PG&E takes the lead in leadership; charged with overseeing a massive business and cultural transformation, the California utility establishes a dedicated leadership team to guide employees.

After Pacific Gas and Electric Co. (PG&E) emerged from bankruptcy following the California energy crisis, it began a massive business and cultural transformation that would fundamentally change business operations and processes, and would require a significant shift in employees' attitudes.

In late 2004, the company started identifying ways to change nearly every aspect of its operations. It upgraded call centers, began developing a new asset management registry, and employed technology in new ways, such as introducing wireless "smart meters" that automatically transmit energy usage data and that do not have to be "read" like ordinary meters.

At the beginning of 2005, the company also rolled out a new vision of becoming the leading utility in the U.S., and set about guiding the transformation efforts and uniting employees around a common goal.

The cultural transformation focused on developing a new set of company values and promoting behavior that supported these values. The values were defined as:

* We act with integrity and communicate honestly and openly.

* We are passionate about meeting our customers' needs and delivering for our shareholders.

* We are accountable for all of our own actions. These include safety, protecting the environment and supporting our communities.

* We work together as a team and are committed to excellence and innovation.

* We respect each other and celebrate our diversity.

Benchmarks showed that PG&E was not keeping up with rising industry standards and customer expectations. The company's infrastructure was aging, and there was room to be more cost-effective. Employees expressed the need for better communication, tools and resources to do their jobs more efficiently and to better serve customers. Results from PG&E's 2004 internal climate-measuring premier survey, conducted by the Mayflower Group, and the annual Towers Perrin Communication Effectiveness Survey indicated that there was little open, two-way communication; supervisors weren't passing on information, and messages across departments and across levels of management weren't consistent.

Despite the need for change, internal research showed that many employees were suspicious of the company's transformation program, viewing it as a "flavor of the month" effort, similar to previous reorganizations that were never fully mobilized or were considered synonymous with downsizing.

To help PG&E's 20,000plus employees embrace the transformation, the internal communication department identified the need for an Extended Leadership Team (ELT) that would include not just company officers but also directors, managers, supervisors and superintendents. The communication department established the criteria for inclusion in the ELT and a process for people to become involved. It then developed and implemented a robust, multipronged ELT Communications Program to engage and educate this select group of 2,400 people, and equip them with the communication skills and tools they needed to fulfill their new responsibilities as leaders in the transformation.

ELT members ultimately have the responsibility for cascading communications to all PG&E employees. They serve as informal opinion leaders who are critical to the success of companywide change.

Objectives

The internal communication department set the following goals for itself. First, it should support PG&E's transformation by informing, engaging and motivating members of the ELT to embrace and promote the changes that would enable the company to achieve its vision of becoming the leading utility in the U.S.

Second, it should communicate PG&E's new set of values and demonstrate the values in action, so that ELT members would have clarity around the day-to-day behavior that would unite the company and drive both the business and culture transformation.

Its specific goals for the ELT were to:

* Strengthen the identity and authority of the ELT as a group.

* Increase senior management visibility, and demonstrate their shared responsibility for leading the transformation.

* Improve ELT understanding of and buy-in to PG&E's transformation.

* Enlist ELT members in the effort to engage employees in PG&E's transformation.

* Build ELT members' managerial skills in communicating business transformation issues to employees.

* Provide leaders with key messages, training and tools to communicate more effectively with employees.

Solution and implementation

Given the size of PG&E's service area and the variety of job classifications (from office workers to field crew supervisors), the ELT communication approach had to be diverse, combining both push and pull electronic vehicles and face-to-face communication. The communication team gathered input for the design of the program through formal surveys and anecdotal feedback, and held focus groups with ELT members. Additionally, the company hired a manager of leadership communication to oversee the program. Major components of this program included:

* ELT Held Forums: All-day meetings held twice a year that focused on the challenges and progress of the company's business and cultural transformation, and allowed for people in different functions and locations to share ideas, concerns and best practices. Participants also received a variety of materials designed to help them report on the meeting to their teams and colleagues.

* ELT Forums: Quarterly meetings conducted in PG&E's main office in San Francisco, with ELT members phoning in from various field locations, focusing on current priorities or pressing issues.

* ELT Lunches: Organized, informal lunches that paired officers (vice presidents, senior vice presidents and the CEO) with local ELT members were held throughout the year across PG&E's service territory.

* ELT News Flashes/E-mails: These provided updates to ELT members and typically included talking points to assist them in answering employee questions.

* ELT Web Site: This web site, for ELT members only, offered timely and consistent information about critical company issues and transformation updates that could be shared with employees.

Measurement and evaluation

The internal communication team used a number of measurement tools to assess its success in achieving its objectives for the ELT Communications Program. The following are samples of feedback from these various measurement tools.

The ELT year-end survey, sent to all ELT members to evaluate the overall effectiveness of the ELT Communications Program for 2005 (based on a five-point scale, with "5" being "strongly agree"):

* The ELT communication program helps me have a better understanding of key company objectives, initiatives and decisions: 4.32.

* The communication tools and information provided through the ELF are timely and consistent: 4.11.

* The tools and information provided through the ELT help me to better communicate key company objectives, initiatives and decisions to my employees: 4.06.

ELT Forum feedback survey, June 2005:

* My role as an ELT member is clear: 83 percent.

* I understand my specific responsibility for sharing the transformation initiatives information with my team: 93 percent.

* I have the information I need to communicate with my team: 82 percent.

ELT Field Forum feedback survey, October 2005:

* The forum increased or significantly increased my understanding of PG&E's vision of the future: 98 percent.

* The forum increased or significantly increased my confidence in the transformation efforts: 94 percent.

* The forum increased or significantly increased my commitment as a leader to making the transformation a success: 92 percent.

Additionally, the Quality of Service Evaluation Survey, which measured senior management's satisfaction with the performance of the internal communication department, found that 92 percent of the officers and directors believed the launch of the ELT Communications Program was effective or very effective in helping support leaders throughout the company in their role as communicators.

This feedback from internal surveys indicates that ELT members are becoming better and more active communicators. Research has also shown that directors and superintendents are a critical link in the communication chain, so PG&E plans to reach out to this audience to increase their engagement in the change communication process.

about the author

Virginia Stefan is director of internal and external communications for PG&E in San Francisco.