Organizational Observation, Essay Example

  1. Introduction

I currently work for Isolux Ingenieria USA’s Spanish division as a Buyer Planner. During my work I have gained insight into the organizational structure, processes and operations management within the company. Through my observation and training within the company I have gained knowledge about the organization itself, the policies, the global market and the structure of processes, hierarchy. The below observation report is designed to reflect on the company’s mission, policies, culture, priorities, structure and operations management principles and to recommend suitable improvement opportunities for the management. I believe that my experience within the buyer-procurement department and the knowledge of the pricing policies enables me to review the company and its T&D Division Energy Business Unit.

  1. Industry Background

Power plants in the world provide electricity for households and businesses all over the world. The safe transmission and management of energy is a complicated task and calls for expert knowledge, the implementation of policies, guidelines and adherence to government regulations. Indeed, the power industry is one of the most regulated markets worldwide. As Aliff (2003, p. 1) states, “great efforts have been implemented by governments, regulators, companies and researchers to run it in the most possible efficient way”.

The major challenges the industry faces today, according to Aliff (2013, p. 3.) are globalization and competition. Companies need to find new ways to create more value for customers and utilize competencies for innovation. The liberalization of many countries’ energy sector has created a great competition, and globalization creates expansion opportunities. According to the International Energy Agency’s report (2010), the demand for energy is likely to double by 2030. That also means that the majority of firms will need to increase their production, efficiency and operations management principles to deliver cost-effective services while maintaining standards and profit margins.

The main innovation opportunities in the industry are based on new processes, creating plants that are more economical, take into consideration the markets, emerging technologies, efficiency and production demand. According to Aliff (2013, p. 6.) the main innovation driver in the industry is knowledge management. Using knowledge as a competitive advantage and core competency to generate value should be the main aim or industry leader companies.

  1. Company Background

Isolux Corsán is a global company. It is currently present on four continents in thirty countries. It has been on the market for over 80 years. With diversification of business areas and several services worldwide, it is an industry leader.

The mission statement of the company is:

“We construct and manage solutions and services for building, energy, infrastructures and the environment that efficiently and sustainably contribute to greater social welfare, fostering economic growth and generating value for all our stakeholders.” It is important to note that the company considers sustainability as one of its principles, as well as growth and generating value. During the observation the authors would like to review how these principles are implemented in internal policies and procedures and how stakeholders are protected by the organization.

The ethical values of the company (Annual Report, web) are caring for people, diversity, integrity, results orientation, social responsibility and excellence. The authors would like to also review the company’s operations management principles and human resource policies in order to identify the main points where the above values are addressed.

According to the Companies and Markets website (web), the main core competencies of the company lie in project expertise, the geographic landscape and increment in sales, resulting in new opportunities for creating new business contracts, improving research and development for renewable energy supplies, investment and industrial growth. However, the report also mentions some weaknesses originating from the Spanish market’s challenges, cost overruns, as well as international and political risks.

  1. Organizational Structure

The Isolux group is a privately held construction and energy company. The board of directors consist of one chairman, a deputy chairman and 12 members. The secretary of the company is not a member of the board. The shareholder profile of the firm is diverse, with over 53 percent of the shares held by Construction Investments SARL.

The main business areas of the company are: concessions, energy, T&D, Infrastructure, Industry and Environment, Installations and Factories. Leaders are selected democratically, based on achievements and capabilities.

  1. Observation Details

According to my experience working for the company, it is evident that the principles of business and operation are taken into consideration. The company takes social corporate responsibilities, renewable energy investments and community projects seriously and continuously assesses the interest of stakeholders, including employees, governments, customers and communities. The company, indeed, among the first companies worldwide recently started the operational stage of the largest ever solar power generator in Europe. Apart from focusing on distribution lines and installation of new power stations, the company has re-invested the majority of profits into solar and wind power plants in order to become able to increase its energy supply and market share. However, the company’s mission to deliver value for all stakeholders is also shown in its investments into high speed railways, motorways and quality assurance projects.

In my line of work, I come across different pricing and contract strategies that are designed to provide the maximum value for customers. I believe that innovation enables the company to remain on the competitive market and gain the trust of multinational companies. The quality assurance, safety and employee well-being policies have all been implemented within the company’s internal guidelines. In a recent communication from the company’s headquarters, I have come across a list of different policies and development programs designed to support employees. These were clearly communicated throughout the company. In the 2011 annual report, the firm states that “the company’s growth can only be achieved through the growth of our employees”. (p. 92) The talent calibration program within Isolux Corsán is created to identify and develop talent within the organization. I have been receiving training on negotiation, effectiveness, as well as skills updates. The human resources training within the company is comprehensive and regularly updated. The Intranet site that operates across the whole group delivers useful, up to date information about projects, guidelines, policies and training materials are also uploaded for employees who would like to check their understanding on one topic.

5.a Open System Evaluation

The company’s main values related to employees are respect, opportunity and non-discrimination and I believe that the whole organization follows the guidelines, with regular updates and training delivered regarding equal opportunities, family plans in place and health and safety commitment. There is a separate workers’ committee and union representation throughout the group, therefore, it is easy to conclude that the firm has applied democratic guidelines within its operations. Isolux operates an open system organization approach. There are multiple subsystems within the company specialized on different business activities, while the communication between them and among employees is not restricted.  Open systems represent the humanistic perspective, fulfilling four different criteria:

A. The management recognizes individual differences

B. Managers motivate employees to achieve their full potential and develop

C. Employees and the organization have mutual interests

D. Employees are treated with dignity and respect.

(Olmstead, 2002)

The organization’s effectiveness is determined the company’s capabilities to determine situations, manage change and make effective decisions while shifting situational demands. (Olmstead, 2002, p. 15.) However, essential human factors also play a role in the company’s competitiveness, effectiveness and competencies. As the performance of different departments and operations depend on human factors (p. 16), in an open structure there is a need for advanced human resources and talent management.

            5.b Culture

The culture of the company is a democratic one, based on open communication, feedback and support. Leaders are there to resolve problems, make decisions and create guidelines, policies to the best of their abilities. They are also skilled to coordinate tasks and manage work-flow. The coordination of work between different departments and synchronizing business activities is also provided by the leadership.

The culture of Isolux Corsán sets clear organizational lines and communication channels through policies and procedures. The objectives of the group are regularly and clearly communicated through intranet channels, written and printed materials as well as team meetings.  The firm focuses on achieving a greater market share, growth and development of new projects, and the visions, operational goals involving the creation of organizational competence are shared by employees. There is a mutual interest between the group and its stakeholders, and this provides the company with a competitive advantage, tools to generate and utilize talent, innovation, capabilities.

The freedom of association is provided for employees, therefore, collective bargaining rights are assured by the management of Isolux Corsán.

            5.c Motivation and Productivity

One of the main tools of the company’s motivation system is training and personal professional development plans. While there are standardized quality assurance and appraisal systems in place implemented in the management tools, there are individual reviews held regularly between line managers and employees to identify opportunities, listen to suggestions, concerns and move forward. Agreements are made based on mutual understanding and support. The work culture is based on safety, quality and environment management systems. The target system was implemented a few years ago and is standardized for the whole organization. It acts as a motivational tool for employees; there are clear guidelines for reporting, monitoring and evaluating business processes and individual performance. Internal audits of departments, as well as individual performance checks allow the leadership to identify lack of competency in time, minimizing risks and maximizing training efforts where needed. Support is provided for employees in order to achieve better results.

The four step process of personal career development designed for employees is proven to be successful in identifying opportunities, talent and managing competencies. The four steps that work as a career motivational tool are: setting up a career map, annual performance assessment, calibration of potential through support and training, and finally the definition of individualized development programs. (Isolux web.)

It is clearly visible from the work environment of my office that individual career goals are considered and supported by the leadership. Work-life balance policies are in place in order to enable employees to enjoy their time outside of work. Flexible working patterns are also supported, as well as internship programs. The company recognizes that training talent creates more organizational competencies and is the best investment into knowledge management based innovation. My team works together to achieve individual and group targets, while there is a supportive but competitive atmosphere present on meetings. My colleagues share their experience with new employees, support them in development and managers offer extra coaching for those who show signs of having difficulties within one particular area of business. Indeed, pricing and contracts is a highly regulated area of the business, therefore, there is a need for continuous updates, check of understanding and compliance training. I believe that the company has created a vision all stakeholders, including employees, can relate to and work towards. Apart from individual goals, employees also work towards the company’s mission.

            5.d Suggestions

            As stated in the 2011 annual report (web), the company focuses on creating talent, innovation and improving its technologies, competencies and processes through research and development investments. I believe that the energy industry’s opportunities provide a scope for further growth. As in many parts of the world, competition is a threat for the organization, there is a need to develop a cost-effective operations management plan for the following five years. With the already existing investment portfolio of the company within emerging economies like South America and Asia, renewable energy sources in place, the company has a competitive advantage on the market. They also have a great reputation, promote sustainable developments and corporate social responsibility. Therefore, within this suggestion for the leadership, I would like to identify three main development focus areas:

A. Sustainable development investments

B. Research and development investment

C. Managing talent and knowledge management principles development for innovation projects.

Aliff (2013) identifies some important motivators for innovation in the electric and power industry: these are liberalization, globalization and economic growth. I believe that creating a detailed organizational plan for the above areas would provide the company with a core competency in the emerging markets that would create a competitive advantage and increase the group’s return on investments.

Recommendations would also include reviewing the policies and missions of the human resources development principles. Engaging new talent within emerging countries, providing training and internship would provide the company with greater assets of knowledgeable staff. As the organization is present in many countries, it is important to standardize human resources policies and provide equal opportunities throughout the group.

Higher level involvement of employees in corporate social responsibility projects would also help the company increase workforce engagement, commitment and loyalty. While my observations confirm that within my division in Spain employee satisfaction rate is high, the company needs to work towards maintaining the same level of commitment across the whole group. Employee and stakeholder satisfaction surveys should be introduced in order to ensure that the organization is meeting its mission targets across the board.

  1. Conclusion

The company is committed to two major development areas: innovation and research&development. As an open structure, it is a democratic organization successfully managing the challenges of the industry and the global market. However, as innovation has been identified as the major force to create core competencies within the industry, it is important that the company is able to attract, train and keep talent. This task would provide the firm with core capabilities to tackle the challenges set by individual governments, the world economy, globalization and competition. The diversification of the group’s business areas shows that it has many strengths regarding competencies. In order to increase its market share, there is a need for engaging all stakeholders in innovation, development, vision and mission.

My observations during working within the Energy Business Unit have provided me with an insight into the challenges of the industry and the need for compliance. While the company focuses on compliance training, internal policies, these need to be updated regularly. I have also noticed that the organization is trying to provide clear instructions for individual cases, support for employees to deal with a difficult situation. My manager has been extremely supportive and has asked me several times about the development areas I was interested in. This has created an impression in me that the leadership is based on democratic principles and individuals count. Before starting to create an observation report, I had a feeling that the company was based on an open structure and democratic leadership approach, however, I was not sure until I researched the topic and read articles about the different organizational approaches. My research has confirmed the results of my observation, and it is clear that the open system paired with a democratic leadership style creates a culture of motivation, based on personal achievement and rewards, mutual respect and a shared vision. It is, indeed true that the company is aiming for “generating value for all our stakeholders.” (Isolux Corsán mission statement, web)

References

Aliff, G. (2013) Beyond the math: Preparing for disruption and innovation in the US electric power industry. A report by the Deloitte Center for Energy Solutions. Web. Retrieved from:  <http://cdn.dupress.com/wpcontent/uploads/2013/03/DUP288_Beyond_the_Math.pdf?6b62b2>  [Accessed: 9/6/13]

International Energy Agency. (2010) World Energy Outlook. OECD .Retrieved from:              <http://www.worldenergyoutlook.org/media/weo2010.pdf> [Accessed: 9/6/13]

Olmstead, J. (2002) Creating the Functionally Competent Organization: An Open Systems Approach. Google eBook.

“Isolux Corsan Website.” <http://www.isoluxcorsan.com> [Accessed: 9/6/13]

“Annual Report 2011 Isulux Corsan” Retrieved from: <http://www.isoluxcorsan.com/recursos/doc/nuestracompania/informe-anual-en/annual-report-2011.pdf >Web. [Accessed: 9/6/13]

Accenture Business Resources. Web. Global Energy Company: Planning Process Design and Road Map Retrieved from: <http://www.accenture.com > [Accessed: 9/6/13]

Isolux Corsán: Company Profile and SWOT Analysis. World Market Intelligence. Retrieved from: <http://www.marketresearch.com/World-Market-Intelligence-v3764/Isolux-Corsan-Company-Profile-SWOT-7437842/>      [Accessed: 9/6/13]