All entries for Friday 24 October 2008

October 24, 2008

Human Resource Management Lesson 4

Foreword

In this blog I will talk about different employee involvement mechanisms in place in Endesa and its effectiveness. This company is the main electricity producer and distributor in Spain, has significant presence in most Latin American countries such as Chile, Brazil, Colombia or Peru and employs more that 45.000 people worldwide. My knowledge from the company comes from the fact that I'm currently managing the outsourcing contract that IBM has in Endesa.

Question 1: What mechanisms and procedures have Endesa used for employee involvement and to give employees voice?

Endesa used to be a public company, accordingly the impact of power-centre/indirect methods of involvement policies such as collective bargaining has been historically high. However, in the last years the prominence of collective bargaining is declining in favour of high performance systems in which negotiation over a wide range of subjects, affecting workforce's conditions and wages, takes place between employees and line managers. At the same time, many others direct methods for employee involvement (EI) have been created.

Alongside collective bargaining, Endesa has joint consultation committees to discuss with staff on aspects not covered by collective bargaining. Regular meetings are being held and discussion ranges from the most trivial things to the more strategic.

However, during the last years significant shifts have occurred in the way that workforce is being managed, towards improving EI. Among others:

· Move from a culture in which people were paid to obey and "not to think" to a culture in which people are being paid (and rewarded) to think. Among other actions, this has led to the deployment of some tools to facilitate the flow of ideas (bottom - up).

· Quality Circles. People were required to participate on teams created to improve a particular process (this can be characterized as a task centred/direct method of EI). Hundreds of teams were created, they were given a problem and a limited amount of time (usually within the range of 2 to 3 months) to come up with a solution.

· Day-to-day management moved from controlling people to tracking information (Endesa thinks that if they create an environment in which people participate, control is less necessary).

On the other hand, during the last years, Endesa's been communicating a "new vision" which focuses on benefits for the society. Costly advertisement campaigns with mottos such as "a better future for the children of our children" have recently been seen in TV in an attempt to improve the company's image to the general public. However, big posters with this motto are also shown in the company headquarters, where they can only be seen by employees. I think that this is one form of EI, in the sense that Endesa's trying to communicate to their workforce that they are part of something bigger than themselves. One can expect people getting energized by this feeling thus improving EI as well.

Question 2: How effective were each of these voice mechanisms in a) giving employees an effective voice at work and b) adding value to the organisation? and Question 3: Account for any variation in effectiveness of different mechanisms

The feeling that unions do not really represent the interests of the majority of employees and the fact that their power has been diminishing over the years has made them very ineffective in giving employees voice at work.

Hence, in the last years, indirect means of communication, like joint consultation, have been progressively replaced by initiatives that directly involve the employees. A considerable percentage of the workforce population think that these initiatives promote higher performance in the organization and they prefer them over the traditional union representation.

However the change from indirect to direct methods of EI in Endesa has found many obstacles.

In my opinion, the main obstacle in increasing direct EI, lies in the attitude of the line managers. Many "old school" managers support EI by words but they not truly believe in employee empowerment. Some workers soon discovered how serious about EI their managers were and if they really walk the talk. In some cases, cynism appeared in the organization as apparently employees were given the power to decide, but the reality was that few things had really changed.

On the other hand, some managers didn't really know what EI really meant and they just come up with the creation of some teams to just analyse morale or to organize the next department's dinner event, but they did not really allow employees to take decisions on the way the things were being done or in the organization and scheduling of their own work.

However some EI mechanisms worked very well. Some quality teams did an excellent job and some of their recommendations were successfully implemented. They key here was that these teams focused on "day to day" issues rather than "strategic" issues. Is my reflection that on one hand, management must make an effort to communicate strategic direction to the employees and on the other hand, allow them to take decisions on "day to day" activities. Using this approach, these "quality teams" added great value to the organization.

However the question here is where are the boundaries of the decisions that lie in the employee's domain or the management's domain. And it's a difficult question.

On the other hand, the tools that were created to facilitate the flow of ideas obtained a great success. It took some time but once the employees learned that their voices were being heard, an exponential stream of ideas appeared. Some of these ideas were awarded a small prize (for example an iPod) and sometimes the author was nominated as "champion" for its implementation. 

Some direct EI mechanisms in place didn't work as expected either. For example, the web pages that were created in which employees can ask questions to executives were hardly used. Also the survey to measure the organization climate, perhaps is a powerful for HR, but is not clear if the surveys really ended in actions to improve climate.  Apparently, the only executive action in response to the survey was to tell the first line managers that they had to "do something" to improve the "numbers" in the next survey.

Some attempts of team working, in the sense of full self-managed teams, were undertaken but these didn’t work very well either and were dismantled after some time. The reason why these teamwork initiatives have failed is not clear but I think that in any case, they have helped in the creation of a new culture across the organization.

References

The Warwick MBA for IBM – Human Resource Management, Lesson 4

Mick Marchington and Adrian Wilkinson, Human Resources Management at Work.     People Management and Development, Third Edition, CIPD, 2007


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