AM: Today, I will be speaking with a human resources and organizational development panel from City Public Service Energy on increasing alignment and linking performance to business strategy. The members of the panel who are with us today include Jeff Tuttle, the VP of HR, Ken Schaefer the Supervisor of Organizational Development and Art Sepulveda and Steven Price, Organizational Development Analysts.
Can you begin by telling us about CPS Energy and your guiding vision?
JT: CPS Energy is a little over 100 years old and has enjoyed about 62 years of municipal ownership as an electric and gas utility in the San Antonio area. As of today we have about 935,000 electric and gas customers in and around San Antonio. We have roughly 3,900 employees. Our revenues are about $1.5 billion per year with assets totaling over $7 billion. We have a long and proud history of being an electric and gas utility under municipal ownership for the city.
AM: Could you speak to the core purpose of the organization?
JT: Given that we do have a long and rich history and given that the utility industry in general is going through a tremendous amount of transition in terms of restructuring in several different states, including Texas, we really needed to develop a transformation in our culture here at CPS. We needed to go from more of a monopoly where decisions were made slowly to a culture where decisions could be made quickly and within the lowest levels within the organization.
One thing that you really need to do in order to develop an effective performance management system is to make sure that everybody is very clearly aligned with what the vision, the core purposes and the values of the organizations going forward are. It is really defining the boundaries or the parameters of your performance management system. Several years ago we had developed a pictorial vision of CPS Energy and that vision is to be the best publicly owned energy company in the United States. That is the grand vision. That has been in existence for about five years but about two and a half years ago we undertook a large initiative to involve every single employee within CPS Energy in developing the core purpose of the company. Why do we exist and what types of values drive our organization in terms of behavior? Where do we want to be performance wise 15 to 20 years down the road? Through that process, the core process is this: to benefit the community in which we serve. It is about convenience and quality of life. That is the core fundamental purpose that our 3,900 employees can relate to.
AM: Can you speak to your core values?
JT: We had four core values that we established at the time we put our vision statement in place, but there wasn´t a grass roots effort to have every employee within the company contribute. That´s what took place two years ago. Essentially six core values were developed. They are: customer commitment, performance, safety, teamwork, respect and trust. Without trust you don´t have anything else. That was really a grass roots effort where all the employees came together to develop it.
The first phase was developing our core purpose and values. The secondary part of that was developing what we call the big audacious goal, which is simply being number one in customer satisfaction. We measure that by being at the top on JD Powers across the board. We perform very well across JD Powers today, but we want to be top across the board in our industry and be recognized as a great place to work, primarily by our employees. We talked a lot about how you measure a great place to work and came up with our workforce policy, which states:
"In order for CPS Energy to maintain its proud history of success and stewardship to the City of San Antonio, CPS will pursue a goal to attract and retain a well-staffed and knowledgeable workforce. It is the policy of the CPS Board of Trustees that workforce planning be a top priority and a key expectation of the entire senior management team.
To accomplish this goal, CPS Energy will offer a competitive total compensation package focused on the long-term growth and performance of CPS and
implement an effective workforce planning process.
AM: Can you speak to us about the process of developing that goal?
KS: The process we went through was remarkable. I believe that the process we took the company through was as important as the results of that process. The CEO picked 11 members from various functions across the company and asked them to facilitate a process that had never been done in City Public Service, now called CPS Energy. That process was to engage every employee of the company at whatever level, at whatever tenure and invite them to share their notions of what our values were as a company, what our core purpose was and in the second phase, to identify and articulate our big audacious goal. It was a very exciting and invigorating time that is difficult to explain unless you have been through it.
We were gathered into a team by an external consultant who taught the team how to facilitate and do long range strategic planning in an operational setting. Then we were out on our own. The team presented their ideas on how we might accomplish this effort to engage every person in the company. That small group of employees, working over an 18-month period, conducted about 600 meetings. We went to each client group, each employee group and held a series of meetings and gathered feedback from each of them on the core values, purpose and big audacious goal. We then synthesized literally hundreds of thousands of inputs, went back to the employees, gave them an interim progress report, got their feedback again and then working as a small team we came up with a recommendation for putting language around what we had heard in those 18 months of meetings. The result has been a galvanizing process for the entire company in a way that we have not experienced before. Employees at CPS Energy feel like they own the values and the process and they are certainly behind the big audacious goal of 100% customer satisfaction and creating a great place to work.
AM: You described this initiative as a journey. What were the main factors behind your decision to identify workforce attributes and leadership competencies?
JT: You want to develop a clear sense of alignment from the values, purpose and big audacious goal and what individual efforts need to take place in order for us to be successful. We wanted to make sure that we had a clear purpose and vision. The primary thing that drives all of that is talent, HR capital. It comes down to talent management. How can you manage your talent? That has been the leading question in the minds of our board of trustees as well as senior management. How can we maximize our talent? I have had the opportunity to speak at several conferences and what I like to propose is that the boards of trustees need to put talent management equal with the financials within the priorities. The more you see the scandals within higher management, I think folks are realizing that it is more and more about how you manage and develop talent.
Our board had the vision a couple of years ago of putting together a workforce planning policy. That was simply to track and attract and retain a well-staffed knowledgeable workforce with continuity of leadership, skills and the development of new skills. They put together a two-part goal and that is to make sure that we have an effective workforce planning process in place and to make sure that we offer a comprehensive compensation and benefits package. As a municipal entity that has been somewhat challenging. When you are quasi-government employees there is a very appropriate value of public servitude, but when we go after talent we have to compete against all industrial utilities around the US. We have to be very competitive in terms of what we can offer with regards to compensation, benefits and development opportunities.
As for the workforce planning strategy itself it is about defining the parameters and where we are going in the future. That dovetails into workforce analysis, which is this effort of looking at which skills and competencies you need for the future, the numbers you need and then doing a good analysis of the people coming in and leaving the organization. What does that mean in terms of potential gaps? Those gaps go into three pipelines. One is a staffing strategy. What does that mean in terms of the skills you need to go outside and recruit for? With succession planning, if you identify early on that you don´t have the talent inside to develop, that goes into a buy strategy. Maybe you just have to go outside the company and buy the talent as opposed to finding it from within. The other part is your general employee and management development program. What does that mean in terms of putting together those core programs? Where do you put your limited money and resources? Then, succession planning is looking at critical positions within the organizations and the critical competencies associated with those positions and then identifying talent, assessing talent and developing that talent. It is an ongoing process. We have done a nice job of identifying gaps and we have begun identifying talent but it is all in the execution of that development, which is what you use your performance management system and other processes for. The board of trustees has established a balanced scorecard to measure the CEO´s performance as well as that of the executives within the organization. As you might anticipate with a balanced scorecard, part of that is financial (30%), another part is customer satisfaction (20%), environmental (10%) and learning and growing and leadership is 40% of the balanced scorecard. Once again, it is one of the key components to bringing in an effective performance management system and aligning behaviors and expectations. It is important to integrate all your different processes with one another and utilize them effectively. You are utilizing your compensation and benefits as leverage in terms of rewards, along with your performance management system.
AM: You describe your integrated performance management system as the key to organizational success. Can you tell us about this process at CPS Energy?
SP: I´ll focus on the appraisal process itself. The key to organizational success is aligning individual performance with the CPS Energy strategic goal, the purpose, the vision, the mission and the values. We do that throughout our appraisal process by using two parts of the appraisal, the workforce goals and the workforce attributes. We look at the strategic plan, the business unit plan, the department plan, the section objectives and get the employees and the supervisors to focus on the individual´s performance and how it aligns to the CPS Energy vision and values.
From a performance perspective, we did a lot of things over the last couple of years to align the corporation to individual performance goals. Appraisals were conducted on the anniversary of hire and we changed that to having all appraisals done at one point in the year (April-May), a focal point process. Prior to that focal point, individuals and supervisors sit down and have a conversation about the values and cascading goals so the employees know how they individually impact organizational success.
We also use the performance data that comes out of our appraisal system to interface with our HRIS data, which also interfaces with talent management, succession planning and the workforce development data.
AM: How did you go about linking the employee performance measures to the values?
SP: When my boss and I sit down and align our goals we are looking at the mission of the organization, the vision and the six core values. In our appraisal system we have placed the corporate strategic goals as standard goals that you align to as you open the performance management system. We look at Jeff´s strategic plan that he has agreed on with our CEO and then both Ken and I try to align those and see how we individually are going to impact the strategic plan of the HR division.
AM: What about specific goals and attributes, how were they broken down?
SP: Our appraisal is broken down into two sections; 50% is work or performance goals, which are deliverables, and the end result. The other 50% is performance behavior, which is how we do the work. That includes how safely we do our work, accountability, punctuality, adaptability, willingness to learn, judgment and your ability to work well with others.
AM: How are individuals evaluated against the attributes?
SP: What we did was break down the rating scale. The ratings, from the bottom up are: unsatisfactory, behavior needs improvement, fully effective and consistently exceeds.
AM: You have called your process, "building the bench." Can you tell us what that refers to?
AS: "Building the bench" refers to the development of all of our employees to prepare them to assume larger responsibilities and fill vacancies that might occur in the future. In order to accomplish that, we have established a competency-based development model, that means that competency gaps can be addressed through the use of developmental activities designed to teach those missing competencies.
AM: You selected Lominger competencies. How did you go through the selection process?
AS: About seven or eight years ago, CPS Energy HR staff identified the Lominger competency cards as a valid research-based tool that could be used for employee development in a variety of situations.
Lominger Ltd. is a well-known provider of employee development products and processes based on over 25 years of experience. At that time, the cards were identified as a good tool and we began to offer classes on the competency cards. The cards were distributed to executives, with training for use in developmental purposes. There was corporate encouragement for the use of the 67 competencies and situations requiring employee development. They began to be used and there was familiarity amongst the leadership of the Lominger cards.
About four years ago when Jeff Tuttle was hired as the vice president of human resources, he brought with him extensive experience in leadership and succession planning using a wide range of Lominger tools. Lominger has a full suite of resources that are built upon the competencies on the leadership architect card. When Jeff came on board, a decision was formalized to make use of the Lominger suite as the foundational set of leadership resources. The 67 competencies continue to be the cornerstone of our use of the materials.
AM: Sixty-seven leadership competencies sounds like a lot. How did you specifically break them down?
AS: Sixty-seven competencies are a lot but we have found some approaches in our organization to narrow those down in various ways for various purposes. One is an organizational narrowing. The senior leaders of each business unit looked at those competencies very carefully and looked at their strategic plans, goals and outcomes and identified a core set of competencies out of those 67 that they felt everyone in their business unit needed to have in order to be successful. One way of narrowing is for each of those business units to identify a core set. Another way of narrowing is by position and/or role profiling. We´ve begun to create those profiles for role and in some cases, position. As we create those profiles, one important set of data within those profiles is a set of competencies that subject matter experts have identified as being important. Another way of narrowing these competencies down is by individual feedback. We encourage employees to get feedback in the context of competencies on their performance. In some cases, 360 feedbacks are administered and in other cases an employee will ask their supervisor to do a card sort on their performance in that job and on themselves. Through some of these methods, feedback is provided to the individual in terms of what their strengths and growth areas are relative to their competencies. Once those are identified then the individual can work to improve those competencies. These work in conjunction with each other. If I were interested in becoming the CEO then I would look at the core set that is required by the organization to move forward. I would look at the position profile for the position and I would look at the feedback that has been provided to me and I would make some important decisions about development based on my core competencies.
AM: Was there any specific process you used to make the link between the identified competencies and employee development?
AS: We use another Lominger model called the feedback and development model. We have adopted that development tool. The model calls on employees to seek feedback in the context of competencies about their abilities. We call that the awareness level. We then expect the employee to make some sort of meaningful choice around the feedback and to act on it to build an individual development plan that blends in actions with the work that the individual is responsible for doing. Critical pieces include monitoring and support for effective plan implementation and growth. This is the concept that we present as we talk about how to link competencies as regards to growth.
AM: How are competencies used in regards to other workforce management programs such as succession planning and hiring?
AS: On the hiring side, our personnel department has begun to use an interview architect that helps them to design interview questions based on the kinds of competencies that are expected of the open position. Once there is a profile on the vacancy, the critical competencies are identified and the HR personnel office uses that interview architect to create questions to ask those applicants.
On the succession planning side we use a six-step development model that serves as a basis across the board. If we were going to manage talent for succession planning purposes or if we are encouraging development for anyone in the organization, we would use the same six-step model. One of the differences is that in succession planning and talent management those candidates are definitely given a Lominger 360 feedback from which to draw data to identify their competencies, strengths and weaknesses. CPS Energy also administers 360 feedbacks to others in leadership roles, like executives. There is the expectation that all management employees will create and implement an individual development plan focused on individual competencies. Beyond that, some of our business units have taken the initiative to call on individual contributors and move that expectation down through the ranks for all of them to have an individual development plan.
Our intent is that employees create plans in the context of competencies that can be implemented quickly, that blend their development with their current responsibilities and focus on what can be changed and learned quickly.
AM: Do you have any advice or lessons learned that you would like to pass on?
AS: We´ve seen the importance of starting out a process like this with a comprehensive and robust performance development model, that includes all of the development functions and reveals their interrelatedness. It is really important at the outset that you have a systematic plan that shows all of the developmental pieces of the puzzle and defines the relationship implications. Not only is it important to start out with a well thought out design, but it is also equally important that it be well understood by the primary stakeholders and that it is regularly articulated to everyone who will be impacted by it. Unless everyone can see the big picture and can follow the map, they are likely to get lost along the way.
AM: Can you summarize what we´ve discussed here today?
KS: Essentially what we have tried to do is share the enthusiasm that we at CPS Energy have in the job that we are allowed to do. We are in the process of tremendous change, not only in the industry but also in our company to prepare for eventual competition. This has been quite an adventure for us and the senior executives, middle managers and every employee trying to cope with the enormous number of changes in technology, political functioning and governmental regulations. I suspect that similar changes are going on in most companies. We have shared the critical importance of having a well-articulated system of interrelated functions that encourage people to take actions that will lead them to alignment from strategic company goals down to each individual´s work life. We talked about the importance of articulated vision, purpose, the big audacious goal and the core values. Involving everyone in that process was as important as the articulation of the values, goals and processes as well. A well-integrated performance management process is, we believe, the basis for any success that we´ve had and the success we anticipate having in the future.