Oct 27, 2014

Keeping the Lights On

Utilities
Roger Connors & Mattson Newell
7 min
In 2009, Oklahoma Gas & Electric (OGE) saw that they needed to change—communication barriers, finger pointing at all levels, and a lack of...

In 2009, Oklahoma Gas & Electric (OGE) saw that they needed to change—communication barriers, finger pointing at all levels, and a lack of alignment around their Key Results were all impacting their Culture. This Fortune 1000 company serving 750,000 customers was filled with 3,000 plus employees that didn’t feel that they could make a difference. This, along with ever-changing market conditions in the Utility and Energy industry, caused the leadership team to step back and realize that they needed to do things differently.

More starkly, senior executives at OGE faced: Increasing safety incidents, stagnant customer satisfaction, and a tolerable, but poorly trending stock price of $13.58 per share.

Any course correction, they believed, would be powered by packing down dozens of measurables into just a few—something they would learn to call “Key Results.” These “Key Results” would need to be results that every one in every role could contribute to—an even bigger challenge. The management team decided on shareholder value and customer satisfaction but then put at the top of their list Safety.

Reflecting recently on the effort involved, OGE’s director of health and safety, Jerrod Moser, said they set out to create a culture that was “more than something that comes from the safety group. It needed to involve every member, every moment of every day, at work and at home”—a more personal culture.

Why? In an industry with just under eight times the fatality rate of others, OGE executives knew that a reduction in Reportable Safety Incidents (RSI) would not only boost employee morale and organizational culture but also add millions of dollars to their bottom line. Since they saw safety as a root issue, one that touched everything they did, reducing RSI was a true Key Result where failure was not an option.

Equally historic was the number of initiatives and programs aimed at reducing safety issues that had either stalled or failed altogether—not for the lack of trying but possibly because marshalling 3,000 people to care equally about one Key Result is just hard.

Powering Up

So how did they get there? Again, it wasn’t easy and took the time and the commitment of the entire organization from the top-down. Here’s the breakdown:

First, clearly define Key Results

OGE’s leaders and managers were not accustomed to discussing the organization's Key Results, and they rarely prioritized the most important results they needed to achieve to a few simple, measurable objectives (again, they had dozens of KPI’s that drove their business). Positively, there was a genuine hunger that was evident among the leaders for more conversation about how their jobs, responsibilities, teams, projects, and priorities could be better aligned with the organization's Key Results.
It’s been said that leadership is defined by results. We think a better version reads: Leadership is defining Key Results. Too many leaders in today's organizations fail to clearly define, fully disseminate, and adequately discuss Key Results that will focus their organization on achieving their most strategic and most important goals. Ask yourself this question: Do the people in your organization clearly understand the Key Results your organization must deliver to ensure achievement and success right now?

Our landmark research and extensive experience shows that 85% of organizations lack clearly defined Key Results, which leads to significant misalignment around key priorities. And nearly everyone—84% of those surveyed—hold their leaders responsible for creating this degree of clarity.

Without clarity, confusion leaves the door open to poor execution and invites counterproductive behaviors. It licenses people to maintain the status quo and to dismiss their accountability for results. It kills momentum because no one feels confident about which direction to move. In the Energy industry, we typically hear these issues come up when we are not achieving Key Results: weather was bad, I had to clock-out, I didn’t get the email, it’s the government’s fault, and on and on the list goes. You can see how this could be an issue and demoralizing to the organization.

By contrast, a clear focus on well-articulated, measurable Key Results reverses this and encourages people to look at what they can do to improve company performance and deliver results that are most needed—our definition of a Culture of Accountability. When Key Results are clearly established, like at OGE, employees are no longer seeking out excuses, they begin to seek out solutions.

Next, create a Culture of Accountability

OGE execs first had to agree that “culture” meant much more than what type of holiday party they’d have, but that it meant pervasively “how we do what we do.” Once they connected that their current culture (C1) produced their current results (R1), the lights really went on. We helped them realize that achieving their desired, new Key Results (R2) could not be accomplished with C1. They needed their desired culture (C2), a Culture of Accountability.

In our meeting with company leaders, we advocated that a Culture of Accountability would encompass the whole organization, including every initiative and all Key Results. With just a few carefully defined Key Results, they would then need to redefine accountability. Only then would they get their culture moving in the right direction—one where people understood and owned delivering the Key Results of the organization.

“We developed our belief statement, ‘Live Safely,’” said Moser. “And that led us to create and develop experiences that supported an Incident and Injury Free Culture.” Still, the company needed a culture that would come from more than just a few experiences from a few individuals—they needed this shift to be reflected organization wide.

Supporting this, our research consistently shows that people who have a crystal clear understanding of their organization's Key Results consistently demonstrate higher levels of accountability for achieving those results than do people who have a less clear understanding of their organization's Key Results. People hunger for more clarity around the organization's Key Results, because they want to be successful and they want to take greater accountability for what matters most to their organization.

In our over 25 years working with the best organizations, we’ve seen the greatest success come from laying claim to a culture where people demonstrate high levels of ownership to think and act in the manner necessary to achieve their Key Results. That starts by everyone knowing what those results are. The defining characteristic of this kind of culture is that people voluntarily assume their own accountability. Rather than having accountability forced upon them, they enthusiastically take it upon themselves. That’s right, they are neither commanded to be accountable nor kept under surveillance until “called to account” for their actions.

Finally, Reap the Fruits of Accountability

It could be argued that it’s impossible to hold everyone accountable. But it is possible for people to hold themselves accountable. Defining Key Results won’t create instant accountability nor will the exercise broadly convince everyone to take accountability—but it’s an essential first step. To get there, you must regularly clarify, reinforce, and refocus the organization on those Key Results. Without concerted effort, the constant forces of resource constraints, problem solving, and operational pressures are working to cause the organization to drift away from this foundation. With concerted effort, people organization-wide begin to own their own contribution to Key Results.

In a Culture of Accountability, people at every level of the organization are personally committed to achieving Key Results targeted by the team or organization, and they never wait to be asked for a progress report or a follow up plan. Instead, they report proactively and follow up constantly, diligently measuring their own progress because they have internalized their commitment to achieving results. Their mantra—“What else can I do to achieve the desired results?”—leads them to continually find answers, develop solutions, overcome obstacles, and triumph over any trouble that might come along. And, as you would expect, everyone holds everyone accountable for achieving those results.

Plugging into Key Results

It didn’t happen overnight, and it didn’t happen without a significant amount of time and effort, but OGE got the Key Results they needed—a 50% reduction in safety incidents which led to improved morale and employee engagement, a 20% increase in customer satisfaction, and a nearly tripled share value of $35.97.

Moser said the culture of accountability that OGE is still building on today helped IIF really take hold in the hearts and minds of OGE members, even from their first day of employment. “Thanks in large part to our work on accountability, our IIF culture comes from every member, every moment of every day, at work and at home.”

***

Three-time New York Times bestselling author Roger Connors is CEO/co-founder of Partners In Leadership, the global leader in workplace accountability training and consulting. Mattson Newell is regional vice president of Partners In Leadership and expert in energy industry issues.

Each brings extensive expertise in helping management teams facilitate large-scale cultural transition through Partners In Leadership’s Accountability Training® methodologies. They have helped the firm’s clients produce billions of dollars in improved profitability and shareholder value using the Partners In Leadership Training.

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

Ofwat
Utilities
water
prices
Dominic Ellis
3 min
Ofwat confirms levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue

Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.

The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.

Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.  

In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue. 

Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”  

There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:   

  1. Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps. 
  2. Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold. 
  3. Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice. 

Further consultation on the proposed adjustments to REC price caps can be expected by December.

Anita Dougall, CEO and Founding Partner at Sagacity, said Ofwat’s decision comes hot on the heels of Ofgem’s price cap rise in April.

"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.

"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."

United Utilities picks up pipeline award

A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.

The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.

“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.

Camus Energy secures $16m funding

Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent VenturesWave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.

As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.

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