Gain insight from across the utility industry through expert opinions, key conversations, and market research surrounding topics that impact today’s utility companies including public safety, regulatory compliance, success measures, and strategic communications.


The Culture of Public Safety and the Importance of Employee Engagement

Public safety must be embedded in a utility’s culture. It must be central to thought, behavior, and work. According to one safety manager, “It takes a real commitment on behalf of everyone to create and implement a safety culture.” The goal is to create “an environment in which every employee is personally committed to his or her own safety as well as that of others.”

Research confirms the connection. A 2013 study reveals that 72 percent of workers surveyed said that employee engagement is essential in order for an organization to achieve its goals. Recently, in a related article, Public Utilities Fortnightly reported: “If employees are committed, then they will work harder to remedy internal and external problems.”

Research into employee engagement as a means of shaping “high-performance cultures” notes two key steps are required:

  1. Gaining management buy-in and
  2. Building employee buy-in and trust.

In other words, for public safety to become embedded in the culture, it must extend from the grassroots to the grass tops—full employee engagement.

Organizational behavior experts note that employee engagement remains every company’s biggest challenge, but when properly managed, the return on investment is significant. This is especially true for utilities whose image is intrinsically tied to safe and reliable operations, and for whom engaged employees translates into meaningful interactions with the community, a strengthened public image, and ultimately, greater business success.

When all levels of an organization understand and devote themselves to the company’s internal and external safety goals, then success can be achieved. Key elements necessary to successfully embed public safety into a culture include:

  • Commitment by leadership
  • Clearly defined public safety vision
  • A working understanding by employees
  • Opportunities for involvement at all levels
  • Training and development
  • Clear communication throughout the organization
  • Ongoing assessment and continuous improvement

It is possible to create a financially sustainable culture of public safety. The direct and indirect financial benefits of accident prevention more than pay for the costs of internal and public safety education programs. When leadership gathers input, listens to the people of the organization, and supports internal and public safety efforts, they send a clear message to employees (and the public) that safety is a priority. This commitment by company leadership is crucial.

Studies across various industries report that strong public safety cultures and employee engagement go hand and hand, and companies with such cultures see higher levels of productivity, customer satisfaction, and profitability. As noted in one such study, utilities that manage the right cultural factors proactively can expect to achieve a return on investment (profitability) three to four times higher than those who do not.”

Effective Public Safety Communication: The Right Audience, The Right Message, The Right Channel

Effective communication is crucial toward achieving your public safety goals. But do you know if your communications are actually working? Are you doing the right things to ensure that they are?

With utility public safety outreach, like every communication model, the onus is on the sender to effectively convey the message and ensure the receiver understands it and takes appropriate action. Now if everyone had the same point of view this would be simple, but every audience differs. Therefore, if you want to make an impact you must target your audience, tailor your message, and use the right channels to reach them.

It sounds like a big commitment, and it is, but the benefits far outweigh the costs. The result is a utility public safety outreach program that offers strategic advantages.

Target Your Audience

The first step in effective utility public safety communication is to target your audience. This requires you to properly identify, research, and actually understand them. To identify audiences, consider your organizational goals, your public safety plans, and key performance indicators. In addition to the audiences identified therein, incorporate audiences mandated by regulators and other governing bodies.

Once you’ve identified your at-risk audience, it’s important to research and build profiles. Start this process with available in-house data. For example, if you’re looking to reduce dig-ins and related repeat offenders, it’s worthwhile to acquire data from your claims, legal, and risk management departments. This information can be augmented via private and public sector databases such as 811/One-Call and other sources. Additionally, there’s an abundance of secondary research available that can provide you with valuable insight.

Finally, when engineering your utility public safety outreach program, it’s critical to include mechanisms for ongoing data collection and feedback. Tools such as business reply mail, surveys, Web forms, email, and outbound call center scripts, are essential to understanding your audiences, their changing behaviors, needs, and preferences—all critical to engaging with them in a meaningful way.

Develop Custom Messages

By targeting your audience, you can begin to pinpoint key messages. Knowing their behaviors, needs, and preferences will help you to develop meaningful communications that connect with them and effect change. Our research shows that when you appeal to your audience with tailored messages, imagery that’s specific to their industry, and communication vehicles that they prefer, you make a greater impact.

For example, in the case of third-party contractors, our research reveals that tailored resources generate a significant increase in “mail opens” and email “click-throughs.” Additionally, contractors are more likely to integrate tailored resources into their formal employee trainings and tailgate meetings. This translates into increased time spent with these training materials which leads to higher information retention and recall rates. These user-engagement metrics are leading indicators that your public safety outreach communication is working—i.e. a well-informed contractor is more likely to behave safely around electrical and natural gas lines and lower the risk of accident.

Use the Right Communication Channels

Today’s communication professionals have more channels at their disposal than ever before. While it’s always nice to have options, it can be challenging to select the right channels in order to reach your audience. You may be tempted to select new, trendy media channels, but it’s more important to know your audience and what they respond to. Ultimately, the measure of success isn’t necessarily based in “hits” or “likes” but instead the achievement of goals such as raised awareness, educated audiences, changed behaviors, and reduced accidents.

When you know your audience, you’re able to select the right channels to reach them and produce the results that you desire. Case-in-point, when it comes to school teachers, we understand that they value direct mail as a primary channel of communication. We also know that educators are required to meet state and national academic standards, so it’s important to tailor electrical and natural gas safety resources to meet those requirements if they are to implement them in the classroom.

Teachers are a major influencer and an ambassador for your public safety message. These trained education professionals implement your safety lessons, and generally encourage kids to take printed resources home and share them with their families—thereby encouraging secondary and tertiary readership. It’s clear that when you target audiences and meet their needs with tailored messaging that’s delivered through proper media and channels, the result is effective public safety outreach.

Raise the Bar for the Right Results

Generally speaking, the bar is rising: the public is continually growing more sophisticated and discerning. In fact, each subset of the population wants to be recognized and satisfied when it comes to engaging with the world, including the businesses and organizations they’re connected to. Think about the fact that three networks dominated television from the 1950s to the 1990s, but now, according to Nielsen, the average American household receives over 189 channels covering a variety of specialty niches. Gone are the days of the one-size-fits-all utility bill stuffer.

Savvy communicators realize that you will not make an impact in this complex world without meeting your customers’ requirements. They understand the payoff. For those of us involved with utility public safety outreach, the data confirms it: targeting the right audience, with the right message via the right channel, equals the right results.

Measuring Public Safety: Take the Lead

Utility companies are discovering the advantages of strategic public safety outreach. But, to fully realize the benefits, they must break from tradition and make a paradigm shift. The new edict: if you want to improve your public safety outreach, you must change the way it’s measured.

There’s no disputing that measuring performance is crucial to success. It’s an absolute necessity for strategic planning, goal setting, and continuous improvement. The challenge is determining what to measure. How do you know which indicators will help you gauge performance?

While it’s important to determine bottom-line results of your safety program, you must also know how you’re doing at accident prevention. Therefore, you require two different kinds of measurements, and you must understand the value of leading and lagging indicators.

Leading and lagging indicators have their origins in the field of macroeconomics. Generally speaking, these economic indicators are pieces of data used to judge the overall health of the economy—allowing organizations to make productive financial decisions. Measurements like retail sales and building permits are examples of leading indicators, whereas measures such as gross domestic product (GDP) and unemployment figures are considered lagging indicators.

Both types of data provide very useful information. So what’s the difference?

  • Leading indicators communicate change and therefore they can be used to predict and influence future trends.
  • Lagging indicators reflect historical performance, a trend that has already occurred. They are usually easier to measure and as a result they are an excellent way to evaluate the effectiveness of your programs.

Both are essential to measuring performance and establishing a world-class safety program.

In fact, for well over a decade, many corporations have applied this approach to their internal safety programs. These companies have identified key performance indicators (KPIs)—leading and lagging—that have helped significantly improve safety. By many accounts, those who have taken this methodical approach to managing risk have reaped rewards in the millions of dollars as a result of far fewer injuries, lost workdays, and other improvements. The same principles can be applied to utility public safety.

Traditionally, utility companies have utilized lagging indicators to measure their public safety results. Lagging indicators, like number of accident claims and loss-related figures, help determine results but they don’t tell you how to improve. Since leading indicators are predictive in nature, they can help you see how your program is doing and where you might need to make changes to get to the outcome you desire. Ultimately they drive the activities that prevent accidents.

According to safety and risk management professionals, when used in this manner, leading indicators:

  • Allow you to see improvements in performance
  • Measure the positive
  • Enable frequent vital stakeholder feedback
  • Help you predict
  • Improve constructive problem solving around safety
  • Make it clear what needs to be done to get better
  • Track impact versus intention

Public safety leading indicators measure the positive and they’re based in engagement with key audiences (which is an essential element of public safety outreach). For example, with regards to audiences like school children, we measure classroom engagement, safety information retention, and other factors. These leading indicators are precursors to changed behavior and ultimately fewer accidents and greater return on investment.

Similarly, with third-party contractors and other workers, we measure their behaviors, preferences, and perceptions. These KPIs not only act as a barometer for this at-risk segment, they provide valuable information toward strategic planning and continuous improvement—information that ensures a utility meets its public safety goals. In short, these leading indicators help the utility to capitalize upon successes and improve upon any identified gaps.

Furthermore, we know that the value-adds of focusing upon leading indicators—which are more proactive and preventative—include an enhanced image and greater customer satisfaction. When a utility regularly and effectively engages with the public, we see a significant increase in customer satisfaction-related scores—which studies show directly correlates to improved return-on-equity and more favorable regulatory outcomes.

Utilities that understand the public’s safety information needs, and focus on leading indicators, actually create prevention. Succinctly put by one corporate executive, “Traditional [loss] metrics can help companies tell the score at the end of the game, but they don’t help management understand the strengths and weaknesses of their safety efforts and cannot help managers with future success [like leading indicators].” Establishing the right leading indicators will help you take an effective, proactive approach toward public safety—and measuring key lagging indicators will confirm your success. The result is a world-class public safety program (and the many business advantages that come along with it).

Public Safety Contributes to Shareholder Value

Investors are always looking for companies showing a solid financial performance. With a product that’s considered a necessity and a firm governance structure, utilities have typically provided a safe return on investment. That said, today’s utility company faces many competitive threats—some of which challenge the conventional utility model. That’s where public safety can offer a competitive advantage.

The shifting energy landscape—exemplified by more affordable solar solutions for customers—continues to test the traditional utility financial model. On the expense-side of the equation, utilities must contend with significant operating costs. They must also  justify (to regulators and other stakeholders) capital expenditures for necessary system upgrades.

In this challenging environment, public safety programs provide a competitive edge that’s crucial to a utility company’s overall financial well-being. They’re an investment that can offer a measurable return. That’s because public safety impacts financial, operational, regulatory, and reputational risks (and their outcomes).

Public Safety Mitigates Risk at Various Levels

Financial

  • Investment community confidencePublic Safety Mitigates Risk
  • Credit risk
  • Remediation
  • Litigation

Operational 

  • Performance gaps
  • Operational inefficiencies
  • Infrastructure
  • Workforce turnover
  • Organizational knowledge assets

Regulatory 

  • Fines
  • Reduced license to operate
  • Risk earning authorized rate of return
  • Required resources for hearings

Reputational

  • Negative media attention
  • Special interest group attacks
  • Employee disengagement
  • Customer dissatisfaction
  • Public confidence and trust
  • Key stakeholder relationships

At the top level, senior leadership knows that public perception about the utility’s commitment to safety is critically important—this is true whether or not a utility is responsible for a safety-related incident. The mere suggestion that a utility may be liable or negligent is enough to damage investor confidence. Rather than reactively managing an incident through public relations, public safety programs that are strategically integrated into the operation work proactively to build customer confidence and loyalty.

Consider the case of federal pipeline safety regulations “Public Awareness Programs for Pipeline Operators” (aka RP 1162).  Until a few years ago, utilities were not yet in a position to consider the impacts on customer opinion and satisfaction, or the rate case impacts of a sustained public safety awareness initiative. They were focused instead on understanding the law’s requirements and developing the resources sufficient to respond to these new requirements.

In the last couple of years, however, leading utilities with gas assets have recognized that public safety awareness programs positively enhance their public perceptions, which influences regulators as they review a utility’s request for rate relief. What’s more, many have realized that a well-designed, integrated, and dedicated public safety program provides operational benefits. According to one former utility executive, such public safety programs “promote increased productivity and also enhance a company’s bottom line. When resources are used more efficiently, company operations run more smoothly with enhanced profitability.”

As with employee safety, public safety must be embedded into the utility company culture—this company commitment to a culture of public safety directly enhances the brand. Utility companies must live it and it must permeate the organization at all business levels (See Enterprise Risk Management: Breaking the Mold in the Utility Industry). We know through our research, that meaningful engagement with the public translates into a positive perception and improved customer satisfaction. We also know that this converts into benefits on the regulatory side: utilities with higher levels of customer satisfaction experience more expedient rate cases as well as rate increases closer to their requests (versus those with lower customer satisfaction scores).

Public utility commissions consider both accident rates and public perception when making decisions about rate requests. A poor safety record combined with low customer satisfaction scores may be cause for a commission to grant a less favorable rate increase. Clearly the return on public safety investment can be significant. In addition to improved regulatory outcomes, the benefits include saved lives, mitigated risk, enhanced reliability, and fewer lawsuits.

All of these benefits are borne out in a company’s financial statements. So it’s no surprise to anyone that public safety is getting more attention from investors. A recent study conducted by investment analysts emphasizes this point, concluding, “Investors are increasingly using safety measures to screen out underperforming stocks and are showing much stronger returns for doing so.” As the marketplace heats up, utility companies need to look toward strategically integrated public safety programs to gain a competitive advantage, boost their bottom line, and satisfy all of their stakeholders.

The Benefits of Enhancing Brand through Public Safety

The connection between public safety and a utility’s brand is clear at the most fundamental level:

A utility provides information to keep its community safe, therefore it has done something good and provided a benefit, which also boosts its public image.

But the benefits of brand actually go much deeper than image. The seemingly intangible nature of brand can in fact be quantified and linked to financial advantages through public safety outreach.

Brand equity, the value that customers associate with your organization, is reflected through awareness, connections, experiences, and perceptions of quality and commitment. Over the years countless research studies have shown that customer satisfaction impacts the strength and favorability of the associations with brand. For utilities, that customer satisfaction is indelibly linked to public safety.

Today’s consumer is much more discerning than ever before. They’re actively involved in their world and its social issues including safety and stewardship. Therefore it’s essential for utilities to engage with them about safety issues in a meaningful way. According to industry analysts, “Utilities are doing a better job adding capabilities for proactive communication and upping their corporate citizenship but they are not keeping pace with those in a variety of other service industries, yet customers expect the same high level of service.”

Active engagement and proper messaging is especially important to satisfying customers and meeting their expectations around safety. For example, in our research conducted with thousands of at-risk workers nationwide, nine out of ten workers say that they expect utilities to communicate safety information. That statistic directly correlates to the perceptions that they have about their utility. Our data shows that workers whose expectations have been met through useful utility-sponsored safety education strongly believe that their utility is committed to safety.

We uncovered similar findings with other at-risk audiences like teachers and students. In our nationwide surveys, teachers say that they find utility safety education information useful. They actually commit significant classroom time to using these resources. Additionally, the vast majority of teachers who receive well-designed resources encourage students to take them home and share the information with family members (see Public Safety to Elementary Schools is a Sound Investment). This behavior exemplifies customer satisfaction and it spreads utility safety messages and goodwill, enhancing brand.

In order to achieve these sorts of results, utility public safety programs must be comprehensive and based upon research-driven continuous improvement. It’s essential that a utility understand the behaviors and preferences of its customers. This helps foster quality messaging that’s tailored to each of the target audiences—ensuring that they use the information, their expectations are met, their needs are satisfied, and the utility brand is enhanced.

So what are the benefits of satisfied customers and the resulting brand equity achieved through public safety? The key benefit of course is saved lives. Well-received safety information means an educated public and a decrease in utility-related accidents and related losses. But there are many other strategic business advantages that can be realized. Research confirms the following:

  • There’s a direct relationship between the level of customer satisfaction and a utility’s net operating margin.
  • There is a strong relationship between customer satisfaction and return on equity (ROE).
  • Brand-level satisfaction scores are associated with the expediency and the time it takes to complete a rate case.
  • Utilities with the highest proportions of satisfied customers received rate increases closer to their requests than did utilities with lower customer satisfaction scores.
  • Customer satisfaction is one of the key variables used by rating agencies to assess risk, and ultimately, determine utility credit rating (i.e. there’s a correlation between regulatory risk and customer satisfaction).

Providing a strong financial performance for investors is a critical element in a utility’s ability to offer safe, reliable, and affordable power and stay competitive. It enables companies to invest in infrastructure upgrades, sophisticated business systems, and improved processes while also maintaining a productive relationship with stakeholders. Public safety is the linchpin to delivering these returns.

A study by PricewaterhouseCoopers concludes, “Investing in the customer experience can yield rewards as significant as investing in tangible assets, such as power plants and transmission lines.” Well-conceived and well-executed public safety programs designed to satisfy customer needs and increase brand equity, translate into significant business advantages. In short, an investment in public safety is an investment in brand. And, as the adage goes (and the data proves), for utilities, brand is everything.

Benchmarking Public Safety: The Measure of Success

It’s clear that public outreach is essential to building a culture of safety in your community. But, how do you know if your outreach programs are making a difference? How do you measure their success? And, how do you build upon that success?

For utility companies who are looking to truly make an impact on public safety and gain a strategic business advantage, benchmarking is the answer.Benchmarking

Simply put, benchmarking is the process for obtaining a measure—a benchmark. When it comes to public safety programs, the right benchmarks can help gauge your performance and the information gathered through the process can identify gaps in organizational processes, ultimately helping you to close them and gain advantages. Accordingly, benchmarking helps utilities align strategic planning (and in turn, outreach programs) with core customer expectations, desires, and needs.

Understanding the Customer is the Cornerstone

Customers are, of course, central to public safety. In order for your public safety outreach program to succeed, you must understand the behaviors and preferences of your customers—workers, first responders, school children, residents, and other at-risk audiences. This is critical to meeting their expectations, ensuring that they use your information, and for targeting performance improvements.

When you understand your audience, you’re able to hone your message, determine the best vehicles for communication, and capitalize upon the right channels in order to effectively reach them. Furthermore, understanding the audience is vital to continuous improvement, which is essential in today’s ever-changing marketplace. Competitive organizations constantly monitor key audiences. This work is the cornerstone of public safety and the benchmarking process.

Aligning Corporate Goals with Customer Metrics

It’s equally important to understand your organization’s goals, guidelines, and performance indicators before embarking on any initiative to measure performance and target improvements. Assimilating this information into your efforts and tying performance indicators to appropriate customer metrics are essential ways of determining whether or not you’re meeting your goals. For example, for many utilities a key performance indicator is a targeted reduction in overall utility-related incidents. Therefore it’s important to track metrics relating to how at-risk workers use utility-sponsored safety information.

Reduction of KPIOther key performance indicators may relate to customer satisfaction. Prominent studies indicate a direct correlation between customer satisfaction and business advantages (e.g., J.D. Power reports that every one-point increase in customer satisfaction generates millions in shareholder equity). Therefore, in our work with utilities, we focus upon tying metrics like workers’ perception of a utility’s safety efforts and the perceived value of the information that utilities provide to customer satisfaction levels.

Measuring the Effectiveness of Accident Prevention

It’s important to measure the effectiveness of accident prevention. In other words, you must measure the effectiveness of your program before accidents occur. This benchmarking strategy is an essential part of public outreach, and its metrics act as leading indicators, revealing the level of preparedness in the community. It is important to measure customer engagement with your communications because there’s a strong correlation between accident prevention and the engagement level of an outreach audience.

Historically, utility companies have only measured the results of their public outreach via loss-oriented data by calculating the number of incidents, accidents, and injuries, and compiling a list of lawsuits and damages. This method provides data about the program’s impact on community safety but it is a lagging indicator. It measures results of the outreach efforts after the damage has been done. These are certainly important metrics, but in the new paradigm they equate to checking your math—they serve to validate the prevention-based leading indicators.

Using the prior example of “reducing the number of incidents” as a corporate goal, it’s clear that by calculating the number of incidents at the end of each year’s program cycle, you will indeed determine whether or not you’ve made an impact. However, in contrast, measuring customer engagement will tell you if your outreach program is making an impact, and why or why not. This measurement will also provide useful information on how to improve it.

Top-Down Support is Essential

It’s worth stating again: For benchmarking to have any value, you and your research partner must have the support of executive leadership. When your benchmarking efforts align with corporate management’s objectives, you’ll establish more meaningful metrics. Subsequently, your public safety programs can be fitted with the research tools necessary to gather customer feedback and data.

Properly engineered surveys and questionnaires, along with online, telephone, and direct mail-based information gathering tools, can be integrated into your program. The resultant data is then used to establish baseline measurements—an important step toward improving your outreach programs. While benchmarking allows you to compare your public outreach programs against the industry’s best, baselining will help you gain your bearings and set initial organizational goals. The baselining process is a key mile marker on your way to establishing a best-in-class public safety program.

Achieving a Strategic Advantage

Benchmarking is intended to compare you to the industry’s best, but much of the value is in the process—identifying your customers’ needs, aligning with your corporate goals, setting baselines, establishing metrics, identifying  gaps, instituting improvements, and capitalizing upon best practices.diagram

While comparing your organization to its peers is revealing and can kindle the desire to compete, it’s really your utility’s service area-specific data that’s transformational. Time after time we see the power of outreach program metrics produce positive change within an organization—generating important conversations, breaking down barriers, and enhancing strategic planning. For utility companies who are looking to improve their public safety programs, the benchmarking process can have a profound impact.

Public Safety Outreach to Elementary Schools Is a Sound Investment

Outreach to elementary school students can have a major impact on public safety. School outreach is not just good community relations, it’s one of the most effective ways to communicate important messages and promote a culture of safety in your community. So whether your focus is safety, communications, legal, risk management, or regulatory affairs, school outreach is an investment that can earn returns.

Elementary school children (and their teachers) are among the best targets for utility safety outreach for many reasons:

  • School-age children care about right and wrong and understand the importance of safety messages. They’re at a stage where they understand consequences and are beginning to make their own decisions based on the lessons they learn.
  • Children are highly impressionable. Much of what they learn in the elementary grades stays with them for the rest of their lives, including when they become your adult customers.
  • Elementary school teachers like using electrical and natural gas education resources. When properly designed, such resources can help teachers address academic standards and can easily be incorporated into school curriculum.
  • During the elementary school years, students bring educational materials home, stimulating meaningful discussion with parents and siblings and increasing awareness and behavioral change.
  • Teachers themselves learn a great deal from the programs and discuss the information with both their peers and their families.

Effectiveness Study Results
Research supports the effectiveness of educational outreach to elementary school students. On an annual basis, we collect feedback from thousands of K-6 teachers nationwide. We find that the vast majority appreciate the resources and are able to apply them to subjects such as reading, science, health, math, and social studies. The resources also address national and state curriculum standards—aiding in the classroom adoption of your safety lessons.

To better understand teachers’ information needs and perceptions, we regularly ask if they feel the resources are worthwhile. We specifically ask teachers whether the educational resources:

  • Benefit students
  • Are discussed at home
  • Connect with students
  • Are valuable

In all four categories, an overwhelming majority respond positively, stating that students will use electricity and natural gas more safely as a result of the resources utilities provide.

The Snowball Effect
In addition to reaching an audience that is receptive, elementary school programs have a “multiplier” effect: They communicate utility messaging to more than just the students. Our research indicates that one teacher can help deliver this important information to tens, even hundreds, of community members.

School Outreach According to effectiveness studies of teachers using Culver utility education booklets, a single teacher supplied with resources reaches an average of 30 students. The majority of elementary school students take booklets home and share the information with their families. So when you provide booklets to one teacher, your results are exponential. This single important touchpoint can result in hundreds of community members engaging with your message.

Powerful Anecdotal Evidence
Anecdotal evidence also indicates that outreach programs to elementary school children can have dramatic impacts. Case in point: Victoria Rosas, a third-grade student in California, prevented a very dangerous, potentially fatal situation because she learned important safety information from a booklet distributed to her school by the local utility.

A power line had fallen in Victoria’s backyard, and heavy rainfall had flooded the area around the home. Victoria helped her family respond safely and stay away from the downed line. Had the family exited the house through the rear, they almost certainly would have been electrocuted. “She saved the whole family,” said her mother.

Victoria explained that her knowledge of the situation came from an illustrated utility company safety booklet. “When the power line went down, I knew what to do because we had read this safety booklet in class,” she said.

There are many compelling stories similar to this one all over the country, proving that utility education programs do raise the level of public safety. View a video of Victoria’s story, along with Kiera Gray’s natural gas safety story, at www.culverco.com/proof-utility-public-outreach-prevents-accidents.

Value to Your Stakeholders and Your Business
Public safety outreach to elementary schools is proven to be a highly effective way to educate the public and prevent accidents. What’s more, research shows utility outreach enhances public perception of the utility and boosts customer satisfaction. When receiving information that they consider valuable, customers view a utility as a company that is making a concerted effort to help the community.

This has positive financial implications. According to J.D. Power, “utility industry research has identified quantifiable links between customer satisfaction and key financial metrics, such as profitability and credit ratings. In fact, a highly satisfied customer base can be a leading indicator of return on equity for utilities.”

The financial benefits can include lower insurance premiums (increased safety in the service territory lowers the risk) and a positive influence on regulators when negotiating rate increases. This makes school safety outreach a sound investment, helping to meet departmental goals and benefit the enterprise as a whole.

The implications are clear: Safe business is smart business.

Utility Budget Planning and the Culture of Prevention

All utilities face budget challenges. Even those with extensive public safety outreach programs need to continue to promote and maintain internal support and funding for these initiatives. The key to creating an enduring and effective safety program that survives budget cycles is to create a Culture of Prevention throughout the utility.

By promoting a Culture of Prevention, an economic case can be made to support—and even increase—funding for public safety outreach.

A Culture of Prevention recognizes that public safety measures deliver significant outcomes for the business: saving lives, preventing injuries, reducing costs, mitigating litigation, and enhancing the utility’s reputation and the value of its brand. (To learn more about the positive correlation between robust public safety communications and community stewardship satisfaction, check out the industry-focused customer impact report from J.D. Power.) When considered as part of a utility’s overall business strategy, a Culture of Prevention has the potential for increasing value for just about every internal stakeholder.

To build an economic case for public safety outreach, consider the following elements:

  • Identify the potential for cost savings to the utility and its customers through reduced claims and claims administration.
  • Solicit input from risk management and insurance sources, who may be able to help you demonstrate the benefits of public safety in mitigating risk—through efforts to cap or even reduce insurance premiums.
  • Research the positive impact of public safety outreach programs on preventing outages and maintaining system reliability.
  • Demonstrate the positive impacts of your public safety outreach initiatives on customer opinions and satisfaction with the utility…research has shown that improving customers’ perceptions about public safety enhances a utility’s reputation.
  • Show the effects of your utility’s public safety program on rate case outcomes.
  • Find internal public safety champions across the enterprise and bring them into your discussions about the need for promoting safety awareness among at-risk customers.

When possible, document and internally share your own public safety success stories. For example, we know of a public safety manager for a large combination company who shared the praises her utility received from the parents of a 12-year-old child. The child received utility-sponsored safety education in her school and used this knowledge to save the lives of her family by preventing them from approaching a downed power line in their yard. Success stories such as this one go a long way toward raising visibility of your program and communicating its value.

As the utility industry continues to transform, public safety managers will remain under enormous pressure to reduce expenses and maximize value. Public safety initiatives, as with all areas of a utility’s business, are being carefully scrutinized. However, by linking your outreach internally to your utility’s Culture of Prevention, your management and customers will experience the dramatic results of your safety efforts, through saved lives as well as improved reliability and enhanced value.

Enterprise Risk Management: Breaking the Mold in the Utility Industry

So what exactly is risk management? Conventional wisdom in the utility industry has focused upon energy trading and insurance policy. However, with an increasingly more complex operating environment and accelerated industry change, utility companies are quickly realizing the interconnectedness of their risks and are therefore shifting towards a more holistic approach: adopting an enterprise risk management (ERM) model.

ERM seeks to achieve an organization’s larger goals and gain a strategic advantage by assessing all of its potential risks and managing them as a risk portfolio rather than as individual silos. The process examines the direct and indirect impacts of risks cross-functionally. Accordingly, it serves to reveal both threats and opportunities. This approach can present hurdles since it requires a systemic change in thinking, management, and structure, but when properly implemented it can produce great benefits.

Integrating Public Safety
We’ve long advocated an enterprise-wide approach to public safety program management. By integrating public safety programs across the organization, a company reaps more reward and achieves greater value (See The Strategic Advantage and The Culver Model).

Public safety programs are key components of the risk management portfolio. It’s clear that risk management—at both the program level and the portfolio level—require enterprise-wide involvement and visibility. This integration is only possible by design, a process preceded by assessment and planning.

Ensuring Performance at Every Level
To help assess risk, many utilities have adopted the widely-accepted principles contained in the Enterprise Risk Management Integrated Framework published by the Committee of Sponsoring Organizations (COSO) in 2004. Alternatively, the International Organization for Standardization’s ISO 31000 Risk Management Principles and Guidelines offer a similar framework.

Both COSO and ISO 31000 provide a structure for risk assessment, with the goal of minimizing risks and optimizing opportunity in efforts to create more value. The obvious core principle of each ERM framework is that risk management must be performed at every work level. It must permeate the organization.

From a public safety program stance, we generally refer to this as creating a culture of prevention in the organization—and we consider it central to success. Our research shows that public safety programs developed and implemented in concert with stakeholders from across the organization achieve optimal results and provide greater benefits to the organization.

Meeting Organizational Goals
Additionally, public safety programs, and overall risk management, must include enterprise-wide systems that provide these stakeholders with the information they require at their level in order for them to meet key performance indicators, achieve organizational goals, and to add more value to the business. Therefore, like COSO, we use a methodical development process to ensure integration into the larger risk management portfolio and to align with corporate goals.

According to COSO, ERM must be:

  • A process, ongoing and flowing through an entity
  • Effected by people at every level of an organization
  • Applied in a strategy setting
  • Applied across the enterprise at every level and unit
  • Designed to identify potential events
  • Able to provide reasonable assurance
  • Geared to the achievement of objectives

These tenets represent the ideal, and they take the vital step of setting the tone for a company. But, while a commitment to ERM must be communicated throughout the organization, it also must be implemented in practical terms and embedded at the program level by design. Top down support and communications are vital to the cause, but just saying it doesn’t make it so.

Making More than Just a Mandate
In a Harvard Business Review piece entitled “Managing Risks: A New Framework,” Robert Kaplan and Anette Mikes point out that there have been many public declarations and well-intended attempts by corporate leaders to make safety the number one focus of their organizations. Many of these cases have resulted in failure and even catastrophe.
Accordingly, Kaplan and Mikes cite the Deep Water Horizon oil rig disaster as a painful example. Despite British Petroleum CEO Tony Hayward’s safety proclamation and all of his efforts, the company experienced a failure to manage risk, resulting in the largest oil spill in U.S. waters.

Following the disaster, an investigative commission concluded that “management failures crippled the ability of individuals involved to identify the risks they faced and to properly evaluate, communicate, and address them.” In their Harvard Review piece, Kaplan and Mike stated, “Despite all the rhetoric and money invested in it, risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them.”

Thinking Beyond Compliance
Similar thinking still exists in the utility industry. All too often public safety, and the larger issue of risk management, is addressed mainly through compliance. It’s easy to understand why. In an industry steeped in regulation, it’s very easy to fall back on historic practices and misplace your confidence in compliance.

In and of itself, compliance is a good thing, but it’s not designed to connect the dots nor drive a holistic approach towards safety or risk management. Furthermore, risk management has typically focused on loss and an effort to simply mitigate it. Certainly alleviating losses or recovering costs are important, but what about preventing the loss altogether? (See How to Win at Public Safety – A culture of prevention versus a culture of loss). This requires a systemic change and a realization of the benefits and opportunities presented by accident prevention.

Making a Paradigm Shift
Old ways of approaching safety and risk are inadequate and will not help utilities compete in the changing business environment. As one industry risk management firm points out, “the [top] challenges to ERM for utilities include a broader spectrum of risk such as new regulations and company reputation, organizational silos and outdated information systems, cost reduction and the alignment of ERM with overall business strategy, and avoiding the pitfalls of over emphasis on avoiding losses.”

Clearly, a proactive approach towards risk management that includes accident prevention is required. And, considering the internal obstacles that utility professionals must contend with, agents of change may come from outside the organization.

Researchers note that “there are individual and organizational challenges inherent in generating open productive discussions about managing risk and that these discussions must be anchored in strategy formation and implementation processes.” This is only possible by breaking down silos and moving towards an enterprise-wide effort. Many organizations have experienced success facilitated by outside experts and by programs that offer a new perspective. Isolated, inside thinking can prevent these conversations from progressing.

Behavioral research notes that individual and organizational biases can inhibit the ability to discuss risk and failure. Furthermore, “groupthink”—the desire for harmony or conformity—is prevalent in organizations and it often results in irrational or dysfunctional decision-making. Experts conclude that rather than mitigating risk, “firms actually incubate risk.” Further exacerbating this challenge is the fact that risk management focuses upon the negative—threats and failures—instead of the positive attitudes required to implement successful strategies. The challenge for management is to take a different view.

Evolving the Industry
Still, there is an active and evolving dialogue occurring in the industry that is identifying risks beyond traditional utility hazards and is seeking ways to address them on an enterprise level. For example, several years ago at the APPA National Conference, attendees ranging from utility company CEOs and CFOs to Risk Managers and Operational Staff participated in a session that identified risks within key business areas.

While not a scientific study, the session revealed a complex understanding of risks that might not have appeared on the radar a decade ago. What’s more, these risks could easily be viewed as both threats and opportunities—a real paradigm shift. Attendees identified such risk concerns as reputation, relations, trust, culture, customers, communications, rate-making, litigation, safety and safety management, and performance.

Realizing Success
The APPA seminar is just one example of a shift in thinking that’s occurring as utilities attempt to identify risks more broadly, connect the dots, discover new ways to address them, and integrate their programs. Additionally, utilities are realizing the benefits of addressing risks and approaching public safety in a proactive, rather than reactive, manner. Benefits that include heightened customer satisfaction, enhanced regulatory outcomes, and an improved bottom line (as identified in J.D. Power studies and other research).

The challenge for utilities is to overcome their reliance upon the past by breaking down barriers within the organization, introducing the right outside experts that can help facilitate change and challenge internal “groupthink,” and incorporating programs and systems designed to span the organization and meet its objectives. It’s a tall order, but success of the enterprise depends on it.

 

Shifting Safety into High Gear

This article was originally published in American Gas Magazine

Utilities are expanding public outreach and educational initiatives about safety to help continue to improve service to customers. With safety as a top priority and expectations from regulators and the public increasing dramatically, these public awareness activities are being evaluated with more scrutiny. Utilities must be able to provide metrics that demonstrate effectiveness and impacts, not just report on activity.

Utilities excel at operational improvement, and you can easily apply the same approach to public safety communications as you do to other critical areas of your business, namely, by driving continuous improvement and creating a positive customer experience. While all utilities have their primary outreach programs in place—such as natural gas pipeline public awareness plans for excavators, emergency officials, public officials and the affected public—today, continuous improvement demands more.

To apply your utility’s continuous improvement skills and experience to public safety, focus on three strategies:
1. Consider the customer
2. Follow the data
3. Track and benchmark for a strategic advantage.

Consider the Customer
As a utility, you know how to deliver memorable messages that avoid industry jargon such as “Call Before You Dig.” Why not apply this knowledge to all public safety messages? Developing the most appropriate channels of communication with your target at-risk audiences will enable you to best serve your customers as their preferences and needs change. Here tactics to help get the right message to the right target audience at the right time:

  • Explore segmentation: Look at claims data and primary research to identify trends, including firmographics, demographics and psychographics. Then, deepen your audience segmentation—from list development to imagery and messaging—to have the greatest impact.
  • Consider an integrated approach: If you are a dual-commodity utility, consider including electrical safety messages with your natural gas messaging. Your customer doesn’t differentiate. And neither do litigators and auditors.
  • Choose the right channel: The popularity of email, social media, and online bill pay is growing—but not across the board for all types of messages. Using research to understand how safety information be is used helps to identify the most appropriate communication means. For example, many at-risk workers use safety information for on-site training sessions and thus prefer printed materials.

Follow the Data
Utilities measure and report on all kinds of operational key performance indicators, including employee safety metrics, but are sometimes stumped when it comes to quantifying public safety. Common questions are: How do we measure the success of prevention-based public safety communications? and How do we prove prevention? Here are types of data collection and reporting that can demonstrate the impacts of safety communications:

  • At-risk audiences: Your target audience lists should include those most likely to come into contact with your utility. Consider input from all stakeholder business units, regulators and insurers, and those who operate in your territory.
  • Delivery rate: Distribute your communications via channels that will allow you to demonstrate that your information is reaching its intended audience.
  • Response rate: To show that people are truly engaging with your outreach, build in response mechanisms, such as the ability to request more safety resources, and provide feedback.
  • Market research: Use your communications as an opportunity to gather primary research data on your at-risk audiences. For example, ask them how many people they provide training for, what their safety needs are, and what they think about your utility.
  • Tracking and benchmarking: When you track the effectiveness of your safety communications against your starting point and benchmark your performance against others in the industry, you can then take advantage of the many strategic opportunities that arise.

Track and Benchmark for a Strategic Advantage
Tracking how your own program performance results compare over time and how your performance compares with others can reveal some powerful findings.

For example, we’ve compared performance and customer opinion metrics of companies that invested in baseline-only communications against companies that took their compliance activities to the next level with an integrated approach to public safety across key at-risk audiences. The results were staggering, with customer perceptions of integrated and strategic communications utilities coming in 15 to 25 percent higher than baseline-only utilities. This kind of data is persuasive when developing a business case for a public safety program or defending an existing program investment when budgets are being cut.

Once you have started, keep in mind that your public safety performance can drive a variety of key performance indicators. Consider the following:

  • Choose your performance indicators wisely: When you choose your key performance indicators, think about your stakeholders. For example, customer satisfaction may not be operations’ top concern, but you can be certain that safety’s impact on customer satisfaction is something that your leadership will be interested in. In fact, according to an industry-focused customer impact report by J.D. Power in October 2013, a positive correlation exists between robust public safety outreach and community stewardship satisfaction.
  • Leverage public safety to your company’s benefit: Management knows that higher customer satisfaction ratings result in measurable increases on a company’s return on equity and can help meet rate case objectives. Utilities that demonstrate their commitment to public safety and report on the effectiveness of their safety communications see positive results in regulatory audits, claims, legal decisions, and general rate cases.

Taking your public safety program to the next level will deliver a strategic advantage and maximize the benefits to stakeholders and the community. Just do what you already know how to do—and do well: Drive continuous improvement.