Vattenfall's evolution into a major European energy group has not always been plain sailing. The company has been historically successful in handling large fluctuations between periods of rapid expansion and times of administration. Albeit with some effort.
Once this first expansion phase was over, around 1920, Vattenfall entered a more administrative phase. In eight years the number of office workers fell by almost 40 per cent, from 1,200 to 750. The number of manual workers fell even more. During the most intensive construction phase, Vattenfall employed around 4,000 manual workers, but by 1928 it had only 300.
Erik Grafström was appointed Director General of Vattenfall in 1958. At that time there was no executive board, and the Director General had 15 managers reporting directly to him. That simply did not work. A sweeping reorganisation was launched in 1962. Cost accounting was replaced by profit responsibility delegated far down in the organisation.
Grafström made a point of ensuring that everyone in his management team would stand behind the new structure. This was a brand new style of leadership. Vattenfall's Director General between 1938 and 1947, Waldemar Borqqvist, expressed personal objections to Grafström: 'It's the Director General who decides'.
During Grafström's time as Director General, the number of employees was reduced considerably. When he left in 1970, Vattenfall had only 8,000 employees. There was less construction going on, and the organisation had been streamlined.
Following incorporation and prior to deregulation of the electricity market in 1996, it was time to abandon the regional organisation structure. Vattenfall was now divided into various functions, principally Energy Market (the competitive segment) and Electricity Grid (monopoly).
Thanks to acquisitions in Germany and Poland in the early 2000s, Vattenfall expanded tremendously in an incredibly short space of time. This put great pressure on its finances. Between 1999 and 2005 the number of employees increased from 8,000 to 32,000. At the same time turnover increased from SEK 28 billion to SEK 129 billion. In order to gain better control, the organisation was decentralised into 13 different profit centres. These were given independent responsibility and reported directly to the group management.
There have also been a number of other reorganisations in the last ten years due to changed strategies.