The Importance of Energy Reduction for Managing a Business

Oct. 3, 2008
Rising energy costs are changing the way senior-level managers understand their organization's energy consumption.

The effects of rising energy costs are changing the way many senior l e v e l managers consider their company’s energy consumption. Rising energy costs have given corporate leaders a wake-up call to devise ways to conserve energy. Energy efficiency is evolving from a corporate concept to a priority item on the CEO’s agenda.

Over the past five years, an average company’s energy costs have escalated from 10-30%. Some CEOs have already adapted to current conditions and implemented strategies to create energyefficient facilities. Company leadership must now treat energy as an operational necessity that must be managed diligently, much like the purchase and utilization of raw materials. In some cases, a company’s survival will depend on how quickly its management team can adopt energy-conservation strategies.

While energy is a vital operating component, energy reduction does not need to be a cumbersome undertaking. With rising energy costs in the news, energy conservation should be seen as an opportunity, treated and managed as a company-wide initiative that will provide long term benefits. As one corporate executive recently stated, “We know we have a lot of low-hanging fruit (energy waste) in our plant. Our problem is that it is still on the tree.”

Effectively managing energy consumption requires a commitment to educating workers. This involves energy awareness, empathy, best practices, coaching, and action. Company leadership needs to modify employee behaviors in order to effect a cultural change throughout the company. It must start with the CEO and executive management regularly articulating their commitment to energy reduction and its importance.

Also, company leadership must lead by example. Upper-level managers should be the first to incorporate these cost-cutting measures in their own offices and departments. This demonstrates their commitment to energy reduction to the rest of the company, and that these initiatives are not simply window dressing.

According to one CEO, “The real secret to reducing energy costs is not in the technical aspects of the process; it is in the management attitude. A desire to reduce costs through good energy management and an effective implementation and monitoring program will always produce the results and the commercial benefits.”

Those responsible for implementing an efficiency program must focus on what is likely a new and unfamiliar set of metrics without historical data for benchmarking. The goals they set need to be communicated clearly to achieve sustainability. However, words alone won’t do the trick. They must be supported by actions designed to remind people of the objective and their individual roles in achieving it.

The key to success will be the degree to which workers can adjust their mindset. It is important that they execute their tasks as conscientious individuals determined to avoid energy waste. With an appropriate strategy, the desired behavioral changes will occur. An easy way to implement this strategy is to point out the strong parallel to the efforts employees make to keep heating, electricity, water and other variable household costs under control.

With this in mind, many executives should ask workers to treat their offices and workspaces like their homes. Such simple tasks as turning off lights and computers when leaving the office and programming thermostats to shut down during non-business hours can have a significant impact on a company’s energy consumption. Even during office hours, every one degree a thermostat is lowered during the winter or raised during the summer will save 2-3% on energy costs by itself. Using “sleep” features on office electronic equipment also will contribute to energy savings.

Graphics can be prominently displayed in high visibility areas illustrating how much energy has been conserved since the implementation of an energy reduction program, as well as how this energy savings is making a difference on a large scale, visibly demonstrating the evidence or effects of the savings efforts. “We saved enough energy to power the city of Indianapolis for three hours last year,” would be an example. Actions like this enforce a “feel good by doing good” sentiment.

Some waste reduction is easy to achieve. For example: Limiting the “On” time of lighting, conveyors, compressor stations, chiller plants and electrical motors to when they are needed for production. These objectives can be implemented by placing certain non-essential systems on a timer.

Less obvious sources of energy waste will require technical expertise of a third-party firm to identify, evaluate, and determine solutions. These issues may include compressed air usage, ventilation systems, cooler fans, water treatment, temperature controls, furnaces, door seals, machine calibrations, and a myriad of other issues depending on a facility’s specific requirements.

The CEO’s commitment to cutting energy costs is critical. Once implemented, people can be held accountable for results. The establishment of goals, planning, data gathering, and implementation will combine to create a sustainable cultural shift that places energy conservation in the forefront without major capital investment.

Wes Andrud is Director of Energy Efficiency and Joe Froelich is a Marketing Researcher for Proudfoot Consulting,which works with companies “implementing change to achieve measurable and sustainable performance improvement.”