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November 1998


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The Power Of Senior Teams

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by Peter Block

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by Gregory P. Smith


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The Power Of Senior Teams
Electricity Plant Redesigns to Face Changing Markets

Management team. Isn’t that a contradiction? Can senior management operate as a team?

The success of line worker and manufacturing teams has been well documented. But can the same team model be applied to senior management teams? For Georgia Power Company’s Plant Hammond this was a question that would shape the future of the electricity plant.

Rhoman Empire
Plant Hammond is a fossil fuel electricity generating plant located in Rhome, Georgia, 75 miles northwest of Atlanta. The plant employs 200 workers, of which 75 percent are unionized. Plant Hammond is a subsidiary of Georgia Power whose parent company is Southern Power, the largest producer of energy in the United States.

The utility business as a whole, including Plant Hammond, has existed and operated for years in a marketplace with no competition and a regulated rate of return. Historically, if you lived in Rhome your electricity was supplied by Plant Hammond. In turn the government regulated what Plant Hammond could charge. The results—Plant Hammond knew who its customers would be, how much they could charge and what its rate of return would be. This safe, structured way of doing business prompted a traditional business environment and management style at Plant Hammond.

“It was top down management. It was autocratic. We had five levels of management from the plant manager down to the to workers in the plant,” states Mike Moore, a business services team leader at Plant Hammond. The management style was top-down with a heavy emphasis on chain of command. Furthermore, information was shared “on a need to know basis” and departments operated independently of each other.

“Our management organization had a very functional focus,” Moore states. “We had operating managers in each one of our functional areas—operations, maintenance, engineering and our services group. Each manager minded his own business…we didn’t talk.”

Not exactly a cutting-edge business culture, especially during a time when businesses around the globe were experimenting with new organizational designs and cultures. But Plant Hammond was profitable with its traditional management style and change seemed unnecessary in the stable business environment.

If It’s Not Broke, Fix It
In the early 1990’s the future of the utilities industry began to look far different than it had in previous decades. A move toward deregulation looked to displace Plant Howard from its comfortable market place into one of competition and uncertainty. As deregulation becomes a closer reality, the one apparent element is that future suppliers of electricity will be those who can supply reliable energy at a competitive price. For the first time ever, Plant Hammond was faced with the fact that citizens of Rhome would be free to shop around for utilities.

So, to prepare for the new marketplace, Southern Company initiated what was dubbed a “Transformation Process” at Plant Howard.
“To get ready for deregulation and the changes we will be facing our corporation implemented what we called a transformation initiative.

We basically looked at all the business and cultural processes in the company. We looked at where we wanted to be,” Moore adds.
In its transformation, Plant Hammond chose to focus equally on the cultural side of their business as well as the business/cost side. “If your people aren’t satisfied and contributing to your success than you’re only half successful,” states Moore.

The transformation process would affect all aspects of Plant Hammond. From the tangible to the intangible changes initiated include:
-Formation of a senior management team
-Redesigning the responsibilities of the plant manager
-Emphasis on information sharing
- Redesign of the organizational chart
- Lower level decision making
-A focus on customers and product delivery
-Departmental wide accountability for most organizational functions´┐Ż - A new culture

Too Many Cooks In the Kitchen?
The senior management team was formed to facilitate the changes at Plant Hammond. This team was comprised of department managers from across the plant. The plant manager, the previous head of the organizational chart and head decisionmaker in the plant, also participated in the new senior management team.

The team began by meeting offsite. The first meetings focused on defining their guides and boundaries including: sharing responsibility; expectations and roles; and needs and strengths. Billie Day, president of OnSite Solutions, a consulting firm specializing in team structures and management coaching, helped facilitate early stages of the management team.

“It was an awkward situation like porcupines trying to kiss,” states Day. “The challenges were mostly personal—ego and turf. Team members had to give up long held beliefs.”

After the senior management team was up and running other changes surfaced throughout the plant. Most noticeably, the new focus of the company (as evidenced by its place at the top of the organizational chart) shifted from the administrations to operations unit. The operations function is directly responsible for putting units online and keeping things running. In essence, the operations department was directly responsible for delivering the product (energy) to the customers and the new organization shifted so that all areas supported the operations department.

Dispersing Decisions
The sharing of information and accountability was another significant change introduced by the senior management team and the transformation process. The top-down decision-making management style gave way to an environment of shared decision making at all levels.

“It’s very unique for the person used to operating the old way to make this change. He struggles with it every day. Because you have to give up power, and you have to give up power on important things, not what color to paint the bathroom,” Day states. “If you only give up power on unimportant things people know it’s a game.”

Members of the senior management team also increased their level of awareness and involvement within other department’s functions. For example, previously a problem in engineering was an engineering problem and a problem in accounting was an accounting problem. Now, within the new culture at Plant Hammond, accountability and involvement were shared making all of the issues everybody’s business.

“You have to be willing to be accountable for the actions somebody else takes,” Day adds. “That’s the essence of having the team, instead of the individual, be the unit of accountability.”

What Made It Work
The management at Plant Hammond was able to change their structure and culture in order to accommodate a changing marketplace. It was a process begun three years ago and still underway today. Plant Hammond’s transformation identified key factors for implementing a senior team. Several factors include: an integration of efforts; a systems perspective; high levels of trust and regular assessments.

The transformation process at Plant Hammond changed the organization of the business and its focus. It was a grueling process and required investment and commitments from all employees involved. But as the entire utilities industry enters a new market, Plant Hammond appears poised to excel.

November '98 News for a Change | Email Editor

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