The economic downturn in the Greater Cincinnati area had
both the city council and the board of county commissioners working to find
ways to save money without sacrificing customer services. While many department
integrations had been proposed during the 2010 and 2011 budget cycles, not a
single one moved forward — even though everyone knew that major change is the
only way to bring sustainable savings. Integration suggestions always were met
with a “we can’t do that” mentality. The city council needed a success story,
and they chose the Metropolitan Sewer District of Greater Cincinnati and
Greater Cincinnati Water Works as their champions. If these two powerhouses
could merge, then their success could become the new standard for governmental
operations in Cincinnati.
The city council approved joint utility management of the
Greater Cincinnati Water Works (GCWW), Metropolitan Sewer District of Greater
Cincinnati (MSD), and Stormwater Management Utility (SMU) in October 2011. It
was projected that a joint utility management model would lead to slower rate
increases, improvement in service level, cost savings and efficiencies, and
more opportunity for Cincinnati to continue to grow as a national leader in
water resources management.
reasons to change
trends were driving utilities to look at doing business differently. They
- uncertain economic trends and financial
- aging infrastructure and increasing capital
- shifting water demands,
- changing workforce and a dynamic talent life cycle,
- increasing/expanding water regulations, and
- efficiency drivers and resource optimization.
With so many trends
affecting public utilities, it is imperative to determine new ways to do
business. Sharing services in a very formal and integrated way was determined
to be the best “new way” of doing business in Greater Cincinnati. It is
expected that there will be improved or new operational processes, increased
collaboration, and new thinking surrounding ways to improve service delivery as
a joint entity.
The three utilities
took the time and energy to educate all employees on what a joint utility means
and how it will affect day-to-day operations. Numerous informational meetings
were held for employees to learn what this new opportunity provides for
utilities and employees. These meetings enabled senior management to explain
that adopting a shared services model was a response to economic challenges to
all three utilities that are driving up rates, was about sustaining public
operations of utility enterprise funds, and would help manage water resources
in a complete water cycle approach. Questions were addressed with a common
intranet site developed to communicate regularly with employees about the plan
The three utilities
then followed an initial implementation road map that addressed immediate tasks
and changes needed for success. Key steps identified in the road map included
- creating and implementing a
joint utility communications plan,
- making organizational
- conducting functional area
assessments and “planning for change” workshops for each area,
- physically relocating some
- classifying job studies, and
- creating and establishing
joint utility policies.
The 100-day plan, organizational structure changes, and physical moves
To jump start initiatives and realize cost savings and
efficiencies, GCWW, MSD, and SMU created a 100-day plan to assess certain
functional areas to determine the degree of integration possible, to start
joint utility efforts, and to build some early momentum for future integrations.
Task teams comprised of more than 260 employees evaluated core functional areas
to identify opportunities for cost savings and enhancements in the delivery of
products and services. Recommendations from the 62 projects were reviewed and
prioritized for implementation.
To mobilize and prepare for the suggested changes,
several organizational changes were necessary. These changes provided the
structure needed to begin realizing the more detailed, long-term changes
planned for shared services.
A phased approach was best for implementing the
integrated sections. The first phase involved changes to the communications,
human resources, engineering, laboratory, and information technology functional
areas; while the second phase focused on finance, accounting, and regulatory
and safety compliance sections.
In September 2013, more than 300 of 1200 employees moved
physically to integrate workgroups in key areas. Workgroups were moved so
employees could begin to learn more about their new workmates and begin to
prepare for improvements to work processes.
Once the rubber hit the road with the physical moves, the
real nitty-gritty work began. The naysayers inside and outside could no longer
deny the changes. Since September, the joint structure has accomplished the
- clearly defined roles and
responsibilities for the integrated functional areas and began work on
increasing the accountability of employees;
- created a change management plan to
implement the necessary changes;
- implemented consistent policies and
practices established by the integrated human resources section;
- developed a new invoice review and
approval process for prompt payment of invoices;
- developed a strategic approach to
filling positions across the three utilities;
- performed cultural assessments and
workshops to help the shared services areas collaborate and work together
successfully by better understanding who they are, how the integrated function
needs to operate, and the best plan to get there; and
- implemented joint utility cost
The most critical
lessons from this process to date involve communications, employee engagement,
and cultural assessments. Regardless of the vision and planning for integrating
shared services, the success lies with the employees and strong communication.
In the first year
of the joint utility efforts, communication occurred throughout the process via
town hall meetings at key milestones, regularly via the joint utility
newsletter, and often by task team updates via e-mail and postings to the joint
utility intranet site.
But it can’t stop
there. Communication needs to occur more often and regularly until the joint
utility concept is in the DNA of the processes and employees. That will take
communication requires intensive effort from senior leaders and staff at a time
when they may be faced with other pressing day-to-day challenges. Often the
skill of effective communication requires training because many managers have
never received guidance on good interpersonal communication practices. They may
be uncomfortable about communicating tough messages to their employees and may
be very good at the hard facts and figures but not so good with the soft people
The joint utility
will embark on a communication plan that includes regular fact sheets,
frequently asked questions, road shows to staff meetings and other meetings,
and manager talking points. In a time of uncertainty, these tools provide some
information that can reassure, educate, and clarify the details of change for
+ empowerment = ownership
During this type of
change, employees are involved — as they were in the 100-day task teams. Their
involvement improved operations and streamlined processes. Moving forward,
employees need to remain involved in new task teams to complete assessments as
well as to implement approved recommendations.
Along with being
involved, employees need to be empowered. Empowerment will allow employees to
- have input about the changes
occurring around them,
- share ideas and suggestions
openly about their work and the organization,
- share their great ideas to
improve productivity and reduce costs,
- create a feeling of true customer
service that will ultimately yield customer loyalty, and
- challenge the status quo,
which is critical when making changes.
eats strategy for lunch
obstacle to integration is the clash of the titans. The “we versus they”
mentality must be broken down as much as possible. Because of the uncertainties
with change, employees often lose enthusiasm for their work and the
organization; morale and organizational pride decrease.
Both MSD and GCWW
are excellent utilities in their own right. Neither wanted that status to be
compromised. Management of the human side of integrating shared services is the
real key to maximizing success.
GCWW, MSD, and SMU
are working closely with an expert to conduct functional area cultural
assessments and planning sessions. Workshops are conducted to engage leaders in
planning for the future of an integrated functional area. The workshops enable
the employees to engage and better understand where they stand, how the
functional area needs to operate, and the best plan to get there.
The leaders in the
functional areas produce feedback and
understanding of the key issues, clear expectations of what’s expected, and
shared understanding of the new organizational structure, including strengths,
weaknesses, opportunities, and threats.
They also assess
targets for the future with things such as agreement on a mission, vision, and
team operating principles; measurable improvements in trust and how the team
will make decisions; and a list of issues to resolve to ensure success. The
team leaders also map the plan to get there with agreement on roles and areas
of responsibility, what success looks like, and an understanding of the
high-level plan for the leadership pipeline.
The outcomes from
this workshop then cascade throughout the functional area as messages and
operating principles. Additional workshops then share this information with
other employees to enable input and buy-in to the changes.
areas has allowed for a reduction in positions. To date, joint utility
implementation efforts have identified $5 million in cost savings in the 2014
budget due to retirements and not filling vacant but funded positions. This is
equivalent to a cumulative savings of $50 million over 10 years.
positions will continue to be reviewed and strategically filled when needed.
This initial calculation just focused on savings identified from not filling
certain positions; as improvements to processes are implemented, additional
cost savings will be identified. The three utilities are on track and within
reach of their shared services goal of savings between $68 million and $105
million over 10 years.