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ABC: A world class local enterprise?

C02-11-006

The enterprise ABC was founded in 1952, with the purpose of providing technical support for the generation, transmission and distribution of the electrical energy in Mexico. The services provided by ABC also include adding value to the process and system of construction and commercialization of the electrical energy. This enterprise was assigned the responsibility of selecting and providing maintenance for electro-mechanical protection equipments in the country. In the beginning of the 1960s, the Department of ABC was assigned other major and important responsibilities such as quality control for materials and equipments produced nationally and purchased by the Federal Electricity Commission of Mexico (CFE1), implementation and diffusion of standards, elaboration of electrical industry specifications, preparation of inspection and testing codes and training of mechanical and electrical personnel. In 1965, due to an initiative of the National Consultative Committee of Normalization of the Electrical Industry (called CCONNIE) was established. The formation of this committee led to the development of the standards and specifications for the electrical industry in the country. In 1971, the Department of ABC incorporated into its responsibilities the functions of quality control for equipments and materials produced in countries other than Mexico, thus extending its functions internationally. In 1976, with the impulse of the national programs such as import substitution, a project for establishing a Laboratory Complex in Irapuato, Guanajuato was approved by the authorities, which was completed in 1981. The building of this complex led to the creation of the important laboratories of different scale ranging from high voltage and power to low voltage and power including a simulator for dynamic testing of (revelators). In 1991, ABC was assigned the responsibility of coordinating CFEs Institutional Program of Total Quality in addition to the responsibility of representing the Mexican government as a Mexican Delegation in the International Committee of ISO-TC 176, which is responsible for the
1

CFE: Comisin Federal de Electricidad or Federal Electricity Commission

This case was written by Professors Mohamed Ayub Khan and Angelica Luna. It was prepared solely to provide material for class discussion. Some of the names have been modified to protect the privacy of the people or institutions envolved. C.R. Instituto Tecnolgico y de Estudios Superiores de Monterrey, Av. General Ramn Corona No. 2514, Col. Nuevo Mxico, Zapopan, Jalisco, 45140, Mxico. ITESM prohibits any form of reproduction, storage or transmittal without its written permission. Centro Internacional de Casos Tecnolgico de Monterrey Revision date: March 25th, 2010 Last revision: March 30th, 2010

C02-11-006

ABC: A world class local enterprise?

development of norms for the ISO-9000 quality system. In 1992, Mexicos National Council of Science and Technology (CONACYT) awarded ABC the legal authority to realize activities of scientific and technological research and provide consulting services in its areas of expertise. In 1997, ABC took charge of coordinating the integration of the Quality Assurance System, as well as the Environmental Protection and Industrial Security Systems of the Federal Electricity Commission (ISO-9000, ISO-14000 and ISO-18000). The same year, ABC received certification that the Quality Assurance System conformed to the NMX-CC004/ISO 9002 standard issued by the Mexican Institute of Normalization and Certification (Instituto Mexicano de Normalizacin y Certificacin, A. C.) and similarly, certification GTO-2000 on behalf of the Guanajuato Institute of Quality. In 1999, ABC received another certification that its Quality Assurance System conformed to the norms NMX-CC-003/ISO 9001 awarded by IMNC and AENOR of Spain. During the year of 2008, ABC earned the National Award of Quality from the federal government of Mexico because of the success of its management by principles model. Vision To be recognized in a national and international level as a best laboratory in the field equipped with a human capital that is progressive and technology that is state of the art and with an economic outcome ensuring ABC development. To have leaders who are loyal to the organization, whose principles and team work generate an environment of trust, who focus on the achievements of objectives and continued improvements of the results, who adjust to the environment which is constantly changing, who establish innovative strategies to meet the challenges of changing environment, and implementing those strategies based on the competitive advantages and core capabilities of the organization. To be an enterprise: with strategic approach guided by principles, where the search is for an organizational culture based on excellence, where relationship is based on mutual benefits and team work, and where decisions are always made based on win-win principles for the betterment of the organization and the development of its people. Mission Serving the needs of electrical sector both national and international by providing specialized engineering studies, laboratory and field testing of equipment and materials, including quality management of supplies and systems: in a reliable manner, on time and effectively while sustaining a high level of specialized personnel with a permanent service attitude. Values
ABC values include the following:

Trustworthiness, opportunity and effectiveness for the customers. Specialized technology and remaining always proactive and innovative in the field. Service attitude that is customer oriented. Teamwork that promotes collaboration and co-responsibility. Ethics and Institutional responsibility encompassing serving the interest of the organization, personnel and business partners.

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ABC: A world class local enterprise?

ABCs management has taken several important steps to initiate, develop, maintain and promote these values. At ABC, values are promoted through a group of an enthusiastic and participative workers denominated VALORES responsible for diffusing and explaining these values to other workers in the company. Through innovation, opportunity exploration, developing competencies in workers and integration of competitive practices, ABC has maintained its position and credibility within CFE, the electrical industry and in national and international markets. Through customer value chain analysis, ABC management identifies current as well as future needs of its clients. The contribution of human resources involved in different projects is optimized through competency development and autocontrol thus leading to the management of intellectual capital in the company. ABC management, through sharing information systematically at all levels of the organization, encourages its people to actively participate in the achievement of the organizational objectives and explore opportunities for further improvement. By emphasizing on process innovation, developing technology and competitive intelligence, organizational interest of keeping competitive personnel, innovative processes and state of the art installations is achieved successfully. Continuous improvement is sought through identification of opportunities for improvement, evaluating the viability of those opportunities and adopting them. At ABC organizational resources (e.g., people, money, technology, time, papers, and building) are managed and utilized efficiently and effectively. In order to make sure that organizational resources are not mismanaged or misused, proper control systems such as Resource Allocation & Application Criteria and Evaluation of the Application of Resources are used. Electrical Industry and National Politics In line with the new industrial policies of re-conversion of the 1987, the Mexican government implemented a plan of import substitution based on a tripartite pact between the government, private industry and trade unions. Because of their structure and lack of technology the micro, small and medium size companies were unable to compete with the international competitors. On the other hand, the Mexican electricity industry was faced with emerging challenges such as the gradual opening of the frontiers with it neighbors to the North (USA and Canada), decentralization of the governmental system and a growing tendency toward privatization. Because of these challenges, the Electricity Secretary brought about a series of restructurings in the electricity sector such as auto-production, coproduction, independent production, small production, imports and exports of energy and transmission services. ABCs Geographic Location ABC is situated in the industrial city of Irapuato, Guanajuato covering an area of 45 hectors with an altitude of 1710 meters above the sea level and 310 km from Mexico City. ABC has installations in Mexico City-Federal District (or DF in Spanish) and in eleven other Mexican cities. The purpose of its presence in 11 different cities of the country is to provide localized and on the spot services to its current and potential customers. Infrastructure ABC offers the benefits of a modern complex, with the latest measuring and control systems allowing for performing a comprehensive range of reliable tests. The technological infrastructure of ABC includes laboratories for testing of materials and equipments used by the electrical sector. These laboratories are also responsible for developing materials and equipment used by the electrical industry with efficiency and efficacy. Similarly, these
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ABC: A world class local enterprise?

laboratories deal with quality control, quality improvement in measurement and determining the risk involved in the operations of the materials and equipments used in the electricity sector. The following list mentions the main installations and gives a brief description of their functions: Metrology Laboratory: Responsible for testing high voltage (up-to 750 KV) materials and equipment. Chemical Laboratory: Responsible for short circuit testing. Distribution Laboratory: Responsible for medium-voltage testing. These installations are unique in Mexico and Latin America. These laboratories provide technical support and research for optimization, diagnosis and analysis of the equipments and materials for electrical energy, not only for the national market but also for the international markets. Products, equipments and systems developed with the help of these laboratories fulfill international norms and standards. Organizational Structure As most other public organizations, ABC has a centralized, bureaucratic and hierarchical structure. Information and communication flow are vertical and reporting relationships are formal. However, in order to meet the needs of its clients in a comprehensive manner, ABC s management intends to be flexible and act strategically based on the competencies of specialists in each of its business areas in order to meet the needs of its clients in an integrated manner. Furthermore, ABC encourages its specialists of each subsidiary and department to coordinate their activities through project teams so that the final customers receive integrated solutions for their specific problems. By looking at the structure and operational philosophies used by ABC, it seems that the organizational system in place is based on job management and tall hierarchy. At ABC, management functions are categorized as follows: General administration. Budgeting and control. Human resource management. Maintenance of equipment, systems and technology. General services. Acquisition (procurement).

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ABC: A world class local enterprise?

Figure 1: ABC Management Structure


ABC MANAGEMENT

SERVICES GENERATION SUBMANAGEMENT

QUALITY MANAGEMENT SUBMANAGEMENT

TRANSMISSION AND DISTRIBUTION SERVICE SUBMANAGEMENT

FINANCE AND ADMINISTRATION SUB-MANAGEMENT

MATERIAL DEPARTMENT

PROCESS DEPARTMENT

TRANSMISSION DEPARTMENT

RH DEPARTMENT

PROCESS DEPARTMENT

QUALITY DEPARTMENT

DISTRIBUTION DEPARTMENT

FINANCE DEPARTMENT

EQUIPMENTS DEPARTAMENT

METROLOGY DEPARTMENT

EVALUATION DEPARTMENT FOLLOWING OF PROJECTS DEPARTMENT PLANNING AND DEVELOPMENT DEPARTMENT INFORMATICS DEPARTMENT

As shown in Figure 1, ABC is organized around the general manager responsible for ABC operations. Under the general manager there are deputy (or sub-managers) managers and under the deputy-managers there are departments. The deputy managers and their corresponding departments are listed below: Deputy Manager of quality management is responsible for the departments of quality control, normalization and metrology, quality system and technology, and supplier evaluation and development. Deputy Manager of service generation is responsible for the departments of material evaluation, evaluation of the process of electrical energy generation and evaluation of electromechanical equipments. Deputy Manager of transmission and distribution service is responsible for transmission and distribution department. Deputy Manager of administration and finance is responsible for the departments of human and financial resources.
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ABC: A world class local enterprise?

The department of planning and development is responsible for the offices of planning and technology, marketing and organizational communication. The department of informatics covers offices of informatics infrastructure and software and telecommunication engineering. The 3 sub-managers are responsible for providing services to clients and have 29 offices and 10 delegations (branch offices or subsidiaries). These subsidiaries are located in places or cities of the country which are closer to the CFE clients and national electricity sector. The purpose of locating these branch offices in different cities of the country is mainly to provide on time service to the customers and quality control. Branches and locations of their corresponding office are listed below: Baja California Branch, Mexicali. Noroeste Branch, Hermosillo, Sonora. Norte Branch, Gmez Palacio, Durango. Golfo Norte Branch, Monterrey, N.L. Guadalajara Branch, Jalisco. Bajo Branch, Irapuato, Guanajuato. Centro Occidente Branch, Morelia, Michuacan. Centro Oriente Branch, Puebla, Puebla. Branch Oriente, Xalapa, Veracruz. Branch, Oaxaca, Oaxaca. Major Services and the Target Market Major services of ABC are testing services and for which purpose the high/medium voltage laboratory services are available to any user inside the country or abroad and to any purpose: research and development, quality assurance, standards compliance, educational or theoretical demonstration. Testing services include short-circuit interrupting tests; interruption of small inductive currents; interruption of capacitive currents; making and breaking load current tests; electro dynamical tests; short-circuit making tests; and, power arc tests. Theses products and equipments can be tested: power transformer; circuit breakers; fuses and cut-out fuses; power switches; current transformers; wave traps; bus bars systems; metal-clad switchgear; transmission line hardware and cables. The main target market for ABC products and services are the companies and organizations in the electricity sector of Mexico. The market segments are generation, transmission and distribution of electrical energy and quality management system. Around 150 organizations of different size and nature receive the services of ABC every year. During the year 2001, revenues received on services provided to the internal and external customers reached at 475 million pesos. Chief customers are: central generators of the electrical energy; transmission and control areas; and, distribution divisions. These client organizations are all belong to the federal electricity commission of Mexico. Supplier Relationship Management ABC receives supplies in the form of information related to the services of advisory, studies, testing, training in the field of generation, transmission and distribution of electricity and quality management system. These supplies are provided by different organizations such as American National Standard Institute (ANSI), American Society of Testing Materials (ASTM), Institute of Electrical and Electronics Engineers (IEEE), American Society for Mechanical Engineers (ASME), International Organization for Standardization (ISO), American Welding Society (AWS), Mexican Institute of Normalization and Certification (Instituto Mexicano de Normalizacin y Certificacin
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IMNC), Mexican Entity of Accreditation (Entidad Mexicana de Acreditacin EMA), Director General of Norms (Direccin General de Normas DGN), and National Center of Metrology (Centro Nacional de Metrologa CENAM). The purpose of the supplier quality management system of CFE is to make sure that supplies (or materials and equipments) acquired by the CFE from its national as well as international suppliers are of high quality and the transaction between CFE and its suppliers is based on mutual benefits. In order to achieve this objective ABC has established a chain of activities which add value to the process of identifying, evaluating and selecting suppliers before the required materials and equipments are acquired. This process/system is called Supplier Evaluation and Development through which CFE in coordination with ABC defines the quality requirements for the suppliers based on the public demand, contractual models of CFE and the customer requirements. Also, other evaluations such as prototype testing, design verification, reliability test and other technical specification measurements are carried out before the acquiring the materials and equipments from suppliers. Furthermore, ABC provides trainings and consultancy to its suppliers in different areas including: Quality management, ISO-9000 (2000), Statistics, Reliability and Six Sigma. Environmental Management System and ISO-14000. Industrial Security System. Testing Techniques of all scales and levels. Materials, Equipment and System Process Improvement. ABC suppliers are evaluated and qualified for the provision of the goods and services based on the following standards: The legal condition and financial health of the company. The experience and commercial capacity. The technological support and organizational and human resources of the company (i.e., facilities, machinery and testing equipments fulfilling the specifications and practical standards). The degree of development, implementation and maturity of the quality system. The pursuit and fulfillment of commitments for the development of its infrastructure and quality management system. Figure 2 shows the process and system that is followed in order to develop and evaluate supplier quality and reliability.

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ABC: A world class local enterprise?

Figure 2: Supplier Development & Evaluation System

EXEMPTION OF RELIABLE SUPPLIERS FROM INSPECTION

ORGANIZATIONAL REQUIREMENTS

SUPPLIERS EVALUATION

FOLLOW UP OF SUPPLIER PERFORMANCE

THE SYSTEM OF EVALUATION AND DEVELOPMENT OF SUPPLIERS

SUPPLIERS DEVELOPMENT

LISTING RELIABLE SUPPLIERS

CERTIFICATION OF RELIABLE SUPPLIERS

SUPPLIERS GRADING

Suppliers product evaluations are carried out by prototype testing for the qualifications of design, reliability and consistency with the product specifications required by CFE. Suppliers have access to the website of CFE containing information and guidelines with regard to the evaluation process. In the same website the results of the supplier evaluation are published and made available for all the interested users. ABC maintains a quality control mechanism that includes inspection and audits of the products supplied to the CFE, and attention provided to the complaints of customers of ABC concerning the quality of products. ABC suppliers are expected to be world class and recognized worldwide for reliability and quality supplies and ensure zero defect products. Figure 3 shows supply quality management leading to customer satisfaction.
Figure 3: Supply Quality Management
TECHNICAL SPECIFICATIONS AND NORMS OF REFERENCES SUPPLIERS DEVELOPMENT SUPPLIERS EVALUATION AND GRADING PROTOTYPE ACCEPTANCE INSPECTIONS OF PROVISIONS

GENERATION

TRANSMISSION

DISTRIBUTION

CUSTOMER SATISFACTION MEASUREMENT

Competitive Advantage of ABC There are several factors which contribute to the competitiveness of ABC both nationally and internationally. Those factors are short listed below: Repository of technical information. Presence in the national and international market. National leadership. Experienced and trained personnel.
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ABC: A world class local enterprise?

Specialized services. Competitive price. Multidisciplinary infrastructure. Well established norms and standards. Unique infrastructure in the country. State of the art technology.

Internationalization of ABC Services: A Few Examples ABC services cover areas of mechanical engineering, electrical engineering, chemical engineering, control engineering, electronic engineering, material engineering, norms and standards, metrology, quality management, information and telecommunication, quality engineering and operational security. ABC is serving its international clients in the following manners. During 1997-1999, ABC helped improvement in the regulation of the Electricity System in Ecuador, and optimizing the operations of around 28 units of the electrical energy generators. From 1998 to 2000, ABC collaborated in improving the electricity inter-connection between Panam, Costa Rica, Nicaragua, Honduras, El Salvador y Nicaragua, through validation of a mathematical model used in computerized simulation of the transmission of the electrical energy. During the years of 1993 and 1998, quality specialists were developed for the Costa-Rica Institute of Electricity, Costa Rica and for the Public Enterprises in Medelln, Colombia. These quality trainings included quality assurance development in the process of generation, transmission and distribution of the electrical energy. For the last 20 years, ABC has made important contributions in transferring knowledge, applications and developments in the area of state-of-the-art electrical system through close collaboration with the Institute of Electrical Engineering and Electronics (Instituto de Ingenieros Electricos y Electrnicos, IEEE), and International Board of Big Electric Network (Consejo Internacional de Grandes Reds Electricas, CIGRE). ABC personnel have also participated in national and international forums. Strategic Management Every year strategic planning is reviewed and updated with an emphasis on strategic projects of the CFE director general and the technical Deputy Director. Such reviews and actualization of the strategic plan lead to the identification of new projects and contracts which the General Manager and the Technical Deputy Director of ABC sign together. Every six months progress made is reviewed and evaluated based on the results achieved and objectives established. The strategic planning process at ABC contemplates the following actions: Development and integration of an information system that covers fault analysis and prospective technology to be used in the continued improvement of the installations. Development and implementation of action plan to improve and promote technical norms in parallel to the electricity companies which are leaders in their field in the World. Diffusion and commercialization of studies and specialized services. Development, implementation and promotion of knowledge management system. Development of a methodology to identify technology development projects.
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ABC: A world class local enterprise?

The system of strategic planning of the ABC is derived from the strategic planning process and system that takes place at the levels of CFE and Technical Director Office. Strategic planning constitutes a fundamental tool in identifying projects for the competitive positioning of the organization. Figure 4 shows stages through which strategic planning passes.
Figure 5: ABC Strategic Planning System
Market and technology knowledge
Customers, market and technology knowledge User needs and technological potential Strategic objectives

Strategic planning
Internal and external analysis in order to identify: Strengths, Opportunities, Weaknesses, Threats Strategic analysis

Information system
Comparison, normalization and/or improvement

Mission Vision Values

Strategy selection

Strategic programs

XXL contract program

Analysis and evaluation

Display of strategic planning


Results measurement Feasibility analysis and resource allocation

Operational planning
Following and diffusion of updates
Activities proceedure Program contracts of sub managements and departments

Specific project

Process capacity

Customer-Relationship Management ABC has established different systems to identify potential markets and customer and then serve them with valued added services. ABC customers both current and potential are classified as: national internal and external and internal and external international. Internal and external terms used to differentiate between the clients who belong to the electricity sector and who do not belong to the electricity sector. Major services provided by ABC are grouped as: generation, transmission, distribution and quality management. At ABC, customer relationship is developed and maintained through diverse organizational and management mechanisms. In order to learn about customer needs and, ABC management undertakes several different types of meetings with its clients and carry-out surveys to learn about the perception of the clients about the services provided by ABC and its component departments. ABC emphasizes on maintaining a culture of good communication with its clients and responds timely to the complaints received from customers. ABC always works
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ABC: A world class local enterprise?

on improving the services to its clients through agreements and contracts with its existing as well as with potential clients. Figure 5: ABC Customer Complaint Attention System
Complaint Attention Data

.
Service Process Improvement

Complaint Reception & Registration Complaint Origin Analysis

Stage 4
Improvement of Data and Service System Service Characteristics Standardization

Stage 1
Immediate Complaint Attention Immediate Attention Action

COMPLAINT ATTENTION Stage 3


Corrective Action Effects Verification Solution Implementation Corrective Action Complaint

Stage 2

Causes

Corrective Action

Solution Implementation

Complaint Solution Plan

Human Resource Management ABC employees are specialized in their areas of work. ABC has 551 employees in different disciplines principally mechanical engineers, electrical engineers, chemical engineers and electronical engineers. Out of 551 employees, 457 belong to labor union or syndicate called Sole Syndicate of Electrical Workers of the Mexican Republic (Sindicato Unico de los Trabajadores Electricistas de la Repblica Mexicana or SUTERM) and 94 are considered as employees of confidence which do not belong to any union. Around 41% of the employees have undergraduate degrees, 26% have master degrees, 33% are technicians and one employee has a doctoral level degree. Generally, ABC employees receive on the job training on regular basis and such training programs are developed and imparted by trainers within ABC. Newly appointed employees are usually given induction and orientation. Majority of the employees are engineers (200 approximately) followed by technicians (160 approximately) and the rest are administrative workers. Around 80.36% of the ABC workers are unionized. The rest of 20% either occupy management positions and/or represent workers of confidence (who do not belong to unions). In terms of gender, only 19% of the ABC workers are female. The average age of ABC worker is 42. Of which 17% have between 1-5 years experience, 23% have between 6-10 years work experience, and 34% have between 20-25 years of work experience. This 34% of professionals who are in their retirement ages (or close to be retired) are a significant proportion of the ABC workforce. These people trained in foreign institutions are leading important projects and possess wider technical and social experience. Having
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them retired in a short span of time would be a challenging task for the ABC human resource managers in particular and the management in general. Factors like technology obsolescence, changes in technology and unionized movements to occupy positions of trust demand from ABC to plan well ahead for its new recruits and the transitional stage--especially from the work environment of old staff to the work environment of new staff--including the transfer of knowledge and experience of the retiring staff to the newly hired staff. Compensation and Promotion System In 1994, CFE modified its system of institutional promotions from a traditional hierarchical and seniority based promotion practice to more of performance and productivity based promotion system. The change was aimed at improving the efficiency and productivity of the organization and its workers. A special committee helps with the implementation and supervision of this new system. Personnel Development Competency development of ABC personnel is directly linked with the necessities of innovation, competitiveness, continued improvement and sustainable commitment with satisfying requirements and needs of the ABC clients. Institutional system of training managed by the Training Office of ABC is responsible for developing career planning and organizing training programs. Almost all existing workers have received training in their areas of work and usually an individual worker is required to receive a minimum of 100 hours training per year. ABC personnel development programs include trainings through short courses conducted by ABCs staff, TECNOLAB magazine (company magazine providing information about the company and its activities), and the multidisciplinary conferences organized by ABC on annual basis in the month of February. Fundamental steps taken by the Institutional System of Training are: technical competencies by business unit, identification of factors that lead to technical competences, career planning and performance evaluation. Group work, management participation in group work and coaching are some of the mechanisms used by ABC to develop it workers. Figure 6 shows such and other personnel development activities of ABC.

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ABC: A world class local enterprise?

Figure 6: ABC Coaching System


Action through a Model Individual/Group Competency Development Diagnosis: Referencial Point Analysis: Situation Review Definition of Competency Nature

Plan

Do

ABC COACHING SYSTEM

Action

Verify

Determining Help Tools: Project Focus Processes Optimization New Technologies in Professions Shared leadership

Action Plan: Reach the Expected Result Present the Help Defined Improvement Points

Coaching Interview: Situation Review Synthesis Formulation Interpretation Setting Diagnosis Define Object by Collaborator Define Type of Help Validate Interview Contract

Feedback: Observation Preparation Message Reaction Management Action Plan

The purpose of the personnel development programs is to enhance the ability and knowledge of the workers enabling them to participate actively in the management system and process improvement of the organization. Performance Evaluation At ABC individual performance is evaluated on annual basis and individuals with high performance are rewarded with a salary increase of around 7%. About 23% of the total ABCs workforce qualifies for this annual reward. This evaluation is carried out on area basis and by the chiefs of each functional area. General factors such as ABC expectations from workforce, cultural change and knowledge creation are used for such evaluations. In particular, the chiefs of functional areas fill-up questionnaires covering elements like for example aptitudes, attitudes, organization, direction and results obtained. Aptitudes- analytical capacity, adaptation, communication, decision making and team work. Attitudes.-initiatives, aspirations and motivations, leadership, punctuality, security, participation and availability. Organization and direction: evaluation of the work method used, authority delegation and organization and management of information. Objectives and achievements: evaluates the achievements of objectives, level of supervision, performance, quality of work and customer attention.

The interdisciplinary committee of productivity composed of top management staffs and employee unions review the performance evaluation reports of departmental chiefs based on the standards established in the productivity agreement, and incentives are awarded to the deserving workers.

Intellectual Capital Management Intellectual capital management at ABC consists of the documentation of procedures, norms, specifications, diagnosis, projects and research works. Among significant
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ABC: A world class local enterprise?

contributions made by ABC workers to the intellectual capital management program of ABC are the following elements or activities: Development and documentation of integrated management system of quality, environmental management and workplace safety and health. Development and documentation of the total quality management model of ABC. Integration of the process of management by total quality at Federal Electricity Commission. Developing instructional manuals or materials for/of new (system) applications relating to generation, transmission and distribution of electrical energy. Development of electrical systems, electronics and mechanics for the improvement of control process in generation, transmission and distribution of the electrical energy. Integration of the specifications for the supplier development of the Federal Electricity Commission. As a result of the intellectual capital management initiatives, ABC personnel have achieved higher academic preparation with average professional degrees and this has made ABC with high qualified staff within the organizational infrastructure of the Federal Electricity Commission. Overall, intellectual capital management program is part of the knowledge management system shown in Figure 7.
Figure 7: ABC Knowledge Management System
Define the Market Served

by ABC Knowledge Application Projects Knowledge Transfer Planning and structuring knowledge, Internal/External Sources
Link Knowledge to Market Value of XXL` Services

Knowledge Transfer Strategies Absorb Knowledge Copyright and Patents Transmit knowledge, Access to in/out users

KNOWLEDGE MANAGEMENT SYSTEM

Knowledge Culture Development Knowledge Generation, Creativity and Innovative Practices Knowledge Technology

Adapting Knowledge

Other specific actions that help knowledge management at ABC are: Developing job profile: involves developing new job profiles for its employees constantly considering the need for developing new knowledge. Employee development plan: establishing relationship between the company and the plan of individual development. Training programs: that allows knowledge transfer within the organization. Detection and integration of services that add value: emphasizing on improving services that are more competitive and profitable. Infrastructure integration and development.
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Process, system and technology innovation. Reports, studies and other projects. Organization of conferences and courses. Determining specialized knowledge.

Life Quality Improvement at Workplace ABC believes that the life quality of its worker is vital for the achievement of objectives: competitiveness, innovation and continues improvement. Through Life Quality System, actions are taken to make sure that the well-being and satisfaction of the workers are guaranteed. This initiative has helped ABC management in achieving performance of high level among its workers. ABC workers enjoy financial help through contractual credit programs allowing the workers to live a good life. ABC focuses on following elements as indicated by it workers as a source of workplace quality life: Growth opportunities. Communicating the objectives of organization at all levels. Interpersonal relationship. Objective performance evaluation. Elimination of privileges. Provision of knowledge and skills of the use of safety equipment and hygiene by the workers. Leadership The leadership system at ABC looks for the involvement of workers and other interested parties in decision making involving implementing strategies, specific actions and objectives established through strategic planning and reflected in the statements of mission, vision and values. The manifestation of participative leadership is observed by open door policies practiced by ABC management and the creation of the work environment that allows employees to exercise self-control, evaluate the global performance of ABC as a workplace and provide open feedback about the same. The central motive behind this is positioning the organization as a unique and competitive entity in the markets of testing service, studies, consulting and specialized training in the process of generation, transmission and distribution of the electrical energy. Team coordinators apply necessary motivation mechanisms, recognition and coaching to the team workers to achieve the objectives established for the team. The leadership system consists of the following steps: Identification of areas for improvement. It is done through an analysis of the information collected from within the organization. Proposing strategic action. Based on the outcome of information analysis, strategic actions for improvement are identified and assigned to individuals concerned. System instrumentalism. Necessary resources are allocated and program elaborated based on the opportunities explored for individual and organizational improvement. Follow up and verification of the results of actions taken. This is done with the help of the departments of Quality Auditing and Quality System. Updating and improving the leadership system. Diffusion, training and implementing of the leadership system in the organization. Additionally, top managers and union leaders interact with the general workforce through different activities organized on regular basis. These activities include: monthly gathering for the national flag salutation and awarding prices for the workers completing their 15, 20, 30 years of service in the organization; semester-wise performance evaluation of each
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department; informative meetings in which objectives and achievements are evaluated and prices given to the productive workers in the company; and, management visits different installations of the company to hear directly from the workers on the floor about their opinions and needs. Human Resources Values Because of the type of activities undertaken by ABC, its workers are multidisciplinary predominantly with undergraduate (professional) degrees in their respective areas of responsibilities. ABC management gets involved in the dissemination of the values amongst the workers. The value system applied at ABC demands from its workers to develop practices, habits and customs reflected in their daily actions at workplace which lead towards innovation, competitiveness and continuous improvement. Figure 8 shows how values are developed, disseminated and preserved among human resources at ABC.
Figure 8: Value Development System of ABC
Make-belief Define Innovation Opportunities
Personal Competency

Development

Integration of Competitive Practices

Customer Value Chain Analysis

Resource Application Criteria Right use of resources Innovative and quality work Value-added Customer Services

Determine Value to Add

Resource Evaluation

Integration of Value Elements

Improvement

ABC Values

Adoption

Competency Development

Improvement Viability
Continuous Improvement Improvement opportunity

Ability to do Things

Creativity and Innovations

Team work and Communication Self-control

Process Innovation

Technology Development

Competitive Intelligence

Information Management ABC information management systems covers customer perspectives (satisfaction, service opportunity, customer retention and new clients); internal perspectives (employee trainings, employee productivity, and personal competency); innovation perspectives (new services, new testing methods, system and process development projects); and, financial perspectives (annual sale increment, cost of sales, and increase in real revenues). Information collected about these different areas helps management identify opportunities for development, improvement and evaluate organizational performance of ABC. Intellectual capital and technology management are linked with the overall knowledge management system of ABC which is based on linking the knowledge and market value of the services provided by ABC.

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Quality Management Model ABC staff participates in activities like for example, the diffusion of the quality management system, environmental management and security & health at workplace. Quality awareness trainings are imparted by ABC staff and usually every worker takes a training of 5 hours average per year. Quality awareness trainings make up an important part of the job profile of the staff which stimulates workers to participate in such training programs. The multidisciplinary conference of ABC, also make up a forum where quality awareness information is shared. Additionally, the Intranet allows workers to have access to the information on management by quality model of ABC. At the same time through Intranet, orientation courses are offered to the employees covering information relating to customer service, environmental protection and health preservation. Figure 9 demonstrates the model of management by quality of ABC.
Figure 9: ABC Model of Management by Quality
Systems that Lead to Competitiveness

Leadership Planning

Customers

Innovation Push System: Organizational Knowledge

Results
Personnel Processes

Impact on society
Systems that Lead to Continuous Improvement

The management by quality model (MQM) of ABC is customer centered and is composed of three elements: systems that lead to competitiveness; innovation push system; and, systems that lead to continuous improvement. The three elements of MQM impact personnel, processes, society, ABC as an organization and CFE as a corporation. The first element of MQM focuses on leadership, planning and customer satisfaction. This element enhances ABCs overall competitiveness through developing sub-systems that are directed towards specific strategies, plans and projects that allow ABC to consolidate its position as a leader in developing quality systems focusing on the satisfaction of customers of CFE and the electricity industry in general. The second element of MQM is innovation push system involving information system management, technology management and organizational knowledge management as factors important for creation, innovation and strengthening the intellectual capital of ABC. The third element of MQM is composed of establishing standards for staff development, process management, social impacts, continuous improvement and value generation for the customer. These three components of MQM contribute to the value creation, employee life
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quality at workplace, continuous improvement in the processes and finally, community building and ecosystem protection. ABC as an Organizational System ABC is an innovative organization with values and cultural identity which justify its existence. It is a technological entity with immense contribution to the development of electrical industry nationally and internationally. ABC strategies are tailored to the needs of the changing environment making it a flexible organization adopting changes on continuous basis. ABC competitive strategies include: customer satisfaction through valueadded services, visionary leadership, strategic planning, competitive intelligence, developing human capital and positive impacts on the community. As an organizational system, ABC is prepared to take advantage of the opportunities presented by the markets of generation, transmission and distribution of the electrical energy nationally and internationally. Services of testing, studies, consulting and specialized training offered by ABC are integrated through the adoption of competitive strategies which makeup the organizational system of ABC. Figure 10 shows the major characteristics and/or activities of ABC as an organizational system.

Figure 10: ABC as an Organization


Customer Satisfaction Results Training
Generation

Leadership

Process Social Impact

Advising

ABC Model and Philosophy


Consulting
Distribution Transmission

Personnel Development

Innovation Tests

Studies/Diagn

Process Management

Info and Tech Management

Planning

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Social Responsibility ABC has established set of actions to impact positively the community and the surrounding atmosphere. These actions concentrate on saving electrical energy, water, paper and imparting courses in local schools and companies situated in state of Guanajuato. Figure 11 shows the process and system followed at ABC in order to identify, develop, implement projects which have positive impacts on the community. Figure 11: ABC Social Impacts
Development Opportunity Detection

Improvement of impact actions


Impact Evaluation Follow-up

Selection of the Community to Impact

Social Impact System & Process of ABC

Determining the Type of Impact to Make Meeting with the Community Plan of Action

Execution

Elaboration
Budget Allocation Action Projects Organization of the Community

More than that, ABC is committed towards prevention of pollution and the preservation of the ecosystems through its environmental management programs. Legal requirements concerning environmental protection are updated on regular basis. Every year, trainings are offered to the ABC workforce about environmental management, work-related-risk management and regulatory developments. Through committees of Quality, Environmental Protection and Industrial Security, every 3 months revisions of the functioning, appropriateness and effectiveness of the Environmental Protection System and Ecosystem are carried out. Challenges and Questions for ABC Management The slow growth in the national economy combined with an alarming international competition, would demand from ABC two strategic actions: process optimization and organizational competitiveness. These actions are achievable through identification and application of new technologies, the better use of normative systems (standards) and organizational restructuring. The problem does not end here, however. The demand for electricity is increasing at a rate of 4-5% every year, which require installations of new plants and maintenance needs of the same will increase too. In few years time a significant percentage of the trained and experienced staff is going to be retired. That being the case, it is necessary to determine effective strategies to manage the knowledge developed by these retirees and find out their adequate replacements. Some of the laboratories buildings are in bad conditions which would require investment and refurbishment. Moreover, increasing demand from the community and the pressure of national and international regulations
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would urge ABC to be environmentally friendly. ABC is responsible to look for solutions to these problems as a flagship organization of CFE, but how?

References Barba, A. (2001). Calidad y Cambio Organizacional: Ambiedad, fragmentacin e Identidad. XXL Public Relation Office, Apaseo Ote., Ave. S/n Cd. Industrial, PO 612, 36630, Irapuato Gto. Luna, A. (2007). Cultura nacional e Identidades colectivas en el trabajo: Su repercusin en las prcticas Organizacionales.

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