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Power (15- Sep- 04)

Strategic culture change works wonders

Five years ago, the top managers of PPL Susquehanna, a two-unit nuclear plant, learned the hard way that corporate culture has a big impact on performance. Since then after implementing a formal program to improve its business processes, internal communications, teamwork, employees' attitudes, and accountability Susquehanna is no longer a bottom-tier plant. It now ranks in the nuclear power industry's top quartile of performance and aims to become the "best nuclear facility in the U.S." By Dr. Robert Peltier, PE When executives seek to identify causes of poor organizational performance, corporate culture rarely gets much scrutiny. Human nature being what it is, leaders typically look first at quick fixes like reducing employee headcount, tweaking work processes, or simply cajoling the troops to work "harder and smarter." Few stop to consider how the organization's behavioral norms or "culture" may be hindering performance at a far deeper level. The willingness to scrutinize the culture at a nuclear power facility is the first step in a long journey toward making it performance-competitive with peer plants. The cold statistics used to gauge nuclear plant performance like those from the Institute of Nuclear Power Operations (INPO), for example are well established and understood, and valuable. However, plant culture is evolutionary and therefore resistant to rapid change. In fact, the culture of a plant may be the best benchmark of the quality of senior leadership over the long haul. Looking back PPL Susquehanna (PPL), located 7 miles northeast of Berwick, Pa., is a two-unit, 2,352-MW plant that is 90% owned by PPL Susquehanna LLC (a subsidiary of PPL Generation LLC) and 10% owned by Allegheny Electric Cooperative Inc. The two boiling water reactors entered commercial service in 1983 and 1985 (Figure 1).

1. Pennsylvania power. The two-unit, 2,352-MW PPL Susquehanna nuclear power plant went into commercial service in the mid-1980s. Courtesy: PPL Susquehanna

As is often the case, today's exceptional performance belies the plant's roller-coaster past. Formerly an INPO "best in class" performer, in 2000 PPL received a stinging INPO assessment that indicated its performance had somehow, over time, fallen into the bottom quartile of the industry. In that 2000 assessment, INPO evaluators rated the facility's employee training, conduct of operations, work management, work standards, corrective action, and equipment reliability as "areas for improvement." A PPL vice president summed up the problems this way: "We isolated ourselves and stopped improving after we achieved an 'INPO 1' rating in 1990. We were stubborn about changing because we still generated electricity and we were still profitable." In essence, PPL had fallen prey to its own success by growing autocratic, insular, and increasingly rules-driven. As a result, the organization's culture which was once described as "team-focused, family-oriented, and having pride in ownership" now was characterized as "avoidant, cynical, and full of blame." Employees felt disenfranchised and were dissatisfied with management's priorities. One supervisor's comment seemed indicative of the mindset at PPL: "I come to work and do what's required no more, no less."

2. New transformer upgrade. Crews replaced Unit 1's four steam turbines in April 2004, adding 50 MW. New main transformers were also added to handle the increased electrical load. A similar upgrade was completed on Unit 2 in 2003. Courtesy: PPL Susquehanna Time for change Enter a new management team, led by Chief Nuclear Officer (CNO) Bryce Shriver, that took on the challenge of regaining the respect of the 1,200-person plant staff. Change began at the top: Only 3 holders of the top 25 positions in the plant remain from 1999, and one-third of the newcomers were recruited from outside PPL. With a new leadership team that understood the importance of open communications within and between all organizational levels, work then began on creating a new culture characterized by shared leadership, increased accountability for operational performance, and greater cooperation between management and employees. Shriver described the transformation as "a strategic culture change." Recognizing a problem is always the first step in finding a solution to it. But given the complexity of creating a cultural shift, PPL wisely figured the next step was to get a little help. It engaged Denver-based consulting firm Tosan Inc. to help PPL leaders identify the cultural patterns that contribute to organizational effectiveness and design a sustainable change management strategy. To benchmark the state of its own culture, PPL completed a comprehensive evaluation using a cultural assessment tool that identified gaps in behavioral norms between PPL's existing and desired cultures. By targeting areas for improvement, the results served as a compass for the management team. According to Shriver, "The cultural assessment helped us understand where we had been, where we wanted to go, and the leadership behaviors we needed to demonstrate to get there." The formal assessment of PPL's culture raised a number of concerns about the effectiveness of existing leadership styles and internal processes. For example, most operational decisions required the approval of the CNO, often with no input from others. Not only did this result in poor execution, it did little to encourage leadership behavior or initiative below the top management level. The assessment also indicated that senior managers had become territorial and reluctant to share resources. As illustrated by their budgeting processes, managers focused solely on their departmental needs with little concern for how their decisions affected the greater organization. Bargaining Unit employees perceived management as disloyal and indifferent to their issues.

PPL's leadership had no illusions about the challenges ahead. According to Shriver, "A key to making this cultural shift was our commitment to modeling the desired leadership behaviors, even if they didn't achieve short-term results. Our focus was on doing things that would lead to sustainable long-term success." Crafting a vision But what exactly would these leadership behaviors and attitudes look like in practice? PPL had yet to create a compelling organizational vision to guide and inform new leadership actions. To come up with one, the company conducted a series of "strategic visioning sessions" attended by managers at all levels of the organization. The consensus: PPL's focus should be to become "the best nuclear plant in the U.S.," and that focus should be aligned with four strategic objectives exemplary safety performance, operational excellence, industry-leading financials, and exceptional teamwork and commitment. In addition, the slogan "one team, one commitment" emerged as a rallying cry for how the management team would collaborate to make the vision a reality. Realizing that achieving the dream would require an infusion of leadership skills, PPL's senior management hired Tosan to conduct its Building Leadership Capacity training program. More than 200 top managers of PPL participated in the training sessions, which are designed to promote positive changes in individual leadership styles, to help managers build stronger relationships with peers, and to break down barriers between departments. Modifying executive behavior is only the first step in changing an organization's culture. Without corresponding shifts at the mid-manager, supervisory, and front-line levels, change initiatives are easily ignored. Similar training, which was offered to all plant employees, emphasized assisting people in letting go of the past, aligning themselves with the new vision, and building teamwork across departments. PPL executives demonstrated their commitment to the training by actively participating in these sessions, often as co-facilitators. "There were consistent messages and examples from senior management on what it means to be 'best in class,' " said one employee. "As a result, people have a better understanding of what's needed to improve performance."

3. Teamwork pays dividends. Changing an organization's culture emphasized aligning the staff and supervisors to the new vision, and building teamwork across departments. One of the PPL teams that designed and built the Systematic Troubleshooting Training Modules includes (from L to R) Bob Mestishen, station

mechanic; Steve Slusser, technical training instructor; Max Crawford, I&C technician; and Bob Lesko, I&C technician. Courtesy: PPL Susquehanna Bona fide rewards In all organizations, it's a truism that "What gets rewarded gets done." PPL knew training sessions alone wouldn't be enough to sustain cultural change; how employees were rewarded and recognized for job performance also would have to change. Senior management implemented a new system designed to reward at all levels behaviors that demonstrate taking ownership, accepting accountability, and fostering teamwork. À propos of this change, one manager said, "In the past, we asked, 'Whose fault is it?' Now we ask, 'How can we make this better?' What's more, employees now are saying 'I can help' and are taking more personal responsibility for getting involved." One way to facilitate and embed cultural change is to recruit and promote employees who embrace and model desired cultural behaviors and to phase out those who won't "get with the program." At PPL, several people in key management positions who resisted adopting new styles were reassigned or let go. The organizational changes included the replacement of the CNO with a manager who had earned respect from plant employees for his participative leadership style and his strong commitment to improving organizational effectiveness. Said one employee of the moves: "The personnel changes on the senior management team have had a huge impact on the station." The true litmus test of change, however, isn't how much employees or managers learn in training sessions. It's how effectively and consistently they apply that new knowledge on the job, particularly when confronted with tough decisions or problem scenarios that can easily trigger the less-constructive responses of the past. Said one senior manager: "In the past, it was the norm to tell people what to do but continue being a bad actor yourself. Now there is more evidence of leaders walking the talk. The key is to be more visible with employees and engage in helping them to succeed." This manager, for example, now makes a point of checking in every week with his teams to see what their issues are, look for opportunities to coach, and help remove any barriers to performance. The growing congruence between management talk and action also affected relationships with the Bargaining Units. "Senior management is much more sensitive to the needs of employees than it was in the past," believes Union Steward Rich Sopko. "People trust senior management more now, and workers are given much more leeway to do what they know how to do . . . it helps energize you and encourages you to offer suggestions for better ways to do things." No turning back PPL's quest for excellence through cultural change has shifted into high gear. The power plant has changed and upgraded its core work processes to make them more efficient, and managers have received "emotional intelligence" training to make them better able to respond constructively under stress and to coach others to change their behaviors. The organizational culture assessment, first administered in March 2001, is being readministered to gauge the plant's cultural gains. And PPL leaders are undergoing 360-degree feedback exercises to assess their strengths and areas for development.

Despite these important strides, management knows the success of such change initiatives is measured in years, rather than in weeks or months. "It takes years of sustained change to get people to buy in," said Shriver. "So much comes and goes that employees can easily view this as the latest management fad. We need to be willing to stay with it in terms of our succession planning, development plans, and the changes in infrastructure and reward systems made to support the cultural change. If we revert, we fail."

4. Real victories. Cultural change can be measured in real terms: The PPL Susquehana's INPO Index has risen from 85.9% to 99.9% over the past three years. Courtesy: PPL Susquehanna Real results Although there's plenty of anecdotal evidence that the strategic cultural change initiative has produced significant improvements, performance gains at PPL Susquehanna can be measured in quantitative terms as well. They include: An overall improvement in the plant's INPO Index (a cumulative score of key performance indicators) from 85.9% to 99.3% over the past four years. A significant decrease in human performance errors from 1.2 to 0.58 incidents per 10,000 employee work hours. A reduction in maintenance backlog from 400 items to 21 items over the threeyear period. Unit 1 ran continuously for 526 days, with only one trip attributed to human error. Unit 2 had run for continuously for 437 days since the last scheduled refueling outage as of July 1, 2004. In addition to the INPO benchmark, PPL Susquehanna also has gotten top-notch marks from another rater. The plant recently was listed in the top quartile of nuclear plants by Navigant Consulting Inc., based on its nonfuel O&M costs, capacity factor, and the absence of any regulatory performance problem as of the fourth quarter 2003 (the most recent figures available). Last year, Susquehanna also inched over the 18 million-MWh generation mark, breaking the old plant record.

According to Shriver, the early results of the culture change project have yielded significant improvement in overall plant performance and staff behavior. But Shriver and his staff understand that most culture change initiatives have to be continuously reinforced. Shriver acknowledges that much work remains before declaring victory, such as strengthening the supervisory role and continuing to reduce human errors.

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