This case study follows the cultural management process of SA Water Corporation, a public utility company in the Australian state of South Australia, for the decade 2000 to 2010. It is a journey that saw SA Water transform from a department of the public service to a strong and vibrant business focused on sustainability. The Walking the Talk methodologies and tools were introduced to SA Water in the early stages of the journey and have been integral to this transition. This case study follows the methodologies
adopted and the tools deployed, analysing in what order and to what effect? We hope some of their experience will help you develop and maintain your Culture Plan and actions.
SA Water is charged with the accountability of providing water and wastewater services in theAustralian state of South Australia. In this arrid region of Australia, supply of water is not assured due to ongoing droughts and the politicisation of access to their major river source, the Murray. With this uncertain supply, the business imperatives of SA Water arejuxtaposed; while having a clear imperative to meet profit targets, there is also the need to educate customers in reducing water consumption. Water quality is also a major issue in this region, and hence SA Water has developed globally recognised laboratories, the Australian Water Quality Centre (AWQC).
SA Water is a wholly owned Government Corporation, established in 1995, with accountability to a Government Minister who
appoints the Board. Although newly incorporated, SA Water can trace its history back to 1856, just 20 years after European settlement in the region, when water was controlled by the Waterworks and Drainage Commission, which later became the Engineering and Water Supply Department and then SA Water.
At the time of writing in 2011, the 1,575 employees of SA Water and associated contractors provide water and wastewater services to approximately 1.5 million people with their core functions being water and wastewaterquality, transport and treatment; constructing, managing, maintaining and operating water and wastewater networks; and water quality research and development. They own, operate and maintain more than (AUD) $9 billion worth of assets.
In 2010 SA Water had increased profits by $12 million on the previous year and is on target to deliver the biggest infrastructure project in the State’s history – the $1.824 billion Adelaide Desalination Project. Their profitability and ability to deliver large projects is a testament to the culture they have established.
At the beginning of the decade SA Water had the challenges of a disenfranchised and disconnected workforce and community, the unchartered waters of commercialisation and a need for generational change in the workforce. The end of the decade sees a high-achieving corporate organisation, meeting their defined metrics in triple bottom-line sustainability - financial, social and environmental.
SA Water has made an astonishing transformation. In our experience there are few organisations that have been working on their culture in such a positive manner for so long. In the case of SA Water there seem to be four critical success factors:
Courage to find out what people really think and define your Current Culture. Anne Howe, the Chief Executive of SA Water and Peter Ward, the Head of People and Change are known for their courage. They have had the conviction to conduct a series of in-depth diagnostics of the organisation within the 10- year period. The diagnostics were a mixture of focus groups, interviews and surveys. In the public sector this ‘holding up the mirror’ was seen as risky, with the media always willing to use any identified areas of weakness to damage reputations. Despite these pressures, transparency and openness were encouraged, mistakes to be learned from and action taken on identified issues.
Courage of the Senior Management Team, to ‘walk above the line’- holding yourself to account.
In 2002 the Walking the Talk tool of ‘above and below the line’ was introduced to the SA Water Senior Management Team. For those who have not read the Walking the Talk book, ‘above the line behaviour’ encourages people to take responsibility when responding to issues, while ‘below the line behaviour’ is blaming, justification, denying and avoiding. The Senior Management Team worked with these Walking the Talk tools to establish acceptable standards of behaviour for themselves in the first instance and later others. Two of these standards, Respect our People and Be Trustworthy, are now core values of the organisation.
Courage to set and role model a Target Culture.
The Chief Executive, Anne Howe demonstrates behaviours of achievement, collaboration, negotiation, altruism and self-awareness. It is evident that many of her personal characteristics have been translated into the organisation. A match made in heaven? Or, productive, sustainable behaviours, role modelled by an excellent leader?
Through the courage of Anne, Peter Ward and the Senior Management Team, they defined a Target Culture that required them to consistently ‘Walk their Talk’. Achieving their Target Culture also required courage to tackle issues such as workforce planning and centralisation in a public and unionised environment. These issues will be discussed in more depth later in the article.
Consistency of the Senior Team
After some initial changes and normal attrition, the Senior Management Team has remained consistent. This has been an extraordinary asset to SA Water, with these team members continuing to lead and inspire the culture through their own development. This consistency continues with the ex-Chief Operating Officer, John Ringham, being appointed the new Chief Executive. John with his in-depth knowledge of the water industry has played a major role in the Senior Management Team since 2000.
Consistency of approach
Culture has been in the Strategic Plan since 2001. However, and quite understandably, the elements of the Culture Plan have changed over time. In 2010, the rolling culture plan is considered essential for the organisation to enable its business imperatives.
Consistency of effort
The elevation of Human Resources to the decision making table has also been a masterstroke. Often in organisations, Human Resources. is seen as a service provider to the business units, an input to decisions taken by others. Ann inherited a transactional Human Resources function, reflected in their first diagnostic by the statement, “SA Water has a relationship with pipes not people”.
Ann took the approach that a more strategic Human Resources function was required to shift the culture. Peter Ward was sourced as Head of People and Change and has driven the culture plan since 2001.
Consistency of communication
During the decade, there had been different measurement instruments, different external requirements and different providers. With all this difference and more, the messages about each tactic were always tied back to the overall strategy of the Target Culture defined in 2001.
Consultation through listening
When Ann inherited the organisation, it was disengaged and disenfranchised. There had been inordinate change from a public institution to a commercial business, instability of leadership, downsizing from a workforce of 8,000 to 1,200 and a transactional approach to people. Using their own triple-bottom line metrics, the organisation was sustainable financially being a benevolent monopoly, but not socially or environmentally. Initially, she was determined not to DO anything and was instead determined to BE a good listener. This data gathering approach gave her a solid foundation for action. Road shows, staff perception workshops and surveys have continued to ‘listen’ to the organisation throughout the 10 years.
Consultation through ‘pull not push’ behaviours
SA Water has as a mindset to pull not push behaviours. The staff, partners and community are consulted with the real intent that a collaborative solution is best determined by all players. Dialogue is key. People are encouraged to help determine, visualise and create their future.
Consultation and external relationships
\Consultation with staff is now a standard deeply embedded in the SA Water culture. However, it has taken consistency of behaviour from the management team to move from a mindset of ‘people doing what they are told, not asking or challenging’ to a more open and transparent decision framework. During this decade of change, the consultative and collaborative approach has also been educative outside the organisation and is now a requirement echoed by the SA community in their dealings with SA Water.
Consultation and learning
SA Water continues to be openly curious about better ways to operate. They have learned from best practice where they have found it in behaviours, systems and symbols. They have benchmarked against their previous performance and against others in an effort to continue to evolve and improve. In 2011 they already have some ambitious strategies identified for the future.
Cultural Plans Linked to Strategic Imperative
Very early in their evolution as a Corporation, that is around 2001, SA Water embedded Cultural Planning as part of the annual planning cycle. It was clear to the leadership that the culture of the organisation was key to achieving the identified business imperatives. Culture Planning was not seen only as a short-term project but is still today an essential pillar of SA Water’s strategic plan.
Culture Plans to Mitigate Risk
Having a rolling Culture Plan is also used as a risk mitigation strategy. The Plan addresses the behaviours, systems and symbols necessary to deliver on specific strategies, e.g. OHS, in the long and short term.
Cultural Plans helps Close the Gap
Consultation is used to identify issues of concern for SA Water while the rolling Culture Plan links these to business imperatives, determining actions, resources and metrics. Reporting against these plans gives an ongoing sense of continuity and achievement.
After a decade, SA Water has worked with all 9 Levers that Walking the Talk identifies for changing culture. Walking the Talk does not believe that utilising all Levers is necessary for change to occur in an organisation nor do Walking the Talk believe that the order and/or combination of the Levers will be the same for every organisation. However, it is interesting to identify which Levers were most critical to the transformation of SA Water and the order in which they were deployed.
The transformation of SA Water began with the appointment of Anne Howe as Chief Executive in 2001. Anne was known as a capable and influential Chief Executive who had successfully overseen cultural change in her previous roles.
Anne inherited a company that in her words was “battered, weary and uncertain”. The previous Chief Executive (CE) had been appointed after a worldwide search for a leader who could move the company from a cost centre to a profit centre. Under his direction there was significant downsizing, the establishment of public-private partnerships and involvement in infrastructure provision in Indonesia.
The changed business model required new skills in the executive and Jeremy Randell, the current Head of Metro Operations and John Ringham, recruited for his knowledge of the industry were appointed at this time. John has now been appointed CE after the retirement of Anne Howe at the end of 2010.
The previous CE’s flamboyant and aggressive style was foreign to the culture of the organisation and the wider community, creating a workforce that was proud of their work and loyal to their teams but alienated from management and the wider mission of the organisation. After a period of public discussion about his cultural fit and some disquiet over deals done in Indonesia, the Board separated him and quickly appointed Anne.
As a local and with her down to earth style and willingness to engage at every level of the organisation, Anne was seen as a better cultural fit. She saw her first job was to listen and “engage people to move on from the past and to describe a future they could live with.” In 2001 a Strategic Review of leadership and culture was conducted. The outcome of 200 interviews, 30 focus groups and surveys, written submissions and stakeholder interviews was that SA Water had a relationship with ‘pipes and pumps’ not the people, that stakeholder perceptions were neutral to negative and that skill loss and an ageing workforce would impact service and profit.
With all the changes in the previous years Anne felt that the organisation was yearning for stability. However, after this Diagnostic, one change to the Top Team became essential. As she saw it, the barrier to achieving their business imperatives was the absence of a strategic approach to leadership, people and culture and with this in mind she brought in Peter Ward.
Peter, the Head of People and Change had held a number of national senior human resource, people and change roles in the private sector in Australia and overseas and was already knowledgeable about how to shift and manage cultures. His previous company, Lion Nathan, had embarked on a substantial culture shift and he brought significant experience from this program to SA Water. Peter became the champion of culture change in the organisation.
Peter’s first intervention in 2002 was to benchmark both the culture and leadership of the organisation. He utilised the Human Synergist's tools of Organisational Culture Inventory (OCI) and Life Styles Inventory (LSI). At this time a wide group of leaders were introduced to the Walking the Talk methodology in offsite workshops, with the decision that Top Team behaviours were the first lever to elicit engagement for their cultural journey.
The content of the leadership development programs focused on personal responsibility, working with the Above and Below the Line tool, the need for personal change as a precursor to organisational change and a move to more constructive behaviours, within the management team environment and in their dealings with others.
Over the next two years, more than 250 leaders were given specific feedback on their leadership behaviours using a 360 feedback tool while 345 leaders attended leadership development with cascaded messages from those used with the Top Team.
One symbolic decision that Anne took early was to be very clear on the standards that were acceptable in her Senior Management Team. They were framed around the constructive behaviours of achievement, collaboration, affiliative (involving) and self-actualisation. After the initial round of Leadership Assessment tool, LSI, a year or 2 of the new performance management system that included measuring behaviours, Anne let 3 senior people go who would not or could not make the transition to the new behaviours. Even though her actions were symbolic, she reflected, “I still didn’t cut my losses early enough when my instinct told me that an appointment wasn’t working out.” Still, the organisation allowed these people to exit with dignity by announcing their resignations after agreeing terms and timing.
Another quick win was the focus on ‘Recognition and Reward’ in the area of employee service awards. Anne and Peter began a long round of personally presenting awards for long service in the organisation, creating a real feeling of belonging and pride. Leaders were also encouraged to arrange events and give awards to reinforce behaviour that was in line with the Target Culture. In the 9 years since their inception, SA Water has spent $1 million on rewarding target behaviours with $50 vouchers. More recently there have also been crossfunctional awards on offer with the aim of further breaking down the silos within the organisation.
One day Ann was rung up by a worker from the Eyre Peninsular who had been with the organisation for more than 30 years. He said, “Do you know that we are all old and our backs are gone, two out of three of us are on light duties and I want to know who will provide this essential service to my community when I am gone?” Peter Ward had begun the process of implementing a suite of strategic people systems and this particular issue was added immediately.
One of these was aimed at generational change of the workforce. These blue-collar workers had not had access to superannuation benefits and therefore had to remain at work. Peter convinced the government to invest in a program where workers would be given a pay-out after a period of time up-skilling the new generation.
Peter remarked, “This ‘refresh’ over three years saw 180 (of around 380 regional staff) given dignified exits and retirements, approximately 33% of that workforce category at the time”. Anne added, ”This was symbolic to the people in the regions, it said to them, we listened and you have it right, we are going to do something to solve this issue.”
Another part of the Human Resources suite Peter brought in at this time was the Chris21 software to define and record competencies and individual development plans. $1.9m was invested by 2006, in addition to core job training to enhance the capability of the workforce and transition the organisation towards the Target Culture.
Role clarity was identified as an issue in the 2002 survey. To counteract this, Position Descriptions were re-written and cascaded through the whole business. Initially one on one meetings between managers and employees were conducted six times a year; subsequently this was rolled back to four times a year and is now three.
Peter says the frequency was a specific strategy to ensure that the new performance management system was embedded quickly in the organisation. 210 workshops within 2 years were conducted with staff to teach them how to conduct performance discussions that aligned employee behaviours to the Target Culture.
Variable annual salary increases were put in place with a ‘Pay for Performance’ system introduced. In this system higher-level staff could request individual contracts to move out of the collective agreement. This was also a way of tackling the tenure issue, where people who had been in the organisation for more than the one years probation had a job for life.
Levers used in the first stage
The Senior Management Team understood that their culture was being defined by all the messages sent through behaviours, systems and symbols and attention was being paid to these channels. However, the results of the 2002 OCI reported that people still felt that they were being ‘told’ rather than ‘involved’ in the change process. In 2003 Kelly Westell was appointed as Manager of Communications.
Peter Ward comments that the behaviours, symbols and systems model underpinned the culture and people strategy, “as all the people initiatives could be linked to one or more of these principles”. Organisational surveys were used regularly during the decade with the culture assessment tool, Organisational Cultural Inventory (OCI) used in 2002 and 2003 and staff surveys conducted in 2006 and 2009. The results were openly shared with communications outlining the congruence between the Target Culture and the actions to be taken. The messages were consistent and gave the organisation confidence that there was ‘no flavour of the month’ but each action was part of a larger plan. Gradually staff felt more confident that they were being heard and that their opinions mattered. Today, there is an expectation by both leaders and staff that consultation will be part of the process of decision-making.
Even when SA Water people were disengaged from the wider organisation, they had in the main a high degree of trust in their own manager. This relationship was capitalised on, with communication often delivered by immediate managers. This delivery mechanism reinforced behavioural standards, with leaders holding their team members to account and the team members looking towards the leaders as role models of acceptable behaviour.
The SMT were aware that in the absence of intentional communications people will make their own meaning from events. In SA Water, myths and rumours were dealt with through a two-pronged approach, a weekly email titled ‘This Week’, and specific issue related communications called ‘Fast Facts’, sent from the Chief Executive. This communication strategy continues today.
During the Stage One, there was an emphasis on bringing in new talent to ‘Refresh’ the workforce. This generational change continues today based on a structured workforce planning analysis that began in Stage 2. At this time the focus shifted from ‘new recruits’ to the current workforce, outlining a commitment to succession through strong internal development and promotions by filling from the bottom. People could see that there was a future at SA Water and it became an excellent marketing tool for both attraction and retention.
This systems change was critical not only for the sustainability of the organisation but it also acted to embed the Target Culture. Previously the organisation had been very technically - focused with selection criteria cantered on what people could DO rather than the BE level of their beliefs, values and attitudes. Through this talent evaluation process, the organisation now focused on both the DO and the BE levels, with results and values being important. Although the organisation continued to be refreshed with external appointments, the succession management system reinforced to staff that there were career prospects within the organisation. From this identified talent pool, SA Water could observe their staff for some time, ensuring their behaviours were consistent with the culture they wanted to build.
External events triggered the use of this Lever at this time. Firstly, in 2004, the South Australian Premier, the Honourable Mike Rann, unveiled South Australia’s Strategic Plan with key objectives being attaining sustainability, growing prosperity, improving wellbeing, fostering creativity, building communities and expanding opportunity. SA Water was heavily committed to the objectives of growth, innovation and sustainability.
In addition in 2005, the Government was discussing economic regulation, which would bring a third party review of SA Water strategy and benefits. With this future apparent, Anne and the SMT were determined to ready the organisation. SA Water again brought in some outside thinking, with PWC working with them to formulate a strategic planning process and economic metrics, while the SMT added the internal assurance that their desired culture was embedded in all new systems. The SMT was also expanded at this time to help operational efficiency.
John Ringham drove the strategic planning process, termed Towards 2010. This review of all of the business management practices ensured that their vision, strategic map and processes were by 2005 more aligned to their Target Culture. The Culture Plan was an important pillar of this strategy, with the metrics of achieving top quartile in the Organisational Culture Inventory (OCI) and an improvement in the Staff Satisfaction Index.
In 2006, they also used the Dow Jones Sustainability Index to benchmark their performance against global water utilities and ranked in the 3rd quartile.
Anne makes the comment that this set of metrics didn’t necessarily help them with the answers to their issues but did enable them to ask better questions about their performance.
By 2006, the staff survey reported a high level of job satisfaction; SA Water was considered to be a great place to work and was perceived to have a strong commitment to excellence. However, there was still work to be done as the survey concluded that the leadership performance of the Senior Management Team needed further improvement; performance management across the business was still an area for improvement, as were silos. Staff also wanted more input into decision making. The culture plan was on-track enabling the business imperatives. However, the culture of SA Water was about to be severely tested.
By 2007, South Australia was facing its sixth consecutive year of drought. The Annual Report of 2007-2008 states, “The River Murray has endured unprecedented drought, continuous record low inflows and ...is under severe environmental distress.” With 85% of water coming from the River Murray, the reliance on the river was having repercussions for the economy, environment and the community. In late 2007, SA Water was charged with delivering a (AUD)$1.8 billion desalination plant by 2010, increasing water recycling, reducing demand and catchment modification to ensure water security. In addition, it became clear that further work was needed on workforce planning to ensure they had all the requisite skills to deliver on the new mandate.
Anne Howe says, “The Drama of the Drought gave the SMT an opportunity to work with no boundaries, to keep the organisation running effectively there was a need for high levels of collaboration. There were no boundaries and not much time for egos. We had to build in times to re-engage and forgive each other as decisions needed to be made quickly. The leaders were empowered to lead as I spent a large part of the time outside the organisation working on external relationships.”
The Target Culture was becoming more apparent in the internal operations of the company. However, the perception of SA Water in their external relationships with the community was different. The engineering solutions were appropriate but the people and community solutions still needed work.
When SA Water started major capital works, the Board identified a risk in community relations. Kelly Westell was moved to the newly created role of Manager of Stakeholder Relations. The community engagement model was based around extensive consultation with the community, finding out what they want and then designing a solution, rather than selling a solution that was already complete. This work was continued after the staff survey of 2009 where the interpersonal skills of project managers and models for internal and external engagement were given great emphasis.
During this period the number of customer interactions increased dramatically due to rebates, restrictions and a new billing system that all required community education. Customer satisfaction scores dropped slightly from 8.2 of 10 in 2006-2007 to 8.0 in 2007-2008.
Anne spent an increasing amount of her time negotiating with external parties to enable her team to get on with the job unimpeded. With the scrutiny of so many external parties, the organisation became more unified, assumed a more well defined identity in the community and drew collective pride in its effectiveness in difficult times. Using the lever of External Relationships consolidated the change in culture that had already occurred and extended the reach of their Target Culture wider into the community.
Levers used in the second stage
The lever of workplace design can be one of the most difficult and at times costly levers for a company to activate. SA Water was eager to create a physical representation of their culture, through the establishment of new headquarters. Anne handed this project to Peter Ward, in her words, “Accommodation is a people issue”.
Peter’s view was that accommodation was a physical symbol of inequity in the culture and a barrier to establishing ‘One Team’ through centralising functions. At the beginning of the decade there were three metropolitan sites as well as regional offices. Each of these had their own strong culture within the wider culture of SA Water.
When the talk of a move to a centralised location was first mooted, some people ejected themselves from the organisation, fearful of the change, they took early retirement. For the remainder, the Senior Management Team was briefed in 2005 and formulated a set of principles for the project, which were later slightly amended through consultation with staff.
One was for an ‘open and transparent workplace’ with an open planned office environment contributing to a positive business case. Another was for resources to be allocated on ‘need not hierarchy’. As the arguments for and against offices raged in the organisation, from the Top Team down, one SMT member remarked, “I earned my office”. Anne silenced further comments by saying that she could see no reason for her to have an office and invited anyone else who thought they had more merit to step forward. No one did. How symbolic is that sort of message from the top?
Other principles for the project were to drive faster decision-making and collaboration, through increased access to leaders, enhanced productivity through increased individual and team interaction and meet triple bottom line sustainability, financially through decreased costs, socially through attraction, retention and provision of well-being and environmentally through the provision of a 6 Star Green Star rated building.
A workplace design consultants (DEGW) were engaged and their expertise in turning cultural attributes into a design brief was invaluable. Subsequently, a Staff Reference Group was trained in the process and support of others. As the building took shape, employees took trips to see their new workspace helping them to focus on what they were getting rather than what they would lose. Along with regular communications, this familiarisation with the changed environment helped allay some fears.
On a tour of the building you can see the entire space from a central staircase. Although lifts are available, employees are encouraged to take the stairs. There is security at the entrance to the building but there is limited internal security so people are freely able to move throughout the building. There are many different kinds of meeting areas, some with large tables, some with communal workstations and comfortable seats and occasional tables for more intimate communications. These are used constantly and there is an informal challenge for teams to see how many of these areas they can use.
Through utilising the Lever of Workplace Design, SA Water has been able to align their culture to support organisational performance. In 2010 SA Water has increased profits and is on target to deliver the $1.824 billion Desalination Plant. A Post-Move Workforce Productivity Survey found that 64% of staff agreed that the Workplace Design increases attraction and retention, there are increased and positive links with the community, the design of the atrium, stairs and shared hubs increased collaboration and made leaders more visible, and productivity increased through access to team members, management and other business units.
There is immense pride in the organisation for the shift they have made both physically and in their culture. The building itself will stand as an ongoing legacy for Anne Howe and her Senior Management Team and particularly Peter Ward.
Levers used during the third stage
The organisation is well placed to meet its future challenges with John Ringham the new CE over sighting a new Alliance partnership for the provision of services to the Metro area and the shift to economic regulation and third party review. SA Water is now a dynamic innovative and consultative organisation, staffed with committed and dedicated people.