arabia and western countries. In the west, women compete with men at all professional levels, and women are considered better Public Relations and Human Resources personnel than their male counterparts for the simple reason that they are better level-headed when it matters. This is not to say that men are bad; it’s just that most organizations feel it is better to have women take the responsibility of trouble-shooting customers. Saudi women are prohibited from working in places where men work, and this completely negates the possibility of having a cordial voice tackle contingencies arising out of service irregularities. When it comes to appointing men for such job profiles, the question that arises is how motivated are they to do the job. Therefore, the question is how does one motivate male employees in the face of increased demands; particularly when they have to meet the standards demanded of them? While it would be easy to say that employees could be made to feel secure, appreciated, and wanted, it will not be easy. However, if managers consider the needs of the employees, provide them with the latest technology to support the challenging needs, and provide them the required training to meet the standards, these employees would be motivated and committed to their work (Benson and Dundis 315).
When the Saudi Electric Company introduced their organization’s goals, they had stated that the company was committed to providing their customers with safe and reliable electric services by “meeting their expectations, actively communicating with them, and providing them with value-added services and products (se.com.sa). This is easier said than done, as training Saudi personnel at all levels would be difficult because of the language. Not all Saudis speak English fluently, and very few engineers have working knowledge of English. If the Board of Directors indeed plans to enhance their services on par with international standards, they would have to take the services of foreign engineers and managers. Training native Saudi Arabian engineers and other support staff on technological advanced machineries and in communication would not be as easy as one thinks it to be. First and foremost, the native employees will have to learn English, and then, with the assistance and under their guidance, learn to handle the advanced technological machineries. This would take time, and this will inadvertently affect work. There would be operational difficulties, and so, the management will have to employ a large number of foreign experts in running the plants. This will be in complete adversary of the rule laid down by the management in their “Care about the Social Surroundings,” where the management promises of the “company’s participation in the electricity industry, nationalization of jobs, and prequalification and training of the national cadres” (se.com.sa).
“People have unique needs, values, and systems of motivation, and so, it becomes practically impossible to tailor jobs and organizational goals to meet the expectations of individuals,” (Burney 33). However, certain common expectations can be identified for these individuals at the workplace. These common expectations can be drawn from their demographic, occupational, functional, or personality lines (Burney 33). One of the most common expectations is job security. Motivation can enhance employees’ productivity, and quality of work. They are known to improve their competency, and they perform better when attending to customer needs. Motivation can also develop an employee’s competitiveness which can help reinforce the organization’s corporate values. Pay and rewards are natural motivators, and they have helped improve an employee’s performance considerably. However, the rigorous training followed by stringent managerial expectations can put enormous pressure on the employees. Not all Saudis are known to be hard workers. This can backfire and cause disruption of power and drop in the quality of services. Because of the rigors of work, there will always be signs of stress and fatigue, and this can affect an individual as well as his or her team’s performance. Such a situation can lead to frustration and conflict. A reason why such conflicts and frustrations can damage the organization’s reputation is that quality of service drops. Many employees find it hard to accept changes occurring from mergers. The organizational policies change, their work pattern and ethics change, and they find it incompatible to work in a team that is new. The frustration and rigors become so intense that many employees leave the company, or revolt the change. They find that new managers have a different approach to managing employees, and this leaves them with no choice but to leave the organization.
In order to study the impact and the possible solutions to problems associated with mergers and also to ensure that the reputation and quality of services were not compromised in the wake of the merger, the management of Saudi Electricity Company had to find ways to overcome the risks and challenges they might face in the face of the company’s new principles and values, and its goals. Therefore, in order to understand the risks and challenges that the management could face because of the merger, this research proposal will use qualitative and quantitative research methods to arrive at a consensus. Qualitative research would occur once the organization begins to function normally. This would be the time when interviews with employees could be initiated to understand their difficulties and the role played by the management.
In the case of the Saudi Electric Company, the mergers of a number of companies into one would have jolted a number of employees. Though the management has sought to streamline operations by breaking the operations into units, it still becomes hard to accept a new style of work. This is something that many of the employees would have found hard to digest. Forced out of their comfort zone, these employees would have sought to leave the organization. This is a precarious situation because, should these experienced people leave because of the uncertainty of their position in the organization, and recruiting and training new people would be very difficult. Also, when working in groups or teams, there could be a lack of cohesiveness among teams if they are from different companies. Apart from the normal contract signed between an employer and his or her employee; bound by respect, loyalty, and honesty, there is an undeclared covenant in employer-employee relationships (Tyson and York). This must be honoured at all costs for the organization to move forward.
Business success is built on performance, and performance is dependent on employees. As employees form the backbone of any organization, it is the manager’s prerogative to ensure that employees remain happy and loyal to the organization at all times. Mergers can be tricky, training can be laborious, and recruiting can be time-and money-consuming, but no matter what may be the situation, if employees are kept happy and their expectations are met, that organization will be able to meet its goals
Benson, Suzanne G., and Stephen P. Dundis. 'Understanding and Motivating Health Care
Employees: Integrating Maslow's Hierarchy Of Needs, Training And Technology'. Journal of Nursing Management 11.5 (2003): 315-320. Web.
Burney, Mohammed A. 'Motivating Engineers'. IIE Solutions 32.6 (2000): 33. Print.
Print.Se.com.sa,. 'Saudi Electricity Company'. N.p., 2015. Web. 23 June 2015.
Tyson, S, and Alfred York. Essentials of HRM. Oxford: Butterworth-Heinemann, 2000. Print.