Leadership, Management and Change: The Case of Eskom

About Eskom

Carefully read the short Eskom scenario below and answer the relevant questions. You are also expected to read up on “Eskom’s current state of affairs” using the online links provided to get a broader view of the magnitude of the situation. 

“Eskom is a South African electricity public utility, established in 1923 as the Electricity Supply Commission (ESCOM) and also known by its Afrikaans name Elektrisiteitsvoorsieningskommissie (EVKOM), by the government of the Union of South Africa in terms of the Electricity Act (1922). Eskom represents South Africa in the Southern African Power Pool. The utility is the largest producer of electricity in Africa, is among the top seven utilities in the world in terms of generation capacity and among the top nine in terms of sales. It is the largest of South Africa's state-owned enterprises. Eskom operates a number of notable power stations, including Medupi Power Station in Lephalale, Kusile Power Station in Witbank, Kendal Power Station, and Koeberg nuclear power station in the Western Cape Province, the only nuclear power plant in Africa. The company has also appointed Andre de Ruyter as the new CEO, this comes after months of deliberations.” 

Eskom current state of affairs

“It is late in the day, but there is, at last, an energetic focus from government and other players on finding a solution to Eskom’s problems. There is finally a general consensus that the power utility once regarded as the country’s greatest state asset — will drag the economy down with it should it continue its epic slide to bankruptcy. Can the government finally fix the Eskom problem? To make this judgment, it is necessary to appreciate five home truths. From this, an equal number of unavoidable key decisions have to be taken, without which Eskom (and likely South Africa’s short-term economy) is doomed.

1. Eskom is the key to the economy - the first home truth is that Eskom is costing the economy a vast amount of money.

2. The risks are growing - what the events of the first quarter suggest is that the risk of the system falling over is higher than ever as the reserve margin the electricity generating units held in reserve to manage a crisis on the grid decreases.

3. Eskom is a cap on growth - but all these plans will come to naught if there is insufficient energy available to companies to expand production or to establish new businesses. This risk of an invisible “power cap” on the economy may be the single biggest factor holding back investment.

4. Poor technical capacity - Eskom is in the deep hole it is in now because it did not have the internal capacity to manage the two massive build programmes for the Medupi and Kusile power stations. New builds, especially those on this scale, require financing skills, engineers with expertise in build management, contracting and the nitty-gritty of power station construction. Eskom lost these skills during the 1990s and 2000s.

5. Splitting up Eskom is not going to solve the problem - South Africa has finally decided it will follow global best practice by splitting Eskom into generation, transmission and distribution.”

Leadership and management are two different constructs. Using practical examples related to Eskom, explain the difference between a leader and a manager.

Hint – you will need to read widely as the application of the theory requires that you demonstrate a new way of thinking, thinking differently to solve the problems at hand. 

No prescribed source of reference is given, as you will need to demonstrate that you have thought through your answers, ensuring that the sources you use are ‘the truth’, supported by academic references.

With reference to Eskom, answer the following questions:

Q.2.1 Explain the importance of the management environment analysis and its impact on decision-making in a company like Eskom.

Markers are to stop marking after the threshold of 550 words has been reached. Please indicate the word count at the end your answer. (10)

Q.2.2 “There is finally a general consensus that the power utility once regarded as the country’s greatest state asset will drag the economy down with it should it continue its epic slide to bankruptcy.”

Discuss three factors making up the economic environment that the CEO of Eskom will have to take into account when looking at ways to improve the performance in his organisation.

Eskom is due to undergo change as evidenced on this quote “His role is a difficult one, as he needs to undertake the unbundling and restructuring of the entity and address load shedding.”

Discuss with examples, three methods that can be used by Eskom management to overcome change resistance. You will be awarded five marks per method discussed. 

The CEO of Eskom will be required to engage in decision -making to ensure that he meets his given mandate and turns Eskom around. You will need to conduct research in relation to the resolutions relating to Step 1 and 2.

Discuss with examples, Step 3 to step 7 of the decision-making process. 

In an essay format, discuss contemporary approaches to leadership AND recommend to Eskom CEO the leadership approach that will work best for him considering the challenges he and Eskom face. Justify your recommendation.

• Your answer should be a minimum of 1 200 to a maximum of 1 500 words (two to three pages). Markers are to stop marking after the threshold of 1 500 words has been reached. Please indicate the word count at the end your answer.

• An essay requires a clear introduction and conclusion, use of paragraphs, headings, subheadings and academic tone.