Why Your Organizational Culture Matters

Every plant has its own unique organizational culture. Organizational culture is what “makes that plant tick.” It drives the focus or philosophy at a power plant. It is influenced by the personalities of leaders, local customs, the operating environment, and other factors. After interviewing thousands of managers and employees at power plants around the world, we have identified five cultural categories. Every plant we have ever visited fits into one of these five categories. The name of each category represents the organization’s primary cultural driver. The following examples of organizational cultures are based on real world experiences that resulted in unwanted consequences.

The Maintenance Culture (“World Control”)

Corrective and preventive maintenance activities, and the work management processes surrounding them, are the focus of this culture. In this scenario, we say that “Work Control” has become “World Control. ” This culture leads to higher O&M and Capital costs, increases in energy replacement costs due to extended outages, and reduced revenues due to lower capacity factors. This culture is sometimes a backlash from an earlier period of under-emphasis on maintenance.

In this culture, the Work Control (or Work Management) organization (formerly the Maintenance Organization) rules the site. They own the plant schedule, and Operations has become subservient to that schedule. The plant focuses on fixing, repairing, and upgrading rather than operating – granted, it is a balancing act. Equipment that is operational is overly-justified to be repaired, replaced, or upgraded now rather than later.

The result is longer outages. This is due to expanding maintenance scopes of work, outage plans that are not “frozen” in advance, and planned outage durations that are expanded mid-outage. Additionally, greater throughput is demanded from the Supply Chain organization. This increases long-term costs due to increased requirements. It also increases short-terms costs due to expediting supplies, parts, and components.

The Engineering Culture (“Paralysis Through Analysis”)

An Engineering culture takes hold when personnel with engineering backgrounds fill most of the leadership positions. Leadership emphasizes equipment reliability, plant modifications, and justifications for unnecessary technical work. Focus on operations erodes.

A note posted on the outside of a cubicle at one plant read “At some point you have to shoot the engineer, and start producing.” This plant had clearly developed an Engineering culture. During interviews at another plant, we learned that they had determined they could design and construct their own dry cask spent fuel storage containers. This demonstrated a loss of the vision of their main mission to safely and effectively use nuclear energy to produce electricity. (Look for our upcoming post on organizational culture and “mission clarity.”)

The Engineering culture typically results from a senior or executive leader with an engineering background. Others with an engineering background then become seen as favorable for the next available leadership position. Over time, most of the senior leaders are engineers. While this is not inherently a problem, it typically challenges the operational focus of the organization. The result is that the organization loses focus on its core mission to produce electricity, and becomes distracted with “required” projects and activities that are really just “nice to haves.” When this occurs, staffing levels typically increase to support these projects. At first this occurs through additional contractor support, but then inevitably leads to additional employees, normally within the larger Engineering organization.

Adding extra employees and contractors has a ripple effect which increase the demand for support, pushing staffing and costs ever higher. For many regulated nuclear plant operating organizations, this is categorized as Capital costs, so it may even be profitable for the owners in the short term. But, the main mission becomes secondary, and performance slips (both in terms of electricity production, but also in terms of additional plant trips, longer refueling outages, and slower recoveries). In our experience, plants with an Engineering culture are typically forced to suffer through extensive (and expensive) recovery programs, or worse, face early shut down due to unsupportable costs of recovery.

The Cost Culture (“How will you fund that?”)

Financial limitations at these organizations have become so severe that good ideas with positive cost/benefit analyses are brushed aside. The general reaction to potential changes is either “there is no budget for that” or “sounds great, now how will you take that out of your existing budget?” This culture may result from a consistent behavioral pattern shown by departmental, organizational, site, or owner leadership decisions. The result is a decrease in morale after being rejected too many times. This is sometimes the result of drastic staffing reductions where remaining personnel are told to “do more with less.” When this happens without effective process improvements, a broad range of negative side effects typically appear.

Cost focused cultures typically strive to operate on the smallest of margins to reduce operating costs. While this is the goal of all businesses, the operating margins within the nuclear power industry are unique. Like an automobile, a nuclear plant requires preventive and corrective maintenance. While the durations between maintenance activities can be extended to run on thinner margins (like less remaining material on your car’s brake pads, or less remaining tread on the tires), thinner margins increase risks. If your car’s brakes fail in the right circumstances, the repair costs will exceed the cost of the brake job you have been putting off, and you will still need new brakes.

Maintaining a nuclear plant to remain within appropriate safety margins takes adequate resources, and those resources must be applied in a timely manner. Skimping on appropriate personnel (the largest part of O&M budgets), or required capital reinvestment, will reduce plant operability, availability, and overall performance. If this gets bad enough, regulatory intervention may occur, further increasing costs and potentially shutting the plant down for recovery, which then reduces overall revenue. In short, you can’t cost cut your way to high performance.

The Bureaucratic Culture (“Was that stamped?”)

Bureaucratic processes have overtaken effective and efficient approaches; due to living within this type of culture, the organization typically devolves into a low-accountability environment (it always someone else’s fault/responsibility, and there is a lot of “they” and “them” in day-to-day work instead of “we” or “us.”) With this culture, everything takes longer, accountability is reduced, performance declines, and morale deteriorates.

Typically, the organization becomes sluggish, slow to respond, and has ever increasing costs. When these costs reach an intolerable level in a de-regulated market, the plant is no longer dispatched for power production, and it becomes unsustainable as a generating asset in the company’s portfolio. When it happens in a regulated market, the regulator calls the high costs into question, or even disallows them. Then the operating organization is faced with a forced cost (or profit) reduction, and must spend additional resources to unwind the overly burdensome bureaucracy. These unwinding activities are both expensive and distracting from the core mission of power generation.

Success Begins With An Operations-Focused Culture

This culture is focused on plant operations, reliability, availability, shorter refueling outages, and keeping the Operations organization as the “Primary Customer” across the other plant organizations. A plant with an Operations culture recognizes the importance of all other organizations, and relies on them for support, but keeps Operations as the highest priority after safety.

Operations cultures are the most successful. They have developed or maintained their focus on the Operations organization, and the supporting roles of the rest of the plant, within an effective nuclear safety culture.

Operations focused cultures consistently have the best outcomes in a variety of areas, including:

Plant performance
NRC Evaluation results
INPO Scores
Revenue vs. Costs Morale

They are the “place to be” and the source of personnel in other organizations’ work force plans. When an Operations culture succeeds over a long-time, personnel from the Operations organization have migrated into other departments, carrying with them an “Ops focus” that then permeates the entire site – and that is a good thing.

What Is Your Culture?

If feel like you have drifted into a non-Operations culture, contact us for an Organizational Culture Assessment. We will identify which culture you do have, and help you develop a plan get back on track.

print

Leave a Reply

Your email address will not be published. Required fields are marked *