MANAGEMENT CASE

describes a real-life situation faced, a decision or action taken by an individual manager or by an organization at the strategic, functional or operational levels

North Delhi Power Ltd.: Dynamics of Change

Debi S Saini and Jyotsna Bhatnagar

KEY WORDS Power Distribution Technical and Commercial Losses Takeover Transformational Agenda

nil Kumar Sardana, the CEO of the North Delhi Power Ltd. (NDPL), was busy in his office attending to calls from different stakeholders of the company one after another. But, at the back of his mind were several questions: Could NDPL hope to escalate its aggregate technical and commercial (AT&C) loss reduction exponentially; obtain, what he called, customers affection; increase revenue and shareholders wealth as per the companys strategy; and attain viability in the shortest possible time period? He was revered by his professional team which ran NDPL. Members of the NDPL fraternity considered him as passionate, visionary, transparent, and ethics-driven in the transformational role of running this power distribution company. In a way, NDPL could be seen as the lifeline for most of the residents of North and North-West Delhi where it was the sole agency to distribute electricity. This company symbolized a kind of a joint venture between private and public ownership. It took over a portion of the ailing Delhi-Government-owned Delhi Vidyut Board (DVB) with effect from July 1, 2002, under a privatization arrangement devised by the government of the national capital region of Delhi (hereinafter referred to as the Delhi Government). Sardana was called from Mumbai to lead NDPL. He was working there as one of the Vice-Presidents of the Bombay Suburban Electric Supply Ltd. (BSES), a Reliance group-controlled company, which became NDPLs competitor (in a restricted sense) in Delhi; for, BSES owned the other two companies which took up electricity distribution in the rest of Delhi as per the privatization arrangement. Under Sardanas leadership, NDPL undertook several initiatives to overcome the problems from which DVB was suffering. Sardanas immediate concern was to ensure stabilization of the two-year old association between the Tata Power (the chief stakeholder in NDPL) and the Delhi Government and eventually to see it becoming a lasting success. The company chose a team of performers to head each of the functional areas, which, among others, included Abhay K Saini, its General Manager (GM) Human Resources. Saini focused himself on future rather than the past. When asked by Sardana to look into the possibility of investigating the source of wealth that some of the DVB employees had accumulated through unlawful means in the pre-takeover phase, Saini advised him against it. He opined that the focus of the company vis-

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a-vis these employees should be on bringing them into the core values of NDPL and should, therefore, rely more on trust and counselling rather than policing and suspicion. Sardana was aware that a number of eyes were set on NDPLs working as it symbolized one of the major initiatives to reform the power sector in India. The aggregate annual AT&C losses of all state electricity boards in India had reached a whopping Rs. 250 billion in August 2004; initiation of privatization in power distribution in other states appeared only a matter of time. The success of the NDPL experiment would be taken as a catalyst for power-sector turnaround and change management in these states. He was, therefore, looking forward to engineering fresh initiatives so as to march towards the companys vision of becoming the most preferred and admired energy company. Sardana was wondering whether the strategy of turnaround that the company had been following would work on the expected lines. He was asking himself whether he would be able to realize the basic commitment of the company to the Delhi Government, as had been agreed upon in the acquisition deal, to stand on its own within the stipulated five years and reduce the AT&C losses from 53 per cent at the time of acquisition to 20 per cent by June 30, 2007.

BACKGROUND
Power consumers were unhappy with the interruptions in power supply and the poor quality of service provided by DVB. They faced regular power cuts especially during peak summer and winter months. They also complained that DVB employees were indifferent and corrupt. A backlog of nearly 100,000 consumer complaints of different types was pending with DVB at the time of the takeover. Its very high incidence of AT&C losses was believed to be a result of several acts of commission and omission on the part of DVBs top management, politicians as well as employees. The Delhi Electricity Regulation Act (DERA) was enacted in the year 2000 to facilitate power sector reforms in Delhi. As per the philosophy envisaged in the DERA, the Delhi Government unbundled DVB into three sets of functional corporate entities related to: (i) distribution, (ii) transmission, and (iii) generation. All the assets and liabilities of DVB were acquired by the Delhi Government and were eventually transferred to six successor companiesone generating company (Genco), one

transmission and bulk supply company (Transco), three distribution companies (Discom-I, Discom-II, and Discom-III), and one holding company. The three distribution companies (or Discoms) were privatized to the tune of 51 per cent but the three other companies continued to be wholly owned by the Delhi Government. In all, the six entities thus created were as follows: Genco (Delhi Generation Company Ltd.); Transco (Delhi Transco Ltd.); holding company; Discom-I (BSES: Bombay Suburban Electric Supply Ltd., later renamed as Yamuna Power Limited); Discom-II (BSES: Bombay Suburban Electric Supply Ltd, later renamed as Rajdhani Power Limited), and Discom-III (the North Delhi Power Ltd.). While Discom-III covered the north and the north-west zones, the remaining two Discoms were operating in the rest of Delhi. The three Discoms bought electricity from Transco at subsidized rates; the cost of the subsidy was met by the Delhi Government. The control in management of Discom-III (NDPL) was with Tata Power which held 51 per cent shares in it; the rest of the shares were with the holding company, i.e., Delhi Power Company Ltd., a Delhi Government enterprise. The transition took place subject to a clear commitment of the Delhi Government to provide financial support to the three Discoms. This was done through subsidized power purchases from Transco during a five-year transition period and a better specified multi-year tariff-setting regime based on more realistic loss targets that could be accurately measured. The loss-reduction target in Delhi focused on a concept called AT&C which meant measuring the difference between kwhs supplied to a Discom and kwhs realized by the Discom from the retail customers. It was estimated that the Delhi Government had already been subsidizing DVB every year for its losses by about Rs.15 billion through loans that were never expected to be repaid. Thus DVB losses were expected to reach a figure of more than Rs. 75 billion in five years . The subsidies were intended to avoid the need for large post-privatization tariff increases which would not have been sustainable for the Delhi Government.

Entry of The CEO

Sardana joined NDPL on July 11, 2002 as the CEO. Saini came into his team in December, 2002. Sardana took stock of the challenges that NDPL was facing. His topmost priority was to put the dilapidated structures and archaic processes of the former DVB in order and to
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imbibe an ongoing change in them to gain viability. He knew that his change agenda was being implemented in an organization that had a heritage of governmentcontrolled culture. In his efforts to promote viable changes, his knowledge of all functional areas helped him in taking crucial decisions quickly. After constituting his team, Sardana took immediate steps to stem the rot. He took some incremental steps towards improvement and some radical performance initiatives. He regularly reviewed the companys performance in the monthly top-management meetings which included all officers above the rank of assistant general managers (AGMs). His critical focus was on operations and maintenance and the extent to which they were in tune with the needs of the customer. He believed that corporate performance was determined by customer care and empowerment of employees. Managing the external environment took a considerable amount of his time as he had to deal with the local politicians, bureaucracy, and all other stakeholders in the company.

do. Almost all employees were averse to working on computers. There were just two computers in the whole organization. As almost all work was done manually, a large number of files had got accumulated that had even lost relevance. Ninety per cent of the employees were paid their salaries in cash which had resulted in DVB undertaking multiple transactions related to withdrawal of cash from banks around the beginning of the month and disbursement of salaries at each zone. Salary disbursement work used to get staggered over a week involving unusually large number of manhours. The exercise of power in the DVB structure was highly centralized. Decision-making was slow. There was no system of job rotation. Once an engineer was posted in a place, he used to spend 80 per cent of the time of his service tenure in that area. Any move to transfer him was opposed on the ground that he was the main person having the knowledge of the technical intricacies of the areas power distribution system and its geography. The concerned official remained the sole incharge of the region for a long time. Also, there was widespread corruption among the officials. Mapping of the organization was taken as a big agenda by the company. The hierarchical designations used, among others, included those such as Junior Engineer, Assistant Engineer, Executive Engineer and so on. DVB did not have much of an HR function though nearly 150 people were associated with the Personnel Department who were mostly concerned with maintaining employee-related records pertaining to leave, personal files, and benefits availed, etc. NDPL reduced this number to 51 and planned to further reduce it to a figure of 25 to 30. DVB neither performed any training function nor any project or corporate function. It only had a Planning Department. Operations and maintenance work was divided into two circles consisting of ten districts and 40 zones in all. Employees who manned various positions, among others, included about 300 engineers, 300 supervisors, clerks, and a large number of semiliterate, semi-trained linemen. Most DVB-scheme employees had never seen a training hall in their lifetime; the quality of their work was low. DVBs performance appraisal and review system mainly consisted of confidential reports as found in the government. Even if some one got a poor rating, he was expected to be promoted on completion of a certain number of years.

Concerns and Issues on Takeover

Some of the key problems that Sardana encountered on takeover included the presence of a large number of nonmetered and illegal customers, under-billing, and poor collections. DVB had accumulated a huge amount of receivables. There was neither any register of assets nor an accurate master list of customers. He encountered a covert nexus between the vested interests that promoted and legitimized power theft. In a large number of cases, meter readers were hand-in-glove with power thieves; they advised consumers as to how to give a gloss of legality to the theft they were indulging in. The distribution network system was much below the requisite standards and in a state of dilapidation. The level of hygiene and sanitation at the worksites and offices showed total casualness in the way the work must have gone on in the DVB. The common employee enjoyed over-security and was indifferent to customer requirements. An army of workforce existed which fattened the wage bills resulting into further worsening of the DVB finances. The workforce was managed in such a way that high performers had little incentive to excel. Nobody ever gave them compliments for the good work done. The employees were not clear about what all they were supposed to

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CHALLENGES
NDPL faced the key challenge of bringing about the desired changes in different spheres of organizational working. DVB was the largest exclusive urban utility in India at the time the transition happened but its crisis had reached serious proportions. The DVB had made little investment in infrastructure for the last two to three years as talks for takeover were going on for quite some time. NDPL first made a Rs. 12.5 billion capital expenditure plan for five years. Running expenses meant another Rs. 2.5 billion annually, on an average, for five years. Some of the key challenges that the company was facing since the acquisition included dealing with rampant theft by slum dwellers as well as industrial/commercial consumers; improving the sub-standard and dilapidated distribution network system; reducing the AT&C losses within a period of five years from 53 per cent during the takeover to 20 per cent after a period of five years; improving system reliability so as to be comparable with the best utilities in India; changing the consumer perception of NDPL; promoting consumer service and IT interface at a level comparable with world standards; tackling the nexus between the vested interests who were responsible for power theft; securing a more comprehensive information on its assets; decreasing restoration periods to acceptable levels; internalizing in the companys culture a concept of consumer priority and service; changing the mindsets of a neglected and semi-trained workforce; enhancing role clarity to the employees so as to increase the quality of performance; imbibing transparent and ethical working in all administrative centres and among the employees of the company; and establishing the Tata brand image in terms of the standards of the Tata Business Excellence Model (TBEM). A significant development in the power sector was the enactment of the Electricity Act, 2003, by the Indian Parliament, which was a major step forward in improving and speeding up the power sector reforms in the country. The only other such experiment took place in Orissa which could be said to be quite successful. Consequently, the power industry opened up in the generation, transmission, and distribution sectors. The Delhi Government also expected the three Discoms to deliver performance in consonance with the changing climate and expectations.

THE TRANSFORMATIONAL AGENDA AND ACTION

In order to deal with the problems the company encountered, the top management of NDPL took the following major steps:

Performance Initiatives
On takeover, one of the key priorities of the company was to improve operations and maintenance. This meant minimizing the number and duration of interruptions, making the fault-repair system simpler and consumerfriendly, improving power-supply reliability, minimizing or removing the faulty billing, and replacing the old meters by electronic ones. The long-term measures included substantial improvements in the hygiene levels in zonal and district offices. Huge quantity of scraps had got accumulated, the removal of which was a priority. This operation was still going on when the case writers completed the data collection; every day, three trucks were operating in scrap-removing operations. Infrastructure received the top attention of the management. NDPLs new state-of-the-art corporate office that was coming up within the next two years was expected to facilitate a much better coordination of the companys activities. Table 1 shows some of the performance initiatives that the company took in relation to people issues and a comparison with the earlier scenario. In order to expedite its functioning, the company started working towards building a management information system (MIS). Sardana sat till 2 oclock in the night to develop a system of daily reporting of operations. The MIS (built through software programming) was eventually fully internalized which was being considered necessary for knowing where the company stood. A centralized control room was established which was located in one of the grid stations and the report on operations was circulated to all the concerned departments through e-mail. A full-fledged performance monitoring cell was created in the corporate office which directly reported to Sardana. The respective functional heads prepared the functional reports on a monthly basis including, among others, the monthly human resource information system (HRIS). Another important performance initiative was the holding of the top management meeting on the 20th of each month which included all AGMs and above (this came to 26 people including the CEO and the seven

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Table 1: Major HR Initiatives of NDPL

Pre-takeover Delhi Vidyut Board Salary was being disbursed in cash/cheques to subordinate staff/ executives starting from the last day of the month till the 7th of the following month.There would be 500 to 700 errors in salary disbursement every month which necessitated a continuous audit system. Only two computers were provided for 5,500 employees. There was no scheme for any computer training. technical, behavioural, quality or August 2004 North Delhi Power Limited Salary was being transferred through electronic clearance to the respective bank accounts of the employees directly; every employee got his pay on the last day of the month. Error level was negligible. Audit was done randomly to stabilize the system. 1,200 computers were provided for 3,400 employees. 18,000 mandays training was imparted in the last two years in quality, customer orientation, and computer handling. ISO certification was obtained for engineering, projects, IT, human resource, and stores departments. Mobile phones were provided to all executives, junior engineers, and other field staff for better connectivity. Executives/field staff were sponsored for training under peer exchange programme to different countries; 32 personnel were sent under this scheme till August 2004.

There was no ISO certification of any function or process.

No mobile phones/pager was provided to the field staff. Junior/field staff were hardly sponsored for exposure/training in foreign countries.

departmental heads). Presentations were made in these meetings by different departments which were followed by discussion and action formulation. This forum helped a great deal in ensuring performance monitoring. The senior management meetings, which included Sardana and his seven departmental heads, were held on the first Saturday of every month. The DVB-scheme engineers initially showed total resistance to the computer system but gradually realized its importance. Eventually, they got well-versed in handling computer technology; in fact, each one of them prepared his own presentation. After some time, some kind of competition developed among them to demonstrate their performance with the help of PowerPoint. Since January 2004, a system of zonal performance monitoring was started. Internet facilities were installed in each of the 46 zones. The zonal managers (who were mostly employees under the DVB scheme) started sending zonal performance data to the corporate office by e-mail. The company started giving zonal performance scorecard which provided the relative performance of the zone. All these activities came under the Performance Management and MIS Department. In order to deliver improved performance to the consumer, the company adopted a 5S concept which consisted of: sugam (easy), sahyog (cooperation of consumers), spasht (unambiguous), sankalp (determination), and sampark (communication). Implementing the 5S concept meant, among others, the following: billing and payment details of all 0.8 million consumers were uploaded on the NDPL website with facilities for printVIKALPA VOLUME 30 NO 4 OCTOBER - DECEMBER 2005

ing duplicate bills, payment of bill on the website, and viewing consumption graph and payment details from the date of inception of the NDPL. These initiatives were the first of their type in the power sector anywhere in India. In order to promote the payment facility, NDPL came up with other initiatives. They included, among others, setting up of NDPL Consumer Care Centres for payment by cheque or cash; 24-hour manned drop-boxes at the announced NDPL premises with stamped on-thespot acknowledgement; and payment of bills through the internet. The company appointed a Customer Relations Coordinator to whom complaints on power theft could be made confidentially on the telephone, post or the web. Some of the other major initiatives undertaken under this concept included strengthening of the call centre by increasing and rationalizing its work stations which led to improvement in the response to consumers from 50-60 per cent to 98-100 cent; auditing of equipment and installation and asking the original equipment manufacturers to take corrective measures to improve the overall system; restructuring of the organization; training of manpower; communicating with the consumers about the expected power interruptions due to various reasons and load-shedding schedules; and taking steps to introduce the state-of-the-art technology in all spheres of business functions.

Rightsizing and Service Conditions

As per the memorandum of understanding (MOU) signed at the time of acquisition, NDPL inherited 5,368 employees from the DVB. Sardana devised an attractive volun-

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tary retirement scheme (VRS). The employees who had earlier worked only occasionally were aware that they would have to work for the new company. They were also apprehensive of their suitability in the new scenario. Out of the total DVB workforce, 1,794 employees sought retirement under the VRS. This included nearly 90 per cent of meter readers who availed the VRS; the remaining 10 per cent were re-deployed after training. The union was involved in the rightsizing process throughout. Some forms of separation, which facilitated rightsizing, among others, included 375 cases of superannuation since the takeover and 70 cases of voluntary retirement. NDPL employed 482 new employees to various positions with new service conditions which, among others, included more than 300 engineers to facilitate the operations and maintenance work and 15 fresh or experienced MBAs in different functional areas. In addition, 72 persons were taken as consultants or on contracttenure in different departments. Twenty-six were on deputation from Tata Power; their compensation was governed by the Tata Power compensation norms. The DVB-scheme employees got their pay and compensation as per the Fifth Pay Commission of the Government of India including the dearness and other allowances. They continued to be governed by the old DVB pay structure as per the MOU and were also entitled to pension and retirement benefits as per the DVB structure. The service conditions of NDPL employees were incentive-linked. Thirty per cent of their pay was variable. Sardana was facing the challenge of downsizing/ redeploying about 750 employees including about 190 women who were earlier involved in serving water in DVB offices; they had little role in the new scheme of organization. At one of the joint interaction forum (JIF) meetings, Sardana said to the participants: One of our concerns has to be improving the skills of our employees. How do we multi-skill a large number of assistant linemen (ALM), drivers, cleaners, pharmacists, shift engineers, women who supply water, and clerks whose skills have hardly any relevance in todays environment? He wanted to do this in a manner acceptable to the union. It was not certain whether he could succeed in that endeavour. In fact, the union leaders were pressurized by this group of employees for maintaining the status quo about their service conditions. The re-training potential of especially the women who served water in terms of learning any sort of technical skills was almost negligible.

Changes in Organizational Structure

After the acquisition, NDPL carried out changes in the organizational structure. It increased the number of circles to five; districts to 12; and zones to 46. It wanted to emphasize the companys 24x7 accountability to the consumer. A circle, which was responsible for operations and maintenance of the area in its jurisdiction, used to be earlier manned by 30 to 40 people. In the post-takeover scenario, only five people worked in it. This was possible due to the use of technology, computerization, and organizational restructuring. With new induction of engineers to facilitate the operations and maintenance work, the number of engineers reached nearly 700 out of which 300 were under the DVB scheme (as on September 1, 2004). In place of one engineer earlier, three engineers were given the responsibility of an area to work in three different shifts in a day. The person concerned was responsible for his shift of eight hours. General shift working was introduced for attending to the day-today problems; major problems were handled by the staff of the general shift. Shift working fostered competition for efficiency even within the zone. The concept of ideal zones was developed wherein few zones were to be selected and developed as worldclass model zones. The new arrangement gave opportunities for job rotation and wider job roles. The NDPL top management consisted of the CEO, heads of seven main departments, which were headed by a General Manager (GM) or a Deputy General Manager (DGM), and the circle heads. Besides, there were seven cells which directly reported to the CEO. Almost all the designations were rechristened. The new designations were changed to manager, assistant manager, office associate, work attendant, and so on. Re-designation aroused considerable resistance from most DVB-scheme employees including senior officers. Most of them had not yet reconciled to this reality. On the contrary, some of them felt empowered, e.g., when stenographers and daftaries were designated as office associates, they felt more dignified. So did the operator, who was now called a Service Associate. Since meter readers were one of the biggest sources of corruption, this function was completely outsourced. A considerable number of meter readers took VRS; the remaining ones were re-deployed to undertake other functions.
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Quality Focus
NDPLs quality concerns could be inferred from its mission statement which read: To be the most preferred and admired energy company, we will strive to deliver quality and cost-effective services. It had a quality policy which stated that the company will deliver errorfree services to our consumers by doing our jobs right, the first time and every time. The company considerably revamped its grid systems, transformers, sub-stations, distribution cables, and conductors. During the year 2003-04, it revamped 1,500 substations. Conversion of low-tension (LT) distribution system to high-voltage distribution system had been carried out to improve the quality of power and to reduce AT&C losses. The ring main units were installed in the distribution sub-stations in place of existing LT distribution panels. Of the 40 grid stations that it had at the time of case writing, only one was fully automatic and remote-controlled; the plan was to make all 40 remotecontrolled. There was a full-fledged Inspection and Quality Assurance Department which was accountable to the GM-Operations. This department ensured right quality of the equipment by inspecting samples. Also, there was a separate department of ISO and TBEM which was accountable to the GM-Technical Services and Projects. This department prepared and implemented the systems and procedures for implementation of ISO in a phased manner. It was also responsible for implementing the TBEM in the company. The Institute of Quality Enhancement, New Delhi, was engaged for giving quality training to employees. This institute followed the Philips Crosby model of quality enhancement. The trainer started with the top management and later on trained the supervisory group and the operational associates. The company secured the ISO 9001: 2000 certification for Quality Management System from Det Norske Veritas of Netherlands for its five departments: engineering, projects, IT groups of technical services, human resource management, and stores group of operations. And, out of the 150 companies which participated in the Grow Talent survey of the best quality companies in 2003, NDPL got the 27th rank.

company for implementing NDPLs transformational agenda. One of the most unique features of employee care at NDPL was its employee helpline, named Saarathi . Any NDPL employee could submit his/her grievance by e-mail or telephone and this helpline assisted in giving a time-bound reply to him/her and helped in processing grievance handling. The grievances could even relate to issues like promotion, posting, error in pay-slip, administration-related issues, and other personnel matters. NDPL was supposedly the first such company in India to have started this kind of a helpline. Table 2 reveals an overview of some of the welfare and performance measures that were being undertaken by NDPL and compares them with the pre-takeover situation. Besides, the company introduced an incentive scheme to promote performance-based culture for employees who successfully achieved their targets. It also launched a reward and recognition scheme with a view to recognizing ingenuities and promoting talent.

Training
NDPL aimed at improving the quality of the employees and hence invested Rs. 0.4 million towards making the state-of-the-art training facilities available to them. It defined job descriptions and key result areas (KRAs) for each position based on the suggestions made in the report of the Shriram Institute Committee. It designed and administered training modules on quality, teambuilding, behavioural aspects, and business development. This helped in improving the overall level of competency in the organization. The company carried out a training need analysis in a larger perspective taking into account the skills and the knowledge required by different pockets of the organization. For example, when computers were brought in and about 100 employees who were earlier involved in salary preparation were to be re-deployed, it was necessary to train them for different jobs including computer handling. Imparting quality training helped in improving the general technical proficiency in the organization. The companys policy emphasized training for all. It was envisaged that every employee had the right to receive need-based training at regular intervals as per organizational, functional, and individual needs. Initially, the company planned to have at least a minimum of two training mandays in a year per employee for the whole of the employee base. It also designed a peer

Employee Welfare and Performance Incentives

Improving the working conditions, welfare facilities, and employee care became the core concern of the
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Table 2: Welfare Measures of NDPL

Pre-takeover Delhi Vidyut Board Medical claims of indoor patient/ treatment were reimbursed by DVB after the expenditure was incurred by the employee from his pocket. A Janata Insurance Scheme with a cover value of Rs. 0.1 million was in place for accidental injuries; premium was paid by the employees. There was no forum/platform for interaction between management and employee representatives. Time-bound promotion scale was being allowed to the eligible employees after considerable lapse of time. Many cases since 1994 onwards were pending. Pathetic working conditions existed in offices; there was no cleanliness and hygiene maintenance. Potable drinking water was not available in many district/zonal offices. No tea allowance was paid. August 2004 North Delhi Power Limited Forty hospitals were empanelled; no payment was required to be made by the employee concerned; the employee had to just show the identity card and avail treatment. NDPL got every employee insured against work-related accidents for a cover value of Rs. 0.25 million at companys cost. A JIF was launched at the district and circle level; monthly and quarterly meetings of JIF were held. Time-bound promotion scale cases were updated. All employees who were eligible for this were allowed the same on 30th June and 31st December every yearNo case was pending. A number of buildings was renovated; hygienic conditions were maintained. Proper drinking water was made available in all district/zonal offices. Water purifiers were installed or filtered (bottled) water was provided. All NDPL employees were served tea twice a day at companys cost or tea allowance was paid every month. A wrist watch was given to every Group D staff and contractual employee to commemorate the Raising Day on July 1, 2003. Labour Day was celebrated every year by observing Industrial Harmony Week; it involved employee participation. Cash payment (allowance + tax at company cost) in lieu of uniforms was made to eligible employees. Group D staff were provided with 12 to 16 weeks technical training at an industrial training institute (ITI) at companys cost and inducted at a higher salary, i.e., Group C on regular rolls. Sports meets were organized for employees and dependants.

No gift was given to employees on any occasion. No function was ever held to celebrate the Labour Day on May 1. Summer and winter uniforms were almost never supplied to the eligible employees on time. Group D staff appointed on compassionate grounds were not given any training before regularization. No sports meet was organized.

exchange training programme with Baltimore power utility and Columbian power utility in the US with the host company taking care of all the logistics. Later on, some employees were sent to Sri Lanka, Bangladesh, Hong Kong, and Nepal to know how things were managed there. The Centre for Power Efficiency in Distribution (CENPEID) was established by the company to impart training. This centre got the accreditation of the Ministry of Power, Government of India and was partly funded by USAID. It had three wings: the HRD Institute (Delhi) that catered to the training needs; the Skill Training Institute (also situated in Delhi), which was expected to become fully functional in December 2004; and Policy and Research, which was expected to start functioning in December 2004. While the former two functioned under the HRM Department, the third was expected to function under the Entrepreneurship and Knowledge Management (EKM) Department. The Skill Training Institute was being built to impart world-class skill development in the power sector. The company proposed to sell the services of this institute to other companies

in India and abroad. The HRD Institute conducted 300 training programmes in 2003-04 in areas such as quality improvement, customer orientation, and computer handling for all employees. In the last two years, 18,000 mandays of training had been imparted.

Union Dynamics
NDPL inherited the DVB workforce along with its recognized Indian National Trade Union Congress (INTUC)-affiliated union and seven staff associations. While it accepted the workers union, it refused to recognize any of the staff associations. Except for some minor disturbances, the company witnessed a peaceful acquisition process. The concept of JIF was put in place at the district and circle levels; monthly and quarterly meetings of JIF were held regularly. One of the case writers attended some JIF meetings. Even a semblance of adversarialism was not visible in these meetings; a few union leaders from the unrecognized unions occasionally made their points which demonstrated some degree of suppressed dissent. In one of the JIF meetings, the secretary of the recognized union made a PowerPoint
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presentation on How NDPL employees could contribute towards greater efficiency? He openly applauded the company for its proactive policies and for sending the union leaders to Tata Steel at Jamshedpur for obtaining a first-hand exposure to situations of cooperative industrial relations. The companys consultant, Dr S N Pandey, who was the former Director-Industrial Relations at the Tata Steel, was guiding the working of the JIF; his contribution to JIF was largely appreciated both by the union leaders as well as the managers. Saini and his team also worked towards implementing the Tata culture in the company as per the TBEM. The payment of retirement benefits to employees for the period for which they had rendered service to DVB in the pre-takeover phase was the responsibility of the Delhi Government. When NDPL announced the VRS scheme, the Delhi Government could not meet its responsibilities of paying the workers dues even after more than two years of privatization. This aroused deep resentment among the retired as well as the serving employees against the government. Saini issued a circular to all the employees that the Raising Day would not be celebrated on July 1, 2004 due to the non-receipt of retirement benefit by the 1,797 retired employees. He also issued another circular suggesting that the NDPL fraternity would not celebrate Puja and Diwali festivals in 2004 as a mark of protest against the Delhi Government. Sardana too gave priority to the issue of union management relations. According to him, he considered it important to focus on removing any fear psychosis amongst employees related to their job security in the new dispensation. While commenting on the unions role in NDPLs functioning, he remarked, Unions played the inevitable role of facilitating communication and rumour management. The union leaders have shown remarkable maturity in the acquisition exercise and handling of the consequential issues. We read positive in anything they asked for as our initial response. Happily, we have thus been able to forge cooperative relations with them. NDPL prioritized the improvement in working conditions. Employees saw this as companys concern for orderliness in work organization. Old furniture was replaced by new. Buildings were renovated. People were made to feel better by providing facilities for comfortable work atmosphere. A manager remarked: Especially the rank-and-file employees initially resisted a
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switchover from payment of salary in cash to credit in bank account. The union raised slogans against the management but no deep-rooted feeling of injustice was visible from their body language. The management stuck to its guns. Gradually, the employees saw the positive side of the managements position and relented. The management did not view union resistance as a serious roadblock in implementing the companys transformational agenda. Both Sardana and Saini focused on problems of the rank- and-file. Sardana took a positive stand on three of the burning issues which were of grave concern to the common employee. This was done partly on the advice of the two NDPL advisors on employee affairs who were earlier officers in DVB and, on retirement, were taken by NDPL as retainerconsultants. They could feel the pulse of the entire organization and were also aware of the sensitivity of the issue from the employees point of view. They advised Saini to take a soft stand on these three contentious issues that the employees were facing since long. Perhaps the most complex of these issues was the payment of Rs. 10,000 out of the Widows Fund to each of the employees widows whose husbands had died on service. The issue was whether this money should be paid from the Employee Welfare Fund (which was raised by contribution from employees) or by NDPL. This issue was pending with DVB for quite some time; the management had refused to pay them from the DVB resources. It was a question of only Rs. 0.4 million. Saini made Sardana agree to pay from the companys funds. Another hot issue related to the employees uniforms. The management had been discussing the issue for the last two months. Employees were demanding Rs. 5,000 per month as uniform allowance. The company felt that only Rs. 1,100 per employee was justified in this case and hence thought of a quid pro quo. Saini preferred to settle this matter on employees terms; the settlement on uniform allowance took place at Rs. 2,700 per employee per annum. Saini also closed about 70 of the 80 files of employees who were facing disciplinary action but their cases involved petty issues. Another important issue from the employees point of view was that of promotion. DVB had a time-bound promotion policy which assured three promotions to all the 75 categories of employees; but promotions had not taken place since 1992 due to financial stringency faced by DVB. Saini convinced Sardana about the need to take a positive stand on the time-bound promotion issue; eventually the

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issue got cleared. In the last two years in question, timebound promotion was given to 350 employees governed by the DVB scheme; some got a higher designation while the others were just promoted to the next scale. Two batches of union leaders were sent to the Tata Steel plant in Jamshedpur in September 2003 for ten days each to observe how the cheapest steel was made in the world in a climate of harmonious industrial relations among 40,000 people.

Performance Management System

On acquisition of DVB, a key priority of the management was to differentiate between the performer and the nonperformer employees. The company was keen to devise a performance management system. The first step in this direction was to develop people for assessing the training needs. Initially, since people did not understand their own training needs, efforts were made to build capabilities in them. It was decided that the performance appraisal (PA) system for the employees should be kept simple; the PA form comprised of only two pages. It contained parameters such as technical knowledge, teambuilding capability, strategic initiatives, behavioural inputs, and man-management skills. This was applicable for the first year. From 2004, KRAs were developed up to the level of Assistant Manager with a view to assessing individual performance. The company proposed to provide two sets of PA systems: an operational performance management system based on targets set by the company in different business areas such as financial performance, commercial targets achieved, consumer billing, capital expenditure, etc, and an individual performance management system whereby the performance of the individual was judged on the basis of his KRA. The key responsibility of every individual was expected to flow from his KRA. For each set of positions, certain level of competency was felt desirable. Performance management system was viewed as an attempt to measure ones level of competency for a given position. The Tata group of companies had identified 14 broad leadership practices to facilitate people development. NDPL worked towards establishing these practices so that the requisite capability including knowledge could be developed among the employees.

pronged communication amongst members and also performance monitoring. Initially, it used to meet every fortnight which was later on made a monthly event. Sometimes, meetings went on for as long as eight hours. Sardana took a lead role in many of these meetings so as to convey his pressing concerns. Since he had the background of technical expertise, he was even seen explaining a circuit diagram to the members concerned. Some of the sessions got converted into training sessions as the situations so demanded. Most of these 20 members were erstwhile DVB people. They were initially somewhat docile in these meetings. An HR manager remarked: Their body language showed that they were questioning their own competence as they had perhaps never done those things at a critical level. Apart from these, Operations Review Team meetings took place at the levels of circles and zones under the chairmanship of the GM-Operations. These meetings inspired members to do self-introspection and eventually in better articulation of performance-related and other issues. JIF too proved to be an important forum where representatives of union and management aired their respective issues of concern. In some sense, it helped grievance articulation and redressal. An in-house quarterly magazine named Navodaya was launched in November 2003 which contained in-house articles and information that the management wanted to deliver to the employees.

Human Resource Management Information System (HRIS)

The company started the process of establishing its HRIS system in January 2003. The HRIS software installation work was given to Tata Consultancy Services (TCS). The system was customized for NDPLs needs. It had twofold objectives: to link salary with the employee and to keep accurate data related to all the employees. For this purpose, two different modules were created: the HRIS module and the pay roll module. The modules were still in the process of comprehensive development and were not fully integrated. The base module had nine applications linked through network. In each module, there were sub-modules. The system was designed in such a way that offline data could be loaded. The system could help generate any kind of report. HRIS reflected the changes that NDPL was witnessing. Among others, ID numbers were provided to all the employees. For each position, KRAs were designed. If
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Communication
NDPLs top management forum aimed at ensuring multi-

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the position was filled up, it got updated in the system. Each position thus had an employee number, a job description number, and a position ID.

PERFORMANCE AND ACHIEVEMENTS

NDPL targeted at bringing about changes in several spheres. Large-scale changes took place in operations and maintenance work which were facilitated by the MIS. The company developed a system-orientation in most of its key processes. It improved its functioning on several operational parameters. It benchmarked itself against the top five utilities in the world. The company added an international concept called n-1. This was meant to ensure that even if one part of the equipment failed to function, the system kept functioning and the consumers did not suffer. The company was working towards making all its 66 kv and 33 kv stations on n1 concept by the end of 2004 with all of them having a back-up. Operations and maintenance work had been facilitated by one store concept. The store was housed in an area of about five acres at a central place and was responsible for delivering material to the places where it was requiredalso called the home delivery concept. At the time of takeover, the number of provisional billing had reached 0.2 million consumers. NDPL was able to reduce the number of provisional bills only to 1,45,000 at the end of March 31, 2004. Larger the number of provisional bills, greater is the possibility of loss of revenue for the company. In relation to billing errors, while a substantial reduction had taken place since the time of takeover, they were still believed to be an area of concern. Sardana admitted at one of the recent JIF meetings: Billing errors of our company are still in the bracket of 1 to 1.5 per cent which are high against the international benchmark of 0.3 per cent. The company attained better level of performance and consequently achieved a gradual reduction in AT&C losses. These are visible from Figure 1. On September 30, 2004, the AT&C loss stood reduced from 53 to 41.3 per cent which meant a reduction of about 12 per cent in a period of 27 months from the takeover. A reduction of one per cent in AT&C loss roughly translated to a corresponding gain in companys additional revenue to the tune of at least Rs. 220 million. The steps taken towards reducing this loss included: energy audit of the distribution network, rationalization and updating of billing database, installation of low tensionless systems in theft-prone areas, replacement of faulty meters, and aggressive enforcement activities. The company became cash-sufficient too. It expected to better the target of loss

Managing Knowledge
NDPL set up an EKM cell which reported directly to the CEO. It had four wings, i.e., benchmarking, knowledge management (KM) portal, customer and external analysis, and sectoral analysis. Each of these wings was headed by an MBA graduate. The role of the EKM cell was performed with the belief that there was a wealth of knowledge within the company as well as outside which had to be tapped for delivering a better value to the customer. Entrepreneurship was seen as a function involving formulation of strategy and its deployment (i.e., action plan) and KM was concerned with collecting and processing of information for facilitating the realization of the organizational goals. NDPL hired AC Nielsen, an American Company, for conducting surveys on customer aspirations to know how soon the aspirations changed. This agency selected 15 parameters on which information was collected. A sample of 2,500 consumers in the NDPL area was selected on whom it administered a half-an-hour interview schedule. The EKM cell chief remarked: It was the first time that an electricity-distribution agency undertook this type of an exercise. In the April 2003 survey, it was revealed that 85 per cent consumers expected power reliability to be one of the most important expectations from NDPL. As power reliability increased in the NDPL area, in the second survey conducted by the same company, the importance of communication about loadshedding increased from the earlier 60 per cent in the first survey to 72 per cent. Following the survey result, NDPL sought the help of Radio Mirchi, an FM radio broadcaster in Delhi, to announce communications about power cuts in different parts of its operational area on a particular day. It also started a system of munadi (Hindi), i.e., a van with a loudspeaker going to a locality and announcing a message. NDPL got feedback about its service from various sources including the communication received on its website. It also had a telephone service which could be used by whistle blowers for reporting power theft or indifference of the NDPL staff. An action plan was followed by the top management every month.

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Figure 1: Twelve-month Rolling AT&C Loss at NDPL

reduction in the financial year 2004-05. Speaking of the change progress on HR front, Sardana observed: Our biggest achievement so far is that we have been able to secure our right to govern vis-vis our employees covered under the DVB scheme. This category of employees has no fear psychosis about the new milieu in which they would be working. Yet, the environment is one of accountability. We have also been able to institutionalize the concept of what the consumer wants from us; this is surely the first step in our working towards the consumer affection. The union cooperation could be secured through our transparent attitude to collective concerns of people, our belief in their right to play their role, and our decision to take on issues headon rather than avoiding or suppressing them. Sardana continuously interacted with Delhi politicians with a view to changing their attitude towards issues in the Delhi power sector. While commenting on the progress towards this goal, he remarked: Each member of the legislative assembly (MLA) of Delhi is regularly invited to have lunch with our team. Politicians have realized the need for radical reforms in this sector. When we ask them to allow us to manage our commercial concerns as per the demands of an enter-

prise, they tell us to give them more time rather than rejecting our demands outright. Table 3 presents the companys performance since takeover on several parameters. Also, in the year 200304, it earned a net profit after tax of Rs. 292.9 million compared to Rs. 222.1 million for the year 2002-03. NDPL got a better media response of its performance than had been the case with the two BSES companies operating in the remaining parts of Delhi. And, in a recent survey of power consumers by the media, 57 per cent respondents felt that the three Discoms had improved power supply in Delhi. But, 80 per cent of them felt that the meters used by them were not working properly. Sixty-five per cent respondents opined
Table 3: Improvement in Power Supply Position since July 2002
Parameter On FY Q1 FY Takeover 2003-04 2004-05 99.57 248 506 7 2,578 17 > 80 99.61 37 669 2 2,419 6 99

Reliability index (%) 98.5 No. of transformer failure 584 per annum Capacitor availability (MVAR) 252 Mean time taken to repair cable 11 faults (days) No. of supply complaints received 8,000 per day at call centre Load-shedding share in Delhi (%) 40 Street lights in working condition (%) < 50

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that their main problem was the faster running of the new electronic meters. However, a majority of them were satisfied with the system of consumer grievance redressal provided by the Discoms. The case writers talked to a cross-section of the DVB-scheme employees about how they felt working for NDPL. They considered Sardana as a highly competent CEO. While comparing their association as employees with DVB and NDPL, they could not pin-point any specific reason to be excited about working for NDPL. Comparatively speaking, the media had reported that NDPL fared much better than BSES. Some of the excerpts from reports in the leading Indian newspapers reflecting the performance of these companies included the following: Dikshit (Chief Minister of Delhi) appeared not too pleased with the performance of the BSES which supplies power to most of the city but praised NDPL for its work. NDPL is doing extremely well, be it with regard to metering, service to consumers or recovery of dues (Indian Express, December 16, 2004); Sheila Dikshit seems to have genuine reasons for being upset with BSESthe areas under the Tata-Powermanaged NDPL are fast emerging as islands of quality and reliable power supply in the capitalLast year, 64 per cent of the power cuts were because of BSES, while 19 per cent were because of Delhi Transco, and 17 per cent due to fault at the level of NDPLwhile billing errors are rare in NDPL, they are massive in BSES ( The Hindu, May 22, 2004); Reliance Discoms spent peanuts on Network: DERC (Financial Express, May 12, 2004); CM praises NDPL work ( Asian Age, December 16, 2004). It was widely believed in and outside NDPL that some of the key factors responsible for major differences in the performance of BSES and NDPL included the Tata culture and the leadership of Sardana. The former company had changed four CEOs in the last 18 months but NDPL could retain Sardana to carry out its transformational agenda.

CHALLENGES AND LOOKING AHEAD

While Sardana looked back at the progress made on various fronts, he was cautious not to feel complacent. He was well aware of some of the challenges lying ahead of him. Reliability of power supply had not been achieved. Only about 30 per cent of the equipments had been changed; 70 per cent was still old. Its anti-theft drive against the power thieves was not fully effective. The company was looking forward to drawing clearer plans
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that helped sustain and catalyze the efforts in terms of framing a long-term roadmap. But, something that it felt was critical was the need to change the mindset of the Delhi power consumers, a large number of whom were used to consuming power for 50 years without paying adequately for it; and changing the attitude and skill levels of a large number of DVB-scheme employees. A union office-bearer thought that employees remained fearful of losing their jobs in the new scenario despite the security provided to them by the tripartite agreement signed at the time of acquisition. The nexus between the power thieves and the political configurations was seen as quite strong and breaking its steel-frame a complex task. NDPL had made a far higher capital investment in the infrastructure than its competitor BSES. It was to be seen whether that was the right way of facing the challenges. The media reported that the two BSES Discoms were to spend Rs. 7 billion on the infrastructure but had actually spent only Rs. 1.47 billion till March 31, 2004. On the contrary, NDPL made a capital expenditure of Rs. 2.88 billion against Rs. 2.87 billion that the Delhi Electricity Regulatory Commission (DERC) had required it to invest till this period. Despite the abovementioned performance indicators, Sardana felt that it was a great challenge for NDPL to make the Delhi Government openly acknowledge that NDPL has performed far better than BSES. NDPL had not yet got 100 per cent loyalty of its people. The administration in the zonal offices was still far from satisfactory. Commenting on the change of mindsets that had taken place, one of the GMs observed: We have been able to acclimatize about 50 per cent employees into the NDPL ethos; about 30 per cent are fence-sitters; and about 20 per cent have not changed at all. On being asked the same question, an HR manager remarked: In my opinion, only 40 per cent of the DVBscheme employees were fully acclimatized, 50 per cent had partially changed, and 10 per cent had not changed at all. These 10 per cent employees have no fear at all as they have the unions support. But, the DVB-scheme employees were not believed to be less competent. An operations manager considered a large number of them as far more intelligent and competent than the new employees of NDPL. While elaborating on some of the challenges that NDPL faced, Sardana observed: We have not been able to enforce a sense of responsibility amongst the consumers. Another manager remarked that while 95 employees knew Sardana, not more than

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60 per cent knew the General Managers. The authors interaction with some of the employees at the field level revealed that they still had no idea of the companys vision and mission. Of course, they could read it on the wall hangings. The training imparted could have focused more on functional capability. The incompatibility between the fast-track NDPL-scheme employee and the old DVB-scheme Junior Engineer was worrying the managers in Operations and Maintenance Department. A recent survey undertaken by AC Nielsen revealed: Employees were involved in tampering of meters of consumers and also their own meters at their homes. While the employee behaviour has improved for the better, the contractors staff should also be trained and

subjected to behaviour modification exercises. The company planned to bring about substantial increase in its performance by regulating power supply and feeders. Considerable investment was required for this. Many policy decisions had to be taken. Sardana was deliberating on many other questions: What would happen in 2007 when the five-year subsidy contract between the Delhi Government and the three Discoms was going to be over? Where would NDPL then stand in competitive reckoning? What roadmap should the company draw and focus upon so as to march towards its vision? He was searching for possible directions that he and his team would adopt so as to move ahead with greater speed and vigour.

Acknowledgement The authors thank Professor C P Shrimali, ChairpersonHRM Area at MDI, Gurgaon, for his help in introduction to NDPL; Pratish Thakur, Rajgopalan, and Vimal Ojha, students of MDI National Management Programme, Gurgaon, for their assistance in coordinating the initial case construction process; and Professor Mukesh Chaturvedi of MDI, Gurgaon, for his insightful comments on the earlier drafts. Debi S Saini, Ph.D. (Delhi) is Professor of HRM at Management Development Institute (MDI), Gurgaon. He has authored or edited seven books including Change Champions Field Guide (Editors: Dave Ulrich, Louis Carter, Marshall Goldsmith, and Debi S Saini) published by Excel, New Delhi, 2005. He is the author of a book-size volume on Social Security Law: India, which forms part of the International Encyclopaedia of Laws (Kluwer Law International, The Hague). He has also authored 46 papers and management cases in the area of HRM, change management, labour relations, and employment law. He is the Editor of VisionThe Journal of Business Perspective, the journal of MDI. Among others, he has been on the Editorial Board of Industrial Relations Journal, Blackwell, Oxford (1998-2002). He has been invited to chair sessions and make presentations in a large number of workshops, seminars, and MDPs in India and abroad. Among others, he has done consultancy assignments for ILO and GTZ (Germany).

He is on the Board of the Best Practice Institute, Boston, USA, as well as on the Advisory Board of the Society for Leadership of Change, Huntersville, USA. e-mail: debisaini@mdi.ac.in

Jyotsna Bhatnagar (Ph.D., IIT, Delhi) is Assistant Professor of HRM at Management Development Institute, Gurgaon. She launched her academic career at IIM, Ahmedabad in 1990 and has over ten years of experience in teaching, research, and training. She has published around 40 papers in national and international journals including International Journal of HRM, Journal of Labour Research, Asia-Pacific Business Review, HRD International, Vikalpa, Management and Labour Studies among others. She has been invited to provide training on HR issues to IAS officers and defence officers, managers of American Express, ONGC, PGCIL, ABB, BEL, NTPC, IOCL, etc. She has also been invited to present papers in international conferences including at the Knowledge Management Conference at Amsterdam, the Netherlands (2000); European Academy of HRD (UK, 2004, 03, 02), Asian Academy of HRD (Bangkok, 2003), European Consortium for the Learning Organization (Birmingham, UK, 2005), and APROS 11 Conference (Melbourne, Australia, 2005). She is an active consultant in competency mapping and talent management in India. e-mail:jyotsnab@mdi.ac.in

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