Succession & Workforce Planning aligned to Strategic Business Initiatives

Lorraine Webb Vice President Organizational DevelopmentPhiladelphia Gas Works GVFHRA April 12, 2010

Topics

Workforce Planning and Strategic Business Management

Understand the elements of a successful succession plan

.Linking HR initiatives to strategic business initiatives

About PGWLorraine Webb VP of Organizational Development

Philadelphia’s source of safe, reliable, natural gas

Our nation’s largest municipally owned natural gas utility

PGW began on February 10, 1836 with 46 gas lights

Today provides natural gas to the 6th largest city in the US

The PGW Journey

10-12 Years ago PGW was faced with: significant debt ($1b) and potential insolvency billing systems meltdown no performance management systems,

rewards or recognition programs, working or strategic knowledge of our human capital bench strength

“accidental leaders” and management in transition

The PGW Journey

Recognized that by 2010 roughly 50% of the workforce could retire w/i 5 years 20 member senior team were and 18 of the eligible

Significant drain on the organization in terms of knowledge, skill, experience and talent

Extreme external pressures

Risks and Challenges Risks to appropriate qualified

staffing levels Staff for the Gap Identification of critical positions Compensation Employer of Choice/Good place to

work

Risks to loss of institutional knowledge and skills Knowledge management initiative Aligned learning opportunities

created curriculums for different levels within PGW

Workforce Planning Succession planning initiative

identifies candidates Workforce development identifies

employees at all levels for bench strength.

Low Morale/Performance Performance Management System

and Career Development/Employee Development Plans

Transfer & IncreaseKnowledge & Skills

Staff for the Gap Develop Employees

Create a Collarborative

Results Oriented Culture

Recognize and Celebrate Success

Build the Organization of the Future

CommunicateCommunicateCommunicate

Focused on Integrated Talent Management

Staffing & Recruiting

Performance Management &

Succession Planning

Training & Development

Employee Relations

How Did We Get There? “C” Suite focus: sense of URGENCY!

Identify succession gaps Assessed 60+ leaders of the organization

360’s, performance reviews, development plans and coaching CEO made it clear that this was a top priority He announced to the Management Team that he would have a

360 as well as coaching Succession plan

Surveyed employees anonymously as to plans for retirement Developed high potential programs Many senior people and others shared their plans often volunteered

to be mentors

Finally…

We changed the culture by becoming strategic partners with the business

What We Did Succession Planning Leadership Development Programs Strong Recruitment Efforts Formal Programs to Assess People and Talent Knowledge Transference Rotational Assignment Programs Cross Functional Assignments Affinity Groups

Succession Planning: The Process

Communicate Plan to Management Team Try to identify projected turnover and likely job openings Clarify and communicate what competencies will be

needed Open it up - who’s interested and willing?

Survey of all employees Assess competency readiness Prepare development plans Offer learning opportunities and resources Compete for “in-training” positions Employee share responsibility for career development

The ProcessThe Process

Outline Key Deliverables

Discuss processPlan

communicationsManage

expectations

Develop key criteria for each position

Build on PGW competencies

Inventory internal talent pool

Use Talent Mapping

Identify Key Positions to be filled and/or replaced

When will needs occur?

Develop alternative scenarios

Map Talent to needs of PGW

Identify HiPo’s and associated development needs

StrategyMeeting

Key DeliverablesKey Deliverables

PositionCriteria

InventoryInternalTalent

Key PositionsAt Issue

Identify Succession

Gaps

Implement Succession

Plan

Begin Implementation of development plans

The Process The Process • Apply succession planning process to the leadership positions at

PGW

• Create a list of candidates for the leadership positions

• Review Essential Succession Planning Process

• Set criteria for the job

• Create Talent Map for candidates

• Create list of potential candidates for the position who meet job criteria

• Got the assistance of a third party, Career Concepts, that could lead us through the process

The Philadelphia Gas Works

Leadership Succession Plan

The Pipeline

A = Ready for promotion to next level or significant increase in responsibility within 12 monthsB = Ready in 3 yearsC = Primary level achieved; not likely to increase responsibilities

1 = Ready to assume role within 3 months2 = Ready to assume role within 12 months3 = Ready to assume role within 3 years4 = No internal candidates; recruit

Sample

President &

Chief Executive Officer

Process: Key Positions at Issue Review the organization chart

Does current organization design reflect future needs? Are there alternative futures likely enough to be

considered? Add positions technically vacant at present

Review each position, the incumbent and state the assumptions Start with CEO Progress through succeeding layers

Iterative process Internal successors to a position, create vacancies

Process: PGW Competencies

Start with Core Competencies Connected to Performance Appraisals and Development

Plans Does the position require

candidate who is highly competent for each specific competency?

Is adequate acceptable? Is the competency not critical for

the position?

Coaching and Developing Others

Visioning Negotiation and Influence

Creating a Service Culture

Networking and Leveraging

Disciplined Execution

Adaptability and Embracing Change

Professionalism Teamwork and Collaboration

Smart Risk Taking Enterprise Focus Managing Others

Process: Executive Attributes

We had discussions early on

regarding what we deemed

to be Executive or Leadership attributes and what were not…

Does the position require candidate who is highly gifted with these attributes?Is adequate acceptable?Is the attribute not critical for the position?

Focus

Intellect

Charisma

Communication skills

Passion

Culture fit

Poise

Appearance

Process: Barrier to Success Attributes

Over-managing

Insensitive

Defensive

Arrogant

Overdependence on a single skill

Key skill deficiencies

Failure to build a team

Failure to staff with winners

Lack of composure

Unwilling to adapt to differences

Barriers to Success Does the position require candidates

who do not have these attributes? Is a ‘mild case’ acceptable? Is the attribute not critical to the

position?

A way to graphically show where people are in their development Cross between performance and potential Subjective rating only – no formula Not an ends, but a means to identifying those ready to move up and

helping all develop appropriately

Process: The Talent Map

Over-managing

Unwilling to adapt to differences

Lack of composure

Failure to staff with winners

Failure to build a team

Key skill deficiencies

Overdependence on a single skill

Arrogant

Defensive

Insensitive

Over-managing

Appearance

Poise

Culture fit

Passion

Communication skills

Charisma

Intellect

Focus

Teamwork and Collaboration

Disciplined Execution

Negotiation and Influence

Enterprise Focus

Professionalism

Networking and Leveraging

Visioning

Smart Risk Taking

Adaptability and Embracing Change

Creating a Service Culture

Coaching and Developing Others

Position Criteria - sample

Position: _________________

Pe r f o rmance

P o t e n t i a l

Low Average High

High Average Low

Niche Player

Monitor

Release

Develop for Next Level

Accelerate

Stretch

Monitor Track and Assess

Stretch

Box 4

Box 9

Box 7

Box 8

Box 5

Box 2

Box 6

Box 3

Box 120%

<= 5%

Legend for Sample Charts

No Identified Candidates

Potential Candidates Below Mgmt Team Level

New Positions?

Positions with Potential Candidates

Draft-Sample Organization Chart

Customer Affairs

Vice President

Regulatory Compliance

Director

Operations

Manager, Meter & Measurements

Credit & Collection

Director, Credit &Collections

Customer Service

Director, Call Center Operations

Supply Chain

Vice President

Procurement & MBE

Operations

Manager, FieldServices

OperationsManager,

Distribution

Gas Control & Acquisition

Director, Supply & Transportation

Engineering

Director, Engineering & Facilities

Gas Planning & Rates

Director

Credit & CollectionDirector, Com.

Resource Center

Gas Processing

Manager, Systems, Administration, Safety,

Training, Plant Protection, OQ & Employee Relations

Gas ProcessingManager, Richmond Plant

Gas Processing

Manager, Passyunk Plant

Operations & Customer AffairsSenior Vice President

Labor Relations & Account

Management

Operations

Director, Employee Relations,

Development & Supervisory Services

Operations

Director, Engineering, Design,

Construction & Planning

Gas Processing

Director

Operations

Director, Field Operations &

Planning

OperationsVice President

Gas Management

Vice President

OD Revised 5-5-09

Defining development largely as educational experiences and job rotations

Moving people so fast they never really finish a job Considering vertical movement in one area a meaningful

developmental sequence Letting one failure knock someone off track Loading the fast track with people who run into trouble as strengths

become liabilities

How Organizations Derail People

Staff for the Gap Reduce time to fill (from 80 to less than 40 days!)

Begin resume banking/continuous interviewing Create on-line application process

Improve caliber of candidates Use down market to recruit: PGW stability and benefits Introduce state of the art recruiting including social media (i.e.

Monster.com; LinkedIn, etc.) Replace passive application process with proactive resume searches,

community outreach and recruitment (i.e. NSBE, SWE, Honickman, etc.) Ensure fairness

Post vacancies Continue to use employee referrals wisely Ensure diversity at upper levels

Retirement Survey Of approximately 1700 employees close to 20% responded Gave us an excellent lens into what people were thinking Closer to retirement, the more willing to share and provide dates Of interest were comments

Union contract coming up If no changes in medical benefit plan, people would stay

longer Plans are to make this an annual event during benefit

enrollment

Talent Replenishment Overview

Where We Are Today Two thirds of the union positions can be backfilled through union

progressions and many middle management positions are also part of a career progression path.

But PGW is clearly vulnerable as to those positions that require extensive on the job training and technical knowledge.

Areas of vulnerability include Operations, Gas Management, Customer Affairs, Finance and Regulatory Affairs

Develop Employees Automate systems

Geo Learning LMS SuccessFactors Applicant Tracking system

Add management tools Career Development (CDP) Performance Improvement (PIP) and Employee

Development Plans (EDP) Time and Labor System ADP HRIS System

Education and Training EEOC and Staff train all management employees in

harassment prevention, accommodations and respect Learning and Development open to all PGW employees English as a Second Language classes offered on site Community College classes on site Tuition Reimbursement Leadership Development

PGW As Employer of Choice Goal: Employer of choice

Change culture, diverse and inclusive Realignment —best of old; add new Worklife balance

Purpose: Ensure talent to meet objectives of company in an environment with few financial rewards as well as sustaining a diverse and inclusive culture

Task: To attract and retain the best, management needs to manage Partner in staffing; evaluate through first year focus and probationary

period Actively coach and mentor Provide performance feedback, honest evaluations and realistic career

development plans

Develop Employees--Programs Leadership Development program--2 cycles

Ed2Go CCP @ PGW provides work-life balance for employees PGW Training Series, taught by PGW employees, gives ‘facilitators’ exposure Boot camp Tuition reimbursement Buddies Mentoring and coaching Ongoing succession planning New talent assessment program

Establishment of an development/assessment center In house training aligned to organizational need Educational and aspirational survey

PGW Career Development Initiative Mandatory for all management employees Forward thinking Learning opportunities Stretch goals For all employees at the proficiency level 400+ Fosters a “developmental” mindset with supervisors

Create a Collaborative and Results Oriented Culture Union/Management relationship based upon transparency and trust

Management and Union probably have the most productive relationship in the history of the Company

Implemented a win/win negotiation process between Management and Union

Reduced grievances/arbitrations Union involvement and input for company initiatives. Introduced mediation training for both Union and Management in

an effort to amicably resolve issues. Six Sigma, affinity groups

Knowledge Transference Program Small cross functional team conducting pilot

Line management, OD and BT Program is a collaborative effort and includes identifying key processes

We document via a videographer (college intern) Interviews Update of policies and procedures

Employees are concerned about knowledge transference Pride in their work and the company Belief and feeling that their work is unique

EDP’s and PIP’s Mandatory for all employees with ratings between 2.76-2.99 Preemptive measure

Assist employee avoid Performance Improvement Plan Mandatory for employees with rating less than 2.76 Collaborative process with Supervisor/OD Meetings at the 30,60,90 day milestones Less than 5% of management population Failure to successfully complete results in termination

Educating the organization on key HR business initiatives

Legacy retreat Drexel PGW mini MBA program CCP and Finance Assessing what organization needs on an annual basis Surveys and interventions

The PGW Journey Now Significantly higher ratings on Wall Street Raised customer collection rates (86% v 98%) New CEO entered succession plan 5 years ago and succeeded at year 4 fully

prepared Successfully managing rate of attrition; an integrated talent acquisition and

management process in place Guided by HR/OD metrics aligned to business The right people are in the right jobs and the organization has depth of talent

(despite a strict residency requirement) Awards received for Human Capital Management/Sales & Marketing Credibility with external stakeholders

Successes Named HR Department of the Year 2009 Named one of the nation’s top diversity employer Rapidly reestablishing “employer of choice” status Reduced costs associated with training delivery Labor relations ( reduction of arbitrations) Zero external fact findings substantiated

What’s Next? Formal Talent Assessment Program Understand employees’ aspirations

Employees often don’t know how to manage their careers or which next steps to take

Need to manage employee’s expectations Everyone with a degree is not getting promoted

Must replace in kind mentality as opposed to re-thinking alternative models i.e. administrative assistants versus analysts

Dearth of good candidates within lower grades Need additional training, education and exposure

Is a 1% turnover rate (absent retirements) a good thing? Ongoing retirements Market improvement coupled with new raises poses retention issues

QUESTIONS?