Nick DeBenedictis builds Aqua America through customer service Featured

8:00pm EDT July 26, 2010
Most utility company heads haven’t had to go through what Nick DeBenedictis has had to endure over the past four years.

What the chairman, president and CEO of Aqua America Inc. has had to endure is rapid growth — the ultimate double-edged sword of business. Rapid growth means rapid success, but it can also mean outgrowing systems and processes way too quickly, creating more problems than it solves, both financially and culturally.

Most of Aqua America’s growth was due to a series of large acquisitions in 2005 and 2006 that greatly increased the municipal water system management company’s presence in the southern U.S., raising the total number of states in the company’s footprint from six to 13.

“Normally, utilities grow at 1 percent,” DeBenedictis says. “We have grown at 50 percent over the past few years. That gives you an idea of the size we’re dealing with. We had to get systems in place, people in place and change out management. The digestion period was one of our big challenges and overlaying that was the recession, the credit crunch and everything else that was happening as we were trying to grow.”

Managing water utilities is a capital intensive business. While Aqua America generated $670 million in 2009 operating revenue, the company is also slated to pay out $300 million in capital improvements to their water systems this year.

On top of managing a high-volume flow of cash, DeBenedictis is also in charge of maintaining and promoting a service-oriented culture to the company’s 1,800 employees.

The capital investments and culture are the two main prongs in Aqua America’s mission to build lasting relationships with customers. Water utility customers can’t choose what company supplies water to their city, but many cities have a choice as to who provides their citizens with water service. If Aqua America doesn’t maintain an impeccable customer service reputation, future growth opportunities might be harder to come by.

“You want to make sure that you have happy customers in any case, not just begrudging customers,” DeBenedictis says. “That’s why we wanted to make sure we had good people and good systems in place. In many cases, the reason we were able to acquire a company was because that company didn’t have good management. We’ve had to come in and make nearly a 100 percent change to first-, second- and third-level management.”

Promote your culture

If you want to have a strong culture as you grow your business, you need to start with strong communication. In the aftermath of the 2005 and 2006 acquisitions, DeBenedictis rolled out a plan that would drive communication down to the ground floor of the company, and do it level by level.

The go-to person in DeBenedictis’ plan was president of each state’s operation. Aqua America has an operations president for each of its 13 states. That executive is charged with having an ongoing and detailed knowledge of the markets that Aqua America is serving in the state and how to best meet the needs of customers.

“The state president is a person I normally select myself, and we usually get a person who has been a star in another state to take on the challenge of having their own state,” DeBenedictis says. “That person basically lays the groundwork for the organization and the people they need, whether the people currently in the company are the right people or if there are changes that need to be made.”

In acquisition scenarios, DeBenedictis and his leadership team try to keep as many executives in place from the acquired company as possible, since they have already built relationships with employees and customers. If the existing state-level leaders can be kept in place and educated on Aqua America’s culture and processes, that is the best-case scenario. However, there are times when the existing managers simply can’t mesh with Aqua America, and DeBenedictis needs to move quickly.

If you don’t remove people who can’t or won’t see eye-to-eye with your strategy — particularly if they occupy influential positions — it can damage your culture and your ability to serve customers.

“We try to keep as many of the original people as we can, but if the culture doesn’t work, you can’t take too long to make the changes,” DeBenedictis says. “If people just don’t understand a corporate philosophy, if they’ve always been a part of a small business, they’re probably not going to understand how we do business, and they’re not going to be productive or happy.

“It’s the people who take up with us very quickly, who like the idea of being with a bigger company with more dollars to spend, those are the people we like to keep. Those are the people who are going to know our type of business.”

Promoting a culture to a new group of employees is primarily the product of two factors: managing by example and managing by data. Managing by example means you set the cultural example yourself — placing an emphasis on customer service and high quality standards with your own actions. It also means highlighting the people in your organization who exemplify your cultural values by putting them in places where they can influence the values and behavior of others.

Managing by data means you set a plan of action that includes well-defined goals, and then using metrics to ensure that your managers and employees are meeting those goals. If your company isn’t hitting targets — whether they be on a companywide level or further down the ladder — it can be damaging to culture every bit as much as a high-ranking employee who isn’t sticking to the plan.

“You have to know that you and everybody else in the company should lead by example,” DeBenedictis says. “They’ll see how you operate and realize that this is how they should operate, as well.

“Managing by data is critical, as well, because you can’t do it all by instinct. As engineers, we learn to listen, analyze and then set a plan of action. Our assets are 100-year assets, so we can’t just do it by instinct. We do a lot of studies and data, and then make huge investments.”

Your biggest allies in developing, sustaining and promoting a culture will almost always be your long-term employees. Your staff members with the greatest company longevity have an extensive knowledge of your processes, your core values and why it all makes sense for your company. Compensation and benefits play a role in reducing turnover and increasing your numbers of 10, 15 and 20-year employees. But aside from that, committed employees will often groom other committed employees.

“We want our people to feel like if they want to work for a company like ours and they want to do a good job, they can be employees for life,” DeBenedictis says. “That is very rare in today’s world. You have to expect that employees should want to be with you for a long time, find their potential within the company. That’s why a part of our culture is entrepreneurship but also consistency and a reward for professionalism.”

Impress your customers

There are many little ways you can impress customers and keep them loyal as your company grows and changes. You can mail coupons or throw in some loyalty discounts for long-standing customers. You can take the time to get to know their names and learn enough about them to strike up a conversation when you see them.

All of those tactics help. But there is only one true way you can build loyalty with customers: fulfill your promises. Do what your mission statement says you do.

At Aqua America, DeBenedictis has made reliable water service the No. 1 priority. With a water utility provider, there isn’t much else to guarantee besides faucets that run and toilets that flush. But when the faucets don’t run and the toilets don’t flush, customer attitudes and confidence can wither in a hurry.

“The No. 1 issue is we get in there and start fixing their system right away,” DeBenedictis says. “The key is that customers see the difference you make early on. For us, it might be a new water plant, fixing leaks, improved water pressure. If we do those things, we get good customer feedback because we got right in there and fixed those systems right away.”

If you want your employees to place an emphasis on customer service, you need employees who realize that they’re not working just to make the delivery or produce the product or balance the budget. They’re working, in their own way, to satisfy your customers and keep them coming back.

Once again, it comes back to culture and what you emphasize as a leadership team.

“If you give people a place where they want to work for life, they’re going to come to you with the mentality of being a professional,” DeBenedictis says. “Then, they’ll say that their job isn’t just to make the repair, it isn’t just to put the pipe in the ground correctly, it’s to make sure the customer understands what is going on and why, and that they’re happy with the job we are doing.

“We get a lot of letters from customers when our employees go above and beyond the job they were asked to do — such as, they went to someone’s house on a service call and found another leak somewhere else and fixed that. If you broadcast those examples, people start to know that their job is to make the customers happy. That is something that really has to be a part of the culture from the start.”

Once again, you need to turn to your long-term employees to set the pace for customer service. When your long-standing employees hold others accountable for maintaining the reputation of the company, it’s a positive form of peer pressure.

“If you’re in a company that doesn’t have a lot of turnover, the peer pressure gets to be important,” DeBenedictis says. “The reputation of someone who has been at the company for 25 years is at stake, and then you’re bringing in a new person who might not be doing things up to their standards. That’s when employees can affect this. It’s peer pressure as much as it’s discipline or anything else.”

If you don’t have a customer-focused culture or if you can’t adequately project it to your customers, your company’s reputation will start to suffer. It’s an ongoing battle, and you need as many allies as you can find.

In the end, you are the company your customers think you are and you are the type of leader that your employees think you are.

“Most people don’t know where the water plant is in their town,” DeBenedictis says. “They just know that water comes out of the faucet and goes down the drain. They don’t know where it comes from or where it goes. But they see the trucks out on the street, they see us digging up and replacing old pipe, so they see that we’re making that investment in them and that we’re trying to build a long-term relationship with them and their towns.”

HOW TO REACH: Aqua America Inc., (877) 987-2782 or www.aquaamerica.com