GDF Suez Australia
1. identify its business mission and vision and key features of its business model
2. determine how shared value could be further created by developing the relationship with two key stakeholders. (two stakeholders will be attatched in additional files)
1st key stakeholder
All companies have two common goals, to be profitable and to create a sustainable on going company; that is, one that never ceases to finish doing business. The idea that organizations need to focus on internal factors scares many managers nowadays. Many of them are assessed on their financial success or failures over a predetermined period, usually yearly, half yearly or on quarterly bases. Corporates need to take the lead in developing an employment strategy that secures the future growth of their business (Turnbull, 2015), in order to do this, it requires them to compromise short term financial success for long term company success. Employees are the foundation of all successful businesses, their growth and development is vital to the survival of the organization. Mayhew (2015) says in his article that “employees who are well-informed about the business they work for are likely to have higher levels of employee engagement”, the importance of involving and engaging employees is crucial to ensure goal congruence, consequently leading to long term financial success for the business.
Since employees are a direct stakeholder, it is easier for companies to enhance their relationship with them. As previously mentioned, employee engagement is crucial as it helps connect them and align them with the company goals. The consequences of having unmotivated employees, or employees that don’t know or follow the organization are dangerous to the development of the company. It only takes a minority of employees in a sector of a company to make the wrong decision that doesn’t follow the company’s mission, leading to a ripple effect throughout the company on other employees. Employee engagement is defined as the commitment to and passion for one’s work and role within a company (PWC, 2014), this engagement can create additional value to the employee’s role as they are the ones who engage with the customers, arguably the most important stakeholders to the company. This engagement can create additional financial benefits for the company as customers will experience improved customer service and will want to conduct business with them, while the employees will gain additional training and a sense of achievement. In order for this to occur, companies need to implement a ‘bottom-up’ approach, this essentially encourages continued employee engagement through their input and advice.
Organizations need to start looking at employees as assets of the companies, they design, produce and sell the product or service which is on offer. The ‘skilled’ labour workforce is very scarce nowadays with many of the experienced ones choosing to stay with their current employer; this is extremely beneficial for the company. In order for companies to retain their skilled workforce, Dilip Khullar, Director at Estabona Management recommends that it is essential to map out an employee’s career journey in your organization as it can help identify opportunities for engagement and enhance the success of shared value initiatives. This is a valid point as many organized nowadays don’t consider their employees as long term assets, rather short term consumables. They need to put the time and resources aside to spend on their employees in order to create an environment where social needs are met through business matters.
Creating shared value is taking into consideration the society in which the business operates in into account when making business decisions. As mentioned, GDF Suez owns and operates one of the largest emission emitting coal stations in Australia, something they don’t plan on advertising. Through new technological advances in today’s age, many organizations and consumers are opting to choose renewable energy as it comes available with the government taking strategic decisions to ensure it succeeds. A study conducted by the Australian Bureau of Statistics (2009) highlighted that over the next 20 years, electricity generation from renewable sources is projected to increase by around 2% a year. Therefore it is crucial that GDF Suez are able to create additional shared value through their employees in order to stay competitive in the market in the long term. Many organizations choose to neglect many of their employees by enforcing wage cuts, minimizing safety standards and health care, reducing their training programs and diminish their opportunities for growth and development, by taking such actions it can reduce their motivation and work ethic, consequently negatively affecting the business. An example stated in Porter & Kramer’s (2011) ‘Creating shared value’ article shows how Johnson & Johnson helped employee’s quit smoking and implemented additional well being programs. By doing so they have not only saved a staggering $250 million, but they have benefitted from a more present and productive workforce.
A recommendation to GDF Suez would be to incorporate the bottom-up approach through-out their company. With this system incorporated into their routine, they could enhance employee engagement, thus shared value. Not only does it ensure that employees understand GDF Suez mission and goal, it involves them into the process to inspire them to follow the company vision while also propagating shared value.
Consideration of Future Generations as a Nonsocial Primary Stakeholder
The current energy industry is one in which the macro environment is still very dependant upon depleting resources. (GDF Suez 2014 Annual Results) displays a 68% total of energy generation dependant upon fossil fuels in particularly gas and coal. In Australia GDF Suez alone possesses a generation capacity totalling 3540 MW and of this only 46 MW is derived from a renewable source whilst the remainder is derived directly from Gas and Coal GDF Suez (2015).
Considering the scarcity, and resultants due to consumption of natural resources that GDF Suez impose upon future generations as a stakeholder can outlay the dramatic implications that may come to pass. Future generations as defined by Carroll and Buchholtz (2006) can be viewed as a nonsocial primary stakeholder. The component of definition outlines the direct stake and influence the natural environment has within the organization as future generations will be grossly affected by what we as a collective and individual organizations within this collective do, consume, pollute and use today. By this establishing that future generations have both a legitimate and urgent stake but have no power notates future generations as a dependant stakeholder.
Adaptations to Create Shared Value Amongst Future Generations
Adaptations to Create Shared Value Amongst Future Generations can be few or many. Primarily GDF Suez has a directive focus on “Our Mission…deliver energy and water in a competitive, reliable and responsible manner”. (GDFSuez 2015) Utilization of the IR framework could aid in understanding as to whether GDF Suez is really creating shared value amongst future generations. Determination of capital created as a resultant business model applies directly to Future generations in the most holistic sense. by which each inputting and output capital will directly affect them. Intellectual capital gained in coal fire will be far less value than intellectual capital gained in development of solar power.
Adaptations through redistribution of capital
Possibilities exist for restructure of both assets and capital within the business and could help create shared value. If capital were to be redistributed to more renewable energy it would result in increased longevity of plants and decreased maintenance costs to be incurred as well as cleaner environment with reductions in climate change for future generations. Hazelwood Power station has claimed “Since 1996, over $1 billion has been invested in operational and environmental initiatives at hazelwood” (GDF Suez 2015). Could this money have been spent elsewhere? Upkeep and improvement costs to ensure generation of Hazelwood Power Station’s 1542 MW (GDFSuez 2015) since 1996. Whilst rivals such as AGL have invested in projects such as the AGL Solar Project, incorporating two sites of Photovoltaic solar cells. The two sites as a combined project have incurred a total value of $439,082,000 inclusive of $234,900,000 worth of government subsidisation. Whilst generation of both Nyngan and Broken Hill Solar plants Only totals a mere 155 MW (AGL 2015) in comparison to Hazelwoods 1542 (GDFSuez 2015) it provides a more reliable and a renewable source of power at reduced maintenance costs.
Adaptation for increased shared value through repurposement of sites.
The repurpose of mines also proves to be a sustainable way of creating shared value for a variety of stakeholders. Not only does GDF Suez need to provide greater support for the local communities it impacts but needs to rehabilitate the mining land that they have exposed. A study completed by Alcoa measured the effectiveness of a various methods of mine rehabilitation in WA as various projects had been derived from water supplies, wood production, recreation, tourism, conservation, science and education (Tracey & Glossop 1980). Measured by a number of germinated seedlings, diversity and number of species present, this report indicated that the current various methods of mine rehabilitation including topsoil stockpiling (placing soil on top of previously utilised land) and double stripping (removing the top layer of soil and replacing with new soil unaffected by mining processes) didn’t meeting the diversity, seedling germination or species numbers as demonstrated in a nearby control group forest (Tracey & Glossop 1980). Tracey and Glossop (1980) discusses double stripping proved the closest results to the numbers of species variation demonstrated by the forest, however topsoil stockpiling proved cheaper. These are methods GDF Suez can implement to further creating shared value within the community by rehabilitating used mining sites via double stripping, increase positive environmental impact, aesthetics of the rehabilitation site and ethical investments within the company (Porter and Kramer 2011). Essentially benefiting GDF Suez themselves through greater asset value and future generations through the business model resulting in betterment of their manufactured and natural capital.