Technical Assistance Consultant s Report Project Number: 41614 September 2010 India: Energy Efficiency Enhancement Project in Assam (Financed by the Japan Special Fund funded by the Government of Japan) Prepared by Pricewaterhouse Coopers Pvt. Ltd. India For Assam Power Distribution Company Limited This consultant s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project s design.
PricewaterhouseCoopers Global Network: Energy, Utilities & Mining Practice Performance Improvement Advisory Building Organizations Redesigning the Organization Structure Assam Power Distribution Company Limited (APDCL)
Table of Contents Introduction... 3 Background of the Assam State Electricity Board... 3 Background of Assam Power Distribution Company Limited... 3 Scope of this Study... 4 Objective of the Study... 5 Approach & Methodology for the study... 5 Structure of the Report... 7 AS-IS Analysis and TO-BE Recommendations... 8 The Reporting Hierarchies in APDCL... 8 Human Resource Profiling... 8 Age Profiling... 10 Retirement Profiling... 11 Board Level: Board of Directors of APDCL... 12 Corporate Level: Structural and Functional Analysis of the Corporate Office... 28 F&A... 28 Commercial and Tariff... 32 HR... 36 LAZ, UAZ, CAZ... 39 Project & Planning... 41 Director PMU... 41 Director Security and Vigilance... 42 Rural Electrification... 46 Field Level: Structural and functional analysis of the field office... 49 Conclusion... 53 Annexure 1: Benchmarking of Organization Structure... 56 Annexure 2: Stakeholder Discussions: Key Points Discussed... 61 Annexure 3: Tentative List of Various Full Powers... 62 PricewaterhouseCoopers Page 2 of 63
Introduction Introduction Background of the Assam State Electricity Board The Assam State Electricity Board (ASEB) was unbundled into five companies by the state Government of Assam (GoA) in December 2004 under the provisions of Electricity Act, 2003. The companies that were formed were Assam Power Generation Corporation Limited (APGCL), Assam Electricity Grid Corporation Limited (AEGCL), and three distribution companies named Lower Assam Electricity Distribution Company Limited (LAEDCL), Upper Assam Electricity Distribution Company Limited (UAECL), and Central Assam Electricity Distribution Company Limited (CAEDCL). The objectives of unbundling were to encourage efficiency, improve the quality of service and increase the accountability of the management. Experience of the last 6 years of unbundling suggests that though the Assam power sector has improved, much scope for improvement in efficiency still remains. Some of the main issues impeding the successful implementation of unbundling are: Partial autonomy with regard to financial management: The newly formed generation, transmission, and distribution companies continue to be partially autonomous with regard to financial management and operate under a centralized cash flow mechanism. These expenses have been prioritized among various heads. Financial management functions such as investment, funding, and budgeting decision making are being carried out in consultation with ASEB. Paucity of well-trained staff: This has resulted in dual charges for positions that require specialized skills among companies. This leads to delays in decision making and restricts the introduction of new initiative within the companies. Employees running as a unified cadre: Despite the reorganization of ASEB and the implementation of a staff transfer scheme, employees in the successor companies have actually run as a unified cadre to protect inter-se seniority and promotional avenues across the companies. Promotion of the employees of the rank of Senior Manager () and above is done through the common seniority list maintained by ASEB for all companies. This is counter-productive for the employees and for the companies in the long-run as it prevents the successful implementation of a company-specific structure aligned with company level objectives and prevents the ability to build necessary competencies that are essential for each company. Background of Assam Power Distribution Company Limited The two distribution companies namely UAEDCL and CAEDCL, their functions, rights, obligations, properties, interests, liabilities along with personnel were transferred and vested with the third distribution company (LAEDCL) vide Department of Power, state notification dated 13 May 2009 bearing no. 41/2006/199 wef 1st April, 2009. Subsequent to this, fresh certificate of incorporation consequent upon change of name was taken for LAEDCL. Therefore, with effect from 23 Oct 2009, the name PricewaterhouseCoopers Page 3 of 63
of LAEDCL was changed to Assam Power Distribution Company Limited (APDCL). APDCL distributes electricity to all consumers in the state of Assam and has about 15 lakh consumers. Assam has a total area of 74438 Sqkm, out of which 35.48% area is covered by forests. The broad role of the APDCL is as follows: To run the organization on commercially acceptable principles To plan and expand the distribution capacity of the state network in order to increase reach to consumers and reduce aggregate technical and commercial losses To build and expand distribution network capacity to enhance reach to customers To interact with the State electricity regulatory commission(aerc) for approval of distribution tariff and expenses To operate and maintain the distribution line and substations in 33kv and below voltages To enter into Power Purchase contracts with bulk suppliers including State owned Genco, Central Sector Generating Stations (CSGS) and Independent Power Producers (IPPs) To undertake and load analysis and system studies to improve availability of network and improve reliability To maintain commercially sound systems for billing to collection of existing consumers The merger of two distribution companies into the third distribution company is among the key drivers for re-designing the Organization structure of APDCL. Scope of this Study The overall scope of this study includes: Reviewing and benchmarking of the existing organization structure with other well-performing utilities and proposing appropriate head office and field organization structures for each company, given the overall objectives of the company Undertaking a human resource profiling exercise of the employees in successor companies Analyzing and presenting options for a promotion policy that addresses concerns regarding immediate transition and evolving requirements over a five year period across successor companies PricewaterhouseCoopers Page 4 of 63
Reviewing the efficacy of the existing performance management system and proposing options to make it more objective and aligned to each successor company objectives Proposing Key Performance Indicators for each company and analyzing alternatives for an employee performance linked incentive scheme for each organization in consultation with the company s top management. This should draw from experiences in other similarly placed organizations in the country. This report pertains to study of re-designing the Organization structure for APDCL. Further, the study under this report is restricted upto the level of & above. The study pertaining to AM & below including non-executive workforce is not covered under this report. Objective of the Study The objectives of carrying out this re-designing of organization structure are: To develop an organization structure at the corporate and field level and bring broad functional clarity and accountability To study the apex structure of few Indian utilities and recommend the appropriate structure To carry out human resource profiling and analyse the age and retirement pattern for each organization Approach & Methodology for the study PwC has developed a comprehensive organizational design methodology to assist with structural design, role design, associated linkages and performance measures. The same is shown pictorially below (source: PwC Gateway): STAGES Assess Design Construct Implement/ Operate PHASES Determine Business Needs and Benefits Assess As-Is Environme nt Agree Improveme nt Opportuniti es Design To-Be Environme nt Develop Implementati on Strategies Construct Organizati on Changes Develop Migration and Implementati on Plans Migration and Implementati on DESIGN REQUIREMENTS Job Structural Comp Linkage Team Perform Descript Changes Plans s R&R ance PricewaterhouseCoopers ions Mgmt Page 5 of 63
This report is limited to the study of organization structure for APDCL. The following approach was adopted while designing the same for APDCL: Understand Business Context, Expansion plans; Understand and review the existing hierarchy, the functional responsibilities, the reporting mechanisms, the main functional areas and the geographical spread of operations etc. Field visits were conducted to Jorhat, Silchar, Plant locations Discussions were held to understand various roles and responsibilities and staff allocations at various functions Benchmarking with different state utilities to obtain industry information Options were generated and deliberated and recommendations made The approach has 3 main stages: Review and Analysis of the Existing Structure: This entailed a review of the existing structure and identifying potential areas for institutional strengthening and greater focus. The following tasks were conducted: Stakeholder Consultation & Field Visits: Top level interactions with the Chairman & Managing Director and s were held to understand the expectations and the direction of the study. Subsequently, discussions with the next level of the hierarchy were conducted to understand and review the existing hierarchy, the functional responsibilities, the reporting mechanisms, the main functional areas at the corporate and field level and the geographical spread of operations, expansion plans etc. Field visits were conducted to Jorhat and Silchar in upper and lower Assam respectively. Discussions were held to understand various roles and responsibilities and staff allocations at various functions. Identify Design Criteria and Benchmarking: This entailed an analysis of the existing structure based on management coverage, span of control, key operating priorities, expansion plans, high level functional clarity etc. The top level structures of some of the state discoms were also studied to identify improvement opportunities. The distribution companies used for this include Maharashtra State Electricity Distribution Company Limited (MSEDCL), PricewaterhouseCoopers Page 6 of 63
Uttar Haryana Bijjli Vitran Nigam (UHBVN) and Andhra Pradesh Central Power Distribution Company Limited (APCPDCL). Develop Organization Structure, Validate and Finalize: Based on the previous stages of the approach, the organization structure for APDCL was redesigned. Successively, based on iterations and need based discussions with the stakeholders, the proposed organization structure was revised and has now been captured in this report. The salient points of stakeholder discussions / feedback are captured appropriately in the report. Structure of the Report This report on the organizational structure of APDCL is divided into 3 chapters. Chapter 1 - Introduction: The first chapter is an introduction to the report and covers the background of ASEB and APDCL, objectives of the study and the approach followed by PwC to conduct the study. Chapter 2 AS IS Analysis and TO BE Recommendations: The second chapter is an as-is analysis of the organizational structure and covers human resource profiling, details of the present organization design and organization structure. The AS-IS analysis is followed by TO-BE recommendations to enable a comparison and clearly highlight the changes being recommended. The TO BE structure is supported with a write-up on the Basis for recommendations, Comparison of as-is & to-be manningpositions and Future scenario & migration for the company. Chapter 3 Conclusion: The third chapter of this report summarizes the broad recommendations made for APDCL. o o o Annexure 1 Benchmarking: The Annexure 1 covers the benchmarking of the organization structure of APDCL with other state utilities and highlights the key learning s of the benchmarking exercise. Annexure 2 Stakeholder Discussions, Key Points Discussed: This summarizes some key issues raised during various stakeholder meetings at HQ and field offices and the discussions thereon. Annexure 3 Tentative List of Full Powers: This summarizes some of the nature of power which can be delegated as full power to committee of functional directors. PricewaterhouseCoopers Page 7 of 63
AS Present IS Analysis Organization and TO BE Recommendations AS-IS Analysis and TO-BE Recommendations The Reporting Hierarchies in APDCL There are various levels of hierarchies present in the organization. The following diagram is a representation of the various levels of hierarchies (above the level of AM) being followed in the company. The hierarchies are representations of the legacies followed in the organization and can be used for quick referral. GM M/DM AM Sl. No. Earlier Designation New Designation 1 Assistant Engineer (AE) Assistant Manager (AM) 2 Assistant Executive Engineer (AEE) Manager/Deputy Manager (M / DM) 3 Executive Engineer (EE) Senior Manager () 4 Superintending Engineer (SE) Deputy General Manager () 5 Additional Chief Engineer (ACE) General Manager (GM) 6 Chief Engineer (CE) Chief General Manager () Human Resource Profiling The HR profiling exercise has been carried out for the three companies (APDCL, APGCL and AEGCL) together. It has been carried out on the basis of the manpower data collected from the office of the Director Personal and Deputy General Manager- Human Resource (-HR) of respective companies. PricewaterhouseCoopers Page 8 of 63
Based on the information available, employees have been classified into two categories - Executive and Non Executive. All employees belonging to grade 10 (G10) and above have been classified as executives and all employees belonging to grade 9 (G9) and below have been classified as non executives. Details of the availability of the data in the data base collected from each company are given below: Company Executives Number of Employees Non-Executives At HQ At Field At HQ At Field Total E / NE Ratio (%) AEGCL 33 195 77 1550 1855 12 / 88 APDCL 110 494 424 10204 11232 5 / 95 APGCL 44 174 107 1113 1438 15 / 85 Total 187 863 608 12867 14525 7 / 93 In this report, the HR profiling analysis has been carried out for APDCL only. The main observations that have been made on the basis of the profiling exercise are as follows: In APDCL, about 5% of the total employees are in the headquarters and about 95% of the total employees are in the field offices. HQ executives form 21% of the total employees working in HQ and field executives form only 5% of the total employees working in the field. For APDCL as a whole, Executives form 5% of the total working employees. PricewaterhouseCoopers Page 9 of 63
Age Profiling The main observations that have been made on the basis of the profiling exercise are as follows: The average employee age of the company is 52 years. The average age of executives and non-executives do not vary much as compared to the company average. Approximately 70% of the total employees are above the age of 50 years and approximately 75% executives are above the age of 50 years. This is the highest among the three companies. The non-executive to executive ratio for APDCL is 18. PricewaterhouseCoopers Page 10 of 63
Retirement Profiling The main observations that have been made on the basis of the profiling exercise are as follows: Approximately 38% of the entire workforce of APDCL will retire by calendar year 16 (CY 16) Approximately 45% of the executives of APDCL will retire by CY 16 Approximately 8% of the executives belonging to the level of & above will retire every year till CY 16 PricewaterhouseCoopers Page 11 of 63
The AS-IS and TO-BE Structure The present structure of APDCL can be classified under three broad levels as shown in the diagram below. The AS-IS analysis and TO-BE recommendations for re-designing the organization structure of APDCL have been presented in the same format. The classifications are as follows: Board Level 1 Corporate Level 2 Field Level 3 Board Level: Board of Directors of APDCL The Board of Directors (BoD) of APDCL has seven members and is headed by the Chairman & Managing Director (CMD). The CMD is the lone functional director of the Board and has been delegated powers to undertake management decisions and control the affairs of the company. The rest of the board members are non-functional directors. The current board comprises one Chairman & Managing Director, two State Government Representative Directors (one each from Department of Power and Department of Finance) and four Independent Director (from academic institutes, local repute etc) Main Observations The APDCL Board of directors has representation from the state government. The APDCL Board has 4 independent Directors. Their process of appointment / nomination is specified in the Article of Association. The APDCL Board has one Functional Director - the CMD. Relevant Guidelines on Corporate Governance The Department of Public Enterprises has laid out certain guidelines for the constitution of Board for Central Sector PSUs (Source: Guidelines on corporate governance for CPSE 2007). The key points of the guidelines are: PricewaterhouseCoopers Page 12 of 63
The Board of Directors of the company shall have an optimum combination of functional, nominee and independent directors. The number of functional directors (including CMD/MD) should not exceed 50% of the actual strength of the Board. The number of nominee directors shall be restricted to a maximum of two. In case of CPSEs listed in Stock Exchanges, the number of independent directors shall be at least 50% of Board Members. In case of CPSEs not listed in the Stock Exchanges, at least one-third of the Board Members should be independent directors. Experience from Other Utilities The following table shows the composition of the Board of Directors of some state utilities: Indicator Directors UHBVNL OHPC AP Genco AP Transco APNPDCL APCPDCL No of Directors Functional 4 3 7 6 6 8 Govt Nominee 4 3 1 1 - - Other Non- Executive - 4 2 2 2 - Recent Board Size 8 10 10 9 8 8 The above table shows that the number of government nominated directors is restricted in most utilities (except UHBVNL) to ensure more independence in operations of the company. The functional directors in most utilities include functional directors from Operations, Finance, Human resource, Technical / Projects to assist the CMD/MD. In UHBVNL (Haryana Discom), the company has formed a committee consisting of functional directors of the company, known as Committee of Whole Time Directors (WTD) of the Company. This is popularly called as WTD Committee. The details and powers of the committee are incorporated in the Article of Association of the company. The WTD committee has been assigned Full Powers for making various decisions in order to enable smooth functioning of the company. The powers of the WTD committee are clearly defined and separated out from the Board of the company. PricewaterhouseCoopers Page 13 of 63
Structural Implications Sl. No Issue 1 Need for greater functional representation at Board level 2 Internal Audit Function not strengthened Experience from other Utilities Presence of 3-6 Functional Directors depending upon the size and focus of the organization Internal Audit function is a separate function directly reporting to the head of the company Recommendations / Changes considered Functional Directors at Board Level for Projects, Human Resource, F&A and Operations proposed to be introduced Internal Audit function is proposed, which will report to Board Audit Committee Recommendations The introduction of 4 functional directors positions at company Board level namely Director Projects & MM, Director Human Resource, Director F&A and Director Operations is proposed. These positions are in addition to existing position of CMD of APDCL. These positions at the Board level need to be selected based on merit and functional requirements and must not be treated as posts by promotion. Future Scenario and Migration During various stakeholder discussions, it was highlighted that incorporation of the positions of functional director at the Board level requires appropriate changes in the Article of Association of the company and thus, it may not be feasible to fill these positions immediately. Therefore, an interim arrangement is recommended under which the proposed positions of Directors may be replaced with Executive Directors (ED) for the company. The appointment of EDs should be filled from the respective functional stream only. For eg: it is recommended that the position of ED F&A or ED Technical is filled from the respective finance or electrical cadre itself. The position of EDs should be retained till the time amendments in Article of Association are made that enable the appointment Functional Directors at the Board Level. A committee comprising EDs and CMD should be formed and appropriate powers should be delegated to the committee to ensure smooth functioning of the company. As discussed above, UHBVNL (Haryana Discom) has similar arrangement known as WTD Committee. Based on PwC knowledge base, we have summarized a tentative list of various full powers which are normally available with such committees. The same is attached under Annexure 3. PricewaterhouseCoopers Page 14 of 63
An Overview of the Entire Structure of APDCL The Existing Top Level Structure The diagram below captures the first level of management that is directly reporting to the CMD. The CMD is the top most functional position in APDCL and is the position to whom all the functional heads in the organization report. APDCL has a functional structure primarily divided into 3 operational zones Upper Assam Zone (UAZ), Central Assam Zone (CAZ) and Lower Assam Zone (LAZ). Each zone acts as a business unit and is headed by a. The 3 operation zones are supported by functional groups like finance and accounts, project management, materials etc. The top level reporting structure under the CMD is as follows: Chairman & Managing Director Overall Top Level Existing Org Chart APDCL Chief Medical Officer UAZ HR UAZ F&A Rural Electrification Director Vigilance & Security LAZ HR LAZ Commercial & Tariff P&P Director PMU CAZ HA CAZ Company Secretary Functions working in APDCL for other utility requirements also Functions working in APDCL for APDCL requirements Functions working outside APDCL but for APDCL requirements also Note: The position under each broad box is reporting directly to CMD. PricewaterhouseCoopers Page 15 of 63
The broad description of the functions reporting directly to CMD is summarized in the table below: Sl. No Function / Position 1 (Operations - UAZ, CAZ, LAZ) 2 (Commercial and tariff) Broad Roles & Responsibilities zones is responsible for all the circles under that zone Acting as an interface between field offices and the headquarter functions (LAZ) is also responsible for the material management and R-APDRP implementation. Commercial (revenue monitoring) wing is responsible for the monitoring commercial performance of all the subdivisions and generating MIS reports. Tariff wing looks after the power procurement issues and also deals with all regulatory issues. 3 Director (PMU) Director Project Monitoring Unit (PMU) looks after the Asian Development Bank (ADB) funded projects. He acts as a coordinating officer for the ADB projects. These projects are across Generation, Transmission and Distribution and loan is often given to ASEB. Thus work of PMU in not limited to APDCL but it also provides services to APGCL and AEGCL. 4 (Projects & Planning) 5 (Rural Electrification) Projects and Planning (P&P) is responsible for allocation of funds in project and tracking the progress of projects. All the funds from the government of Assam and Government of India are allocated to ASEB (for old schemes that were initiated before unbundling and are continuing). Project & Planning is responsible for planning of the projects and then as per the plan funds are allocated to different projects being undertaken by APGCL, APDCL and AEGCL Rural Electrification is responsible for planning and implementation of Rajiv Gandhi Grameen Vidyut karan Yojna. 6 (F&A) Preparation of pay and keeping pension & provident fund records Corporate finance Preparation of final accounts, budgeting and audit activities 7 (HR LAZ, CAZ, UAZ) Posting and transfer of employees Promotions Recruitment The position is acting as Director Personnel also for ASEB for unified cadre activities 8 Chief Medical Officer Approval of medical bills Liaison with local hospitals / medical practitioners PricewaterhouseCoopers Page 16 of 63
9 Company Secretary Act as company secretary on behalf of BoD Maintain details of Board meetings and other statutory compliance 10 Director (Vigilance & Security) Security arrangements of entire establishments in the company Structural Implications Sl. No Issue 1 14 positions directly report to the CMD and few of them are not among core business requirements 2 HR Function is not unified at the head office, limiting its strategic company wide transformational role 3 Need for greater focus on functions such as commercial, regulatory, Power procurement, load management 4 Project planning & implementation is not unified and is being carried out by many functional heads. Eg: ADB projects, RE projects, GoI & GoA projects are managed under separate heads Experience from other Utilities The span of control for head of organization is between 5-10 HR is a clearly defined functions at head office with reporting to head of organizations directly At head office, functions are clustered within their functional line and its reporting hierarchy is clearly defined in the organization structure Normally, the projects activities are functionally integrated under Projects & planning wing. The head of projects & planning represent in the company board Recommendations / Changes considered Functions aligned and clustered to reduce the span of control and ensure CMD is reported by functional head which are of core business requirements HR is unified at head office with transformational responsibilities and field level presence is created for both transformational support and transactional activities The Commercial function is proposed to be strengthened with clear responsibility for Regulatory, Power procurement, Load management, Energy audit activities Functions aligned and clustered to reduce the widespread handling of project related activities. The entire Project planning, Designing, DPR, Tendering, Procurement, Execution monitoring is unified under Director Projects & Material management PricewaterhouseCoopers Page 17 of 63
To-Be Organization Structure The top level proposed organization structure for APDCL is as follows: Chairman & Managing Director Board Audit Committee Company Secretary & PRO Internal Audit Legal Director Vigilance & Security Director Projects & MM Director HR Director F&A Director Operations Rural Electrification GM Projects HR F&A LZ Guwahati Commercial Material Management GM Civil Admin, Welfare, IR GM Corporate Accunts, Taxation UZ, Jorhat IT & MIS ARPDRP Chief Medical Officer CZ, Dibhu The following is a summary of the key changes recommended: The four positions of functional Directors Director Operations, Director Human resource, Director F&A and Director Projects & Material Management have been introduced to have greater representation at the Board level The entire HR function has been unified under Director HR to create single point accountability for the function. Internal audit has been proposed as a separate function to ensure independence is maintained while carrying out audit activities. The function will take care of internal and statutory audit and preferably be supported by external auditing firms. The internal audit function will report to the board audit committee. PricewaterhouseCoopers Page 18 of 63
The centralized legal cell has been proposed for handling all commercial and employee legal cases for the company. This position will be filled by the HR of LAZ. The legal cell will handle cases related to land acquisitions, consumer complaints, employee complaints, recovery of unpaid amounts etc. The activities related to company secretary, security, PRO will be handled by company secretary. The proposed functions under each Director level position are discussed under subsequent sections of this chapter. However, we are highlighting some of the key changes proposed under each Director level position. Changes proposed under Director Projects and Material Management: The new position of Material Management will take care of activities like Material planning, Procurement, Tendering, Stores etc. The new position of GM Projects will take care of project coordination, project planning for non-adb schemes, preparation of design specifications/dprs, meter relay testing (MRT) and project management unit (PMU). The positions under GM Projects are aligned to create single point accountability for the design wing of entire APDCL for projects not covered under RAPDRP/ADB/RGGY. The civil design for new projects will be carried out under GM Civil to support the project requirements of RE, Projects etc. The mechanism to integrate corporate office civil function with field zonal offices, civil maintenance of colonies & buildings of APDCL is ensured by creating a position of Coordination under GM Civil. Changes proposed under Director Operations: It is proposed that the zone office under each be relocated to the area of the zonal operations. The office should preferably be located centrally to manage the entire zone functions effectively. The functions under commercial have been unified in such a manner so as to support the commercial activities of company and create clear accountability for regulatory & tariff, power procurement & load management functions. The additional position of GM energy audit and customer services has been proposed to monitor the revenue & loss of three zones, commercial & customer service; energy accounting activities and compile the same. The new setup under IT implementation & MIS is proposed to take care of IT initiatives, IT project management and supervisory role in the company. RAPDRP program for APDCL will lead to establishment of Data centres, addition of requisite IT infrastructure & hardware, ERP based solutions for commercial and support functions in APDCL. Therefore, the IT PricewaterhouseCoopers Page 19 of 63
cadre within the company should be built. Accordingly, we have proposed one position of -IT and three positions of -IT apart from existing positions of AM-IT at field level Changes proposed under Director F&A : The changes under F&A are focused towards getting functional clarity & greater accountability in the department. The various positions of GMs / s have been named with respect to the functions they will perform. These are - GM corporate account, taxation; budget, treasury; corporate finance, power purchase, project finance; establishment. Changes proposed under Director HR: The changes that have been proposed aim at creating a more transformational role of HR. The functions introduced in the HR department are essential from the point of view of employee development and building a healthy HR function within the organization. The existing positions of HR at CAZ and UAZ are functionally rearranged under Director HR. The various functional positions proposed are Establishment, Manpower planning & Recruitment and Training & Performance management system. The position of Chief medical formerly reporting to the CMD will now report to the Director HR. Changes proposed under zone office and circle office: Zone Office: A new position of Establishment is proposed at zone office reporting directly to zone for the entire establishment and, training & recruitment activities. The existence of this position will ensure lesser establishment load on corporate office. Thus, this position under zone needs to be provided appropriate delegation of power to perform effectively. A new position of F&A is proposed at zone office reporting directly to zone for entire zonal F&A matters. This position will facilitate building zone as a profit centre for the company. The position of HQ, Technical will perform activities related to Works, new schemes, civil assistance. The position of Technical under HQ will also coordinate the execution of all project activities at field. The Technical will further be supported by IT for implementing IT initiatives across the zone office. PricewaterhouseCoopers Page 20 of 63
A new setup of GM enforcement is proposed under zone to conduct raids to detect theft, revenue realization, preparing case for legal proceedings etc. Circle Office A new position of project / RE execution is proposed at the circle office. This position will coordinate the entire project execution under the jurisdiction of circle. The position will be a single point contact for head office in terms of progress monitoring of projects. The projects will include RE, APDRP/RAPDRP, IT implementation, State/self funded, ADB funded projects etc. A new position of Energy audit / SPPS has been proposed to introduce effective energy audit initiatives across circle and monitor the performance of SPPS / other outsourcing initiatives in the circle. A new position of AM Establishment has been proposed at the circle office. This position will ensure adequate support to circle head for performing its establishment activities and will look after training & recruitment support activities. The appropriate delegation of power should be assigned to this position. Designation Electrical Civil F&A HR Comparison of As Is and To Be Man-in-Position Corporate Legal IT Medical Security Secretariat Total E P E P E P E P E P E P E P E P E P E P 5 6 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 6 8 GM 9 9 0 1 0 1 0 0 0 0 0 0 0 0 1 1 0 0 10 12 28 31 2 0 3 3 3 2 0 1 0 1 0 0 0 0 0 0 36 38 161 159 19 17 8 11 0 8 0 0 0 6 0 0 0 0 1 1 189 202 AM / DM / M* 365 365 0 0 25 25 2 15 0 2 15 15 0 0 0 0 0 0 407 422 CMO 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 1 1 Total 568 570 21 18 37 41 5 26 0 3 15 22 1 1 1 1 1 1 649 683 1) The numbers mentioned in above table are based on our discussions at corporate office and on assumption that all the field level circle heads and division heads positions are filled. 2) *: The count of AM / DM / M is based on the employee database. 3) E: Existing; P: Proposed PricewaterhouseCoopers Page 21 of 63
Building Cadres and Promotional Avenues: This section has been divided into two parts Highlighting the concerns raised by the stakeholders and addressing the concerns raised by the stakeholder. Concerns raised by the Stakeholders: The various concerns raised by the stakeholders have been grouped under two headings Building of cadres in the company and Promotional avenues for the executive workforce of the erstwhile ASEB, now belonging to APDCL, AEGCL and APGCL respectively. The details under each part is as follows: o o Building of cadres in the company: The main concerns in this regard are as follows: What are the new cadres that need to be introduced and how can they be built in the company? How should the existing cadres be strengthened? How can attractive promotional avenues be built for employees in each cadre? Promotional avenues for the employees of erstwhile ASEB, now belonging to APDCL, APGCL and AEGCL respectively: The main concerns raised in this regard are as follows: Inter Company Promotional Avenues: How can it be ensured that employees belonging to the three companies post restructuring do not feel at a disadvantaged position in terms of promotional avenues as compared to the situation prior to restructuring? In the pre restructuring scenario, employees are eligible to move across the three companies to avail the promotional opportunities. However, post restructuring, this movement will be restricted. (for eg. In the current situation, it is possible that a GM in AEGCL becomes in APDCL/APGCL, if any vacancy arises in APDCL/APGCL respectively. But post re-structuring it will be possible for this GM of AEGCL to become the only when a vacancy arises in AEGCL). In case the vacancy arises in the other two companies before it arises in AEGCL, an employee will feel he/she was better off in the pre restructuring scenario. To conclude, how can it be ensured that employees don t feel that the other company is offering better promotional avenues? Promotional Avenues within a company: How can it be ensured that all cadres within the same company have equal promotional opportunities? For eg: An employee serving as a in the F&A cadre in AEGCL must not feel that he/she lacks promotional opportunities as compared to a in the electrical cadre in AEGCL. How to ensure that the employees occupying the leadership positions in each company (eg: at the level), occupies PricewaterhouseCoopers Page 22 of 63
the position for a longer duration to have sufficient time to build a vision and also be involved in the execution? At present, the tenure of employees at these positions is limited to 1-2 years. Addressing the concerns raised by the Stakeholder: Building Cadres for APDCL: o o The re-designing of organization structure for the three companies has been conducted and the cadres proposed for three companies are exclusively for the respective companies. This exercise for APDCL has built new cadres for HR and IT stream and strengthened the existing cadres of Electrical, F&A and Civil. The aspects of building/strengthening each cadre have been discussed below: Electrical Cadre: This is the largest cadre in APDCL. The electrical function is the core function of the company, no activity is proposed to be outsourced. All the activities will be built within the organization. The top most position of this cadre in the redesigned structure is the level of. In the redesigned organization structure, the presence of this function across the HQ and across all levels of the field has been maintained. Overall, there has been an increase in the promotional avenues among executives. Though there is a marginal reduction at the level, the additional posts at the and level provide greater opportunities of promotion for the executives. Civil Cadre: In the redesigned structure, this cadre has been given the positions of and GM under various activities both at HQ and field level (at circle level). The positions that have not been given under this cadre are the level of and. These have been recommended as Post Personnel (PP) posts. The PP concept is explained later within this section. Overall, there has been a decrease in the number of executives for this cadre. However, in the sum total for all the three companies put together, the numbers of executives remain the same and there is an increase in the positions of GM and. F&A Cadre: In the redesigned structure, this cadre has been strengthened and has been given all the positions from to under various activities. The cadre is introduced at zone level also in the proposed organization structure. Overall, there has been an increase in the promotional avenues among executives. By introducing one post of GM PricewaterhouseCoopers Page 23 of 63
F&A and increasing the number of positions of F&A, the promotional avenues have been increased. HR Cadre: The presence of the HR cadre in APDCL has been very limited and is mainly handled by electrical cadre at the field level. Thus, the redesigned structure has built this cadre in the company. Twenty six positions of HR at various levels have been proposed. The positions of s that have been proposed are presently not occupied. Therefore, it is recommended that lateral recruitment for filling these positions be conducted immediately. Alternatively, it is also possible to give an option to the existing DPMs (placed at circle office but from electrical cadre) to switch over to the HR cadre and carry out the functions respectively. Thirteen new positions have been recommended at the entry level. In order to ensure that the cadre is built within the company, the recruitment for thirteen positions must be conducted keeping in mind that people who will fill this post mush have an appropriate HR background. Overall, the recruitments at senior positions or at entry level positions should be done among candidates with a background in HR to help the company build this cadre effectively. The HR cadre has been given all positions from to, except that of the GM. This position of GM HR will continue as a PP post in APDCL. IT Cadre: The function of IT for APDCL can broadly be classified under two categories Basic IT administration and IT initiatives under RAPDRP. Under RAPDRP program, a huge sum/ grant has been provided by Government of India for all state utilities with an objective to set base line data for various project areas covering consumer indexing, GIS mapping, Metering of distribution, Transformers and feeders, Automatic data logging, SCADA/DMS system. RAPDRP will also include adoption of IT applications for meter reading, billing & collection, energy accounting & auditing, MIS, establishment of IT enabled consumer service centres, data centres etc. Overall, a successful intervention of RAPDRP program will lead to establishment of Data centres, addition of requisite IT infrastructure & hardware, ERP based solutions for commercial and support functions in APDCL. Thus, it is imperative for APDCL to build a strong IT function in future. This will require the presence of specialized manpower that will have the ability to manage projects, act as an IT coordinator and perform supervisory role to manage internal challenges. The immediate need is to develop the skill of project management under the IT function which will PricewaterhouseCoopers Page 24 of 63
ensure effective implementation & administration of the various IT initiatives. The presence of IT skill in APDCL is limited and currently managed by employees belonging to electrical cadre. Therefore, the IT cadre within the company should be built by recruiting personnel having appropriate skill sets. Accordingly, we have proposed one position of -IT and three positions of -IT apart from existing positions of AM- IT at field level. These positions must be filled as lateral recruits who have the skill and experience to render the duties. These professionals must be hired on a contractual basis and their recruitment policies and compensation must be benchmarked with the job-market in private sector. This will help the company to build this cadre in a short span of time ensuring that the skills required are not compromised upon. This arrangement need to be reviewed in next 3-4 years. Till then, the AM s who have been recruited for IT must be made to work under the guidance of the newly recruited employees and their skill must be built. This will lead to a stronger IT cadre once the phase of RAPDRP implementation is over. Promotional avenues for the employees of erstwhile ASEB, now belonging to APDCL, APGCL and AEGCL respectively o o In dealing with the various issues arising with respect to promotional avenues, a concept of Post Personnel (PP) has been used. Before the concerns with respect to promotional avenues are addressed, a brief description of the concept of PP is presented below: Post Personal (PP) enables an employee to attain the next level in the hierarchy and earn the benefits assigned to higher position, despite that position actually not existing within the structure. Once this employee retires, this post will cease to exist and will return to the original proposed position. For Eg: In the proposed organization structure of one of the companies, the highest proposed position is GM in a cadre. This means that the employee cannot get promoted beyond the level of GM as there is no post available above this. By introducing the concept of PP, the employee will be promoted to the post of based on some set criteria (this needs to be defined in the PP policy directive). He/she retains the position achieved through PP till he/she retires. Post his/her retirement, the status of position in the structure is restored to GM level and the promotion among successors will take place accordingly. Dealing with inter company promotional avenues: This refers to the situation where an employee on the common seniority list who could have been promoted to the PricewaterhouseCoopers Page 25 of 63
o next level in the pre-restructuring scenario now loses out on the opportunity in the post-restructuring scenario. The vacancy that arises is in the next company is filled by someone else from that company and this person despite being eligible for promotion gets left out as he is not working in that company. In order to deal with this issue, the following options are recommended: Give promotion to each employee who is likely to be deprived of the next promotion Allow PP based higher position to eligible employees in other companies Grant higher pay scale to deprived employees equivalent to the promotion post. In either case, these options can only be exercised till a particular point of time. Beyond a certain point, when the company has taken care of the majority of such cases, individual cases can be handled and each aggrieved employee can be dealt with at an individual level. The retirement profiling of the three companies reveals that by Calendar Year (CY) 2018, 62% of the total executives of APDCL would have retired. The same figures for AEGCL and APGCL are 60% and 60% respectively. Thus, by CY 2018, a majority of the executive workforce (more than 60%) that is likely to be affected by the restructuring exercise would have retired. The PP Policy must then be made valid only till 2018, so that these employees need not suffer. The situation post CY2018 needs to be reviewed and a separate solution can be created when the business requirements are different and a different set of solutions can be created. Dealing with promotional avenues in different cadres of the same company post restructuring: This refers to the situation where employees belonging to different cadres of the same company feel that they are disadvantaged as they belong to a cadre that does not have enough promotional avenues. In order to deal with this issue, the following option is recommended: Allow PP based promotions to deserving and eligible employees in each cadre. This will be an accommodation made for the employee to motivate him/her to keep performing and ensure that the promotional avenues are not blocked. PricewaterhouseCoopers Page 26 of 63
This policy of PP for cadre based promotions is not time bound. This is because the structure itself does not provide for the promotional avenue. So whenever the employee hits a ceiling, a PP post must be offered till the employee retires or becomes eligible for the next level of promotion. Following is the summary of cadre wise PP position proposed to be introduced in APDCL Civil IT HR PP PP GM PP PP PP o Increasing the tenure of Top Management, especially at the level of It is recommended that the company creates an appropriate policy to ensure that the employees occupying the position of have a minimum balance of service period (say three years). While preparing such policy for the company, the following care must be taken: The performers do not lose out on promotional avenues as their balance of service is less then 3 years. For such employees, an interim arrangement such as extension of service may be adopted. The ineligible (based on balance of service period) but senior employees do not lose out on their chance to occupy position. They may be granted promotion either on PP basis or may be awarded higher pay scale. This policy will ensure the following: The average tenure spent by the will increase and greater time will be available for conceptualization and implementation of an overall strategy The deserving employees do not lose out on promotional opportunities PricewaterhouseCoopers Page 27 of 63
Sl. No Corporate Level: Structural and Functional Analysis of the Corporate Office F&A Existing Structure Finance and accounts function is headed by a. Finance section at present is divided into ten sections. Each section is either headed by a or and each officer is responsible for multiple sections. The table below provides details of the various activities in Finance and Accounts wing: Name Function Responsibility Assisted by 1 GPF To maintain provident fund records 2 Budget and Head Quarter Cash Preparation of budget for APDCL and monitoring of expenditure as per the prepared budget -I -I S.M-I S.M-II A.M-I 3 Compilation Preparation of Final Accounts -II S.M-III S.M-IV A.M-III 4 Establishment Establishment activities of Officers in Finance and accounts cadre -III A.M-V 5 Audit Revenue Audit -III S.M-V S.M-VI S.M-VII A.M-VI 6 Pension To maintain pension records S.M-I 7 GAD Generation of Payslip of the executives, pay fixation and retirement records 8 Billing and subsidiary cash Approval and payment of Bills for employees and contractors. 9 Corporate Finance Manage all major fund flow management including, power procurement and repayment of loans S.M-I S.M-III S.M-IV 10 Reconciliation Reconciliation of Accounts S.M-V A.M-II A.M-III A.M-IV Some of the officers of the rank of have dual reporting. They are reporting to the for certain functions and are directly reporting to for others. The detailed organization structure of the Finance and Accounts function is given below PricewaterhouseCoopers Page 28 of 63