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.

Knowing Your Audience: The First Step to Effective Public Safety Outreach

You’ve got a problem. How do you effectively address the risks associated with utility contacts or dig-ins, regulatory requirements, recommendations from insurers, or mandates from management? In each case, the solution likely includes reaching a particular at-risk audience with safety information. The right message to the right people at the right time saves lives. It mitigates risk and even enhances your utility’s brand. The wrong message or wrong channel will miss the mark and can eventually result in budget cuts, slashed programs, and the inability for your organization to meet its safety goals. Knowing your audience is key to developing communications that are effective, efficient, and sustainable.

Keys to Identifying and Reaching Your Target Audience
When it comes to public safety outreach that delivers results, the old ways don’t cut it. For example, bill inserts may be part of your plan, especially a PPAP, but you can’t rely on them as the only method to reach your audience. People who read bill inserts are typically not your at-risk audiences such as third-party workers, first responders, or children. What’s more, the content within an insert is too general to make an impact. The keys to effecting behavioral change and reaching your organization’s safety goals are to identify your audience, understand them, and develop proper tools and channels to address them. Along that vein, here are some important tips and best practices to consider:

  • Target: Start by considering who might damage power lines or gas pipelines, or experience utility-related injuries in the course of their day. When developing target lists, employ industry best practices for identifying occupations commonly associated with electric and gas incidents. For example, we cross-reference private and public sector databases such as industry association lists and 811/One Call data. We also recommend that utilities work cross-functionally, checking with legal, claims, and risk departments for their insights as well as their records that identify audiences such as repeat offenders or industry “heavy hitters.”
  • Design Strategically: As with any communication, it’s important to always keep the receiver in mind. What does that mean from a user experience standpoint? It means considering learning styles, work environments, modes of communication, and what barriers might exist. Factors like these help inform design and deliver a greater impact. For instance, in a printed booklet or mailer, factors may include everything from step-by-step instructions and illustrative graphics, to page composition and booklet format. Deliberate and informed decisions surrounding these elements can make a difference in whether information is read or discarded, remembered or forgotten.
  • Tailor Your Message: To increase engagement and make an impact on safety with your outreach, appeal to your audience using industry-specific imagery and tailored messages. These tactics are proven to increase direct mail and email open rates as well as information recall. Have you reached out with just a letter in the past? Speak more directly and get your target’s attention by addressing their concerns, using their language, and featuring images of equipment and hazards specific to their industry. For more on this, read our Segmentation blog post.
  • Integrate: When it comes to workers at risk of a gas pipeline contact, who you target is imposed by RP 1162. While that’s required for compliance, a prevention-based approach takes the customer perspective into account and considers all the risks associated with those working near electric and natural gas utilities. One implication of this customer-centered approach: it’s a good idea to consider dual-commodity safety messaging if you’re a dual-commodity company. This provides a more comprehensive approach towards safety, as well as cost-efficiencies and the benefit of presenting a unified company image.
  • Think Holistically: With increased scrutiny from regulators and insurers, and an overall heightened expectation for public safety, audiences that used to be supplemental have become the standard for best-in-class utility public safety programs. Consequently, many utilities now regard school-age children, formerly a peripheral audience, as crucial recipients of hazard awareness and safety education.
  • Reach Influencers and Integrators: Many public safety programs have the directive of reaching all schools in the service area. If this applies to you and you’re reaching out to principals and superintendents with safety information, consider adding teachers and curriculum coordinators to the list. They’re most likely to bring the information into the classroom to be taught and remembered.
  • Touch Primary and Secondary Audiences: When identifying an audience, consider the primary and secondary targets of the message in order to create a more meaningful impact. Our national data reveals that 97% of students receiving safety booklets in the classroom take them home and 74% share them with their families. Knowing this, we tailor our messages to reach students and their families—often including home safety or energy-saving audits and bilingual content for non-English speaking family members.
  • Rely on Research: Our national research has demonstrated that the size and type of an at-risk business can greatly influence the best ways to reach and educate them. Knowing that 33% of at-risk third-party worker organizations are sole proprietors helps us shape tactics. Smaller companies often want print materials because they’ll use them in tailgate meetings, whereas larger companies prefer videos for larger groups of workers.
  • Guide by Your Goals: A critical point to remember—no matter who the audience—is that your strategy and tactics will depend on your circumstances and your goals. As you identify your target audience and determine the best ways to reach them, keep in mind the metrics you’re asked to deliver and the key performance indicators you’re measured against.

Commit to the Relationship, Regularly Measure, and Constantly Improve
As you build stronger relationships with your audiences by utilizing the right messages and the right channels, use those channels to learn even more about your audiences. Include surveys in your outreach to obtain firmographic data as well as improvement feedback and customer satisfaction details. We do this as a matter of course, and as a result we have a wealth of useful information about at-risk audiences and public safety program performance.

Benchmarking is valuable when it comes to building a business case to expand, or even maintain, a high performing safety program. More importantly, it’s a crucial process if you’re to continually improve your program and take advantage of industry best practices. We use our data for exactly these purposes. Similarly, today’s utility professionals are very aware of the priorities set by their leadership, and using customer insights to drive continuous improvement is high on that list. But the first step is knowing your audience.

Don’t Fear the Audit—It’s an Opportunity to Improve Relations and Your Financial Position

The term “audit” has many connotations and not many of them are positive. It conjures images of medical check-ups and tax investigations. However, simply put, an audit is an examination of your actions (and facing the potential consequences). So if you conducted yourself well in the time leading up to an audit, the audit itself shouldn’t be dreaded. The same is true in the utility industry. Whether undergoing a regulatory audit or an insurance audit, if you’re properly prepared, then an audit can be a stress-free process. In fact, an audit can help you improve stakeholder relations as well as your financial position.

In the utility industry, the key to audit preparation begins with public safety outreach. A well-designed and executed public safety program—one that’s data driven and integrated with your company’s goals—not only meets audit requirements but adds value to your business. Remember, the audit isn’t the driver, successful business management is. A public safety program that’s an essential part of the overall business plan enhances the entire organization from corporate communications and operations to claims and legal. It produces data and establishes metrics that benefit the business and exceeds auditor expectations.

When you step into an audit with meaningful metrics that include key information about your public, show positive impacts based upon solid research and statistics, establish benchmarks that show your progress and demonstrate how your organization stacks-up within the industry, and represent a sustainable plan for ongoing improvement, then you instill great confidence and exemplify good corporate governance. The benefits that this sort of program has on stakeholder relations are clear.

First, consider the auditor-auditee relationship. When you display transparency, cooperation, and are proactive, you show respect and indicate that you’ve taken your commitment to the safe and reliable delivery of energy seriously. According to the American Institute of Certified Public Accountants (folks who know a little about audits), “It pays to be able to talk in an open and honest way during an audit.” Auditors in many industries identify both preparation and open communication as keys to a successful audit. These factors build trust and establish a strong relationship with your auditor. Why is this important? Well, a study by the General Accounting Office reports that stability in an audit relationship translates into significant process efficiencies and cost savings.

The other key stakeholder in public safety outreach, as well as the audit process, is of course the customer or the public. They’re the receiver of outreach communications and a major influencer in the audit process—which incidentally are closely tied. Regular, useful communications—like public safety outreach—is documented to improve public opinion and customer satisfaction, and in turn, audits and regulatory proceedings. In fact, one industry study notes that, “new data strongly suggests a positive relationship between a utility’s customer satisfaction levels and its regulatory experience, including financial metrics, disallowance amounts, and the time it takes to complete a rate case (regulatory lag).” Furthermore, “utilities with higher proportions of satisfied customers received rate increases closer to their requests than utilities with low customer satisfaction scores.”

It’s all part of establishing good relations. Properly designed outreach programs and related success measurements are crucial to establishing and maintaining a good relationship with all of your stakeholders. Analysts advise that “most public utility commissions have already put into place performance metrics” and, “in some cases, additional factors that influence customer satisfaction—such as communications and other customer enhancements—may also be configured into measureable performance metrics that are part of an incentive or penalty model in regulatory proceedings.”

Finally, an industry study entitled Aligning Customer Satisfaction and Utility Regulation concludes, “A tactical plan to improve customer satisfaction often requires investment in multiple customer outreach programs,” and, “a successful customer engagement program will result in a measurable improvement in overall customer satisfaction levels.” Both of these points bear out in our research as well. In our experience developing integrated outreach programs, we’ve found that our partners reap many rewards including fewer incidents and claims, lesser payouts and insurance premiums and, of course, more favorable audits.

Stakeholder Engagement and Advanced Technology Result in New Public Safety Solutions

When you think of public safety, first responders immediately come to mind. These life-saving professionals are usually the first on the scene of an emergency and the main line of defense between utility-related hazards and the public. It’s no wonder regulations like RP 1162 identify these professionals as key stakeholders and mandate that utility companies make them aware of natural gas and electrical incident prevention and response tactics. And, while promoting awareness is an important element of compliance, a more comprehensive approach towards the education of first responders can have a greater effect on public safety.

One particular utility company that wanted to provide more in-depth safety education to first responders found itself restricted by limited staff resources and an expansive service area. Culver Company worked with the utility and key influencers in the company’s local first responder community to build an outreach program that offers wider access, encourages participation, and meets stakeholder needs. A key component is a comprehensive e-learning website with detailed educational modules, self-paced lessons, multimedia content, valuable testing, and completion certification. What’s more, the site is designed to support the company’s brand, reinforce their reputation for reliable energy services, and demonstrate their commitment to public safety.

The accompanying slideshow is an abbreviated version of a presentation introducing this e-learning website to firefighters at a regional U.S. conference. The slideshow includes narration recited from the speaker’s notes and offers a brief tour of the site and some of its key features. The e-learning resource is part of a larger safety outreach and risk management program developed by Culver Company that includes strategic communications, performance metrics, evaluation tools, and continuous improvement.


Public Outreach as a Strategic Advantage

With a new fiscal year upon us, most companies are assessing their financial health and plotting a path for the future. Where does your program fit? How has it performed? Will it retain funding?

If you’re a manager of utility safety or energy efficiency programs, you are committed to reaching service area communities. You know that educating people about safety prevents accidents, protects infrastructure, and saves lives. You understand that teaching customers to use energy more responsibly can also help them save money and resources. But, do all of your stakeholders understand the value of your program?

The benefits of great outreach go beyond compliance and even beyond behavior change—they save and enhance lives. What’s more, effective outreach programs can help utilities gain a strategic advantage in the marketplace.

Communication Is Key
Nothing says “we get you” more than speaking the language of your customers. When you’re reaching out to them about safety, using their industry terminology, addressing the issues that are important to them, and reflecting their daily reality with images of their life and work, speaks volumes. We’ve found that different customers want to hear from their utility in different ways. For example, based on customer surveys, we’ve learned that third-party contractor and excavator organizations with 1–20 employees want printed materials to display in their breakrooms and to share at tailgate meetings—while larger employers want training slide shows and DVDs. When your audience is engaged by your materials, they’re more likely to read them, retain your message, and adopt the behavior. Additionally, they’re more likely to think favorably about your company.

The impact of your outreach goes beyond the direct messaging of safety or energy efficiency. In addition, these messages, through your outreach, are telling your customer: “We care about your safety,” “We help you save money,” and “We want to enhance your life.” These outreach efforts are viewed by the community as good corporate citizenship and stewardship…they build your brand and strengthen your reputation.

Keeping in Touch Makes a Difference
We know that the outreach we perform on behalf of utilities improves their customer satisfaction numbers. Case in point: In order to demonstrate the value of their third-party contractor outreach program to management, one utility company compared satisfaction rates of customers who received safety materials to customers who didn’t receive them. An independent research firm performed the assessment. The study concluded that key audiences are more engaged with the utility when proper, regular outreach is performed. What’s more, utilities performing outreach enjoy a significantly higher customer satisfaction score than those who do not.

In our outreach work for electrical and natural gas utilities we consistently find satisfaction rates in the 80–90% range. While most companies can’t boast a customer satisfaction rate anywhere near the 90s, more and more companies are discovering that these numbers are within reach if they harness the power of outreach communications. A recent JD Power study of 93 electric utilities serving nearly 12 billion customers found that proactive communication improves customer satisfaction. Best-in-class utilities now understand that this type of communication—outreach beyond compliance—is a really good idea. Not only that, it’s also good for the bottom line.

You Can’t Buy Love, But You Can Buy Trust
For those who deal with cold, hard numbers on a daily basis, brand awareness can seem intangible and amorphous. But new research puts a price tag on the power of a utility’s brand. A 2014 study released by Market Strategies International finds that the trust a utility develops with its customers can be linked to monetary value. They surveyed 19,000 residential customers of the 125 largest natural gas, electric, and combination companies to measure brand trust along with operational satisfaction and product experience. The report showed that for the top-performing “most trusted” companies in the study, the value of their good relationship with customers was an estimated $8 billion dollars.

What’s Measured, Matters
More and more utility company management, regulators, and insurers are asking for key performance indicators that reflect corporate and regulatory priorities. The metrics obtained through public outreach programs are vital to satisfying these stakeholders, proving a program’s worth, developing a process for continual improvement, and realizing a competitive advantage in the marketplace. What’s new is the growing role and power of communications. In partnership with our customers, we developed a scorecard to report on what matters most to them. The scorecard is customized for each company, but what doesn’t change is the impact these scorecards have on the people who develop them and the people they show them to. The scorecard makes real, tangible, and valuable, something that may have seemed vague—and expendable—before.

Utility Industry Change is an Opportunity to Create Value

According to industry analysts, utility companies face ongoing, dramatic change and must find sustainable solutions and improve productivity to succeed. These goals are compounded by serious challenges like workforce turnover, aging infrastructure, and a heightened regulatory focus on safety. Plus, as a part of this drive to streamline, utilities must grapple with these challenges in an increasingly flattened organization. In order to be successful, leadership must shake free from old world views, take advantage of the changing landscape, and look for opportunity to create value in every corner of the organization.

A PricewaterhouseCoopers (PwC) survey of utility companies reports “many [utility companies] are unsure how to best handle the dramatic evolution within their organizations.” Nevertheless, evolution is inevitable, and forcing functions often bring about worthwhile change. It has been our experience that this change—specifically the flattened organization—has put the frontlines closer to the boardroom. It’s forced a breakdown of some of the barriers that have plagued top-down companies. Those who are ready to capitalize upon the change can produce dividends in the form of sustainability, productivity, and profitability that the industry is striving towards.

For example, at a recent meeting, a public safety manager at one investor-owned utility touted that her public safety program receives C-level support. And rightfully so—she took advantage of the altered corporate landscape and put valuable supports in place to elevate her program. By recognizing and acting upon improved visibility and interactions within her flattened organization, she was able to more effectively span boundaries, form relationships, and build coalitions that strengthened her program.

As a safety manager, she made it a point to recast what safety means to claims, operations, corporate communications, and ultimately the company’s bottom line. She explained how she established champions throughout the organization and shaped her program in a manner that cross-pollinated departmental goals and key performance indicators. She described a more orderly and effective approach towards the production, sharing, and utilization of metrics that benefit departments, the enterprise, and other stakeholders.

We’re experiencing this strategic shift across the industry—especially when it comes to public safety outreach. The days of simply complying with regulations and checking the box is no longer adequate. What’s more, silo mentality and turf defense has given way to cross-functional work, collaboration, and a more holistic corporate view. There’s a realization that comprehensive, integrated public safety programs can benefit the whole organization. Accordingly, many utility companies now view their public safety programs as more than just an obligation, but instead as a competitive advantage.

For this very reason, many utility companies are moving towards best-in-class public safety programs. These higher profile programs certainly pay off when it comes to public perception, but the real value is much more economic. Well-designed programs are sustainable and contribute to the shareholder value that companies require. The good corporate governance inherent in such efforts helps to create long-term value. This is because best-in-class public safety programs help manage risk, measure success, strengthen the balance sheet, and increase efficiencies through continuous improvement.

But best-in-class programs don’t just happen. They start with good leadership—clearly depicted in the previous anecdote of the “proud safety manager.” According to the PwC study, “successful utility companies are focusing on effective leadership,” and these leaders “are leveraging performance measurements.” The study reports that leaders must have the skills to
• maintain efficiencies and ensure reliability and safety;
• accomplish more with resources that are spread thin as they [utilities] look to streamline costs but continue to launch new initiatives;
• effectively use social media and traditional communications to interact with the public and regulatory agencies to garner support for rate increases and address safety issues;
• build transparency into management and operations.

The same utility representatives who report the need for leaders with these qualities also “acknowledged the lack of recognition [in their organizations] that change is big, unstoppable, and something that they have difficulty addressing.” If the industry is going to effectively tackle change, someone must step up to the plate. Strong, visionary leadership is crucial.

Leaders can come from any level of an organization and become the catalyst for change. Increasingly we’ve seen safety managers step into this role. It’s understandable because safety can be a rallying point for many organizations, particularly around major incidents. What’s more, many safety managers understand the true value of the work that they perform. Our own recent survey of utility safety professionals shows that 92 percent of those surveyed believe that their companies can gain a strategic advantage by going beyond compliance with their public safety programs.

In its own words, the utility industry is facing “big, unstoppable change.” While such change leaves the industry vulnerable to threats, it also opens new opportunities. In order to capitalize, the industry requires strong, visionary leadership. Old legacy thinking must give way to new strategic decision-making. Programs like public safety outreach can produce a strategic advantage especially when integrated into the larger business plan—benefiting multiple departments, regulatory bodies, and stakeholders. The result? The PwC study’s conclusion says it best, “a holistic approach to company strategy, structure, process, and people, can result in the creation of an overall service delivery model and organizational design that better serves customers, regulators, and investors.”

How to Win in Public Safety

The Utility Public Safety Alliance (UPSA) is the leading association of utility professionals dedicated to creating a culture of electrical and natural gas safety and incident prevention. The association held its annual meeting June 4–7, 2013, in San Francisco, California. Attendees included UPSA members and other utility industry leaders looking to bolster their safety efforts amidst mounting pressures from customers, regulators, and insurers.

We were invited to speak on June 6 and gave a presentation entitled, “How to Win in Public Safety.” You can download a copy of the presentation by clicking the image below or visiting our web page to watch the video of the presentation from the meeting.

How to Win in Public Safety Presentation PDF     How to Win in Public Safety Presentation Video

Despite a long tradition of public safety, the utility industry is grappling with the repercussions of several extremely serious accidents. Accordingly, I shared Culver Company’s experience creating a culture of accident prevention within utility companies and their service areas. I discussed methods for sharply reducing serious accidents and public fatalities. More than ever, when it comes to utility-related accidents, public outreach and prevention are far more cost effective business strategies than response and recovery. We’ve seen it work. You can substantially reduce dangerous behaviors by targeting key members of the public and measuring the resultant drop in minor and serious accidents.

The right measures are critical to understanding and quantifying the benefits of such sustainable strategies. What’s more, measures are essential if you’re to embed continuous improvement in your organization. These elements are crucial if you plan to foster a culture of accident prevention—a culture that benefits all stakeholders, both in- and outside of the company. I invite you to download and read our presentation and continue the dialogue by posting your comments and questions here on our blog.


Restorative Communications Are Critical to Building A Culture of Prevention

Increasingly, the way electric and natural gas utilities communicate around storm events, pipeline leaks, and other crises affects their relationships with public officials and regulatory agencies. Developing restorative messaging that communicates safety messages quickly and effectively with the public during these types of disasters is critical to these relationships and to creating a safer community.

Last December, we wrote about our experience—in partnership with a large New York state utility—delivering restorative communication to at-risk third-party contractors in the wake of Hurricane Sandy and this post elaborates with quantitative insights.

Research demonstrates that recipients of safety-based restorative messaging are highly motivated to use the information to protect themselves and others, including their customers. Furthermore, crisis conditions and the media environment make them more receptive to the message. For example, the readership rate among recipients of restorative communications in the wake of Hurricane Sandy had a 45% improvement over the readership-rate of those who received safety communication in a normal working environment.

Based on our recent national survey of at-risk workers, described in the last blog, 79% of stakeholder workers will change their behavior on the job as a result of reading utility safety outreach messaging. When you combine this statistic with the increased readership rate of restorative messaging, it’s clear that strategic communication around storm events, pipeline leaks, and other crises is highly effective and critical to establishing A Culture of Prevention within the community.

Utilities can derive great value from restorative communication, which is demonstrated through prevention-based effectiveness metrics. In addition, given the pressures that most utilities face in today’s highly scrutinized regulatory environment, communication in the wake of catastrophic events needs to be considered as a critical part of every utility’s overall strategic public safety outreach plan.

Utility Delivers Safety Messaging in the Wake of Hurricane Sandy

Hurricane Sandy, and rapid response to the effects of that storm, demonstrated that the delivery of effective public safety messages remains a critical element of utilities’ emergency communication and preparedness process today.

Hurricane Sandy confronted utilities with the enormous task of restoring power safely to the hundreds of thousands of customers it left in the dark. Not only were the needs of their customers overwhelming, the utilities involved were under unrelenting pressure to do repairs quickly and to communicate extensively with the public about them. The infrastructure was severely damaged by flooding and debris from the storm, and repairs needed at commercial and residential sites represented potential safety hazards to contractors and residents.

Beyond system problems, third party contractors doing repairs to private property (plumbers, electricians, and other contractors engaged in the repair of storm damaged furnaces, other appliances, and service connections) were at greater risk than normal.

We executed an immediate public safety outreach campaign on behalf of a large New York utility that reached many thousands of contractors in under a week. Since then, we have conducted interviews with the outreach recipients following the delivery of the safety materials to determine their effectiveness and identify areas of concern and opportunities for improvement. Documentation of all aspects of the safety initiative will be delivered to the utility this month.

The enormity of the destruction from storms has always been a challenge for utilities; increasingly, the way utilities communicate about these events affects their relationships with public officials and regulatory agencies. Today utilities are asked to take greater responsibility for communicating with the public and for ensuring safety inside and outside the home. Delivery of effective public safety messaging, and documentation, are tools to help meet these demands, especially in difficult times like those created by Hurricane Sandy.