Paper Example on Organizational Change

Introduction

Today's business environment requires firms or organizations to get involved in changing nearly constantly to always remain at the competitive edge. Organizational change is a process that takes place when firm transit to a number of the state desired future from its recent state. Managing the change of an organization is a procedure that involves planning and implementing change within organizations in a manner that minimizes the resistance of employees and the organization cost. In contrast, simultaneously, it minimizes the change effort effectiveness (Stouten et al., 2018).

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Brief Summary

Saudi Electricity Company (SEC) is one of the largest firms within the Kingdom and the Middle East. It was established as a Saudi joint-stock firm. According to Alharbi (2018), the government holds a 74.3% direct ownership and a 6.9% indirect ownership owned via Saudi Aramco. The general public owns the remaining 18%, whether by investment institutions or individuals. The company is one of the biggest employers in Saudi Arabia, with 89% of them being Saudi Nationals (Alharbi,2018). SEC is responsible for handling power transmission as well as power generation for the entire Kingdom. It holds 48 plants of power generation, 570 substations of transmission, and more than 143 customer service offices, which serve 6.7 million customers all over the Kingdom.

According to Mezghani and Haddad (2017), electricity consumption in Saudi Arabia has risen to a 6.6% average rate annually between the years 2006 and 2016. The growth resulted from some factors, which include: an increase in population, levels of income, subsidized prices of electricity, strong growth of the economy, and urbanization. In meeting this growing demand, the government of Saudi Arabia has heavily invested in the new capacity of generating power. The current capacity installed within the Kingdom is approximated at 82GW, up from about 60GW in the year 2010. Therefore, the need for curbing the growing demand has become a priority since the old model is no longer sustainable.

Historically, electricity prices have been low, thus resulting in overconsumption, although the subsidized feedstock provision towards power plants promoted generation, which was inefficient. However, meeting the rising demand pushed the governments towards investment in recent generating capacity, particularly at a high price, putting more pressure on the government's energy budget.

Change Process

Electricity and Cogeneration Regulatory Authority (ECRA) is the electricity regulator in Saudi Arabia. The sector, therefore, moved towards privatization, whereby ECRA launched an Electricity Industry Restructuring plan. This involved SEC unbundling, with the creation of an open generation and an open distribution market, the establishment of a transmission firm, and a parallel market in which big consumers were in a position of purchasing power from producers they chose. The progress led to National Grid creation and an understanding memorandum signed between SEC and ECRA, which outlined the commitment of both parties and actions taken as part of the restructuring process in late 2016. In December 2017, alongside wider market reforms, ECRA announced its electricity tariff system reorganization for both low-consumption commercial and residential customers. In 2018, the system was an attempt to gradually increasing the prices of electricity, whereby the lowest residential classification was raised to 18 halalas ($0.05) from 5 halalas ($0.01) per KWh (Mikayilov et al., 2020). The savings were used to assist families of middle- and low-income levels through the citizens' account welfare program. The measures were a move towards bringing electricity tariffs of the nation in line with multinational standards, which was in accordance with the Fiscal Balance Programme of the Kingdom in 2020. However, it has not affected the industrial sector tariffs, geared toward not affecting the non-oil growth pursuit.

The radical change within the generation capacity and energy mix was part of the restructuring that was proposed. Regarding transmission and distribution, the goals included reducing some outages annually that lasted for five minutes and above from 6.36 to 3, reducing the outage average duration to 120 minutes from 262 minutes. This boosted the reserve generation capacity to 12% from 10% and increased general grid coverage to 99.5% from 99% (Mikayilov et al., 2020). The company used a formal modeling framework, which makes it possible to represent diverse organizational reality aspects from several perspectives, like the organization-related, process-related, and performance-related perspectives. Given that people often exert noteworthy influence on an organization's dynamics, aspects in relation to the behavior of human beings were explicitly considered.

Stakeholders

According to Stouten et al. (2018), to guarantee responsibility, investment, and support, the company ensured that all partners or stakeholders were kept on top of the change and refreshed amid all the change management process progression. Correspondence lines were kept open. Thus, the representatives were not offered data simply to enable them to understand each occurrence but to ensure that they were extra prepared to make inquiries and voicing their worries alongside the process. The government was involved in funding the entire process and ensured that everything went on as planned. The employees were actively involved in implementing the changes and ensuring that the customers got the best services. The customers were involved in reporting what was working for them and what was not and how the change affected them.

Successful Change

According to Mikayilov et al. (2020), restructuring targets to unbundle a monopoly was a market liberalization pre-requisite, which in turn provided long-lasting benefits like a competitive market that improved service quality, productivity, and the efficiency of operation. In attracting investment that contributed to the satisfaction of big growth rates requirements in demand of electricity, keeping and maintaining the power system's stability was very important, so restructuring was gradually implemented in a way that ensured zero impact on the services offered by SEC. The other strategy that the SEC used in containing electricity consumption was ensuring that the retail and wholesale prices reflected total costs. Keeping the prices of energy low was the Saudi government’s tool for managing inflation. SEC strategies were successful even though it led to a continuously widespread consensus regarding the need to reduce the substantial subsidies, particularly following their adverse impacts on emissions of CO2. Subsidies of fossil fuel generating a pricing scheme that caused a dead-weight loss of welfare were not successful. Instead, the government lost revenue, particularly from the subsidized domestic consumption, which was greater than the rise in the consumers' domestic surplus.

In the future, meeting the increasing domestic demand for energy should greatly involve deploying nuclear and renewable energy. SEC should consider working with the City of Atomic and Renewable Energy (CARE), which is the body with the responsibility of definition and establishment of atomic along with the renewable program of energy in Saudi Arabia with the main goal of evolving alternative capacity of energy along with creating a domestic chain of supply (Mezghani & Haddad, 2017).

Conclusion

A joined uniform framework for the process, along with performance modeling, could be considered. As asserted by Mikayilov et al. (2020), it incorporates parameters of business or accounting into a formal procedure of a modeling approach based on Petri-nets. In this framework, main aspects like individual and organizational goals, power relations and authority, and individuals' behavior do not get considered. An analysis carried out across various views allows an investigation of the impact of a combined factor from various perspectives on an organization's behavior, provides a designer with additional manifold and rigorous analysis likelihoods compared to using analysis techniques that have a dedication towards a specific view only.

Change is indeed inevitable, particularly for any organization aiming to succeed in its operations. Therefore, it is the responsibility of a company to properly plan well for its entire change process to avoid failure, disappointment, and loss of extra resources during the change process.

References

Alharbi, A. (2018). Power Generation Integrated Operation and Maintenance Scheduling: A study of the Saudi Electricity Company.

Mezghani, I., & Ben Haddad, H. (2017). Energy consumption and economic growth: An empirical study of the electricity consumption in Saudi Arabia. Renewable and Sustainable Energy Reviews, 75, 145-156.
https://doi.org/10.1016/j.rser.2016.10.058

Mikayilov, J. I., Darandary, A., Alyamani, R., Hasanov, F. J., & Alatawi, H. (2020). Regional heterogeneous drivers of electricity demand in Saudi Arabia: Modeling regional residential electricity demand. Energy Policy, 146, 111796.
https://doi.org/10.1016/j.enpol.2020.111796

Stouten, J., Rousseau, D. M., & De Cremer, D. (2018). Successful organizational change: Integrating the management practice and scholarly literatures. Academy of Management Annals, 12(2), 752-788.
https://doi.org/10.5465/annals.2016.0095.