One mistake that broke Eskom

The government’s decision to ensure that no bonuses and salary increases were given to Eskom’s staff for five years ensured the utility’s operational performance would collapse. 

As bad employees were not punished for poor performance, good employees were also not rewarded for doing their jobs, creating a toxic culture without incentives to improve outcomes. 

This resulted in employees, even those in good standing, merely going through the motions and not doing what was required to improve Eskom’s performance. 

Since Eskom’s new board has been in place, consequence management has become more frequent and good employees have received increased bonuses. 

This is feedback from Eskom chairman Mteto Nyati, who outlined some of the reasons why the utility’s performance has greatly improved over the past two years.

Speaking at Old Mutual’s Tomorrow Investment Conference, Nyati explained that collective punishment is never the right course of action for a company. 

This is because collective punishment does not drive behavioural change, which is what was required for Eskom’s operational performance to improve. 

Nyati said the utility could not afford to have apathetic workers. It needed to incentivise the right behaviour and following correct procedures. 

This has to be coupled with other forms of consequence management, such as punishment for poor performance and behaviour. 

As a result, the decision to have no salary increases and bonuses for staff members for five years brought the utility to the brink of collapse. 

“We told the late Pravin Gordhan, ‘We need that tool to help us drive the right behaviour to fix Eskom.’ We needed the government to reverse its policy of no increases or bonuses for the past five years,” Nyati said. 

“Leaders were not leading. Managers were not managing. When we came into Eskom, there were no consequences. It was a nice socialist environment that was not going to create the change we needed.” 

“If you do not want to work, then you will get a 0% increase, and maybe you will leave Eskom. We had to recreate the standards of operational excellence at the utility.” 

Eskom’s people problems

Eskom has suffered from severe “people problems” over the past decade as its workforce became steadily less productive and effective. 

This was seen predominantly in the utility’s poor maintenance standards, with units tripping shortly after coming back online following repairs. 

German consultancy group VGBE Energy pointed to Eskom’s toxic staff culture as one of the main reasons for the utility’s operational collapse. 

In a report commissioned by the National Treasury, the firm said Eskom’s staff are frustrated and unmotivated, working in an environment characterised by indifference, ignorance, and blame-shifting. 

One of its suggestions to resolve this aligned with Nyati’s observations – the utility needed to implement an incentive scheme to encourage good performance at an individual level. 

At around the same time the report was published, Eskom’s board announced it was taking steps to fix the utility’s dysfunctional organisational culture. 

These steps included bonuses and salary increases for high-performing employees, alongside consequence management for those who underperformed. 

“We found certain cases where leaders were not leading, and managers were not managing. That means we have the wrong people in those positions,” Nyati said at the time.

Nyati also laid some of the blame at the feet of former Eskom CEO Andre de Ruyter, saying he failed to get employees pulling in the same direction. 

“They found that each time they were listening to their leader, the leader was saying all sorts of things about them being the source of the problem,” Nyati said. 

“How can you be excited to come to work when you are being seen as the person who is creating the problem?”

Nyati also echoed another element from VGBE’s report in saying that Eskom needs to revive its historic training programmes. 

VGBE noted that over the past decade, Eskom delayed or deferred many of its training programmes, resulting in a workforce with adequate skills but little improvement over time. 

“The competencies of the technical managers are at a reasonable level, but there is greater potential for improvement,” they said.

“We repeatedly noticed that there is a high degree of theoretical knowledge. However, its application is made very difficult by the complex management system.”

Nyati said Eskom is busy restoring its centre of excellence and management training to ensure the utility’s standards are well-known and implemented throughout the organisation.