Power culture Featured

4:26am EDT March 1, 2006
Southern hospitality brings to mind friendly folks who part easily with a smile and a wave.

For Southern Co. top executive David Ratcliffe, the concept — one he hopes is synonymous with the power company’s name — means much more. He wanted those same values to be adopted by the company’s nearly 26,000 employees and to be more than just a mantra; he wanted them exhibited every day with every action.

Ratcliffe wanted three key values — unquestionable trust, superior performance and total commitment — to be more than just lines in the annual report. He wanted them to be the core of his company’s culture, which is referred to as “Southern Style.” To achieve that meant changing some long-held company principles and finding a way to explain them to workers and measure their progress.

Southern Style traces its roots to the mid-1990s, when the company’s value statement included nine separate elements. While each element conveyed a positive trait about the company, nine concepts were difficult, if not impossible, for workers to keep “top of mind,” says Ratcliffe, who was named president in April 2004 and added the chairman and CEO titles three months later.

“When I stepped into this role officially, I wanted to make certain that people understood my expectations as chairman of the company,” Ratcliffe says. “(I wanted) a revitalization and a re-emphasis on Southern Style because that is who we are, and it so important for us to make that a reality in our work force, as opposed to simply a statement that we write on nice paper and hang on the wall.

“We want these concepts embodied in how we actually run the business day in and day out. We have to create accountability for that, so I want (employees) to begin to talk about these concepts. I then want you to create the new posters and put them on the wall, but I want that to be the genesis of new conversations around what this means to us.”

That’s when the company, which posted $1.53 billion in net income on $11.9 billion of revenue in 2004, solidified the values that would carry it forward.

Ratcliffe settled on three because that number would be easy to remember; he picked those particular three because of their ability to define and sustain the company’s culture and their ability to explain to employees and customers in the 120,000-square-mile service area exactly what is expected from the company.

“We’ve come to understand over the years that electricity is the lifeblood of society,” Ratcliffe says. “When it’s out, society doesn’t function very well. Our people understand how important it is and therefore, have a remarkable commitment to restoring service.

“To ensure Southern Style becomes an everyday reality, management must frequently discuss it with members of their work teams and assess its implementation regularly. For instance, with unquestionable trust, we’re challenging employees to be honest, respectful, to be fair, have integrity and to keep our promises. Ethical behavior is our standard.

“In terms of superior performance, our priorities are safety first, teamwork, diversity and continuous improvement through strong leadership. From the top of the organization to the bottom, our objective is to make Southern Style a reality in our workplace with ownership at the front line.”

Taking ownership
To be effective, any change in the company’s attitude and approach to daily operations must start with — and be exhibited by — top managers.

“Accountability (begins with) us, as leaders, to actually model this behavior day in and day out and to lead with this kind of value proposition,” Ratcliffe says. “I asked each one of my senior executives — every officer in the company — to undertake an effort to talk with their teams about these concepts and to push in their organizations those conversations all the way down to the front line.

“My challenge is to (tell managers), ‘Make that a reality in your team.’ Don’t worry about somebody else’s plant or somebody else’s division or portions of the operation. Worry about the people who report to you, that you are responsible for as a supervisor.

“I don’t care if you are a frontline supervisor or the CEO of one of my subsidiaries. You have a team, and you have accountability to your team to make that a reality. You have to ask them, you have to engage in conversations around, ‘What does trust mean. Am I, as a leader, doing things that engender trust and build trust, or am I doing things that destroy trust?’ If I’m doing things that destroy trust, you have to challenge me about that behavior, or I won’t get any better.”

Ratcliffe didn’t stop there. Layers of management can be an impediment to effective communication, so he explored other ways to get the message out.

“We created four different Webcasts internally,” Ratcliffe says. “We sat down and said, ‘What does unquestionable trust mean? What does it look like?’ When we talk about it, it is easy to say the phrase, but what, exactly, does it mean?”

The company also produced Webcasts for superior performance and total commitment, along with one featuring a question-and-answer session with the managers and a live audience discussing each of the concepts.

The Webcasts were vital because they gave employees the opportunity to hear directly from top management about their views of Southern Style and how they work both collectively and individually to fulfill its characteristics. The Webcasts aren’t a one-and-done project, or just shown to new recruits; employees view them quarterly.

Ratcliffe recognizes that talking about Southern Style is far easier than living it. If the company were to have any hope of delivering Southern Style on a daily basis, there needed to be a way to measure it.

“That is the way you create the accountability,” Ratcliffe says. “If you go out and ask the frontline employees, ‘Am I really managing with the notion of unquestionable trust? Do I create an environment that creates trust-based relationships? Do we expect superior performance from each other in everything we’re doing?’ It’s very difficult to measure.

“One of the ways you do it is employee surveys and 360-degree analysis of your leadership, and through upward assessment processes. We use all of those. This information is part of annual performance reviews that are conducted by managers. Our employees are expected to take personal ownership of Southern Style principles.”

Employees receive an annual bonus, and part of the equation that determines the amount ties into how well the employee upholds the three core values of the culture.

Ratcliffe recognizes another benefit of Southern Style, one that may be a little harder to measure but that is no less real or less important.

“People want to be a part of something good, and they want to be part of something better than they are as individuals,” he says. “That’s what makes teams so great. If I can be part of something that helps me be a better individual and helps me grow, then that is exciting.”

Values in action
Ratcliffe and his management team defined each of the values and explained how they can be put into action. The results were apparent in how the company responded after natural disasters devastated parts of the South.

“We are committed to the success of our employees, customers and shareholders, and to citizenship and stewardship in all our actions,” Ratcliffe says. “Total commitment is responding to the call of our customers when there’s a power outage and working safely to restore power to all those able to receive it, such as when Southern Co.’s operating subsidiaries restored power in record time to customers following Hurricanes Ivan and Katrina.

“Total commitment requires that we give back to the communities we serve and that we are responsible environmental stewards. Total commitment is meeting or doing better than what’s required by laws and regulations while working to keep costs down. It is how we operate our plants and run our transmission system while continuing to find more efficient operating methods and developing technology through research. It takes the form of a long-term, thorough planning process that looks for solutions to meet growing energy requirements while reducing our impact on the environment.”

For example, in this country, there is 200 years’ worth of domestic coal supply that can and should continue be used, Ratcliffe says.

“We have to do that in a way that is acceptable from an environmental impact standpoint,” he says. “We are doing much better at that than ever in our history. My company is producing about 30 percent more electricity with about 40 percent less emissions than we were in the early ’90s. It’s a huge accomplishment, and there is always more to do.

“The next three or four years we will spend $6 billion of new capital on environmental improvements on existing coal plants. We’re also looking at nuclear. We are also building natural gas capacity.”

On the surface, the values are not difficult to understand. It’s putting them into action that is the challenge.

“Unquestionable trust has elements that everybody knows growing up — honesty, integrity keeping your promises and things like that,” he says. “What I’ve tried to articulate for our folks is that the way we will sustain a culture of excellence is by building relationships that are based on unquestionable trust. When you have unquestionable trust between employees — from employees to supervisors, from employees to customers, from employees to regulators or employees to leadership in the community — then it makes the decision-making so much easier, faster and more efficient.”

Without trust among the power companies comprising Southern Co., last fall’s disaster response would have been slower and far less effective, Ratcliffe says. To achieve the restoration effort, Mississippi Power sought help from Gulf Power, Georgia Power Co., Savannah Electric and Alabama Power.

“To the extent that we had relationships that were built on trust between executives and between managers, it made that process of appropriating those resources, getting them deployed and, more importantly, allowing them to be effective on the front lines ever so much faster and more efficient because there was not a situation where they had to call somebody they didn’t know and worry about whether they believed they were going to show up or whether they were going to do the work correctly,” Ratcliffe says.

Of course, none of that work would have been possible without the people who did show up to work, even though many were affected by the storms’ wrath.

“The commitment concept is clearly seen in how our people responded,” Ratcliffe says. “We had people show up the next day, after the storm, because of their assignment and responsibility to the company and the restoration effort. They left families and homes that were damaged and showed up to get business back in place. There’s no better example of the dedication and commitment that we talk about than that.”

The final value, superior performance, was exhibited by delivering on the promise to restore power.

“When it comes to superior performance — the guy who’s in charge in that situation is my CEO with Mississippi Power (Anthony J. Topazi) because it’s his territory, his backyard, his customers,” Ratcliffe says. “He set an objective [on] either Day Two or Three (after the hurricane) to have the lights back on by Sept. 11, within 12 days. That’s superior performance. We were flat on our back. We had [nearly] 195,000 folks out. We had no electricity.

“The notion that he set that kind of objective and then, the way in which he delivered on that, by any stretch, people would characterize that as superior.”

The values are interrelated. Take away any one, and the others are weakened.

“Superior performance and commitment must be driven by unquestionable trust,” Ratcliffe says. “Our objective, day in and day out, is to create relationships that are based on unquestionable trust so that we deliver superior performance throughout the entire business.”

HOW TO REACH: Southern Co., (404) 506-5000 or www.southerncompany.com