PowerSeraya And UPAGE Announce Landmark Workplace Reforms

Joint initiative promises more opportunities for staff, greater efficiency for company.

29 June 2004 – Singapore electricity generator PowerSeraya Ltd and the Union of Power and Gas Employees (UPAGE) today signed a historic collective agreement containing a raft of workplace reforms aimed at delivering new opportunities for staff and improved efficiency for the company.

The reforms, spearheaded by the company and jointly developed with the union, include the introduction of 12-hour shifts, a new asset-based team structure, wage restructuring, a performance-based pay system and enhanced medical benefits for female employees.

Mr Neil McGregor, PowerSeraya’s Managing Director, said the reforms represented the first major overhaul of workplace structure in PowerSeraya since 1995. This demonstrated PowerSeraya’s commitment to strive for quantum improvements in its Human Resource practices and processes.

“Both PowerSeraya and UPAGE understood the challenges we faced in the new deregulated energy market and the need to take bold steps to retool our workforce, be more innovative and increase our flexibility – thus giving rise to the potential to work smarter than our competitors,” said Mr McGregor.

“The new structure is a truly joint effort between the company and the Union, and is another example of both parties working in partnership to ensure PowerSeraya develops new ways to cut costs and improve efficiency while delivering opportunity and security for staff,” he said.

Mr Nithiah Nandan, Executive Secretary of UPAGE and Nominated Member of Parliament, said: “We see these reforms as a major step forward in terms of developing a highly skilled and mobile workforce necessary for the competitive environment. With a much flatter structure, staff will have more responsibility within the organisation, more opportunities for job enlargement, more latitude for promotion and the potential to significantly increase their earning potential.”

Focus on team-based structure

The new structure will see the formation of three core asset teams – Combined Cycle Power Plants, Orimulsion.

Plants and Oil and Diesel Plants, which will be backed by service teams consisting of Performance and Engineering, Facilities, Fuel Handling and Major Projects teams. Each of these asset teams will oversee the technical and financial performance, operations and maintenance of their respective assets.

“The previous function-based structure was put in place decades ago when the primary focus was reliability and availability of the supply of electricity. We felt this structure was outmoded and inefficient in a deregulated market where the success of a generation company depends on its ability to offer reliable electricity at the best prices,” said Mr McGregor.

“Under the asset-based structure, each staff member will be responsible for a wider range of tasks. This will enable them to gain a clearer vision of their role in the operation, and to better focus their efforts on achieving performance targets. To prepare staff for their new roles, the Company will embark on new training programmes to enhance and raise the overall multi-skilling capability,” said Mr McGregor.

Fewer organisational levels, a flatter structure

To support the restructured teams, the responsibility and accountability structure will also be streamlined. The number of job grades will be reduced from its existing 17 to 7 grades for non-executives. This means that staff will have more opportunities to move laterally and vertically to higher grades. In addition, generic job titles will be introduced to give the company greater flexibility to rotate staff and enlarge their job scope. “The flatter structure will enhance the speed of decision making,” said Mr McGregor.

Wage Restructuring

In line with the latest National Wage Council Tripartite’s recommendation to increase wage flexibility, PowerSeraya will increase the variable component of wages from 12% to 20% for bargainable employees. In addition, the current cumulative 6% Monthly Variable Component (MVC) will be increased to 10% over the Collective Agreementperiod. This MVC will form part of the basic wages. Should there be a need to cut wage in future, this will be from the MVC.

By moving away from the seniority-based wage to a competency-based system, PowerSeraya will bring the current average salary maximum-minimum ratio of 2.2 to 1.7.

This will be achieved through the merging of some technical and support service grades and adjusting the maximum and minimum salary points. There will be no reduction in the employees’ salaries. This move is to a narrower salary range will enhance the competitiveness of the wage system. “This will also help us to reflect the value of the job and our future plan is to reduce this ratio to 1.5,” said Mr McGregor.

Performance Bonus

The annual performance bonus of the company will be linked to the Return on Equity (ROE). Clear targets will be set to provide different levels of rewards. By linking the actual payout to the set targets, employees will have a “clear line of sight”. To reward team effort, a new team bonus will be given if the trigger points of the ROE targets are achieved. In addition, each bargainable staff member will receive a variable component based on their performance.

Move from three eight-hour shifts to two 12-hour shifts

PowerSeraya will also replace its current eight-hour shift cycle with a 12-hour shift cycle. “This new arrangement will enhance the overall work productivity, provide continuity of work between the operation and maintenance staff and reduce working days. Shift employees will enjoy higher shift allowances and more personal time,” said Mr McGregor.

Medical Benefits

PowerSeraya will expand its medical benefits to cover dependents of female employees For the Union, the collective agreement was signed by Mr Abdul Rahman Mahbob, President of UPAGE and Mr Nithiah Nandan, and witnessed by Mr R.K.S Nachiappan, General Secretary, UPAGE and Mr Tay Seng Chye, President of the PowerSeraya Branch. Managing Director Neil McGregor signed for PowerSeraya and this was witnessed by Mr Chan Swee Huat, Vice President (Generation) and Mr Quek Khai Hor, Vice President (Corporate Services).

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About Mr Neil McGregor
Mr Neil McGregor, 48, has more than 20 years of management experience in the international power, gas and the deregulated electricity industry environment. Prior to joining PowerSeraya Ltd, Mr McGregor was President and CEO of Dabhol Power Company in India. Mr McGregor took over as Managing Director Designate in October 2003 and was appointed Managing Director of PowerSeraya on 1 February 2004.

About Mr Nithiah Nandan
Mr Nithiah Nandan is the Executive Secretary of the Union of Power and Gas Employees (UPAGE). He is a veteran unionist with more than 20 years of experience. He is also a Nominated Member of Parliament.