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Empowering leadership Featured

7:00pm EDT November 25, 2007

Life was pretty good for Raj Rao in the early 1980s. He was the chief engineer at Richmond Power and Light, and he was working on his MBA at Ball State University.

“I bought a home, and I was happy there,” Rao says. It was right around that time that Irving Huffman, Rao’s general manager, asked him if he would consider taking a lead role at Indiana Municipal Power Agency. The utility was struggling, and Huffman saw a talent in Rao that he had yet to see in himself.

“He said, ‘I’ve got full confidence that you can do it,’” says Rao, admitting that he did not share Huffman’s confidence in his own leadership skills. “I was lucky, or really smart, or maybe a combination. He saw those traits before I saw them.”

Rao took the job and quickly learned the importance of trusting others in making an organization work.

“When I moved from my engineering role to the management role, the first thing I learned was, ‘Gee, I’m not supposed to do things with my hands anymore,’” says Rao, the organization’s president. “I’ve got to trust my people and let them do things and give them opportunities to prove who they are. A leader is the one who will make sure he has good people around him.”

Because Huffman took the time to get to know Rao, he knew that Rao could lead the agency out of trouble. Rao applied that lesson to his own style and now looks for ways to get to know his own employees so that he can identify the people who will one day take over for him.

The best way he’s found to do that at IMPA, which had 2006 revenue of $268 million, is through lots and lots of communication.

“If I want to achieve something, I need to talk, talk, talk and repeat 10 times what I’m trying to communicate,” Rao says. “It becomes their way of doing things, not my way. When I see my board members or my customers doing things the way I think they should be doing them, I realize I achieved my goal of making them believe in what my vision was.”

Rao has led the organization of municipally owned electric utilities to steady growth by adopting a philosophy of empowerment, innovation and the mantra that when you think you’ve communicated your message enough times, say it once more just to make sure.

Empower your employees

There was a time when Rao thought success could best be achieved simply by finding as many employees as he could who share his entrepreneurial personality.

“I thought everybody should be like me,” Rao says. “I soon learned that was not going to work out. To complement entrepreneurs, we need to have people who make sure things are done and completed.”

While Rao says he looks for hard workers, he is more interested in finding people he refers to as being “smart-working.” Smart workers focus on accomplishing the goal rather than on how long it takes to accomplish it.

Rao wants employees who can work efficiently and who are willing to look for ways to do things better, not just do things the way they’ve been doing them for 15 years. Empowering employees to pursue growth instead of waiting for it to happen requires that they be given opportunities to prove themselves.

“We give them a lot of freedom to do it their way,” Rao says. “We tell them we’re hiring not just their bodies but their souls and their brains. We want them to feel IMPA belongs to them and that they are the owners of IMPA. They have to feel like they are spending money from their pocket.”

To empower employees, start by talking directly to them to get the answers you need and spend time with them.

“I go to that person, sometimes even skipping two or three management levels in between,” Rao says. “But in the process, the staff, wherever they are, they know that if I need something, I will come to them. They will go home and say, ‘The CEO came to my desk, and he asked me a question, and he sat there for maybe five minutes.’”

Rao says he also wants employees who are willing to challenge his beliefs.

“Don’t just follow because I told you, but tell me your opinion,” Rao says. “Sometimes, your opinions will be different than mine, and I’m going to listen. If you convince me that your way of doing things is better than mine, I’m going to take you to lunch or dinner.

“When I do that, they are very happy. They go back, and they brag that they convinced me of something, which was different than I used to think before, and the CEO took them to lunch. It gives them more motivation to think and come back doing things better than they were doing.”

With that chance to offer their input and know they’re being heard, employees also take on more responsibility for moving the company forward.

“We believe the people who are doing the hands-on, they know better than the top management or the CEO,” Rao says. “You tell us what we should be doing, and if it’s not the proper direction, we’ll tell you. We give a lot of responsibility on their side. I tell them a company is like a ship. The CEO may be a captain, and I’m telling them the direction we need to be going.

“But how to get there depends on each one of them. They are the ones that need to come back and say how to operate and how to put in the proper direction so we can go. Management is trying to ensure the ship is moving in the right direction, but the tasks done by individual employees, they are the ones that come up with how to do it.”

Deal with failure

In the process of developing employees and nurturing their untapped talents, setbacks will inevitably occur. And knowing that, you must create an environment in which failures are not feared, and mistakes are treated as learning experiences.

“If you restrict them from failure, they will not take the risk to produce the proper results,” Rao says.

Rao says at IMPA, mistakes are taken in context, meaning that isolated incidents fade from memory much more quickly than a pattern of ongoing problems.

“If 90 percent of the decisions are mistakes and only 10 percent are good things, we’ll look back to see if the employee fits in that role, that department, or does he fit in the company?” Rao says. “We do not discourage. It’s the percentage of mistakes that makes the difference.”

Evaluation plays a large role in keeping employees on the path to progress. Make observations when you see the behavior happening instead of delaying simply because a review is not scheduled for another two months.

“If somebody is not doing a good job, or we’re not happy, we tell them then and there,” Rao says. “We do not wait until the end of the year. The same thing goes for positive feedback, too. If someone is doing something good, their supervisors will tell them right there.”

When it comes time for formal evaluations, Rao says employees are asked to evaluate themselves at the same time that their supervisor files an evaluation report.

“Senior management will look at both and try to evaluate what is happening,” Rao says. “We’re trying to make sure that the supervisors and employees are communicating. If there is a difference between the two, we know there is a lack of communication and we need to fix the problem. Who knows better than the person himself or herself?

“Are they satisfied with what they are doing? Are they happy with their productivity? Can they do better? If you feel like you didn’t do a good job here, tell us how you can do a better job. We are asking employees to tell us how he or she can do a better job. We do not punish somebody telling us they don’t know how to do something.”

To solve the problem of employees not knowing how to do something, IMPA has a program that pays 100 percent of the cost for employees to go to graduate school. Rao says it has been his experience that a majority of the work force wants to work hard but often does not have the skill level to do so.

That all changes when you launch an effort such as tuition reimbursement.

“If you don’t know how to do it, it’s not your problem, it’s my problem,” Rao says. “Once you know how to do it and you don’t do it, it’s your problem.”

Retain the good ones

In baseball, it’s known as keeping your eye on the ball. In business, experts say, “Watch the numbers.” But it’s human nature to look beyond your own corner of the world and wonder what it all means in the big picture.

“We keep telling the younger generation, when we retire, you are the ones running the organization,” Rao says. “They do need to understand that they are the ones that need to provide the vision and the leadership to move the company in the proper direction.”

Rao says when he talks with employees, he brings up larger issues that affect the whole company, rather than the particular department of the person he is speaking to.

“Every time I give a speech, I talk about the total organization and then come back with details about how the individual department is affecting that particular effort,” Rao says. “I want them to understand that whenever they are talking to customers, customers don’t want to know what that individual or department is doing, they want to know what the company is doing. They’re all my ambassadors.”

Employees need to project a consistent message as they interact with people outside of the company. But the benefit of sharing the business of the company with every employee goes beyond that.

“Once you start telling them what they need to do, what you find is that they will love it,” Rao says. “Any time they go out or they are talking with someone, they want to take pride that they are working for a wonderful organization.

“Those people start asking questions: ‘What does your company do? Why is your company better?’ ... When they go home, they are talking with their families about how happy they are and what they accomplished.”

Employees appreciate being made to feel like they are part of a team. But they also want to be rewarded for their efforts.

“If you want to pay below average and you expect above-average results, it doesn’t happen,” Rao says. “Make sure you pay the right money. Do a market survey and pay a little bit above average. And once they come on board, don’t forget they can go somewhere else. Make sure they are rewarded properly. I would rather pay one above-average person instead of two or three below-average people.”

Rao says the final piece to getting employees to buy in to your vision is to ensure that you walk the talk.

“If I give a big speech and then tomorrow morning, my staff finds out that’s not what I do, then it’s bad leadership because people don’t do it,” Rao says. “People have to see what he is talking is what he is doing. They know that is what is going to happen, and they can follow that direction.”

Rao sees the fruits of his labor each morning when he hears the receptionist saying, “Good morning” to a caller.

“They may not see the smile,” Rao says. “But they’ll feel the smile. It starts right there.”

HOW TO REACH: Indiana Municipal Power Agency, (317) 573-9955 or www.impa.com