Downsize or rightsize? Changing KESC to K-ELECTRIC (Case A)

Abstract

Subject area

Organizational restructuring strategy such as downsizing and rightsizing and their effects on organizational performance.

Study level/applicability

The case can be taught to graduate students of a business administration program for change management or human resources management courses.

Case overview

The case discusses a structural change strategy followed by a crisis management situation of a Pakistani state-owned enterprise with hierarchical structures, unclear work roles and workplace corruption and its shift toward a profitable company with rebranded mission and values. With the management takeover by the Abraaj Group, several issues were identified as major blocks to K-ELECTRIC’s performance. Drastic changes included information technology advancement, investment in infrastructure of generation capacity, marketing campaigns and corporate social responsibility initiatives with a record profit in 2011-2012, for the first time in 17 years. But, the greatest challenge to quality service and profitability was faced by the human resources department, to retrench 4,459 workers by offering a voluntary separation scheme to non-core management staff in 2009. However, disregarding the successful impact on business performance, only 300 workers (approximately) had accepted the package in early 2010, while the rest questioned the decision of outsourcing non-core jobs and demanded reinstatement with the company, followed by a series of protests in January 2010. K-ELECTRIC needed to make some sensitive and timely decisions to ensure efficient and quality service to its customers as its top agenda.

Expected learning outcomes

The outcomes include: to understand the challenges faced by a recently privatized public utility service to become lean and efficient without compromising on its public mission of providing electricity to the residents of the city; to analyze the factors that influence choice of restructuring strategies and their effects on the employment relationship and organizational performance; to recognize the critical role of leadership in choosing a voluntary downsizing strategy and analyzing the sense of urgency needed to execute the decision; and to recognize the role of legal and organizational consultancy needed in critical decision-making to prevent workplace violence.

Supplementary materials

Teaching notes and teaching guide.

Citation

Ansari, N.A. (2016), "Downsize or rightsize? Changing KESC to K-ELECTRIC (Case A)", , Vol. 6 No. 1. https://doi.org/10.1108/EEMCS-01-2015-0014