Journal of Organizational Behavior Education 5.

2012 NeilsonJournals Publishing

Ref. No.: JOBE5-0CS1

This case study has been peer reviewed by the editorial board of the Journal of Organizational Behavior Education (JOBE). For further
information on this journal please visit the JOBE website at www.neilsonjournals.com/JOBE

Central Power Corporation: The Challenge of Building

Motivation and Morale
Kavita Singh
Faculty of Management Studies, University of Delhi, India

Abstract. This case deals with an assessment of motivational practices of an Indian Public Sector organization. The case is a clear reflection of
the gap that existed between the expectations of the employees and the provisions made by the organization to keep them satisfied. An analysis
of survey information revealed that in spite of the top facilities provided by the company, the employees generally remained dissatisfied. This case
brings out the issues related to current theories of motivation and beyond.
Keywords: public sector organization, reward and recognition system, performance management systems, training and development, grievances.

1. Introduction
Mr. Kumar had been under stress for quite some time in the recent past. Though being at a very senior position of
General Manager of Human Resources at a large Public Sector Power Company (Central Power Corporation, (CPC))
for last six years and enjoying the associated perks and benefits associated with the position, he had been experiencing
a feeling of discomfort with the way the employees of the company had been behaving. Mr. Kumar was a sincere and
dedicated employee of the company and had always thought for the good of the organization. His main concern was
that though the company was doing very well for itself and had the lowest rate of attrition amongst its competitors and
also had been judged as one of the best employers in different surveys conducted by different agencies, the current
employees did not reciprocate the same feeling towards the organization. Throughout the last twenty years he had seen
the company go through its varying phases of ups and downs and had found the employees to be generally motivated
and satisfied but not at the present time.
As a General Manager (HR) of the company responsible for a large section of employees, Mr. Kumar had been
feeling for quite some time now that the morale of the employees seemed to be withering. He felt that the current
employees did not have a high level of commitment and sincerity as was the case ten years ago. He could possibly relate
this to the higher rate of competition in the business environment which was having a toll on the psyche of the
employees. This was one of the main causes of worry. The apprehension of losing many competent employees to
competitive private players in the industry was becoming a constant matter of great concern. He fully understood that
he had no control over the future aspirations and ambitions of employees but still did not want to lose them at any cost.
He had to find out very quickly what was ailing the employees before things got out of his control. He wanted to know
what had happened to the employees and the company which was now disturbing both of them.

2. Background of Central Power Corporation Limited (CPC Ltd.)

CPC Ltd. was one of the largest thermal power generating companies of India. A public sector organization, it was
incorporated in the 1975 as a wholly owned company of the Government of India to accelerate power development in

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Ref. No.: JOBE5-0CS1

Central Power Corporation: The Challenge of Building Motivation and Morale

the country. Within 30 years CPC had turned into a truly national power company, with power generating facilities in
all the major regions of India. Based on 1998 figures (Data Monitor UK) CPC was the 6th largest in terms of thermal
power generation and the second most efficient in terms of capacity utilization amongst the thermal utility companies
in the world. It provided power at the cheapest average tariff in India. CPC extended consultancy services to various
organizations in the power business sector as an outcome of being a successful organization. It also had the lowest
attrition rate amongst its competitors, being rated one of the best employers in the industry.
And then, the Indian Power Sector was opened with much fanfare to private participation in 1991 to hasten the
increase in generating capacity and to improve the system efficiency. The process of inviting private participation into
the power sector and the problems experienced resulted in an increase in the restructuring of the power sector. As a
result of which the Central and State Electricity Regulatory Commissions were formed. Some problems remained
inherent such as the addition to generation capacity without the corresponding improvement of transmission and
distribution facilities which further undermined the system efficiency.
As an aftermath of the reform process, public sector enterprises (PSEs) in India lost their monopoly status and found
themselves in oligopolistic markets (Gupta, 2005). The power sector witnessed massive transformation vis--vis
restructuring, regulation and private sector participation (Hindustan Times, 2006). The tasks which had previously been
handled by purely Government Departments/Electricity Boards had to acquire a new look and to attain a corporate
identity. In the changing scenario, only two factors could give the company a competitive advantage, i.e. effective use
of technology and the right focus on human resources.
CPC set forth an ambitious growth plan for itself. By 2017 it aimed to become:
A Global Fortune 500 company.
An Indian MNC with presence in many countries.
A diversified utility with multiple businesses.
A group turnover of over Rs 1400 bn with 30000+ employees.
Be amongst the top 5 in market capitalization in the Indian Market.
Be a benchmark in project construction, availability and efficiency.
Have a strong research and technology base.
Have a loyal customer base in both bulk and retail supplies.
Be a Preferred employer.
Be a leading corporate citizen with a keen focus on executing its social responsibility.
As had always been observed, embracing change in a stably performing organization was infinitely more difficult
than implementing changes in a downward performing one. It was simply because success paradoxically breeds
stagnation (Ahmad & Chopra 2004). There was always a tendency to believe that since there existed a winning formula
which had worked well in the past, why abandon it? But this could be a recipe for disaster. This is what happened to
IBM before Lou Gerstner rescued it and Kmart paid a heavy price and went bankrupt (DiCarlo 2002)
With the objective of becoming one of the worlds largest and best power utilities, CPC had embarked on a number
of initiatives. Labeled a Navaratna (Indian Government policy of ascribing status to performing organizations by
calling them one among the Nine Jewels) company with the potential of becoming a global giant, CPC remained alert
to the changes taking place in the external environment, such as policy and regulatory changes, customer expectations,
national and international economic factors, etc. Along with these changes there was also an increasing focus on the
environmental aspect of business and societal obligations. With the changes taking place in the competitive external
environment, it had become essential for organizations to become proactive or they would not be able to enter into the
next phase of growth. The potential of CPC to become a world-renowned energy company was becoming more and
more clear. CPC was already recognized as one of the best organizations to work in. According to a survey conducted
by Grow Talent, CPC was ranked as the third best place to work in India amongst a sample of 180 companies
(Hindustan Times 2006).
Even in this competitive environment, CPC was reactive enough to respond to the external forces of change by
bringing about alterations to its structure, process, culture, system, attitude, and in short, the way it did business. The

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approach had to be radically different to get the necessary breakthrough results. Competition was extensive and the
market unforgiving. The company had to shape up or ship out. The shaping up process was not easy, as it required
the drivers of the highest caliber. It required leaders with vision, foresight, empathy, and courage, with an ability to build
winning teams and consistently deliver results by creating a culture of excellence. They had to be agents of change,
who visualized the future, aligned the organization to this vision, generated energy and acceptability, built systems and
processes to sustain the momentum, and create a culture where there were managers and employees with the necessary
desire to raise the organization to the highest levels of acheivement. The organization needed leaders who were able to
drive the workforce towards making excellent contributions to the organization while at the same time maintaining
motivation and morale at the highest level. In short, CPC needed a highly motivated workforce with strong levels of
morale to take it to the necessary levels of performance to acheive its goals.

3. The Current Issues

As a student of management many years previously in a premier business school, Mr. Kumar had learnt that many
people mistook motivation to be something managers did or gave to their employees in order to make them work better.
He knew it was necessary to know that motivation had to do more with the inner personality of the individual rather
than with external inducements or allurements. Managers could only try to understand the inner feelings and processes
of their employees and try to influence them to the maximum extent. It was possible to look at motivation as a chain
reaction. People had needs. These needs gave rise to wants or goals which in turn created tension. This tension was
resolved by taking action towards achieving that goal which ultimately resulted in satisfaction. Mr. Kumar wanted to
understand where his employees currently stood on this chain reaction. His main concerns were to find out whether the
employees were receptive to any change initiative or not? How did they view the decision making process in the
organization? Were they satisfied with the reward and recognition policies of the company? What were the main reasons
for any grievances? Which of these steps in the reaction needed immediate attention from the organizations
perspective? To resolve these issues, he decided to perform an analysis of the motivational practices being followed by
the organization to attract and retain the most competent and talented pool of employees. He asked his HR team to help
him explore and identify various factors that were responsible for retaining the motivation and morale of employees in
the organization and also to assess levels of satisfaction/dissatisfaction.

4. The Survey
As proposed by Mr. Kumar, the HR team of the company carried out an extensive survey to diagnose the causes for the
apparent low levels of motivation and morale of the work force. The survey included employees from all levels of the
organization (executives, supervisors, and workers). Respondents were given a standardized questionnaire to be
answered through a paper and pencil test. The total number of respondents covered in the survey was 532 (219
executives and 313 non-executives) and the time period in which it was conducted was January to March 2011.
A questionnaire based on 24 dimensions (catering to the perception of employees towards different motivational
practices used by the organization) was distributed to the respondents which included objective and multiple choice
questions. In addition to this, information was sought through interviews and group discussions with the aim of attaining
an insight into the views of the employees towards the motivational practices and their feedback.

4.1. Profiles of the Respondents of the Executive Survey

A summary profile of the 532 respondents is given in Table 1(a) to 2(b).
Profile of Executives (N = 219)
Table 1(a): Gender Profile of the Respondent Executives
Gender

Respondents

% age

Males

180

82.1%

Females

39

17.9%

Total

219

100%

Central Power Corporation: The Challenge of Building Motivation and Morale

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Table 1 (b): Age Profile of the Respondents Executives

Age Group

Respondents

% age

21 30 years

53

24.42%

31 40 years

72

32.98%

41 50 years

53

24.18%

More than 50 years

41

18.42%

Total

219

100%

As is evident from Table 1(a) and 1(b), the total sample of executives comprised 82.1% males and 17.9% females
and amongst these 24.42% were in the age range of 21-30 years, 32.98% in 31-40 years, and 24.18% in 41-50 years,
and the remaining 18.42% were more than 50 years of age.
Profiles of Non-Executives (N = 313)
Table 2(a): Gender Profile of the Respondents of Non-Executives
Gender

Respondents

% age

Males

233

74.4%

Females

80

25.6%

Total

313

100%

Table 2 (b): Age Profile of the Respondents of Non-Executives

Age Group

Respondents

% age

21 30 years

37

11.88%

31 40 years

41

12.42%

41 50 years

133

42.92%

More than 50 years

102

32.78%

Total

313

100%

As is evident from Table 2(a) and 2(b), the total sample of non-executives comprised of 74.4% males and 25.6%
females. In the non-executive sample 11.88% were in the age range of 21-30 years, 12.42% in 31-40 years, and 42.92%
in 41-50 years and the rest 32.78%were more than 50 years of age.
For the purpose of analysis different dimensions identifying the perception of employees towards different
motivational practices used by the organization were ranked in order of importance as rated by the respondents. The top
five parameters which were rated with relatively high scores by the executives accounting for high motivation and
morale were Safety & Security, Organizational Commitment, Job Satisfaction, Monetary Benefits, and Welfare
Facilities. The bottom five parameters which were rated low by the respondents accounting for low motivation and
morale were Training and Education, Recognition & Appreciation, Performance Appraisal, Communication and
Transparency, and Grievance Handling. For the non-executives respondents the top five parameters which were rated
with relatively high scores were Organizational Commitment, Job Satisfaction, Vision & Values, Safety and Security,
and Monetary Benefits. The bottom five parameters which were rated low by the non-executives were Training &
Education, Employee Management Relations, Grievance Handling, Objectivity & Rationality, and Participative
Management. Through the survey findings it was observed that approximately one seventh of the executives were in
the high risk category or were disengaged, i.e. both their attitudes and behaviours were negative with respect to the
organization and its motivational policies.
After going through the detailed conclusions drawn by the survey findings, it emerged that the factors responsible
for low motivation and morale of employees in the organization fell predominantly in four problem areas namely: 1)
Reward and Recognition, 2) Performance Appraisal, 3) Training and Development, and 4) Communication and
Transparency.

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4.2. Reward and Recognition System

With regards to recognition and appreciation it was observed that the recognition of actual performance was almost nonexistent and a lot of favoritism was observed in the practice of rewarding the employees. A formal system of recognition
was not in place and new ideas and initiatives did not get the needed support. With respect to the perception towards
the reward and recognition policies the verbatim statements of respondents were recognition of work of actual
performance is almost non-existent, near and dear ones get rewards/promotions, there is no formal system of
recognition/appreciation, and initiative and new ideas do not get the needed support.
The company had a policy and its administration believed in the Power of People and it was the professional
philosophy of the management to create an enabling organizational culture for people to demonstrate their creativity,
initiative, and involve them in holistic development, through recognition and celebration of achievements (CPC HR
Manual). Although the company had formulated many HR policies for employees development and growth, it was felt
that there was still space for enhancing employees motivation and morale on a continuous and sustained basis.
4.2.(a) Actions taken by the company to regulate the Reward and Recognition System
As a result of the findings drawn from the survey and the concerns of the employees towards the reward system a new
program was launched with a view to recognizing and rewarding employees work, good behavior, leadership qualities,
involvement in TQM initiatives, demonstration of human values and core values of the company with a view to
fostering a culture of recognition and celebration of achievements in the organization. The reward system was
introduced by the management for enhancing the motivation and morale of the employees with all the regular
employees of the company being eligible for receiving the rewards and recognition under the Reward System as per
their applicability and eligibility.
The final list of rewards and recognition included Thank You Slips (to promote a culture of thanks giving, and
acknowledgement of help rendered by other employees), Applause (to appreciate a task well done/target achieved
within a stipulated timeframe), Appreciation Letter (to place on record good work done by an employee/group of
employees), Star of the Month; Employee of the Year; Power EXCEL Award (to recognize excellence in discharging
official duties and adherence to the companys core values), Pearl Award (to recognize excellence in leadership), ACE
Awards (Award for Corporate Excellence); Mentors Recognition; Welcoming the New Employee; Bidding Farewell;
and Long Service Award.

4.3. Performance Management System (PMS)

Through the survey it was found that the employees had severe concerns regarding the performance appraisal system
being followed by the organization. The observations made by the employees in verbatim were PMS is not used for
development. It is used for deciding PRP (Performance Review and Planning) and promotions, PMS is not objective
and transparent. It is still being operated on the line of Annual Confidential Reporting, PMS is only eyewash. Targets
are set. Executives perform well to achieve targets but outstanding is given only to those who are due for promotion,
The existing PMS is too cumbersome to fill in and takes up lot of busy executives time, There may be different
KPAs for the same job in different units, PMS is being misused for promotion to non-deserving candidates.
One of the major observations was that the Performance Management System was not being used for development.
Rather its application was more for the purpose of transfers and promotions. PMS was observed to be less transparent
and was stated to be still operating on the lines of annual confidential reporting. It was seen as an eyewash as it was
expressed that there was no direct relationship between the performance (in terms of achieving the targets) and rewards.
The PMS was found to be too complicated and time consuming and was stated to be misused for the purpose of
promotion to non-deserving candidates.

4.3.(a) Actions taken by the company with regards to Performance Management System
In response to these grievances the company introduced a Performance Management System named Performance and
Competence for Excellence (PACE), which was applicable to all the executives in the company. The basic philosophy
of PACE was to build a culture of performance by aligning individual and organizational objectives and encouraging
open communication and continuous feedback.

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Central Power Corporation: The Challenge of Building Motivation and Morale

Basic processes which were included in PMS were Performance Planning, Mid Year Review, Annual Assessment,
Normalisation, and Feedback, Coaching and Counseling. The PMS was linked to other HR systems through training
and development, a rewards system, and a career development system.

4.4. Training and Development

Training and development was identified as another area of concern. Though there were positive feelings associated
with the policy like there is continuous imparting of training at all levels which has helped in improving skills, but
there was still a great deal of concern associated with it. Employees generally felt that there was an observed bias in
nominating employees for overseas training and there was an absence of a training evaluation technique (Training is
rarely based on TNA (Training Need Analysis), there is bias in nominating executives for external training). People
who were sent for training within India were normally those who were redundant at their jobs. Employees also felt that
Knowledge Management is generally a neglected area, and Generally those executives are nominated for training
whose presence is not required in office. With regards to scope for advancement, employees reacted by stating that
there is no defined career plan, or growth opportunities for executives, No proper succession planning at senior
levels, Criteria for promotion are not clear, reasons for non-promotion are not disclosed, which caused a lot of
discontentment.

4.4.(a) Actions taken by the company with regards to Training and Development
These findings were quite contrary to the facilities provided by the company for training its employees. The company
had a very strong orientation in training and development. It had a Training Institute of its own of national repute where
state-of-the-art facilities for training were available for its employees and other stakeholders. The company also had an
Employee Development Centre at all the project stations across the country. It is not surprising then that it had more
than 10 days of training for all employees which were more than twenty thousand in number.

4.5. Communication and Transparency

It was found that there was an inadequate communication of plans to employees and policies and plans were not
circulated properly and timely (Improper/inadequate communication of plans to all concerned, Policies and plans
not widely circulated or delayed). There was lot of filtering happening as the messages passed on from top
management to the employees at the bottom were not found to be in order (Employees down the line have less access
to communication coming from the top management). And also it was sated by the employees that there was no
provision of feedback on the actions taken on various issues.
There was a uniform perception that the organization did not follow the norms of open and transparent
communication processes in either an upward or downward direction. As a result it was causing alienation among the
employees and distancing them from the management. For effective performance and productivity of the organization
it was essential that the employees amalgamated well with the culture of the organization. For this it was necessary to
have an open and transparent communication system in place.

4.5.(a) Actions taken by the company with regards to Communication and Transparency
Through the interaction with the employees of CPC it was obvious that the organization had a very strong tradition of
internal communication, but employees did not feel very comfortable with it. Its internal magazine used for internal
communication had been named best monthly magazine of all Public Sector Undertaking taken together. As a result of
the grievances of the employees with respect to the communication systems and processes plans were made to focus on
other channels of communication e.g. News Flash, Power Vision, Quality Circle, Professional Circles, etc. Recently the
Managing Director took the initiative of introducing the Suggestion Scheme so that more and more employees could
contribute to the improvement of the self and company alike. All the employees had direct access to the Managing
Director and Directors through dedicated emails links or through the system of MD Open House where an employee
could publicly counter the management. From the reactions of the employees it was apparent that though the systems
were in place, they still required to be implemented in the right manner so that the employees could develop confidence
in the management and the organization.

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4.6. Other Areas of Concern

Besides the above, there were other grey areas that needed attention by the management immediately. Employees in
general felt that that there was no well defined career plan for them and there were very few growth opportunities in the
company. There was an absence of succession planning at the senior level and there were both external and internal
influences on promotion. With respect to organizational culture employees felt that although the management was
efficient, systems were strong and there was a good work culture, the complicated policies slowed down the decision
making process. The company had become quite rigid over a period of time and the HR department had become a parent
department rather than being a service department.
Employees also observed that that there was a lack of transparency in systems and policies, and implementation
procedures were cumbersome. Employees stationed at the corporate office were not rotated so they continued to enjoy
the advantages of being at the headquarters. Other employees were transferred on a frequent basis. The policy on
transfers did not take into account the personal needs and problems of the employees, and political pressures had strong
influence on transfers.
While going through the report, Mr. Kumar found that there were still other issues of concern. Employees also
observed that achievement and competence were not considered as important as hierarchical status. Conforming to rules
and procedures came in the way of creativity and innovation. Mentors did not find time to meet mentees and people
demonstrated their frustrations during meetings. Employees were not involved in any change process taken up by the
organization.
The most important causes of dissatisfaction with participation and decision making as identified by the employees
were lack of timely implementation of the decision taken, non implementation of the decision, lack of involvement in
the implementation of the decision, manner of implementation of the decision, not sharing of the decision with the
employees, not highlighting the activity and other initiatives of the participative forums sufficiently, and the way the
issues are represented in the forum. The important causes of dissatisfaction and the grievances were related to transfer,
career growth, lack of job rotation, relationship with superiors, lack of objectivity in performance appraisal, work-life
balance, assignment of responsibilities, work related facilities, placement within a team or department, welfare
facilities, education facilities, health facilities, and lack of openness and relationship with other colleagues in the group.
With such a plethora of reasons for employees to feel dissatisfied with the company in spite of it providing the best
of facilities and services, Mr. Kumar was definitely a concerned man. He was not able to find or assign any single cause
to any of the dissatisfactions experienced by the employees. Though the organization boasted of its world class
motivational practices as per the market standards, employees were not satisfied with these. The major challenge facing
Mr. Kumar was to set the house in order. How he was going to go about this serious issue?

Questions for preparing for the classroom discussion:

(Students should make notes on the questions and bring them to the classroom)
Question 1: What were the major issues or problems arising in the case?
Question 2: Given the background of major motivational theories, which of these would help us to understand this
situation more effectively?
Question 3: How should Mr. Kumar tackle this situation? What should be the future course of action?

References:
Ahmad, A. & Chopra, O. P. (2004), Passion to Win, Excel Books Private Limited.
DiCarlo, L. (2002), How Lou Gerstner Got IBM to Dance, www.forbes.com
DSa, A., Narasimha Murthy, K.V., & Reddy, A. K. N (year?), Indias Power Sector Liberalisation: An Overview, A International Energy
Initiative, 25/5 Borebank Road, Benson Town, Bangalore - 560 046 (India).
Gupta, V. K. (2005); Power Scenario in Punjab - A Birds Eye View, Indian Journal of Power and River Valley Development, Vol. XXV (July),
p. 179.
Report on Public Sectors, Hindustan Times, 18th September 2006.