Organizational Behavior
TXU corp.
Group 12: Jeffery Trinh , Dalya Al-‐Matari, Tisha Harvey,
Brandon DeAlmeida, Hemisha Khatri
Energy Future Holdings, previously TXU Corp., is a privately held energy company located in Dallas, Texas. Energy Future Holdings, abbreviated as EFH, provides Texas residents with energy through the production, servicing, and delivery of its energy products. In order to be able to run an operation of this capacity efficiently, EFH manages three organizations, TXU Energy, Luminant, and Oncor, which specialize in different areas of this energy servicing. TXU Energy, the leading retail electricity provider, controls the retail operations by providing
competitive pricing plans, energy savings solutions, and superior customer service. The branch strongly values its relationship with its customers and strives for customer-centric goals. Luminant’s operations include generating power, mining and development, and wholesale marketing. Being a company that also focuses its efforts on improving the community and environment, Luminant invests a large amount of its resources in wind-generated electricity and is one of the largest purchasers of this form of energy in the nation. Finally, Oncor is associated with the distribution and transmission of the generated electricity. It administrates electricity to a vast region which includes three million delivery points, one hundred two thousand miles of distribution conductors, and fifteen thousand miles of transmission lines. As a result, Oncor reports to a board of directors who are independent from EFH Corp enabling them to better manage this aspect of Energy Future Holding’s operations. In addition to the magnitude of Oncor’s responsibilities, it is the only business unit out of the three under EFH’s umbrella which is regulated causing management of this area to be more controlled and strict.
For this project, our team will focus on the Information Technology division that works under EFH. As technology advances, it is imperative that businesses do the same to maintain efficiency and be ahead of the competitive curve. This is no different for Energy Future Holdings which holds the responsibility of being the largest electricity provider in Texas. The IT division
has numerous important responsibilities to help this operation run smoothly such as data management, risk prevention, vendor contract management, etc. However, in previous years EFH did not exercise enough effort into building a strong structure for the IT division which resulted in a series of issues for the organization. EFH was an electricity company trying to be an IT company. There was not enough focus on IT beforehand to create an effective structure that fit the demands of upper management and the consumers. As EFH made plans to cut costs, the company failed to allocate enough attention and resources towards IT programs. IT had no way of tracking company assets, telephone and computer systems were not the same across business units, and business platforms were not being updated to meet customer needs.
In 2004, Energy Future Holdings outsourced its IT division to CapGemini, an IT services and business consulting company, which offered to provide IT services and restructuring for EFH. In an attempt to decrease expenses on inefficiencies and improve the systems and
organization of the company, EFH delegated the tasks of the IT group to CapGemini. However, CapGemini did little to improve the organization structure and failed to follow through with aspects of the original contract. They did not demonstrate the necessary skills and develop the cost structure to provide for the expertise regarding data and cost management for the IT
business structure. This was not an issue that lied solely with IT as well – CapGemini failed with the Planning, Strategy, Architecture, and Audit groups as well. In more specific instances, CapGemini could not provide billing information to EFH regarding what was being expensed causing a strain on accounting. There was also an issue with Luminant, the generation group of EFH. Luminant was faced with fines from Ercott for their inability to update their grids at certain plants because of CapGemini’s lack of organization and skilled employees. They were behind on
project schedules and could not deliver what they had originally agreed upon – a resolution to EFH’s issues.
As stated above, the original issue occurred due to lack of planning and allocating resources towards a productive IT division. The company neglected to support the IT division with enough financial assets and performance suffered because of it. This led to poor systems and management of platforms across business units under EFH. At a time when IT was
becoming a more prevalent facet of business organizations, EFH did not have a plan to upgrade its own IT skillset so they turned to CapGemini to find the solutions for them. The hastiness of this decision led to a poor contract in which specific details were not outlined and goals were not definitively set. Communication across business units and companies was definitely in issue when drafting the contract. A result of outsourcing the IT tasks inevitably caused a loss of jobs for some employees while others were ‘repurposed.’ Many of the employees became disgruntled and eventually left the organization. Finally, upper management terminated the negotiations with CapGemini and proceeded to bring IT tasks back to EFH. These efforts were closely monitored by the CEO, Board of Directors, and Management Executives of the many business units.
To help our team with gathering information regarding this issue, Tisha Harvey, a Senior Financial Specialist working with the IT Division, contacted coworkers and management. Tisha also provided her own insightful experience with the company during this process as she has gained roles under each umbrella of EFH Corp. through her time there. The other points of contact are Rob Singleton, a Manager with the Performance Management group, and Mike Taccino, VP of Infrastructure Management. Rob Singleton was actually a part of the Outsourcing Business Management function which helped manage the contracts with CapGemini and
recently joined EFH Corp. has firsthand knowledge of the task that IT has before them to gain the trust of the different business units of EFH Corp.
In order for Energy Future Holdings Corp. to resolve the issues above, they must increase operational efficiencies so the critical tasks of the IT division are aligned with the overall
mission of the company. In previous years EFH Corp. did not exercise enough effort into building a strong structure for the IT division which resulted in a series of issues for the
organization. There was not enough focus on IT beforehand to create an effective structure that fit the demands of upper management and the consumers which left IT behind. Since EFH Corp. heads three subdivisions, TXU Energy, Luminant, and Oncor, it can be difficult for IT to keep up with the demands of these businesses without organization. EFH Corp. is a very customer centric business as they provide services and products that directly affect businesses and homes. The IT division should be constructed with a system of checks and balances to ensure fail-safes should anything go wrong. Also, as insourcing occurs and new positions continue to be filled, there should be mentorship from more senior employees in regards to the policies and procedures that take place along with a collective class on company history culture and vision. This will allow the IT division to keep track of functions, assets, and become a more efficient support service. The right personnel must be hired in order for these resolutions to have optimal effect. As the roles of the organization become more clearly defined, Human Resources and hiring managers should become more in sync with a person-job fit and person-organization fit aspect.
Making changes to an organization will inevitably have its pros and cons especially in terms of who gains and loses from the adjustments. In the grand scheme of things all of the companies under EFH Corp. will gain from a more organized IT division. TXU Energy will be able to keep servers up so clients will be able to access online billing at all times, Oncor will be
able to communicate more smoothly with its distributors, and Luminant will be able to reduce risks of losing money due to power grid failures. As a result of insourcing IT operations, CapGemini will lose a huge contract with EFH Corp. Their services did not perform up to the standards that were expected when agreeing to the contract. Finally, employees who will potentially be repurposed or even terminated will lose due to their inability to contribute to the organization. Often times when employees are repurposed, they are placed in positions and areas that they do not specialize in and therefore do not have as much to provide for the company. These ‘empty’ roles are a downside to the resolutions.
Through the case studies we looked over in class, we have been able to determine that organizations with a solid congruence model in which the critical tasks are aligned are the ones that operate most efficiently and achieve success. In the Thomas Green case there was a stress on conflict and how it was managed by the personnel. With EFH Corp, the conflict lied within the negotiation between EFH Corp. itself and CapGemini. In EFH Corp’s case, the right system of organization needed to be aligned with the goal of the service it was providing. One of our solutions is to ensure that the goals of the IT division are properly aligned with that of the overall organization by insourcing IT operations. This forces the employee to see the bigger picture as opposed to performing a function and not seeing its value in the production process. We also studied employees whose values or goals match the organization’s boost company morale and are effective performers. Based off of this finding, our other solution is to hire personnel who have a person-job fit and person-organization fit with the company. Often times employees desire change but are not willing to perform extra duties for the change to occur. Once the employees fully understand how their individual tasks affect the overall performance of the company, they will begin to work for the customers instead of thinking of their tasks as menial.
