They were not incompetent or anything; they had simply broken more pumps in the last year than any previous year the engineers could remember. Not the inexpensive kind, but the large 200 horsepower, $22,000 pumps used in geothermal power plants; each blew up in a succession of preventable blunders. But then it got worse. They complained to management, suggested a solution, and management did nothing about it.
Details of the gross negligence still haven’t reached the Executives of Ormat (NYSE: OSA), which ironically, will serve as evidence for the purpose of this article. That valuable, actionable information is being stockpiled and kept hidden from everyone else for a variety of selfish reasons. This fact stands as one of the most important symbols of why organizations large or small, need to become a Social Business.
To fully grasp the situation at Ormat’s Heber facility, one first needs to realize that, regrettably, this isn’t just circumstance or an isolated incident. Situations like these play out around the world in millions of companies.
The reaction of Ormat’s employees, of course, is entirely predictable. Recognizing that things do not change despite overwhelming evidence to do so, employees become apathetic. Their apathy exacerbated by managers either too worried about delivering bad news or too stubborn to recognize their new maintenance and control procedures are destroying pumps.
As one Ormat employee who wished to be anonymous said, “If our executives knew what we knew, they’d start firing people. Clearly, our internal communication is broken.”
Occupy the Board Room
Despite an ocean of evidence, Executives of most organizations are still choosing to ignore the call for social. The reason, it seems, stems from an old command and control leadership formula that goes something like this: information hoarding plus ambiguity, equals power and control.
And so stockholders get screwed, employee morale deflates, and the Company’s Board is left wondering why there are so many unforeseen disruptions that keep impacting the organization. When “management by crisis” is the rule rather than the exception, the Board must step in and taken action.
But in most crisis, the Board rarely wants to participate directly. They are on the sidelines, representing the shareholders, asking questions, and in some cases, giving advice. Alarmingly, most are not given access to employees and only hear a filtered version of events from management.
So, for how long are we going to accept the command and control corporate leadership structure? A reality in business that is eroding shareholder value and employee morale. For existing businesses dominated by information silos, information opacity and downward channels of communication; the answer is that employees must demand the organization become a social business.
And since their executives are not listening, they must take it to the Board. They must demand the Board ask the tough questions of management. Questions like: Why are we not utilizing social business tools than enable collaboration across teams, functions and departments? Why don’t we have a company-wide activity stream that enables employees to receive answers to their problems? Why don’t we give every employee the tools to be heard whether they are on the front lines or up in the executive suite?
The Board must recognize that people like to work within a social framework. For any business wanting to remain competitive, they must insist their executives create a structure that provides the means for people to be social. To do that, they need to create a culture that makes it risk free to operate transparently. This means, they have to make sure that the company supplies the best tools, incentives, user experience and policies, that reward and drive the right behavior and does not punish it.
Impossible Dream or Future Reality?
So will this happen? How can we as employees, shareholders and board members make a difference? I suggest we continue to highlight examples like Ormat which over time will compel the Board to make changes.
The good news is that Ormat’s GeoThermal operation is producing clean and green power. It’s operating with a large profit margin; which is even better news for taxpayers as we’ve given them a loan guarantee of $350 million. Imagine if they were experiencing these types of preventable issues while completely subsidized by taxpayer money.
In reality, the Social Enterprise is a struggle for most companies. It’s about whether or not management will relinquish control of information and empower its employees to communicate and collaborate without unnecessary impediments. It’s about providing a culture of trust instead of one of fear. It’s about empowering the organization’s experts, regardless of rank or title, to get the job done.
And the struggle will confirm once and for all whether companies are serious about listening to their employees. That an open door policy is not just subjective, and employees are defined not by what who they know, but what they do.