INSIGHT
change management
Managing Change in the Public Sector
"A Person Convinced Against Their Will Is Of The Same Opinion Still"

Alan Manning EMA's Chairman of the Board

When customers interact with private corporations, either party can opt out of their business relationship. If the hamburger at McDonald’s is not to my liking, all I need to do is walk down the block and eat at Burger King. In the public sector, however, the equation is very different – no matter which side of the counter you’re standing on. It’s not as if I can go elsewhere to get a building permit.

Even public servants must do business with other public servants. Many of us have experienced the unpleasant attitude that we often see in public sector organizations. I have been on both sides myself, having worked in or with the public sector for 40 years. I started my career as an eager young public servant for the New York State Department of Health. I have worked with private sector companies doing specialized work for public agencies, and more recently, served as a consultant for public agencies. During that time, much has changed.

More Bureaucracy, Less Service

The number of public employees has grown dramatically in our lifetime. Bureaucracy has increased and the number of rules and regulations has mushroomed. Cities, counties, states, and the federal government have all swelled in scope to handle the impact of ever-expanding legislation.

At the same time, there has been a serious erosion of public employee attitudes and an associated loss of passion for the work. Interest in the job at hand has all but disappeared. In some cases, behavior has become downright surly, even violent. The question is ‘why?’

I believe it stems from a conflict of values between managers who view employees as less-than-active participants – an expense only – and employees who feel devalued and disengaged as a result. Perhaps the root of the problem lies in the typical selection criteria for public sector employees. Management’s focus on not taking risks or making mistakes has spawned a culture in which managers don’t care about their people, or at least behave that way.

Figure 1: Permanent work practice change requires culture change.

Because public sector managers are under ever-increasing public scrutiny and criticism, they simply pass on the resulting stress to their employees. What are employees supposed to think? If they believe their manager doesn’t care, their behavior will reflect their beliefs. (Figure 1)

Unless we find a way to stem the tide, these conflicting views – the clash of values – will produce further dissension and lower levels of service from public institutions.

Yes, There Is Hope

Fortunately, the situation is not hopeless. Years of real-life experience (too many!) has engrained the old saying that “a person convinced against their will is of the same opinion still.” The only way to truly change the way someone thinks and behaves is to help them change on their own. You can’t force people to do anything. Once they discover it is in their best interests to change, however, folks willingly jump on board.

The methodology for change must include significant and substantial input from those people who have been directly affected by the existing negative behavior of managers and supervisors. I have seen it work in the public sector over and over. Now I am sharing what I have seen with those who can benefit most.

That’s what this ‘How To’ book is all about. It is written for you, the director, manager, or supervisor who truly desires a better relationship with your employees, a happier and more productive workforce, and a better relationship with your customers – the public.

I look forward to sharing the good news.

EMA Chairman Alan Manning is writing a how-to book based on his years of experience managing change in the public sector. This opinion piece is excerpted from the book, to be published in 2007.

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FORESIGHT
public sector optimization
Cities Use Self-Funding Model To Leverage Savings For Continuous Improvement

Judith Cascio Vice-President, EMA’s Public Sector practice leader

Every American city has a wish list of improvement projects that runs longer than the sources of funding to pay for them. Fortunately, when resources are scarce people tend to get creative. That’s what has been happening with EMA’s work in the public sector across North America, as cities and counties employ a new financial model to fund ongoing improvement projects.

The Self-Funding Model creates a cycle of continuous improvement. The key is being able to accurately measure Return-on-Investment (ROI). When the first improvement project results in substantial savings, government organizations are able to leverage those savings to pay for the next project.

The process begins with EMA conducting an organizational assessment to scope out opportunities for improvement. We work with clients to identify gaps in those areas where performance can be improved, money saved, and revenue enhanced.

Saving $14 Million and Counting

Although it was not called ‘Self-Funding’ at the time, the model was first implemented in Akron, Ohio more than eight years ago (Communicator, Fall 2004) at the behest of long-time Mayor Donald Plusquellic.

The City of Akron began its continuous improvement cycle in 1998, leveraging $1.5 million in first-year savings to stabilize water and sewer rates (which had been among the highest in Ohio), fund capital improvements, and launch the next phase of continuous improvement. In year two, Akron saved another $3.2 million.

From 1998 to 2005, the City’s investment in services, application software, hardware, infrastructure enhancements, and technology implementation has produced more than $14 million in real savings and current-year increased revenues, while dramatically improving customer service. The Self-Funding Model made it possible.

EMA helped Akron identify opportunities for improvement, including a number of low-cost, low-risk successes that yielded rapid returns and support for the effort. These ‘quick wins’ generated sufficient cost savings to recover the initial investment and provide seed money for the next phase. The key was being able to accurately calculate the return, publicize the savings to gain wider support for the change efforts, and leverage returns. What worked in Akron is now working in other jurisdictions.

In transforming public service organizations, EMA focuses on three areas:

• Organizational alignment – more effective ways to work together internally
• Process redesign – more efficient means to deliver service
• Technology – informational tools for more effective management

A more efficient organization, using more effective processes, yields cost savings and revenue enhancement – while new technology facilitates more effective management. Department leaders use that technology to identify trends, measure results, and be more accountable to the public.

Results-Oriented Approach

Meeting citizen expectations is more complicated than ever, as residents demand the same from public service organizations that they receive from private corporations. With access to the right data and adjustments to the way service is delivered, the public sector can make more educated decisions and better manage customer expectations.

Once managers learn how to use the data generated by technological improvements, they can shift their focus from tasks to results. As each improvement is implemented, the process is repeated. It is a practical approach to improvement that makes good sense.

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Q & A INTERVIEW
Aging Infrastructure Means Rising Rates

Jon Schellpfeffer is Chair of the Utility Management Committee of the National Association of Clean Water Agencies (NACWA). He has been instrumental in the creation and execution of the National Survey of Municipal Wastewater Management Financing and Trends. Conducted and published every three years since 1981, the Financial Survey is designed to provide NACWA members, government officials, and the public, insight into the financing and management of clean water utilities. EMA recently interviewed Schellpfeffer on rate trends.

What is the NACWA Index and what has your involvement been with it?

The intent was to try to get a measure of the changes in service charges across the country. When we started that in 1992, we asked for data going back to 1985. The Index itself is a population-weighted measure of the average residential service charges of those responding agencies. If you have an agency with twice the population of another agency, they get twice the weight in the index. We now have 21 years worth of data, and we track that by EPA region and compare it to the change in the Consumer Price Index as a benchmark for inflation.

The number of responses to the survey varies from year to year but is generally between 220 and 240 agencies. These are most of the larger agencies in the country that are members of NACWA. If, for some reason, a utility doesn’t participate one year but they come back the next year with data for two years, we simply update all of the data so that it reflects as much information as possible.

Back when we started, it was a time-consuming process. We faxed the forms out and compiled the responses one-by-one in a spreadsheet. Now everything is done online through the Clean Water Central database.

What trends have you seen over the last 20 years and what factors influence those trends?

Back in the 1980s, we had some pretty hefty inflation. The Consumer Price Index in 1990 topped out at over five percent. At that time, a lot of agencies were just completing some of the initial requirements of the Clean Water Act and its amendments. That pushed costs up until the early- to mid-90s. Then there was a big push within the industry on privatization, and there was a lot of work done on competitiveness issues. Many agencies cut the fat out of their workforce, improved their work flows, and did a lot of things to work smarter. That had a pretty dramatic impact on rate increases from the mid-90s until almost 2001. Since then, those types of savings – the low-hanging fruit – have been pretty much taken care of as far as trying to become more efficient.

A lot of agencies are now dealing with wet weather issues, and many agencies are dealing with major replacement activities. This is going to be a pretty dominant factor in this industry, to the point where rate increases are probably going to be about double the rate of inflation. The wet weather work is driven by regulation. The infrastructure part is driven by the general realization, not just in our industry, that there is a lot of old infrastructure out there that has to be replaced.

If you look at the period of improved operations and efficiency, do you think there was also some neglect or delay of capital improvements?

There certainly could have been, because I think there was a general feeling in the industry that we had to protect ourselves from privatization. We were going to show that we could reduce rates and be competitive. I don’t know if I have seen any data to support that. Certainly, the emphasis on asset management and infrastructure replacement was not as hot an issue during that period as it is today.

Would you describe asset management and infrastructure replacement as the area where the most improvement is being made today?

Asset management is a concept that people are trying to get their hands around right now, how it can work for them, what changes they have to make in the ways that they have managed their assets in the past to try some of these newer techniques and tools. In the management area, that is a major issue right now.

The other survey result that jumps out at you is the increase in long-term debt. Could rates be impacted if interest rates rise?

I think most of the financing is done with fixed interest rates, so I would be surprised if anyone would be refinancing any of the debt that has been taken on in the last five years. They have got some pretty good rates now, but it may preclude people from doing more in the future if rates increase. That could be another factor. But just in general, over the past six to nine years, the amount of debt agencies are taking on has continued to increase. I think in the last survey we did in 2005, 25 percent of the operating budget for agencies is now debt service on average. For some of them, it is much higher than that. In the 2002 survey, the number was 22 percent – so it is going up.

How far into the future is this trend going to drive rate increases higher than the rate of inflation?

That’s always a hard one to guess. I don’t think anybody saw this current trend coming quite as quickly as it did. You never know what might happen. You may have people pull back. Right now, with inflation taking off, with the price of energy, the cost of chemicals, along with big increases in health insurance costs and those types of benefits, all those things put quite a pinch on governments. One way to try to reduce that is to spend less on capital. Right now it looks like that’s where most of the capital expenditures will be, but I don’t know how long it’s going to continue.

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CUSTOMER STORY
Columbus Water Works
‘Way Down Yonder On the Chattahoochee,’ Columbus Utility Turns Strategy Into Action

Columbus Water Works has been an integral part of the Georgia community (top left) since 1902. The utility has a reputation for innovation in areas such as customer service (top right), treatment processes (center right), and most recently asset management (bottom left). Columbus landmarks, such as the Riverwalk (bottom right) are bound to become well-known outside the area as the city enters a major growth phase.

From the heart of the economy to the soul of the community – even in the lyrics of country music – the Chattahoochee River is inextricably linked to the city of Columbus, Georgia. Formed as a planned community in 1828, Columbus was on the last frontier of the original 13 colonies. It grew into a thriving city of textile mills that depended heavily on the river’s water.

Today, the textile industry has moved offshore, leaving Columbus Water Works (CWW) with excess capacity and a new set of challenges. For many communities, such economic shifts are catastrophic. In Columbus, this marks a dramatic new beginning and CWW is ready to serve.

“Not long ago, Columbus was a blue collar town,” said Billy Turner, who has served as president of the utility since 1989. “We lost some huge water users when the mills closed. Today, we are much more of a white collar town with the growth of Aflac (the global insurer) and Synovus (credit card processing). And of course, Fort Benning is a gigantic part of our economy.”

After 100 years of slow growth, Columbus is about to boom. Aflac and Synovus are adding thousands of new employees and Fort Benning is adding 40,000 soldiers, family members, and contractors. Up river, Kia is building a giant automobile manufacturing plant. Thanks to an extensive strategic planning process that melds future plans with present-day activities, CWW is poised for prosperity.

(L to R standing) Emory Blount, Steve Davis (L to R seated) Billy Turner, Cliff Arnett, Bob Tant, and Jim Patterson.

Award-Winning Innovation

Since 1902, Columbus Water Works has served this community of 200,000 (including the surrounding communities) located 90 miles southwest of Atlanta, across the river from Alabama. As the northern-most navigable point on the Chattahoochee from the Gulf of Mexico, Columbus became a center of shipping and military manufacturing (water and rail transportation and hydro-electric power); its development greatly influenced by Fort Benning.

With 65,000 water and 62,000 wastewater connections, more than 200 employees, and a national reputation for innovation, CWW has always stayed ahead of the pack. Since Turner arrived 17 years ago from Spartanburg, SC, the pace of change has accelerated. As a result, CWW has won more than 75 state, regional, and national awards in the last 10 years.

Turner has never been afraid to try something new. Columbus served as the pilot for the American Water Works Association Research Foundation (AwwaRF) QualServe program and has participated in numerous industry research projects. It was an AwwaRF strategic planning project that ultimately changed CWW’s course.

Most utilities recognize the importance of planning, yet few use it as the means to capture an organization’s true potential. While incremental improvements are possible without a strategic plan, to take full advantage of opportunities for significant change Columbus embarked on a strategic journey. Working with EMA, the utility conducted a comprehensive, one-year strategic planning process, complemented by in-depth planning in several focused areas.

Columbus had done strategic planning for years but it never had the desired impact on the organization’s day-to-day operations.

“Truth be told, it was a nice book, it had some good ideas in it and occasionally we’d pull it out and talk about how we were going to get these things done,” Turner said. “We made some progress. We identified some issues that we thought were critical to us and we talked about them. But we didn’t have any real mechanism to follow up.”

Then came Scan, Plan, Do, the strategic planning methodology developed by the AwwaRF project “Strategic Planning and Organizational Development for Water Utilities.” It includes both proven and innovative methods and tools to develop and implement a set of business strategies.

Scan, Plan, Do proved to be icing on the utility’s cake, a path to improvement that began with the threat of privatization in the early 1990s. “We don’t have a competitor per se in the Columbus area,” said Bob Tant, Executive Vice President and Director of Strategic Planning Implementation. “But there were these people out there marauding around the country looking to take over other utilities on the basis that they could do it cheaper and better. We were determined that nobody could come into Columbus and say they could do it better than we could.”

Figure 1: Scan, Plan, Do methodology

A New Way of Strategic Planning

The Scan, Plan, Do methodology (Figure 1) includes strategy development and addresses organizational needs, such as forging new skills, leadership, dealing with tough issues, adapting to uncertainty, handling emerging goals, and managing communications.

Strategic planning for CWW was carried out in a series of six multi-day workshops with the strategic planning group. In addition, four sub-teams were chartered to address specific areas for issues and opportunities with more detailed planning efforts. The sub-teams focused on:

• Facility Master Planning
• Information Technology Master Planning
• Customer/Public Interface Planning
• Performance and Succession Planning

“It was a bitter pill to swallow at first, it really was,” said 46-year CWW veteran Emory Blount, Senior Vice President and Director of Customer, Employee and Financial Services. “Nobody was looking for another team to be on.”

The purpose of the Scan Phase is to ensure that the organization is fully aware of the outside world. Data is collected and analyzed and agreement is reached on a customized planning approach for the organization. Data requirements are established as well as critical landscape elements.

The Plan Phase ensures that the organization focuses on the most important strategic issues. The team explores strategic directions, options, and possibilities, and considers its capacity to respond to strategic needs. The team selects strategies, maps these to existing plans, identifies owners, and sets measures for the strategic goals.

The purpose of the Do Phase is to ensure that the organization implements the strategies. Operational goals, objectives, and plans are determined that will make the strategies a reality. Based on these plans, the strategic planning team takes action, evaluates the results, and adjusts as necessary.

CWW also reached out to its customers and stakeholders for input on key issues through in-person interviews and interactive focus groups. Industry trends and significant business drivers were evaluated to develop an appropriate future direction for the company.

An important aspect of effective strategic planning balances the utility’s strategic direction with its organizational capacity. Stakeholders (external/internal) need a say but it is the utility that has to execute elements of the plan (Figure 2).

Figure 2: Successful strategies balance the demands of the external landscape with the needs of the organization.

It was – and is – a highly-inclusive approach. “Not everybody is going to have a good idea out there but maybe the good ideas are going to come from folks that you never would have asked before,” Tant said. “We’re not looking for ‘naysayers’. We’re looking for ‘yaysayers’. We’re looking for people who say, ‘I know how we can do this better.’”

Figure 3: The strategic framework includes the process for strategy development and addresses organizational needs.

Linking Strategy to Action

By design, the planning process was intended to link the strategic direction to tactical operational plans and activities (Figure 3). The mission, vision, and values are the apex of the strategic plan, providing overall guidance and direction. The strategic direction is articulated in strategies, goals, and objectives. Each goal and objective is supported by tactics, actions, roles, and responsibilities with targeted measurable performance. Operational activities carry out these strategies.

In Columbus, each business strategy is being executed via teams in the appropriate organizational units, with cross-functional team members to enable organization-wide support. The success of each strategy is measurable with team leaders reporting periodic progress to CWW’s Strategic Planning Implementation Team.

CWW has developed six key strategies:

1 – Enhance Customer Satisfaction
2 – Strengthen Regional Economic Potential
3 – Leverage Information Technology
4 – Optimize Infrastructure Performance
5 – Develop a Sustainable Workforce
6 – Maintain Financial Stability

In a remarkably bold move, Columbus even revamped its organizational structure so that one of its three divisions is now Strategy Implementation, led by Tant and Jim Patterson.

“Most people do strategic planning and hope, by osmosis, that it filters into the organization,” Turner explained. “I know there are at least a couple of organizations that have a staff person or a team that meets from time to time to focus on their strategic planning efforts. We decided to create a division within the organization that would focus full-time on the achievement of the strategies we laid out.”

Columbus may be the only utility in America using that approach. “It’s the only one I’ve seen so far,” Patterson said.

The impact of placing such importance on the outcome of strategic planning cannot be overemphasized. “I think it was very important to put some ownership to it,” said Gwen Ruff, CWW’s Vice President and Deputy Director of Customer, Employee, and Financial Services. “I think when you roll out a new program and nobody owns it, then it has a tendency to fade away. But if somebody owns it, you have a greater chance for success. Maybe in two or three years that division can be absorbed into another area because the foundation will have been laid.”

Strategy Team members include those directly involved in implementing the tactics to support the strategy, so that adjustments to the tactics can be made as needed to meet targeted performance measures.

A recent change to CWW’s purchasing policies emerged from this new structure, based on the suggestion of a front-line employee who serves on one of the teams.

“It used to be that every purchase had to be approved by the head man. It had been that way for eternity and had never changed with inflation,” explained Blount. “The impact had gotten real bad because it had to go all the way to the president and in some cases to the Water Board.”

As a result of one employee’s initiative and the effectiveness of the team structure, managers now have increased purchasing authority and a more efficient process.

Planning for Succession

Like most municipal utilities, Columbus Water Works is facing the impending retirement of much of its senior leadership. Consequently, succession planning has become a major component of preparing for the future.

“Billy Turner is such a unique guy. There is not another one like him around the country,” said Steve Davis, who serves as Vice President of Engineering and Deputy Director of Operations & Technical Services. “Anybody who says it will be business as usual around here when he retires is pulling your chain.”

Ruff, a colonel in the Army Reserves with 25 years of military experience, is leading the charge on succession planning. She believes CWW has made great preparatory strides.

“It does not worry me because we have a plan in place. Is it perfect? No,” she said. “We’re changing the mindset and the culture where knowledge transfer is becoming second nature. If top management left today, would we have a hiccup? Definitely! It may set us back a minute but we will not stop selling water.”

In the military, Ruff explained, leaders move every two or three years and the beat goes on. That’s because preparation is embedded in the organizational culture and the processes are in place to ensure knowledge transfer. At CWW, there have been dramatic improvements in the last 10 years in training, communication, technology, and opportunities for employees to grow their leadership skills. There has also been major cultural change.

“Succession planning is only one component of the big picture,” Ruff said. “I don’t think you can have a good succession program if you don’t have the foundation in place in other areas.”

Preparing for Prosperity

At Columbus Water Works, strategy has become reality and the utility is reaping the benefits of the Scan, Plan, Do framework.

“It almost becomes seamless,” Tant said of the relationship between strategic planning and day-to-day activity. “From the outside, it may not look like a lot of things are happening. What’s really going on is a culture change and it’s hard to see sometimes.”

Turner believes the impact is being felt. “We are far enough into it to know that the process has worked for us,” he said. “We have achieved somewhere around 75% of the tactics and goals that we started out to do.”

By using a dynamic, flexible process, CWW has charted a sound course for the future. The utility will revisit the Scan phase again in the fourth quarter of 2006 to ensure it is prepared for changing conditions.

For Ruff and her colleagues, comprehensive strategic planning that leads to proactive implementation is simply good business. “Good organizations have a strategic plan. Good organizations plan for the future, they don’t sit back and wait for things to happen,” she said. “To some degree you can control the future by how you plan and prepare for it. I think that’s what we are doing right now.”

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e-FLUENT
work management systems
Utility Achieves Uniformity With Flexibility Despite Merging Multiple Technologies

Amy Tatum Region Practice Manager

When organizations grow via mergers and acquisitions, coping with incompatible technology is one of the primary obstacles to a successful transition. Dealing with multiple hardware platforms, software applications, and human approaches to technology can be a logistical nightmare.

Such were the circumstances for National Grid USA (NG), an amalgamation of multiple utilities that deliver electricity to more than three million customers in the Northeastern United States. The company brought together Niagara Mohawk Power, Massachusetts Electric, Granite State Electric, and other acquisitions. NG retained EMA to meet a very specific set of technical requirements in the design and implementation of a new work management system across the organization.

High Reliability, Low Cost

National Grid’s Operations and Maintenance (O&M) organizations are comprised of 600+ employees and 100 supervisors/managers, who are responsible for more than 100,000 assets and 2,000 sites and substations.

The data involved is heavily used by multiple constituencies for multiple purposes. It supports a complex organization that requires a high degree of data security and ease of access across a geographically-dispersed, often remote, set of assets. The company’s maintenance philosophy is one that manages the conflicting goals of high reliability and low cost. Planned maintenance is elected based on ‘Critical Number,’ a weighted representation of deferral risk and need for maintenance.

NG selected MRO’s MAXIMO™ 5.2, with a mobile technology component, because it had the functionality necessary to help NG manage its complex collection of assets. The real challenge was in customizing MAXIMO to fit NG’s specific needs. When the utility’s initial choice for a technology implementation partner failed to deliver, EMA was called in to make it work.

Shared Yet Secure Data

The genesis of NG’s unique requirements is the fact that much of the equipment at substations belongs to different organizations. Some of the data is shared, but portions must remain separate and secure. The utility wanted data access to be based on individual security clearance codes.

EMA was able to incorporate these and other equally-complex business requirements into the work management application without losing existing functionality. In the end, users acquired a tremendous amount of additional capability in terms of sharing data and maintenance practices, as well as visibility of information across the organization.

A total of 400 mobile units were deployed to substation maintenance crews, enabling remote system access and real-time data entry. Personal Digital Assistants (PDA) were the platform of choice because these are less expensive and offer greater versatility than much of the ‘rugged’ mobile technology available. Using PDAs, work crews can now log inspection results and complete information in the field. At day’s end, data is uploaded into the database while crews receive tomorrow’s assignments.

Achieving More For Less

The implementation of a single, compatible work management system has given NG more accurate data, greater efficiency, and the transparency needed to more effectively manage maintenance activities, costs, and scheduling, all with reduced staffing expense. The application is used as a scheduling tool and is linked to several other applications. The utility now tracks costs directly to a single piece of equipment, enabling much more effective asset management. The result is uniformity with flexibility.

“EMA was able to get MAXIMO to suit our needs instead of the other way around,” said Barry Rogan of NG’s New England Substation O&M Services Group. “Other electric utilities are still using standard applications. When they look at our system and see what we have, they tell us it is exactly what they have needed for a very long time.”

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