The Internal Impact of Rapid Growth within Scottish & Southern Energy - Case Study Example

The internal impact of rapid growth within Scottish & Southern Energy plc [Word count: 2053] By 'Place' 'DD/MM/YYYY' Introduction Scottish and Southern Energy plc (SSE), is currently one of the largest energy industries within Great Britain, generating, transmitting, and distributing electricity and gas to more than eight million industrial, commercial and domestic customers throughout the country. Through subsidiaries, such as Southern Electric, Scottish Hydro-Electric, SWALEC, and Atlantic Electric and Gas, the company is also involved in electrical and gas trading, utility tracking, energy trading, and telecommunications. Aim of this desertion is to evaluate the impact of rapid growth within Scottish and Southern Energy. Briefly, this desertion will concentrate on following issues. Studying the company's performance throughout the past decade. Company's contributions towards corporate social responsibilities. Reviewing the company's policies relating to planetary issues, employers welfare, and community involvement. Identifying the factors responsible for sustainable growth of organization. Understanding the vision of SSE for future. The paper will conclude by considering the ways in which SSE views the future, through which an attempt will be made to assess whether the company can continue their current sustain of growth, and what factors need to be addressed in order to assure the continuation of their success. Discussions and the Literature Review "SSE's strategy is to deliver sustained real growth in the dividend payable to shareholders through the efficient operation of, and investment in, a balanced range of regulated and non-regulated energy-related businesses. The successful implementation of this strategy in 2006/07 delivered another year of excellent financial performance, with profit before tax exceeding 1 billion for the first time, and strong operational performance, with our policy of responsible pricing helping us to gain more than one million additional customers" (Miranda.com, 2007). "We are committed to offering customers a combination of price, service and products which will enable us to achieve further growth during the rest of the financial year and beyond" (Ian Marchant, as quoted by Hamish Rutherford, The Scotsman, 2007). Scottish and Southern Energy plc, believe that the company's rapid growth has been due to a consistent and continuing focus on four essential areas: the maintenance and investment in present energy networks; continued investment in SSE's "leading-edge portfolio" (Annual Review, 2006, p.1); increasing and developing energy supply; and through the development of a strong presence in businesses such as gas storage, contracting connections, and telecoms. As a result of the achievements and progress made within these central goals, the company's 2006 reported its financial performance, with adjusted profit before tax, as being at approximately 858.2 million (Annual Review, 2006). Scottish and Southern Energy was formed in 1998, following the no-premium merger of Southern Electric and Scottish Hydro Electric, and required Connect South West contracting business just a year later. Following this Scottish Hydro Electric Contracting was launched, while by 2000, the company had acquired the energy supply business, SWALEC, it had completed its 50% investments into the Seabank 2 gas-fired power station, and the number of customers had exceeded more than four million. Then, in 2001, SSE began operating Cuilieg, the corporation's hydro election power station - it's first in forty years - and in 2002, the company's Annual Report showed profits of some 597.2 million (Annual Report, 2002). SSE's growth continued in 2003, the year in which the company acquired Neos Telecom, and customers passed the five million mark. It was also during this period that Scottish and Southern Energy announced its plans to construct the Glendoe hydro-electric power station, while also acquiring the balance of equity for the Medway gas-fired power station, and embarked on its 450 million program of investment in new able generation, including refurbishment of hydro stations and the development of wind farms, and, possibly, new hydro stations" (Annual Report, 2002, p.3). In 2004, SSE acquired the Fife gas-fired power station, Atlantic Electric and Gas, and the coal-fired Fiddler's Ferry and Ferry bridge stations. Construction was also began at the Aldbrough gas storage facility during this period, following which, in 2005, SSE reported that energy customers had increased to more than six million. It was also during this year that Spurns Wind Farm became operational and that a 50% ownership in Scotia Gas Networks was acquired. The company continued growing in strength during 2006, during which construction began at Glendoe hydro-electric power station, while Hadyard Hill wind farm became the "first in the United Kingdom to exceed 100MW output" (Scottish and Southern Energy 1, 2007). By 2007, Scottish and Southern Energy customers had exceeded more than eight million. British society, something which is reflective of the Western world in general, has changed. In today's contemporary world the way in which a corporation conducts its business, its attitude towards its employees, and its involvement in local and world communities, are all considered as being an essential part of a company's function, and are contributory elements within any success. This has meant that the majority of major corporations and businesses now include, along with their annual report, other publications that list the company's corporate responsibility and sustainability reports. In contemporary Britain, the public demands to be informed. A clear recognition of this fact has been something that has strongly shaped and formed SSE strategies, which reflect economic, social, and environmental concerns. The company's core purpose is, obviously, providing the energy that society needs in a reliable and sustainable way, with the aim of delivering "sustained real growth in the dividend payable to shareholders" (Scottish and Southern Energy 2, 2007), but SSE's profile is one that goes far beyond the idea of just acquiring profit. Corporate Governance Behind the rapid growth and success of SSE, is a system of corporate governance, which, besides the Executive Committee, includes a Remuneration Committee, Risk Committee, Nomination Committee, Health, Safety, and Environmental Committee, and an Audit Committee. Each of these have a number of principle responsibilities in order to ensure the effectiveness of company strategy, with regular meetings during the year, during which the members receive "briefings on new developments affecting the Group's activities, such as company law reform, corporate governance, regulatory developments and financial reporting standards" (Corporate Governance Statement, 2007). Induction and Professional Development Directors, when joining the Board, also receive an extremely comprehension induction course, which is tailored towards their individual requirements, and which places an emphasis on developing skills. This is includes visits to key sites, a meeting with SSE's broker and analysts, and a review of the risks that face the company, including such things as safety and environmental performance. Directors are also able to update personal knowledge in relation to the company through meetings with senior management, and through regular presentations given by senior management, which covers the all of the Group's activities. Policy also includes an agreed procedure that allows Directors to take independent professional advice if required. The purpose of this program, as stated in SSE's Corporate Governance Statement, "is to develop the Executive Directors and senior management and maximize individual and group performance to ensure that the business is managed effectively" (2007, p.3). Corporate Responsibility SSE also claims to firmly believe that corporate responsibility is vital to maintaining financial strength and to assuring the achievement of its core objective, which is "to deliver sustained real growth in the dividend payable to our shareholders" (Scottish and Southern Energy 3, 2007). The company also considers corporate responsibility to be essential to ensuring responsible business practices, which has led to them adopting six core values and eight principles or objectives in order to effectively support these values. The corporation's six core values are safety, service, efficiency, sustainability, excellence, and teamwork, and their eight principals are: To achieve the highest standards of both safety and health performance; the provision of opportunities that enable employers to be shareholders; to be actively responsible through fulfilling both regulatory and statutory environmental requirements; to prioritize and continually increase and improve environmental performance across all of the Group's activities; working in a way that ensures the highest level of customer service; to respond effectively to all client concerns regarding services and products; to ensure that communities have both a safe and reliable supply of electricity; and, to encourage employees to be responsible and effective members of their local communities.(Scottish and Southern Energy 4, 2007). The forming of the Group's values, principles, and policies were all developed during the company's history, throughout which it had, and continues, to experience rapid growth. Introduced in order to assure the fulfillment of the company's essential goal, they, and the subsequent results that they have produced, have strongly impacted the corporation's staff, their shareholders, and their customers. The company, for example, has recently introduced a new induction program, which has dramatically reduced staff attrition, and which has helped to double customer-satisfaction ratings. In contrast to SSE's old induction program, a twelve-week course that focused on imparting knowledge, the new initiative is more concerned with developing and enhancing skills. This, according to a number of reports, has caused a dramatic drop in recruitment figures, an estimated increase of 40-80% in customer satisfaction, and a decrease in employees taking sick leave (Human Resource Management International Digest, 2007, pp.14-17). Environmental issues have also had a large impact on SSE, in particular within the corporation's provision of renewable energies, and its persistent research and investment into wind energy. However, the company's concerns for the well-being of the planet do not just look ahead to the future, they also concerned about the present. This was clearly seen by reports that showed that SSE, along with Powergen, was the only firms able "to cut overall CO2 emissions" (Catalyst Commercial Services, 2007). Summary and Conclusions Scottish and Southern Energy have introduced a number of measures and policies, which have impacted shareholders, employees, and customers in a number of ways. The organization has introduced new training programs to ensure customer satisfaction, which has also successfully dealt with employee attrition, while pacific strategies have been put in place in order to achieve the company's future goals and objectives. These have included the development of core values, principles of practice, financial considerations, and employee relations. The corporation is also attempting to ensure the world's future through putting into practices that are environmentally safe, while also investing in new forms of energy - in particular that of wind power. A company that has experienced rapid growth, which has effected positive internal changes, Scottish and Southern Energy is resolved to remaining committed to stretching targets for renewable generation and to the key policy instrument for achieving growth, the Renewable Obligation. Its aim is to encourage investment in renewable energy sources by providing incentive based generators to produce progressively higher levels of renewable energy over time. Although it is clear that the energy industry remains subject to significant change, SSE's policies and strategies are well-placed to ensure further growth. The Group has been increasingly expanded in recent years, which has been a result of incremental growth and investment in assets. Future growth, if consistently based on SSE's core strengths, has every possibility of succeeding, especially through the provision of renewable energy (Annual Report, 2006). References and Bibliography Annual Report, (2002). Online Report: Annual Report 2002. Information retrieved 18/10/2007. http://www.scottishsouthern.co.uk/SSEInternet/WorkArea/showcontent.aspxid=910 Annual Report, (2006) Online Report: Annual Report 2006. Information retrieved 18/10/2007. Available for download: http://www.scottishsouthern.co.uk/SSEInternet/index.aspxpageType=15&id=506 Annual Review, (2006). Online Report: Annual Review 2006. Information retrieved 18/10/2007. Available for download: http://www.scottishsouthern.co.uk/SSEInternet/index.aspxpageType=15&id=506 Catalyst Commercial Services, (2007). Online Article: Renewable Energy. Information retrieved, 19/10/2007. http://www.catalyst-commercial.co.uk/blog/ Corporate Governance Statement, (2007). Online Report: Corporate Governance Statement. Information retrieved 17/10/2007. http://www.scottishsouthern.co.uk/SSEInternet/WorkArea/showcontent.aspxid=7582 Enterprise and Culture Committee, (2004). Online Article: Evidence Received for Renewable Energy in Scotland Enquiry. Information retrieved 20/10/2007. http://www.scottish.parliament.uk/business/committees/enterprise/inquiries/rei/ec04-reis-scottish&southe.htm Human Resource Management International Digest, (2007). Scottish and Suthern Energy slashes staff attrition: Better, shorter induction program helps to double customer-satisfaction ratings. Volume 15, Number 2, 2007, pp. 14-17. Emerald Group Publishing Limited. Ian Marchant, as quoted by Hamish Rutherford, The Scottsman, 2007. Online Article: SSE set to overtake E.ON as TK's No 2. Information retrieved 17/10/2007. http://business.scotsman.com/topics.cfmtid=1412&id=928082007 Miranda.com, (2007). Online Report: Scottish and Southern Energy. Information retrieved 20/10/2007. http://miranda.hemscott.com/ir/sse/ir.jsp Scottish and Southern Energy 1, (2007). Online Article: Group History. Information retrieved 18/10/2007. http://www.scottishsouthern.co.uk/SSEInternet/index.aspxid=568&TierSlicer1_TSMenuTargetID=568&TierSlicer1_TSMenuTargetType=1&TierSlicer1_TSMenuID=6 Scottish and Southern Energy 2, (2007). Online Article: Our goals and vlaues. Information retrieved 17/10/2007. http://www.scottishsouthern.co.uk/SSEInternet/index.aspxid=400&TierSlicer1_TSMenuTargetID=400&TierSlicer1_TSMenuTargetType=1&TierSlicer1_TSMenuID=6 Scottish and Southern Energy 3, (2007). Online Article: Corporate Responsibility. Information retrieved 18/10/2007. http://www.scottishsouthern.co.uk/SSEInternet/index.aspxrightColHeader=40&id=290&TierSlicer1_TSMenuTargetID=80&TierSlicer1_TSMenuTargetType=4&TierSlicer1_TSMenuID=6 Scottish and Southern Energy 4, (2007). Online Article: Values. Information retrieved 17/10/2007. http://www.scottishsouthern.co.uk/SSEInternet/index.aspxid=494&TierSlicer1_TSMenuTargetID=494&TierSlicer1_TSMenuTargetType=1&TierSlicer1_TSMenuID=6 Read More