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How Douglas H. Yaeger made leadership development a priority at Laclede Featured

8:01pm EDT April 30, 2012
How Douglas H. Yaeger made leadership development a priority at Laclede

It was a moment that was “make or break” time for Douglas H. Yaeger’s future at Laclede Gas Co.

In 1993, massive flooding was occurring throughout the central United States, including territory serviced by Laclede. Among the many things homeowners had to be worried about was the effect of the flooding on their gas lines.

“Houses were underwater and water was infringing our system,” says Yaeger, who was senior vice president of operations at the time. “Parts of our heavy pipelines where the ground support was, the actual dirt that was around the pipes had washed away and the pipes were floating in the water. We knew when the water went down, we were going to have to do something relatively quickly or the weight of the pipe would not hold itself.”

The burden to come up with a solution to this crisis fell on Yaeger. His response was to lead an effort to drop quick-setting cement bags into the water to create new support systems for the pipe.

“They set up as cement so when the water receded, we had a trellis that was holding up the pipe,” Yaeger says. “We backfilled it with dirt and everything was great.”

It was a defining moment for Yaeger, who ultimately went on to become chairman and CEO at the 1,622-employee natural gas utility, which generated $932 million in 2011 revenue.

It was a defining moment for Yaeger, who ultimately went on to become chairman and CEO at the 1,622-employee natural gas utility, which generated $932 million in 2011 revenue.

Defining what it takes to be ready for whatever challenges you might face is rather simple — it’s your ability to develop leaders in your organization. Just as others had put Yaeger in position to be ready to deal with the flooding crisis when he became CEO, it was up to him to do the same for the next generation of talent.

“Quite frankly, it makes the employees that much more involved in the mission of the organization so they feel like they are really current on what’s happening inside and outside the company,” Yaeger says. “They see and feel that they are a meaningful and important part of the execution of the strategy. Companies that don’t take advantage of that are not going to operate on an optimal basis.”

Yaeger retired early this year from his position leading Laclede, but he took some time to offer his thoughts about clearly identifying the problem you face and then developing a team of people who can help you solve that problem.

Identify a clear problem

Much of leadership is about solving problems such as the one Yaeger faced in 1993. But one of the things that can create trouble for leaders is when they don’t really take the time to figure out what the problem really is.

It’s not always as plainly obvious as massive flooding that is uprooting your gas lines.

“You get to the senior levels of organizations where not everything is an operational problem or a financial problem and not everything is earnings driven,” Yaeger says.

Yaeger learned about the gray area where problems often live during a 13-week senior management program at Harvard Business School.

Participants in the program met six days a week for 13 weeks and would go over three case studies a day regarding problems that had occurred at prominent companies such as Frito-Lay and Nike.

“You’d go through it and come up with what you thought was a really profound definition of what the problem was and a profound response to that,” Yaeger says. “You’d be sitting there and you might give your two cents worth and then you would sit and listen to five other people and you know what, they had five different ways of getting to the same place. Sometimes it was a completely different view of what the challenge was.”

The exercise was trying to teach leaders that not every problem is as clear-cut as it might seem, even one as seemingly obvious as the floods of 1993.

“What they really try to get you to do is sort through the noise of an organization and really get down to the basics,” Yaeger says. “What are the drivers of what’s going on? Make sure you’ve got the problem defined correctly. What’s driving that problem? What are the real solutions, not what the superficial stuff might be.”

Yaeger says it’s easy to get wrapped up in a certain mindset when you become a leader to the point that your vision becomes very narrow.

“There are a lot of people who run companies who come up through the financial side or they are attorneys,” Yaeger says. “But not everything is financially driven and not everything is legally driven. There’s a lot of operational, marketing, supply, etc. You need to make sure you’re not relying on what’s comfortable to you because that’s what you know. You need to be able to look through the organization with kind of open eyes and a clinical approach to the other functions as well.”

It’s perfectly logical that someone develops a skill, hones that skill and uses it to advance up the corporate ladder. But you need to keep broadening your skill set beyond what you already know and so do the people you want to train as leaders.

“At a certain point, you have to go from being a specialist to a generalist so that you have the ability to oversee multiple functions, multiple disciplines and multiple departments,” Yaeger says.

“As was typical in the utility business years ago, you become kind of a siloed employee. You come into the company as an accountant and you retire as an accountant. There is certainly room for people like that; I’m not dismissing that. But in terms of successful management development, you really want to challenge those people to see what their capabilities are and allow them to develop and give them an opportunity and the authority to do that.”

Always be learning

Yaeger spent a lot of time at Laclede evaluating people and considering their potential to be a leader in the company.

“That’s really the key of a successful manager,” Yaeger says. “Keep an eye on those folks who have that capacity and give them the opportunity to demonstrate it. Make sure they understand that their key to success is their ability to broaden their capabilities and not just be a single-subject specialist, but much more of a generalist.”

As you’re evaluating your people, give them opportunities to contribute to matters that affect the company as a whole. Take the situation at Laclede in recent years where the supply of natural gas has increased significantly.

“That’s a benefit for us and it’s an opportunity to grow our markets and build and leverage that stability of both supply and pricing that we haven’t had in quite a while in the gas business,” Yaeger says. “So from a standpoint of empowerment, it’s really letting my folks know and really directing them toward much more of an aggressive and offensive approach to expanding markets.”

Ideally, Yaeger doesn’t want to be the one being aggressive and offensive in expanding into new markets. He wants to create an environment where his leaders feel the pull to do that on their own.

“I view my role as one to help set the vision and the strategy and then get out of the way and empower people to execute on that strategy and that vision,” Yaeger says. “But certainly be available and be there to jump in and get into the nuts and bolts if need be. It’s their job to execute on that and it’s my job to make sure they are doing it in the right direction and that they have the resources and assets available to them to execute.”

The role of teaching and developing is one that never really ends, at least if you want your leaders to always be on top of their game.

“If you get to this position in any organization and you think you know everything there is to know about the job, that’s a guy I’m going to keep my eye on because I just don’t think that’s necessarily the truth,” Yaeger says. “I don’t care what part of the company you are in. The company is changing and the marketplace is changing and that is a factual state of growth. There are always new challenges and there are always new things to learn. You can always improve and you can always do what you do better.”

You can’t throw your leaders into a critical situation where decisions have to be made if they are not ready and if making the wrong move would put people at risk. At the same time, it is important to present as real a scenario as you can to help leaders feel what it’s like to make decisions while under pressure.

“We do a lot of simulation and regular testing of our plans,” Yaeger says. “When we do have a situation where those plans and those types of reactions in the real world have to be enacted, we do post mortems afterward to see what we did well and what we need to improve on.”

By getting people involved in simulations and combining that with discussions afterward, you can get pretty close to making sure they are ready for a big challenge when it occurs.

“We sit down and we clinically look at how we handled the situation,” Yaeger says. “What could we have done better, what we did exceedingly well and if there were areas we didn’t anticipate. Did we overemphasize certain areas that maybe technology has changed so we don’t need to focus on as intently anymore?”

Continue to evaluate people just as you should continue to evaluate your own skills and job performance as CEO.

“We do 360 Evaluations where we have subordinates, superiors and peers all evaluate their management style and the way they treat people, the way they handle emergencies, the way they go about executing on strategy,” Yaeger says.

“Have the ability to critique yourself. Self-critique how what your vision of what the company should be is matching up with what the marketplace’s vision and your employees’ vision is. Sometimes you find out that what you thought was dead right wasn’t. So you have to accept that nobody is perfect.”

If you find out as your training someone else that the individual doesn’t seem to have what it takes to be a leader, you need to take that person’s attitude into account to determine the appropriate next course of action.

“There are people who turn out to be very good competent accountants and that’s what they’re going to be when they retire and that’s fine,” Yaeger says.

“Not everybody can run the company or be in senior management. It’s those that don’t meet the expectations and don’t show the flexibility and the ability to adapt to the implementation of strategy that you say I don’t think the fit is good and it’s probably best for everybody that you find somewhere else to work. But we try to make that the exception, not the rule.”

How to reach: Laclede Gas Co., (800) 887-4173 or www.lacledegas.com

The Yaeger File

Douglas H. Yaeger, retired chairman and CEO, Laclede Gas Co.

Born: St. Louis. Yaeger grew up in Webster Groves, Mo.

Education: Undergrad degree in marketing, Miami University, Oxford, Oh.; MBA, Saint Louis University; Advanced Management Program, Harvard Business School.

What was your first job?

Probably the best job I ever had. I worked in the concession stand at the Webster Groves public swimming pool. I got a dollar an hour, all I could eat and all the girls you could meet at the swimming pool. It was a great job.

Who has the been the biggest influence on you?

I’ve been very fortunate to work with and for a lot of different people both here at Laclede, and before, who had good Midwestern values and a lot of integrity and just were good human beings. I think it’s part of this industry. I feel really blessed that I had that ability and opportunity to work with some really fine people almost throughout my career. Is there one? No.

Who would you like to meet?

I’ve always been intrigued with Winston Churchill. He was an interesting person and from what I’ve read about him, not a particularly likeable person. He just happened to be at the right place at the right time to provide the kind of leadership that England needed at the time when they needed it. I’ve always intrigued by him.