Profile of Excellence in Public Power Governance

By Patty Cruz, Vice President of Consulting & Training, Hometown Connections

June 25, 2018

There is a multi-service utility that for many years has dedicated efforts to establish an effective working relationship with its Board.  A key component of this utility’s success has been to provide newly appointment Board members with an Orientation program that clearly describes what the Board is responsible for monitoring including:

Organizational Performance
This utility has a strategic plan that layouts the roadmap for what issues the utility will address in the next five-years.  To keep the pulse on the utility’s performance, the Board in collaboration with the executive team, defined key aspects to monitor such as Financial Sustainability, Operational Performance, Workforce and Workplace Performance, and Communications and Community Engagement.

The utility defined Key Performance Indicators (KPIs) for each area and on a monthly basis provides an update to the Board about the metrics tracked.

Organizational performance metrics are high level indictors of progress that must be easily understood and accepted by those that are tracking the KPIs and those that are using the results to determine actions to sustain or improve.

Performance of Direct Reports
The Board at this Texas utility is responsible for evaluating the General Manager’s (GM) performance.  The Board conducts an annual review where feedback is provided to the GM about meeting job expectations and requirements and how well leadership competencies were demonstrated.  The performance evaluation tool used is an online questionnaire that measures performance in various leadership competencies, including financial perspective, strategy formulation and execution, demonstration of the core values, internal and external stakeholder relations, and personal qualities.  Additionally, the performance evaluation tool looks at level of achievement of the GM’s strategic goals.  This information is then used to decide on salary levels for the GM and action plans for development, if required.

Own Performance
It is also important that the Board conduct a self-assessment of its performance as governing body for the utility.  The Board at the Texas utility recognizes this is the next level of development for them.   When a Board evaluates its performance, it obtains feedback regarding its own policies and practices.  It is helpful to have a set process and tool to help the Board evaluate itself.  Frequently, questionnaires evaluating how the Board managed communications, roles and responsibilities, financial oversight, strategic planning, relationship with staff, and Board development are used on an annual basis.

The process of self-evaluation promotes a clear understanding of accountabilities for each Board member and clarifies expectations.  The process also helps identify priorities for the Board’s future efforts, the Board’s strengths and areas in need of improvement.

For the utility in Texas and many other utilities, establishing the processes for the Board to evaluate performance, defining the guidelines as to how the processes will take place and the objectives each evaluation will satisfy, requires effort and collaboration between the members of the Board and the General Manager.  Successfully implementing the systems to monitor and track the key areas and the KPIs requires additional resources within the organization.  Clearly defined performance evaluation systems achieve the overarching goals of improving the bottom line, aligning strategic activities, improved decision-making, and continuous improvement.  The effort to design, implement and track performance in the three components described above (organizational, direct reports and self) by the Board is well worth the results that will be obtained!

This article is based on the presentation “Board Responsibilities: Excellence in Governance” at the American Public Power Association’s National Conference in June 2018. For more information or an electronic copy of the slides, please contact Patty Cruz at pcruz@hometownconnections.com or 512-569-8323

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