Water companies have had a difficult couple of years. The challenging demands and targets of PR19 have led some to seek resource to the Competition and Markets Authority. Media articles highlighting executive pay, poor customer service, limited capital investment and high shareholder returns have fostered negative public perceptions and led to debates about renationalisation. The industry is often characterised as old-fashioned and slow, and there is a growing recognition that if it fails to evolve at pace it will struggle to meet the increasing requirements placed on it.
If all of this was not enough, the industry is now dealing with the impact of the COVID-19 pandemic and changed perceptions about the role of government and public ownership. That means there is a real need to make that step change now and key to this is to look at corporate culture and organisation to make sure the sector can meet these challenges.
Fulfilling a vital social purpose
It is important to recognise that the water industry fulfils a vital social purpose through the provision of clean water and wastewater management. It also employs directly and indirectly over 120,000 people and its gross value added to the UK economy is over £15 bn. The sector has a vital role to play in bring the country out of recession post COVID-19.
The secret to accelerating the adaption of the sector is to change the sector’s culture and to do so building on its strengths and extend what is working well. That means focusing on innovation, customer-centricity and agility; building on their existing cultural strengths and developing the next generation of leaders and reshaping their workforce to bring in the new skills it requires and be more representative of the community it serves.
Five step change
There are five steps water companies should be taking to reshape their culture:
1. Determine the cultural priorities - innovation, customer-focus and agility
Water companies need to be clear how they can create a culture that enables them to be more innovative around what they do and how they do it. That means being more customer-focused and agile in responding to and shaping the market, be it through digitisation or leading on sustainability. This starts with the Board defining and agreeing cultural priorities and setting a clear and powerful message that cultural change is a business goal.
2. Play to cultural strengths, engaging people and their pride for their work
Water companies already reliably deliver their services, they place a value on deep technical excellence and respond rapidly to crises. They should apply these same strengths to improving customer service, environmental sustainability, and driving performance. They can do this by finding people in the business who are demonstrating the qualities needed – be it innovation, customer centricity, collaboration or driving performance – and enabling them to be role models, who spread their positive influence.
3. Build an inclusive and empowering leadership fit for the future
Companies then need to define their expectations of leaders. Leaders need to be inclusive and find ways to bring in and nurture talent and empowering people to get the best out of them. They also need to be open to new ideas as companies look to bring in new types of capabilities – from data analytics and digital, to customer service. Finally, they need to be more skilled in driving collective performance by demonstrating genuine desire to support their people and providing the challenge to meet demanding standards.
4. Drive the behaviours that make a difference - listening, collaborating, and experimenting
The best way to shift culture is through focusing on a handful of core behaviours. For the water sector that means listening more to customers, collaborating with each other, and experimenting with new ideas. Finding the people in the organisation who are already proficient in this and using them more effectively is essential to implementing this behaviour across the organisation.
5. Reshape the workforce, recruiting based on behaviours and strengthening performance
If water companies continue to recruit the same people they always have, they will end up with the outcomes they have always achieved. Leading companies like IKEA recruit people with the right behaviours and attitudes rather than simply focusing on skills. There is also a need to bring in new capabilities – like data analytics and digital, not to mention having a workforce that is more representative of society, in terms of gender, BAME and disabilities. They then make sure their performance management is focused on rewarding this behaviour.
Too good an opportunity to miss
For too long water companies have tinkered around the edges of culture change. Now there is a real opportunity to make it a reality through a senior commitment and the right leadership who are focused on motivating their people to change their behaviour in a redesigned workforce.
If they do this and underline the contribution they make to society this could transform the perception of what they do. That could be the difference between remaining private or being renationalised. If not culture change now, when?