Introduction to E.ON
E.ON UK is a leading energy company and is amongst the big 6 energy suppliers. It was established in 2002 through the acquisition of Powergen and now has the second largest electricity generator in the UK and owns the second largest distribution network in the UK. E.ON UK employs over 10,800 staff and has 97 sites including customer contact centres, offices, wind farms, technology centres, training academies and power stations. E.ON UK is part of E.ON who is the world’s largest investor-owned energy service provider, where its headquarters are based in Germany. E.ON UK has over 8 million customers and has a vision to be our customers’ trusted energy partner.
Why E.ON needs to change and how change affects the organisation “Organisations need to remain competitive in order to survive” (Martin, Whiting & Jackson, 2010, p308). In order to maintain a competitive advantage, E.ON must react to the internal and external factors affecting the company and change appropriately. In terms of external pressures the PESTLE tool is very useful for analysis, as detailed by Leatherbarrow, Fletcher and Currie (2010, p9) which includes the following major drivers of organisational change; Political, Economic, Social, Technological, Legal and Environmental.
In relation to E.ON, one of the most significant of the PESTLE factors is Technological. As the energy industry is highly competitive, particularly between the big 6, E.ON must ensure they are keeping up with technological advancements in order to remain competitive. The technological advancement of Smart metering – a clever piece of kit that allows the electricity and gas meters to talk to each other, to their Smart Energy Display and directly to their energy supplier, has had a significant impact. This will have great advantages for both the customer, such as an end to estimated bills, and E.ON, such as being able to switch a customer from monthly billing to pay as you go remotely, but means significant changes need to be made to achieve the roll out including the up skilling of thousands of staff to give them to skills to install and fix Smart meters.
Another external factor affecting E.ON is Legal; the energy industry is highly regulated and all companies must comply with all legislation including the Energy Sales Rules. A recent investigation by Ofgem has meant E.ON must pay out £12million to customers as it was found that customers were misled during the sales process. The investigation found that E.ON failed to properly train and monitor both its own staff and those employed through third party telesales agencies, leading to incorrect information being provided to customers. In response, E.ON has made considerable changes and improvements to processes, has ceased to use the third party agencies involved and has delivered a programme of re-training to all sales staff.
Other external factors driving change within E.ON are Environmental factors and changing Societal demands. E.ON is under pressure to find more environmentally friendly and sustainable methods and so constantly researches new ways of producing greener energy, such as wind farms. The introduction of wind farms and the reduction of power stations have meant significant changes within E.ON; the recruitment of individuals with different skills is required and redundancies have been made due to the closure of power stations.
In addition to the external factors driving change within E.ON, there are also many internal factors that necessitate change. For example, a recent change in strategy in relation to sales channels utilised by E.ON resulted in the removal of the VEC (Venue and Events Channel) and the focus shifted to Telesales. While this will hopefully increase sales and drive efficiency, this has led to a large number of employees being redeployed or, where that wasn’t possible, being made redundant and also a large recruitment drive for Telesales staff.
Changes to the senior leadership team also causes change within an organisation as the new team members have different ideas they are keen to implement which will potentially have a long term effect on the company strategy. How new members of the SLT are perceived by employees is vitally important in order to maintain engagement of staff and commitment to organisational goals.
A further internal driver of change is a need to decrease costs and increase consistency and efficiency, which is the aim of the centralisation of some support functions from E.ON UK to Berlin where E.ON headquarters are based. This has resulted in a number of redundancies and the re-education of hiring managers across the UK business to understand the changes.
Approaches to change
A useful model when looking at different approaches to change is Tannenbaum and Schmidt’s (1958, cited in Leatherbarrow et al, 2010, p414) Continuum of Leadership. This model explains a scale of various levels of delegated freedom and the subsequent effect on the employees. It details ‘telling’ where the manager decides and announces the decision, ‘selling’ where the manager decides and then sells the decision to the group, ‘consulting’ where the manager presents the problem and asks for suggestions before making a decision, and finally ‘joining’ where staff are involved in all stages of the decision making process.
The model argues that ‘joining’ is the key to implementing change successfully as when employees are part of the change they are more likely to engage with it in a positive way. At E.ON the change process adopted for the centralisation of the resourcing team to Berlin is best described as ‘selling’ on the Continuum of Leadership as there was no involvement of the employees in the decision making process, the decision was made and then ‘sold’ to the teams affected. This may have been because it was such a transformative change, whereas smaller changes would perhaps be approached by ‘consulting’ or even ‘joining’.
The CIPD (2010) states that the three essential aspects of successful change are “leadership, people and planning”. It is essential that any approach to change considers and incorporates these three elements. Communication is another vitally important aspect in managing change as employees should know what is happening and, more importantly, why it is happening. This links to ‘Unfreezing’ in Lewin’s (1951, cited in Leatherbarrow et al, 2010) Three-Phase Model of Change; If employees understand the reason for change, they are likely to have a more open mind with regards to accepting it.
When discussing different approaches to change the CIPD (2014) states that “organisational forms are themselves evolving. Therefore, the change management response will have to be adaptive”. Therefore highlighting that the approach taken to change management needs to be modified as appropriate to the organisation and the change that is occurring.
Behavioural responses to change
Although each person’s reaction will vary, it is useful to refer to Kubler-Ross’ (1960, cited in Martin et al, 2010, p313) Change Curve when looking at employees behavioural reactions to change. An employee’s initial response may be denial, as they believe the change won’t happen or it won’t be successful, or anger where the employee actively resists perhaps as they feel they have nothing to lose. It is vital that employees are given the chance to voice their opinions and ask questions at this point in order to reduce negative feelings and allow people to feel involved in the process. HR must be involved in this, ensuring everyone has the chance to be heard and ensuring employees feel their thoughts are recognised. The way in which this is done must be considered, as some may prefer a public forum whereas others will not feel comfortable and may prefer a one to one meeting. HR must use their knowledge of the people employed to understand which channels should be employed for feedback and discussion.
Employees then may start to accept that the change is going to happen and progress to the next stage of depression. This is because they may feel scared, fear that they may no longer be required once the change happens and feel helpless. Resistance from individuals and groups can build up in this phase and so communication is vital to keep the employees informed about what is happening while acknowledging their feelings and ensuring they understand how the change will affect them. HR will at this point provide emotional and practical support to help employees start to think positively about the change.
The Employee Assistance programme should be promoted which will give employees access to free confidential advice and guidance. The final stages are acceptance and commitment where hopefully employees are able to come to terms with the change and perhaps even start to embrace it. As understanding of the reasons behind the change increase so will acceptance, especially if the benefits to the employee are highlighted. Employees may then start to demonstrate commitment and may even promote the change to colleagues. HR must at this point aid the institutionalisation of change to ensure that employees do not return to old ways, this can be achieved by paying particular attention to new teams and the way they are working together. How HR can support individuals during change
In addition to the support above, there are also other ways that HR can support individuals during significant change. At E.ON we have a Redeployment team who assist individuals whose roles are no longer available or who cannot fulfil their roles anymore due to ill health to find alternative roles within the organisation. A dedicated Redeployment Consultant will meet with each employee offering CV guidance, advice on which roles could be suitable, mock interviews to aid preparation and will answer any questions they may have. They will be able to talk through any relocation assistance which is available, whether their salary could be protected if they take a lower level role and let them know if they are eligible for a training bursary to help them retrain and learn a new skill to aid their employability.
1. Martin, M., Whiting, F. & Jackson, T. (2010) Human Resource Practice. 5th Edition. London: CIPD. 2. Leatherbarrow, C., Fletcher, J. & Currie, D. (2010) Introduction to Human Resource Management. 2nd Edition. London: CIPD 3. Tannenbaum and Schmidt (1958) cited in Leatherbarrow C., Fletcher, J. & Currie, D. (2010) Introduction to Human Resource Management. 2nd Edition. London: CIPD 4. CIPD Practical Tool ‘Approaches to Change: Building Capability and Confidence’ (2010) accessed at http://www.cipd.co.uk/hr-resources/practical-tools/change-approaches-building-capability-confidence.aspx 08.06.2014 5. Lewin (1951) cited in Leatherbarrow, C., Fletcher, J. & Currie, D. (2010) Introduction to Human Resource Management. 2nd Edition. London: CIPD 6. CIPD Factsheet ‘Change Management’ (2014) accessed at http://www.cipd.co.uk/hr-resources/factsheets/change-management.aspx 08.06.2014 7. Kubler-Ross (1960) cited in Martin, M., Whiting, F. & Jackson, T. (2010) Human Resource Practice. 5th Edition. London: CIPD.