first_imgRelated posts:No related photos. Survival of the fittestOn 22 Oct 2002 in Personnel Today Energy company npower’s aggressive expansion philosophy was borne out ofnecessity rather than desire. Mike Broad talks to Saudagar Singh, npower’s HRdirector, about the challenges raised for his HR team as the UK’s leadingelectricity supplierOrganic growth has not been an option for energy company npower. Thederegulation of electricity and gas supply in the early 1990s created thebusiness equivalent of the Wild West and utility companies have either beenacquiring or being taken over ever since. Since its launch in April 2000, npower has been picking off competitors withthe confidence of a hired gun. Innogy, npower’s parent company, boughtYorkshire Electricity in April last year and Northern Electric four monthslater. Rapid growth has been a key element of npower’s business strategy. Its sizehas increased from 1,800 staff at launch to 8,500 at present. Saudagar Singh, HR director of npower, says: “The question is: do yougrow organically or through acquisition? As utilities have been opened up,those organisations that have not responded have seen their market share godown.” Singh, who sits alongside the finance director and CEO on the integrationteam, explained that he supported the aggressive M&A activity as much asanyone else. “It was painful but the commercial reality is that we had to do it. “We felt that if we did not get beyond four million customers rapidly,then we would be at risk of being gobbled up.” The pace of change has raised huge challenges for the 50-strong HR team.Performance management, employee relations and rolling out common brand valuesand culture across the company were priorities. The HR team is also supporting the transformation of npower into ahighly-competitive retailer. It now supplies gas, electricity, telecoms andfinancial services to nearly seven million customers. Singh says: “We are taking our company from thinking and acting like autility, and turning it into a competitive and commercial organisation.” Recruiting the right people – with strong commercial skills – has beenessential. Singh has targeted people from progressive, blue-chip organisationsoutside the sector, such as their new head of PR Richard Frost, headhunted fromCadbury Schweppes. “To compete in the harsh realities of a commercialenvironment, you have to bring the right people in,” he says. “You have got to get the blend right – we need a mix of people withbusiness acumen and industry experience.” The energy giant has taken a direct approach to developing a single-work culture.Not content with the normal communications that follow the launch of companyvalues, npower has incorporated them into a new bonus structure. A year-long pilot of the bonus system, called the matrix, proved successfuland its adoption goes before the board this month. The matrix bonus is split 50-50 between hard measures and living companyvalues. The values include team working, customer obsession,straight-forwardness, focus, initiative and being results-oriented. It islikely to be rolled out to 750 senior managers from January. These leaders willin turn incorporate values for their staff in the appraisal and performancemanagement system. Employee relations have also been a major challenge during a period ofsignificant change. While npower has recruited 900 staff, it has also made1,200 redundancies. Singh wants to forge stronger relationships with unions, and increase theirlevel of commercial understanding. Honesty and openness is vital to achievethis, he says. In the Midlands, for example, the company runs a business review forum withunions. It shares commercially sensitive information on a regular basis,withits members to explain why decisions are being made. The company is alsoengaging unions in discussions over the future of its call centre in TeamValley, and the 500 jobs located there. Singh says: “We’re having an adult conversation with the unions to seehow we take can take costs out, rather than just telling them what we are goingto do.” The HR team have also worked hard to unify the organisation’s HR processes.Singh targeted the most divisive terms and conditions first, such as car andtravel policy, then focused on key areas such as pensions, payroll and healthand safety. Getting common policies for all staff on npower’s intranet has helped bringthe organisation together. “Four different versions of everything adds alayer of complexity and we have been working hard to bring processes intoline,” he says. The structure of the HR team is also being evolved. HR managers have beendecentralised to sit within business teams, supporting the divisional managingdirectors. Singh has also recruited four operational HR managers from outside theutilities sector, but finding the right people hasn’t been easy. He says: “I don’t want people who spurt out the latest HR jargon, wewant people who understand proper business issues and are realinfluencers.” A six-strong HR management team sits centrally working on areas such asbusiness support, organisational design and health and safety. Singh sits onthe board. “They are now a commercial team – they are business people first and HRpeople second,” he says. Npower’s profitability has jumped from £1m to nearly £100m in two years.Singh says the company is now trying to consolidate its position, following thepurchase of Innogy by RWE. “The strategy over the next five years is to keep the profits up, andwe are looking for efficiencies and synergies that will cut costs,” hesays. But he grins and adds: “If at some point an acquisition appears on thehorizon, then we will move, but we are getting ourselves into a stable position– so that we can add without huge upheaval.” Timeline: the company’s evolutionNovember 1999 – National Powerannounces demerger plans to form Innogy, to manage UK power generation andsupply, and International PowerApril 2000 – npower is launched to manage UK retail energybusiness September 2000 – Innogy acquires the operations of IndependentEnergy to add to the npower brandOctober 2000 – National Power shareholders approve formaldemerger to form Innogy (npower’s parent company)April 2001 – Innogy moves to acquire Yorkshire ElectricityAugust 2001 – Innogy acquires Northern Electric making it theUK’s leading electricity supplier September 2001 – Innogy is promoted into the FTSE100 andsupplies 7 million customersMay 2002 – RWE acquires Innogy Comments are closed. Previous Article Next Articlelast_img