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Staff Report 4558
City of Palo Alto (ID # 4558) Finance Committee Staff Report Report Type: Action Items Meeting Date: 3/18/2014 City of Palo Alto Page 1 Summary Title: City of Palo Alto Utilities Department Organization Assessment Title: Review of City of Palo Alto Utilities Department Organization Assessment From: City Manager Lead Department: Administrative Services Recommendation Consider the attached report on Leidos’s “Organization Assessment” of the City of Palo Alto Utilities Department (CPAU) (Attachment A). Staff proposes that the Finance Committee comment, approve and forward to the City Council a motion to include the recommendations included in the Utilities Organization Assessment. Background In past Budget hearings, the Finance Committee asked staff to review the Utilities organization to see if there were efficiencies that could be achieved and whether the department was staffed appropriately. Staff requested that an independent consultant be utilized for this organizational assessment, since an in-depth knowledge of the industry would be required to give a balanced assessment of the organizational needs and priorities of the Utilities org anization. SAIC Energy, Environment & Infrastructure, LLC was selected to conduct the assessment. Since the beginning of their work, they have been reorganized and renamed Leidos. The objectives of this organizational assessment were twofold. The first was to review the services CPAU provides to determine optimal staffing levels. The second objective was to evaluate the current trends and challenges in the utilities industry (i.e., electric, gas, water, wastewater collection, fiber), and to ensure that CPAU is appropriately positioned to meet those challenges. They addressed the following questions in their study: City of Palo Alto Page 2 How are CPAU’s current services valued by customers? Is CPAU positioned correctly to use state-of-the-art technology applications to serve its customers? What level of leadership should CPAU take with regard to environmental sustainability and green technologies? What are the current CPAU efficiencies and inefficiencies? Are operating costs appropriate? Are current staffing levels optimal to support current services? If additional services were desired, what additional resources would be needed to deliver them? Which services should be provided internally and which externally? In its report, Leidos concluded that CPAU is appropriately organized and effective, performing as well as or better than comparable utilities. Yet there are opportunities to improve operations, and the City and CPAU should develop a workforce management plan; implement an enterprise work management system; review and update performance tracking metrics; and consider additional outsourcing, particularly of project management functions. More detailed results of the review are presented below. Discussion Leidos reviewed CPAU’s performance against more than 20 best practice s for electric, water, gas, fiber and wastewater collection services, concluding that CPAU operations reflect best practices in 14 categories, is making good progress towards meeting best practices in eight categories and needs significant work to meet best practices in only three categories. At the highest level of consideration are five indicators that CPAU is performing very well: 1) With the exception of water rates, rates for utility services are competitive 2) Service reliability is very good 3) Customer satisfaction is improving 4) The utilities are in excellent financial condition 5) The utilities are effectively achieving the City’s environmental and social goals. City of Palo Alto Page 3 Under the current management and structure each of the utilities is performing as well or better than comparable utilities. A particularly significant indicator of this effectiveness is the Utilities’ positive financial health. Current Staffing Levels are Sufficient for Current Needs but Unfilled Open Positions Are Impacting Performance Leidos finds no evidence that supports recommending significant staffing or organizational changes. However, there is evidence that the electric utility’s outage restoration performance is impacting customer satisfaction. The 2012 Customer Satisfaction Survey indic ated that while customers experienced fewer outages, they were less satisfied with the time that it has taken to restore service. This is very likely a result of six open Lineperson/Cable Splicer positions -- over half of the 12 budgeted positions. While no evidence suggests that current authorized staffing levels are in excess of current needs, the ability to meet future needs could be very different if attrition due to retirements and employees leaving for better opportunities is realized as expected. Based on current City projections, more than half of the current Utilities workforce will be eligible for retirement by 2015. The utilities currently have 20 open positions out of 236 budgeted full -time positions – nearly ten percent of the workforce. Among the need for highly skilled workers are six open positions for electrical workers (Lineperson/Cable Splicer) which is more than half of the 12 budgeted positions and 3 of 8 budgeted positions for Senior Engineers. Workforce challenges that CPAU faces include: Recruiting, developing and retaining employees in a competitive employment environment in which other utilities offer more to prospective employees, especially utility workers and engineers who are in high demand at utilities throughout the st ate and country. Ensuring that there is an effective succession plan to maintain the capability of the organization given the potential attrition of managers and staff due to retirement over the next five years Maintaining a safe work environment while being responsive to customer expectations, and Retaining open positions long enough to find employees to fill them, especially with intense scrutiny over the justification for every position. The Utilities Effectively Use Outside Resources to Supplement Capabilities One strategy that CPAU management employs to address staffing constraints is to use outside contract resources to provide temporary labor to address peak workloads and provide City of Palo Alto Page 4 expertise that staff cannot. One critical area where outside contractors are relied upon is qualified electrical workers to supplement existing crews to provide electric distribution infrastructure construction and maintenance. Other examples include: Outside legal services Engineering and planning consulting services Leveraging NCPA and CMUA regulatory and legislative support Operations, maintenance, inspection and construction support Information technology project implementation support Customer Satisfaction and Services Valued by the Community Along with utilities across the nation, during the protracted economic downturn, CPAU experienced a decline in customer satisfaction from 2008 to 2011. However, in the most recent customer satisfaction survey, CPAU residential customer satisfaction exceeded that of all other California utilities. Recommendations As a result of Leidos’s best practices review of CPAU it recommended the following priorities for City and CPAU consideration: Workforce Management Plan Faced with many unfilled positions, the potential for numerous retirements in the next few years and a competitive job market that offers incentives for CPAU staff to leave for higher paying jobs, CPAU should consider workforce management as its highest priority. Three key tactics that should be implemented as soon as possible are: 1. Develop a Workload Forecast – CPAU should develop a workload forecast that predicts the number, type and experience level of staff that will be required to accomplish strategic plan goals and capital improvement plans over the next five years. 2. Develop a Staff Recruiting, Development and Retention Plan -- The utility should work with City and governance to address recruiting, developing and retaining staff. Recruiting strategies should extend beyond the current capabilities of City Human Resources division to include significant use of professional recruiters and recruiting networks. A compensation survey should be conducted to develop an understanding of what compensation levels are required to be competitive in the market for skilled u tility professionals and compensation levels adjusted accordingly. To retain existing employees, CPAU and the City should ensure that current staff are being competitively City of Palo Alto Page 5 compensated, that benefits are competitive and that training and staff development opportunities are sufficient to retain staff. 3. Develop a Succession Plan -- To address the need to plan for the succession of key management positions, CPAU should complete its ‘working-draft’ succession plan. The current draft succession plan is a good start but needs to be expanded to include all key supervisory and management positions. Implement a Work Management System In order to determine whether the utilities are ‘optimally staffed’, the City and utilities should implement an enterprise work management system. This could be a new system or could be accomplished by activating enterprise work management capabilities of the existing SAP system. Enterprise work management provides workload forecasting, tracking and performance measurement for all personnel, allowing CPAU to track and management its workforce. Review and Update Performance Tracking If the City and the utility are truly committed to making performance measurement an effective management tool, it is absolutely necessary to ensure that the identification of key performance indicators becomes a formal business process with dedicated resources to ensure implementation. Absent this allocation and commitment of resources, it is very likely that other priorities will surface and performance measurement and tracking will suffer. The City should incorporate monitoring and reporting the success of implementation of any actions taken in its balanced scorecard system (BSC) and update performance on the regular Strategic Planning Performance update schedule to the City Council. While CPAU currently tracks about 20 performance metrics, Leidos recommended that CPAU reconsider its metrics, selecting a manageable number that best indicate desired performance and then measure and report those metrics frequently and transparently. Consider Additional Outsourcing to Address Workforce Constraints In addition to the outside services currently used by the Utilities, the industry regularly outsources services including meter testing, calibration and readin g; water system operations; call center services; customer billing; information technology services; risk management; and energy marketing and operations. One outsourcing decision that could have a very significant positive impact would be project management. There are many professional project management firms that can stand -up a project management office for CPAU, provide project management tools, business processes City of Palo Alto Page 6 and training and provide staff to assist with project management. This would relieve workload from engineering which would allow them to focus on project delivery. Bringing in outside help to temporarily fill other positions needs to be considered where it is feasible. While there may be many willing workers to fill positions on a tempor ary basis, it is not always easy to find the right combination of experience, capabilities, cost, and availability to effectively support CPAU’s needs. Bringing in outside help often exacerbates the problem of limited workforce because of the burden placed on existing workers who will be further taxed to supervise, train and oversee outside services. Detailed Staffing and Organizational Opportunities Attachment B Table ES-3 lists suggested staffing and organizational recommendations, including staffing and cost impacts (if applicable and known). Next Steps After the Finance Committee’s review and comments, staff will continue with implementation of many of the recommendations. Please see Attachment B: City of Palo Alto Utilities Response to Leidos Organizational Assessment for a list of follow-up actions planned by CPAU. Resource Impact Staff will continue to evaluate the recommendations that are in progress including a work management system, enhancements to Utilities customer website, and Smart Grid projects. When recommendations for each of these projects are developed, the resource impact of implementing the projects will be determined and submitted to Council as part of the recommendations and requests for contract approvals, if appropriate. Attachments: Attachment A: City of Palo Alto Utilities Department Organization Assessment, December 2013 (PDF) Attachment B: City of Palo Alto Utilities Response to Leidos Organizational Assessment (DOCX) City of Palo Alto Utilities Department Organization Assessment City of Palo Alto, California December 2013 City of Palo Alto Utilities Department Organization Assessment City of Palo Alto, California December 2013 This report has been prepared for the use of the client for the specific purposes identified in the report. The conclusions, observations and recommendations contained herein attributed to Leidos constitute the opinions of Leidos. To the extent that statements, information and opinions provided by the client or others have been used in the preparation of this report, Leidos has relied upon the same to be accurate, and for which no assurances are intended and no representations or warranties are made. Leidos makes no certification and gives no assurances except as explicitly set forth in this report. © 2013 Leidos, Inc. All rights reserved. Organization Assessment City of Palo Alto Utilities Department Table of Contents Table of Contents List of Tables List of Figures Executive Summary Section 1 INTRODUCTION .................................................................................................... 1-1 1.1 Approach to this Study............................................................................. 1-2 Section 2 CURRENT SITUATION ........................................................................................ 2-1 2.1 Services Delivered ................................................................................... 2-1 2.2 Current Organizational Setting and Staffing ............................................ 2-2 2.2.2 Electric Operations..................................................................... 2-10 2.2.3 Resource Management Division ................................................ 2-12 2.3 Services Valued by the Community ...................................................... 2-16 2.3.1 Customer Satisfaction ................................................................ 2-16 2.3.2 Priorities for Customers ............................................................. 2-18 2.3.3 Values Alignment of Programs and Services ............................ 2-19 2.3.4 Services Valued But Not Provided ............................................ 2-20 2.3.5 Demands From Non-Customers ................................................ 2-20 2.4 Emerging and Future Market Demands and Opportunities ................... 2-24 2.5 Department’s Ability to Adapt and Excel .............................................. 2-26 2.5.1 Summary of CTT Results .......................................................... 2-27 2.5.2 Conclusions from Cultural Assessment ..................................... 2-30 Section 3 BENCHMARKING ANALYSIS ............................................................................ 3-1 3.1 Performance Benchmarks ........................................................................ 3-1 3.2 Benchmarking Results of Current Performance ...................................... 3-1 3.2.1 Electric ......................................................................................... 3-5 3.2.2 Water .......................................................................................... 3-21 3.2.3 Wastewater ................................................................................. 3-32 3.2.4 Natural Gas ................................................................................ 3-40 3.2.5 Dark Fiber .................................................................................. 3-49 3.3 Best Practices Review ............................................................................ 3-49 3.3.2 Best Practices Recommendations .............................................. 3-67 File: 001420/3153211006 Table of Contents Section 4 CONCLUSIONS AND RECOMMENDATIONS ................................................. 4-1 4.1 Appropriateness of Current CPAU Staffing ............................................ 4-3 4.1.1 Productivity by Utility ................................................................. 4-4 4.1.2 Adequacy of Current Staffing and Opportunities for External Resources ...................................................................... 4-5 4.1.3 Adequate Compensation of Employees ..................................... 4-13 4.2 Staffing to Support Expansions in Services and Future New Markets .................................................................................................. 4-15 4.3 Cost Allocation and Services between CPAU and Other City Departments ........................................................................................... 4-18 4.4 Policy, Management and Capacity Building Recommendations .......... 4-19 4.4.1 Staff Retention, Recruiting, and Training .................................. 4-19 4.4.2 CIP Financing ............................................................................ 4-20 4.4.3 Strengthening CPAU’s Culture ................................................. 4-21 4.4.4 Expand Use of Master Service Agreements .............................. 4-22 4.4.5 Purchasing .................................................................................. 4-22 4.4.6 Improve Sharing of Best Practices ............................................ 4-23 Section 5 IMPLEMENTATION PLANNING ....................................................................... 5-1 List of Appendices A Cultural Values Assessment – Barrett Values Center B City of Palo Alto Utilities, Regulatory and Internal Reporting Requirements C Benchmarking Data Sources D Best Practices Review ii Leidos, Inc. Final 2/27/14 Table of Contents List of Tables ES-1 2011 Benchmarking Overview ..............................................................................4 ES-2 Best Practices Overview ......................................................................................12 ES-3 Summary of Recommendations ...........................................................................16 2-1 Non-Utilities Employees that Receive Funding from CPAU ............................... 2-3 2-2 Summary of General Fund Transfers from CPAU ............................................... 2-5 2-3 Additional Services Desired ............................................................................... 2-20 2-4 Reporting Resources by Utility Service.............................................................. 2-23 2-5 Levels of Consciousness ..................................................................................... 2-27 3-1 2011 Benchmarking Overview ............................................................................. 3-3 3-2 Best Practices Overview ..................................................................................... 3-50 4-1 Comparison of Current CPAU Salaries to APPA Surveyed Salaries (dollars) ........................................................................................................... 4-14 4-2 Potential Future Annual FTEs and Contractor Costs associated with Emerging and Future Services ........................................................................ 4-16 5-1 Summary of Implementation Actions ................................................................... 5-2 List of Figures 1-1. Project Workflow ................................................................................................. 1-3 2-1. CPAU Organizational Chart ................................................................................ 2-2 2-2. Commercial and Key Account Customer Satisfaction ...................................... 2-17 2-3. Value of Utility Services.................................................................................... 2-18 2-4. Values Alignment of Programs and Services .................................................... 2-19 2-5. Personal Values.................................................................................................. 2-28 2-6. Current Culture Values ...................................................................................... 2-28 2-7. Desired Culture Values ...................................................................................... 2-30 3-1. Revenue per kWh for All Retail Customers ........................................................ 3-5 3-2. Revenue per kWh Sold – Residential .................................................................. 3-6 3-3. Net Income per Revenue Dollar (Electric) .......................................................... 3-7 3-4. Total O&M Expense per kWh Sold ..................................................................... 3-8 3-5. Total O&M Expense per Retail Customer ........................................................... 3-9 3-6. kWh Sold per FTE ............................................................................................. 3-10 3-7. Retail Electric Customers per FTE .................................................................... 3-11 3-8. A&G Expense per Retail Customer ................................................................... 3-12 3-9. A&G Expense per kWh ..................................................................................... 3-13 3-10. Customer Accounting, Service, and Sales Expense per Retail Customer ....... 3-14 3-11. Customer Accounting, Service, and Sales Expense per kWh.......................... 3-15 3-12. Current Ratio – Electric ................................................................................... 3-16 3-13. Average Monthly Residential Electricity Bill based on Average Monthly Usage ............................................................................................... 3-17 3-14. Annual Energy Efficiency Cost per Customer ................................................ 3-18 3-15. System Average Interruption Duration Index (SAIDI) ................................... 3-19 3-16. System Interruption and Frequency Index (SAIFI) ........................................ 3-20 3-17. Revenue per Million Gallons of Water Delivered ........................................... 3-22 3-18. Net Income per Revenue Dollar ...................................................................... 3-23 3-19. Retail Water Customers per FTE ..................................................................... 3-24 File: 001420/3153211006 Leidos, Inc. iii Table of Contents 3-20. O&M Expense per Million Gallons................................................................. 3-25 3-21. O&M Expense per Water Retail Customer ..................................................... 3-26 3-22. O&M Expense per Mile of Water Main .......................................................... 3-27 3-23. A&G Expense per Retail Water Customer ...................................................... 3-28 3-24. A&G Expense per Million Gallons Processed ................................................ 3-29 3-25. Million Gallons per Day Delivered per FTE ................................................... 3-30 3-26. Average Monthly Residential Water Bill ........................................................ 3-31 3-27. Revenue per Million Gallons of Wastewater Collected or Processed ............. 3-32 3-28. Net Income per Revenue Dollar ...................................................................... 3-33 3-29. Retail Wastewater Customers per FTE ........................................................... 3-34 3-30. O&M Expense per Million Gallons................................................................. 3-35 3-31. O&M Expense per Water Retail Customer ..................................................... 3-36 3-32. Million Gallons per Day of Wastewater per FTE............................................ 3-37 3-33. Miles of Sanitary Sewer Line per FTE ............................................................ 3-38 3-34. Average Monthly Residential Wastewater Bill ............................................... 3-39 3-35. Natural Gas Revenue per CCF ........................................................................ 3-40 3-36. Net Income per Revenue Dollar ...................................................................... 3-41 3-37. Retail Natural Gas Customers per FTE ........................................................... 3-42 3-38. A&G Expense per Retail Customer................................................................. 3-43 3-39. A&G Expense per CCF ................................................................................... 3-44 3-40. O&M Expense per CCF .................................................................................. 3-45 3-41. O&M Expenses per Mile of Main ................................................................... 3-46 3-42. O&M Expenses per Retail Customer .............................................................. 3-47 3-43. Average Monthly Natural Gas Bill at 40 Therms............................................ 3-48 4-1. Increasing WWO Staff Leads to Reduced Sanitary Sewer Overflows ............. 4-10 iv Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY Introduction This report evaluates the operation of the City of Palo Alto Utilities Department (CPAU). Commissioned by the City of Palo Alto (the City) and conducted by Leidos Engineering, LLC (Leidos), this analysis concludes that CPAU is a well-run, reliable, and innovative organization that reflects strong values of community, innovation, responsibility, and environmental protection. Like most utilities, the City’s Utilities Department is facing fiscal and industry challenges including: Rising employee costs. Difficulty attracting and retaining employees. Aging and increasingly mobile workforce. Aging infrastructure. Increasing environmental, regulatory, and legislative complexity. Rising power supply costs. Demands from consumers to both provide innovative services and keep utility rates low. This report concludes that CPAU is an appropriately organized and effective Utility that performs as well or better than comparable utilities. The Utility provides very reliable service to the residents and businesses in Palo Alto at competitive rates while reflecting the values of the community it serves. As with most utilities, there are opportunities to improve operations and accordingly, CPAU and the City should further examine strategies to improve performance and address issues associated with attracting, developing, and retaining its workforce. CPAU provides electricity, natural gas, water, street lighting, fiber-optic communications, and wastewater collection services to the residents and businesses of the City of Palo Alto. Founded more than 100 years ago, CPAU is one of 40 consumer-owned utilities in California and is the only municipal utility in California that provides all of these essential services. Based on the 2011 operating results, CPAU serves a population of approximately 64,000 in an area of 26 square miles with approximately 235 employees and generates about $200 million dollars a year in revenue 1 of which $13 million is transferred to the General Fund to cover the cost of services provided to CPAU and another $17.7 million is contributed to the City’s general fund to support valued community services including public safety, fire protection, parks and libraries. 1 At the time of final report preparation, the 2013 adopted budget forecasts revenue of $234 million and 267 FTE’s. The revenue growth and increase in authorized positions are both positive indicators for the utilities. File: 001420/3153211006 EXECUTIVE SUMMARY Objectives of Study The objectives of this organizational assessment are twofold. The first is to review the services CPAU provides to determine optimal staffing levels. The second objective is to evaluate the current trends and challenges in the utilities industry (i.e., electric, gas, water, wastewater collection, fiber), and in the future, to ensure that CPAU is appropriately positioned to meet these challenges. The main questions addressed in this study include: How are services currently delivered valued by customers? Is CPAU positioned correctly to be appropriately innovative and effectively and efficiently using state-of-the art technology applications to serve its customers? What level of leadership should CPAU take as compared to its peers in the area of environmental sustainability and green technologies? What are the current CPAU efficiencies and inefficiencies? Are operating costs appropriate? Is current staffing optimal to support current services? If additional services were desired, what additional resources would be needed to deliver them? Which services should be provided internally versus externally? While discussing the threat to the organization as a result of CPAU’s aging workforce and expected retirements over the next five years was not a stated objective of this study, we believe that all recommendations in this study should be consistent with addressing this threat. The City’s Human Resources (HR) Department projects that 58 percent of CPAU’s employees will be eligible for retirement in the next five years. Improving training and succession processes is paramount as is increasing the City’s ability to hire highly competent replacements by critically evaluating the gap between City compensation packages and compensation currently offered by the utilities industry in general. Based on discussions with City managers directing this study, the relative priority of the recommendations are the following: 1. Opportunities to improve the efficiency of core CPAU services. 2. Opportunities to improve the efficiency or effectiveness of interfaces with other departments (e.g., HR, Information Technology (IT), and Purchasing Division in the City’s Administrative Services Department (ASD). 3. Policy, management, and capacity building actions. Findings and Recommendations Overall, CPAU is well organized, effectively managed and operating well. Benchmarking against neighboring service providers and peer utilities indicates that ES-2 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY CPAU performs as good or better in nearly every performance metric. Leidos reviewed CPAU’s performance against more than 20 best practices for electric, water, gas, fiber and wastewater collection services, concluding that CPAU operations reflect best practices in 14 categories, is making good progress towards meeting best practices in eight categories and needs significant work to meet best practices in only three categories. Generally speaking, where CPAU is not performing at best practice levels, it is because of human resource challenges, specifically having sufficient staff with necessary skill levels and capacity to perform the work. At the highest level of consideration are five indicators that CPAU is performing very well: 1) Rates for utility services are competitive. 2) Service reliability is very good. 3) Customer satisfaction is improving. 4) The Utilities are in excellent financial condition. 5) The Utilities are effectively achieving the City’s environmental and social goals. The Current Utility Organization is Effective While the City of Palo Alto is unique in that it provides electricity, water, natural gas, fiber optic and wastewater collection services to its residents, it closely resembles a significant number of multi-service municipal utilities to which it can be effectively compared. The current organization is effective based on our investigation and comparative benchmarking. One unusual but not necessarily ineffective characteristic is that the wastewater collection services are combined with the other ‘supply’ resources – electricity, water and natural gas. Other cities that have a wastewater collection function generally organize its personnel under a public works or environmental utilities organization. CPAU effectively combines administrative and operations functions to a greater extent than other multi-service utilities. The Resource Management Division (RMD), for example, addresses electric, water, gas, telecommunications, and wastewater issues; no other utility in California does this. Engineering and Operations for all of the utilities are also highly integrated which is very different from other California utilities having service-specific divisions that report to the general manager; water operations, gas operations, etc. Under the current management and structure each of the utilities is performing as well or better than comparable utilities. A particularly significant indicator of this effectiveness is the positive financial health of the Utilities – there may be no better indicator of how well the organization is managed than strong financials, competitive rates and rising customer satisfaction. File: 001420/3153211006 Leidos, Inc. ES-3 EXECUTIVE SUMMARY Productivity and Efficiencies Leidos compared CPAU to nine other similar municipally owned utilities and Pacific Gas and Electric Company (PG&E). Data from the American Water Works Association (AWWA) and the American Public Power Association (APPA) were also used, where appropriate. The information provided in much of this benchmarking analysis represents a snapshot in time, reporting publicly available data from FY2011. Benchmarking is an important management tool but has several important characteristics that must be considered when drawing conclusions about performance based on benchmarking results. Benchmarking results should not be taken as a precise indicator of performance because every utility is differently organized, staffed, funded, managed and geographically located. Leidos suggests that the best use of comparative benchmarking is to consider whether one is above or below average and where there is a significant variation look first to differences in structure, reporting and demographics to explain differences and then consider other factors such as performance. Benchmarking should not be evaluated at a single point in time. Several years of comparison are far better than a one year comparison. In some cases, it may be possible that a single year does not account for any one-year anomalies for any of the utilities. In these cases, a view of more than a single year may be beneficial. A multi-year comparison is beyond the scope of this analysis. Table ES-1 2011 Benchmarking Overview CPAU Results (CY 2011) Measure Better than Average At or Near Average Worse Than Average Electric Revenue per kilowatt hour (kWh) Sold – All Customers (Fig 3-1) √ Revenue per kilowatt hour (kWh) Sold – Residential (Fig 3-2) √ Net Income per Revenue Dollar (Fig 3-3) √ Total O&M Expense per kilowatt hour (kWh) Sold (Fig 3-4) √ Total O&M Expense per Retail Customer (Fig 3-5) √ kWh Sold per FTE (Fig 3-6) √ Retail Electric Customers per FTE (Fig. 3-7) √ A&G Expense per Retail Customer (Fig. 3-8) √ A&G Expense per kWh (Fig. 3-9) √ Customer Accounting, Service, and Sales Expense per Retail Customer (Fig. 3-10) √ ES-4 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY Table ES-1 2011 Benchmarking Overview CPAU Results (CY 2011) Measure Better than Average At or Near Average Worse Than Average Customer Accounting, Service, and Sales Expense per kWh (Fig. 3- 11) √ Current Ratio (Fig. 3-12) √ Average Monthly Residential Electricity Bill based on Average Monthly Usage (Fig. 3-13) √ Annual Energy Efficiency Cost per Customer (Fig. 3-14) √ System Average Interruption Duration Index (SAIDI) (Fig. 3-15) √ System Interruption and Frequency Index (SAIFI) (Fig. 3-16) √ Water Revenue per Million Gallons Delivered (Fig. 3-17) √ Net Income per Revenue Dollar (Fig. 3-18) √ Retail Water Customers per FTE (Fig. 3-19) √ O&M Expense per Million Gallons (Fig. 3-20) √ O&M Expense per Water Retail Customer (Fig. 3-21) √ O&M Expense per Mile of Water Main (Fig. 3-22) √ A&G Expense per Retail Water Customer (Fig. 3-23) √ A&G Expense per Million Gallons Processed (Fig. 3-24) √ Million Gallons per Day Delivered per FTE (Fig. 3-25) √ Average Monthly Residential Water Bill (Fig. 3-26) √ Wastewater Revenue per Million Gallons of Wastewater Collected (Fig. 3-27) √ Net Income per Revenue Dollar (Fig. 3-28) √ Retail Wastewater Customers per FTE (Fig. 3-29) √ O&M Expense per Million Gallons (Fig. 3-30) √ O&M Expense per Wastewater Retail Customer (Fig. 3-31) √ Million Gallons per Day Collected per FTE (Fig. 3-32) √ Miles of Sanitary Sewer Line per FTE (Fig. 3-33) √ Average Monthly Residential Wastewater Bill (Fig. 3-34) √ Natural Gas Natural Gas Revenue per CCF Delivered (Fig. 3-35) √ Net Income per Revenue Dollar (Fig. 3-36) √ File: 001420/3153211006 Leidos, Inc. ES-5 EXECUTIVE SUMMARY Table ES-1 2011 Benchmarking Overview CPAU Results (CY 2011) Measure Better than Average At or Near Average Worse Than Average Retail Natural Gas Customers per FTE (Fig. 3-37) √ A&G Expense per Retail Customer (Fig. 3-38) √ A&G Expense per CCF (Fig. 3-39) √ O&M Expense per CCF (Fig. 3-40) √ O&M Expenses per Mile of Main (Fig. 3-41) √ Natural Gas O&M Expense per Retail Customer (Fig. 3-42) √ Average Monthly Natural Gas Bill (Fig. 3-43) √ Source: Leidos Electric The City’s electric utility enjoys excellent reliability, competitive rates, exceptionally healthy reserve funds and is achieving many of its strategic objectives. However, electric utility staffing should be closely monitored as there are some indications that this performance could erode due to staff limitations. Examples include the following observations: Over half of the utility workforce will be eligible for retirement in the next five years. Electric operations crews are experiencing extreme difficulty in recruiting and retaining qualified electrical workers. Nearly one half of the lineperson/cable splicer positions are currently vacant (as of January 2013). Capital Infrastructure budgets are being reduced due in part to the number of unfilled authorized positions. Outage restoration time goals are not being met due to insufficient resources. Water The City of Palo Alto generally has a high commodity cost for water provided by the SFPUC, which along with conservation measures tends to drive consumption down. Additionally, in allocating FTEs to the water utility operations, Palo Alto is more conservative in its accounting than the allocations from some of the other utilities in the benchmarking study who do not account for administrative and customer service staff in their accounting of water system operations. These factors contribute to the water productivity benchmarks. ES-6 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY CPAU’s water utility’s benchmarking performance is worse than average in three of the ten metrics measured: 1) O&M expense per mile of water main, 2) ratio of system throughput to number of FTEs, and 3) average monthly bill. We believe that O&M expenses per mile of water main are higher due to CPAU’s increased attention to aging infrastructure. The ratio of FTE’s to volume of water delivered should be considered carefully as volume is not a strong driver of staffing as are miles of water main and number of customers. We believe that on average, CPAU customers use less water than many of the comparable utilities in response to conservation efforts, relatively high cost of water and concerns of scarcity of supply all three of which are typical behaviors for residents of Bay Area cities. CPAU’s average monthly bill is a direct reflection of water rates, which are higher than some other utilities due primarily to the higher wholesale cost of water supply. It is also important to understand the situations and challenges are never exactly the same across a group of water utility organizations because of the size and age of the facilities. Leidos concludes that the water utility is performing well and should continue its efforts to manage O&M costs and wholesale water supply costs. Wastewater The productivity measure comparisons from the benchmarking analysis indicate that total current staffing numbers for CPAU’s wastewater utility may be slightly high for the services provided. This conclusion is driven by our findings that the wastewater utility’s productivity falls short of the comparison group average productivity using one measure and nearly equals group productivity using a second measure. The lower productivity finding is for retail wastewater customers per FTE. The equivalent finding is for million gallons per day of wastewater per FTE. (However, the wastewater utility productivity exceeds the published AWWA statistics for both measures.) Gas The gas utility’s productivity falls far short of that shown for Long Beach and PG&E, but is superior to the other utilities we benchmarked. Since Long Beach and PG&E are larger gas utilities, they may be able to achieve productivity efficiencies not available to smaller natural gas utilities. Productivity measure comparisons indicate that total current staffing for CPAU’s gas utility are appropriate to perform the services undertaken. Current Staffing Levels are Sufficient for Current Needs But Unfilled Open Positions Are Impacting Performance Based on interviews with staff and management of the City and its Utilities, considering the benchmarked performance of the Utilities, Leidos finds no evidence that supports recommending significant staffing or organizational changes. However, based on performance results reported in the June 2011 Strategic Plan Update and the 2012 Customer Satisfaction Survey, there is evidence that the electric utility’s outage restoration performance is impacting customer satisfaction. In the June 2011 strategic plan update, the utility reports that while the number of outages is declining and File: 001420/3153211006 Leidos, Inc. ES-7 EXECUTIVE SUMMARY restoration times are decreasing, the outage restoration times remain below strategic plan targets due to insufficient experienced electrical workers. Further, the 2012 Customer Satisfaction Survey indicates that while customers experienced fewer outages, they are less satisfied with the time that it has taken to restore service. This is very likely a result of six open positions for electrical workers (Lineperson/Cable Splicer) which is more than half of the 12 budgeted positions. A challenge that CPAU faces in determining whether they have appropriate staffing levels is being able to demonstrate, through informative accounting and work management, what staff are expected to do, how staff spend their time and how much time do they spend doing it. This is not to say that management and staff lack awareness of employee performance, but the inability to demonstrate these performance measures in an audit environment is readily apparent and indicates that the Utilities should consider a more robust approach to work management, which would provide more performance information to allow management to better assess the balance between workforce requirements and workforce effectiveness. Recruiting, Developing and Retaining Staff is a Significant Challenge While no evidence suggests that current authorized staffing levels are in excess of current needs, the ability to meet future needs could be very different if attrition due to retirements and employees leaving for better opportunities is realized as expected. Based on current City projections, more than half of the current Utilities workforce will be eligible for retirement by 2015. The Utilities currently have 20 open positions out of 236 budgeted full-time positions – nearly ten percent of the workforce. Among the need for highly skilled workers are six open positions for electrical workers (Lineperson/Cable Splicer), which is more than half of the 12 budgeted positions and 3 of 8 budgeted positions for Senior Engineers. Workforce challenges that CPAU faces include: Recruiting, developing and retaining employees in a competitive employment environment in which other utilities offer more to prospective employees, especially utility workers and engineers who are in high demand at utilities throughout the state and country. Ensuring that there is an effective succession plan to maintain the capability of the organization given the potential attrition of managers and staff due to retirement over the next five years. Maintaining a safe work environment while being responsive to customer expectations. Retaining open positions long enough to find employees to fill them, especially with intense scrutiny over the justification for every position. ES-8 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY Increasing Regulatory Uncertainty and Compliance Requirements Creates Significant New Workload for Utilities The many demands and pressures of market and technological changes in the utility industry, as well as meeting regulatory requirements that California utilities must satisfy, have a significant influence on CPAU’s organization, operations, and expenditures. CPAU manages a litany of issues including renewable portfolio standard, energy efficiency and conservation, public benefits programs, cyber security, critical infrastructure protection, workforce safety, natural gas pipeline safety, and water quality. Complying with state and federal regulations, including those regulations and standards promulgated by the Federal Energy Regulatory Commission (FERC), the Western Electricity Coordinating Council (WECC), the North American Electric Reliability Corporation (NERC), and the California Independent System Operator (CAISO) for electricity, and the U.S. Department of Transportation (USDOT) for gas, require extensive data collection, analysis, and reporting demanding significant time and effort from CPAU staff. In water and wastewater, CPAU must comply with a myriad of regulations including the Safe Drinking Water Act (SDWA) and the Federal Clean Water Act (CWA). The regulatory situation will continue to shape and influence CPAU and require the organization to adapt continually and will continue to put pressure on staffing resources as well as increase CPAU’s exposure to regulatory risk. The Utilities Effectively Use Outside Resources to Supplement Capabilities One strategy that CPAU management employs to address staffing constraints is to use outside contract resources to provide temporary labor to address peak workloads and provide expertise that staff cannot. One critical area where outside contractors are relied upon is qualified electrical workers to supplement existing crews to provide electric distribution infrastructure construction and maintenance. Other examples include: Outside experts for legal services. Consulting services for engineering and planning. Leveraging NCPA and CMUA regulatory and legislative support capabilities. Contractors to support operations, maintenance, inspection and construction activities Professional services to support the implementation of information technology projects Plan to hire an outside expert to support compliance issues. File: 001420/3153211006 Leidos, Inc. ES-9 EXECUTIVE SUMMARY Customer Satisfaction and Services Valued by the Community Like other communities, the City’s utility customers expect exceptional service at a reasonable cost from its utility. As such, CPAU’s top vision is to “deliver Extraordinary Value to Our Customers.” 2 Along with utilities across the nation, during the protracted economic downturn, CPAU experienced a decline in customer satisfaction from 2008 to 2011. However, in the most recent customer satisfaction survey, CPAU residential customer satisfaction exceeded that of all other California utility levels. Among residential customers, satisfaction with CPAU declined for several measures when compared to results of surveys conducted in 2008 and 2010. The latest RKS survey for residential customers (for 2012) has been released and shows an improvement in customer satisfaction ratings. Summary from RKS includes this: “CPAU’s 2012 Residential Customer Oversample finds customer satisfaction reaching a high water mark: CPAU’s mean overall satisfaction stands at 8.6 (out of 10), significantly higher than statewide muni, NCPA and IOU levels.” For other attributes tested, CPAU’s results have increased since 2010. Factors exhibiting an upward trend include: Efforts to protect the environment. Efforts to keep rates down. Involvement in community/good community citizen. Among commercial and key account customers, satisfaction levels show improvement on numerous attributes since 2007 and 2009. The measures that appear to be trending more positively are: Overall satisfaction. Being an organization you can trust. Works hard to improve services. After a drop in 2009, two attributes that have improved in 2012 are: Well-run utility. Providing good value for the money. 2 Utilities Strategic Plan Performance Update, February 1, 2012, Strategy Map. ES-10 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY CPAU is well aligned with what the municipal utility industry in California views as key roles and activities including a focus on safety, reliability, as well as providing fiscal benefits (i.e., reasonable rates, general fund transfers) to its community. Moreover, the residents of the City of Palo Alto and CPAU employees are supportive of CPAU’s direction based on surveys. In our survey, Leidos found the City’s residents support CPAU’s priorities, including technological and environmental initiatives, such as smart grid adoption and energy efficiency programs. CPAU is appropriately responding to new market and technological developments. A cultural assessment of CPAU employees Leidos conducted for this study found that employees’ values are generally aligned with the organizational goals and are ready to adapt and develop with the organization. CPAU has a dedicated group of employees and the concentration of values selected by employees through the assessment tool indicates they focus on finding purpose and meaning in life. However, when looking at matches between the employees’ personal values and the values experienced in their work environment, there is very little overlap, which is troubling. Employees want to build a stronger connection to their work opportunities to enhance their career and are asking for opportunities to develop effective systems and processes. Another matter of concern is that the current culture has a high level of limiting values that direct the employees’ energy toward negative rather than positive factors. The cultural assessment indicates that approximately one third of the efforts and energy is negatively focused (e.g., frustration with bureaucracy), which affects overall organizational performance. However, the assessment also shows that the employees have a desire to improve the way they work together to build a strong internal community. The employees are asking for a more open work environment and to be held accountable. While CPAU is a City department, it is different from other departments in that it is more similar to a business that must offer competitive goods and services to survive, let alone excel. The high values its employees place on accountability enable CPAU to succeed in this environment. Utilities Performance Depends on Effective Support from Other City Departments CPAU management and individual divisions work with and rely on other City departments to meet their functional responsibilities, particularly the services provided by the HR Department, ASD (including Budgeting, Purchasing, Payroll, Accounting, and Treasury), and the IT Department. The City Attorney’s office also provides regular support to CPAU. In certain cases, CPAU directly funds positions managed under these other City departments, such as the IT and Administrative Services Departments. File: 001420/3153211006 Leidos, Inc. ES-11 EXECUTIVE SUMMARY Best Practices Review Leidos conducted an extensive review of how well CPAU employs best practices in the operation of the utility. A set of more than 20 best practices developed by utilities and recognized by various utility associations including the American Public Power Association (APPA), and the American Water Works Association (AWWA) are considered. Table ES-2 Best Practices Overview Meets or Exceeds Best Practices Working Towards Meeting Best Practices Does Not Meet Best Practice Performance Level ● Strategic Planning ● Performance Measurement ● Resource Efficiency and Conservation ● Adequate Financial Resources ● Competitively Priced Services ● Managing Regulatory and Legislative Uncertainty ● Regulatory and Legislative Compliance ● Operational Resiliency ● Maintain Positive Investment Ratings ● Financial Risk Management ● Physical and Operating Risk Management ● Customer Service and Engagement ● Facility Adequacy ● Outsourcing ● Safety Culture ● Organizational Effectiveness ● Information and Operating Technologies ● Asset Management ● Geospatial Information Systems ● Infrastructure Planning ● Operating, Maintenance and Capital Planning ● Business Processes ● Workforce Development ● Project Management ● Work Management There are three utility best practices that CPAU should consider addressing: • Workforce Development – the utility struggles to recruit, develop and retain a sufficient workforce. In particular, a large number of unfilled positions in the electric operations division are contributing to increased system outage response times, deferred system operations and maintenance and difficulty training and developing apprentices into journeyman electrical workers. Contributing factors are that CPAU’s electrical workers are represented by SEIU while most of the qualified electrical workers in the very competitive northern California market are represented by the IBEW. The differences between the two unions make it at best difficult for qualified electrical workers who can or are willing to leave the IBEW for SEIU representation. Vacancies in engineering positions combined with other operating vacancies to result in the deferral of capital projects in electric, water and gas. ES-12 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY • Project Management – project management is seen by the Utilities as an ‘additional’ responsibility for engineering and certain other staff that adds to an already very significant workload. Current best practices in utilities is to create a project management organization with dedicated project management professionals to manage projects. CPAU should consider developing a small project management organization with three or four dedicated project managers with formal project management training and experience to manage most of the capital, operating and maintenance projects. Doing so would free-up engineering staff to focus on project delivery, engineering, construction and operations, for example. • Work Management – current best practice in utilities is to implement formal enterprise work management systems to plan, execute and track work. CPAU currently uses various stand alone systems to execute certain key work management functions, like SAP for work order management, but it does not have a holistic work management system that can provide an enterprise view of forecasted labor, actual labor and labor costs, project costs and other project performance metrics. Current project performance information comes from multiple sources and is not reported to project owners until many weeks after the costs are incurred. Further, CPAU does not have the ability to prepare a budget-based forecast of future engineering, operations, construction and other resource needs A robust work management system would allow CPAU to better forecast labor needs, plan and track project performance, provide real-time operating information to operating personnel, and manage fleet and warehouse needs. CPAU management recognizes the value of advancing best practices in the utility and has considered solutions for advancing these three issues but is currently so resource constrained as to be unable to take on any initiatives to do so without impacting higher priority operational responsibilities. Details of the best practices review are provided in Appendix D and summarized in Section 3.2. Recommendations A Workforce Management Plan is needed to forecast resource needs, identify strategies to recruit and retain staff and plan for succession of key positions Faced with many unfilled positions, the potential for numerous retirements in the next few years and a competitive job market that offers incentives for CPAU staff to leave for higher paying jobs, CPAU should consider workforce management as its highest priority. Three key tactics that should be implemented as soon as possible are: File: 001420/3153211006 Leidos, Inc. ES-13 EXECUTIVE SUMMARY Develop a Workload Forecast – CPAU should develop a workload forecast that predicts the number, type and experience level of staff that will be required to accomplish strategic plan goals and capital improvement plans over the next five years. It is important that the plans drive the resource needs to avoid the current situation in which the resource capabilities drive plans. Develop a Staff Recruiting, Development and Retention Plan – The Utility should work with City and governance to address recruiting, developing and retaining staff. Recruiting strategies should extend beyond the current capabilities of City Human Resources division to include significant use of professional recruiters and recruiting networks. A compensation survey should be conducted to develop an understanding of what compensation levels are required to be competitive in the market for skilled utility professionals and compensation levels adjusted accordingly. To retain existing employees, CPAU and the City should ensure that current staff are being competitively compensated, that benefits are competitive and that training and staff development opportunities are sufficient to retain staff. Develop a Succession Plan – To address the need to plan for the succession of key management positions, CPAU should complete its ‘working-draft’ succession plan. The current draft succession plan is a good start but needs to be expanded to include all key supervisory and manage positions. Further, the plan needs to identify specific areas of staff development and training needs, including action items and budgets to implement the needed development and tracking of performance in accomplishing the defined objectives. Implement a Work Management System In order to determine whether the Utilities are ‘optimally staffed’, the City and Utilities should implement an enterprise work management system. This could be a new system or could be accomplished by activating enterprise work management capabilities of the existing SAP system. Enterprise work management provides workload forecasting, tracking and performance measurement for all personnel allowing CPAU to track and management its workforce. This is especially important given the challenges resulting from many open and unfilled positions and positions at risk of being vacated due to retirements or resignations. Review and Update Performance Tracking Leidos identified more than twenty performance metrics that are tracked and reported in quarterly reports to governance; semi-annual strategic plan updates; annual financial and performance reports; and in various other operation reports. A challenge for CPAU is that these reported metrics include data that is not used to make management and operational decisions. This review finds that the identification and tracking of performance objectives should be reconsidered by selecting a manageable number of metrics that best indicate desired performance and then measure and report those metrics frequently and transparently. ES-14 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY Consider Additional Outsourcing to Address Workforce Constraints In addition to the outside services currently used by the Utilities, the industry regularly outsources services including meter testing, calibration and reading, water system operations, call center services, customer billing, information technology services, risk management, and energy marketing and operations. One outsourcing decision that could have a very significant positive impact would be project management. There are many professional project management firms that can stand-up a project management office for CPAU, provide project management tools, business processes and training and provide staff to assist with project management. This would relieve workload from engineering, which would allow them to focus on project delivery. Additional temporary outsourcing should be considered for all areas where needed positions cannot be filled by new hires including utility locating, cross connection compliance activities for the water utility and increased use of contracted services for water, gas, and electric meter calibration and related services. This is exceptionally challenging for qualified electrical worker positions due to union issues and a dearth of available workers. Because CPAU’s qualified electric workers are represented by SEIU, the potential pool of candidate workers is somewhat limited. IBEW represented electrical workers and non-represented qualified electrical workers are not likely to join SEIU in order to come to work for the City. Further, as CPAU recruits inexperienced electrical workers and invests significant time and money in training them, they are likely to leave CPAU for higher paying positions with other utilities including PG&E whose workers are represented by IBEW. Bringing in outside help to temporarily fill other positions needs to be considered where it is feasible. While there may be many willing workers to fill positions on a temporary basis, it is not always easy to find the right combination of experience, capabilities, cost, and availability to effectively support CPAU’s needs. Another consideration is that bringing in outside help often exacerbates the problem of limited workforce because of the burden placed on existing workers who will be further taxed to supervise, train and over see outside services. Detailed Staffing and Organizational Opportunities Based on our productivity analysis and interviews with CPAU staff, there appears to be opportunities for efficiency gains through staffing changes and improved management processes. These detailed recommendations should be carefully reviewed by CPAU management to fully vet the potential impacts and benefits. Generally, the nature of these changes are best left to the judgment of the CPAU management team as they are not expected to have a significant impact on performance. Table ES-3 lists suggested staffing and organizational recommendations, including their staffing and cost impacts (if applicable and known). The suggested schedule should be reviewed by the City and CPAU and modified as may be needed to reflect management priorities, resource availability, and other constraints. File: 001420/3153211006 Leidos, Inc. ES-15 EXECUTIVE SUMMARY Table ES-3 Summary of Recommendations Recommendation Implementation Actions Schedule Action Recommendations CPAU Water-Wastewater-Gas Operations Division CPAU Customer Service and Resource Management Divisions Reallocate priorities and workload for one FTE of resources from the RMD to energy efficiency planning, reporting and program development functions. The goal is to free up one FTE of CSS resources to invest in EE program marketing and targeted customer service projects including communication to improve satisfaction among residential customers. Develop and adopt revised Division work plans. Implement immediately or as soon as practical. Probable Actions Customer Support Services Add one additional classification each for utility marketing representative and for customer service representative to increase career progression opportunities. CPAU to develop appropriate documentation to send to the HR Department. Obtain appropriate City approvals. Implement immediately or as soon as practical. CPAU Water-Wastewater-Gas Operations Division Outsource Water Meter Calibrations, Testing, and Installations. Operations Division has released an RFP and plans to complete outsourcing process. Immediate (no implementation plan needed). Engineering Division Reclassify two administrative positions (currently vacant). One to a computer technician who will support GIS functions and a second position to a management analyst to support contracts planning, administration and management. Implementation analysis to compare costs against status quo and options and consider other benefits and costs. If analysis is favorable, reclassify positions in budget. Make appropriate staffing changes. Start analysis immediately and implement changes by Q2 2014. ES-16 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY Study Recommendations Resource Management Division Study of service delivery alternatives for some of resource management duties. These duties include contracting with the NCPA to conduct some of the resource acquisition or resource scheduling or contracting with another entity to perform these functions (e.g. Santa Clara, TEA, or ACES). To be determined in discussion with CPAU and ASD. By the beginning of Q2 2014. Customer Service Support Division Review CSS annual work plan against customer satisfaction goals and evaluate whether CPAU is under-investing in customer service (technology, staffing, or programs). Make appropriate recommendations. To be determined in discussion with CPAU. Beginning of Q2 2014. CPAU should continue to evaluate the need for the six field customer service staff that read meters if the City decides to transition to two- way meters and consider options including retraining and repurposing these staff members, resizing the division or outsourcing repair and battery replacement functions. City to review annually as part of the budget process. If the City transitions to two-way meters. Operations Division, Electric and Wastewater Groups Study Shifting to More Reliance on Third Party Contractors for Electric line work and construction. Study (including costs-benefits). Issue RFP. Select Contractor(s) and negotiate contract(s). Begin study in six (6) months. If action is taken, completion of transition within two to four years. City Warehouse and CPAU- Operations Division to work to improve interface. Specifically, the CPAU-ASD team should analyze the ratio of dollars expended under work orders/service to dollars expended under “blanket” accounts. Further, more generally, the team should establish a process to improve coordination, efficiency, and effectiveness. Q2 2014. File: 001420/3153211006 Leidos, Inc. ES-17 EXECUTIVE SUMMARY Policy, Management and Capacity Building Recommendations Staff Retention, Recruiting and Training. CPAU and the HR Department to develop a five-year HR plan to address retention, succession, recruiting, and replacement. Team to review existing leadership and people development, training, apprenticeship, retention, and recruitment policies and identify gaps against industry best practice and what is needed to meet HR/staffing goals. A short-term action is for CPAU’s AD (in coordination with the HR Department) to contract with a qualified outside recruiter to focus on key hires. Q1 2014 for needs assessment and five year plan scoping. Five- year plan by May 2014. Strengthen the Department’s Culture. Integrate assessment findings in HR/staffing plans. Brief divisions on the cultural assessment’s findings. Also, CPAU should correlate these findings with the last two annual employee surveys. Identify improvement measures. Q1 2014 and ongoing. Investigate high current ratio- electric and approach to CIP project financing/debt service. Investigate if CPAU/City’s lack of debt service for CIP projects is appropriate, especially given the low cost of borrowing (See Figure 3-12, Current Ratio-Electric for more details). Q2 2014. Expand Use of MSAs. Each division to develop a prioritized list of current and potential future MSAs and preparing a schedule for executing MSAs. Q1 2014. Cost Comparison Study for IT, Purchasing and HR Services. Commission a study and hire a consultant to compare the quality and costs of these services provided as they are now (by City Departments) to those that could be provided by contractor resources. Alternatives should be considered such as increasing current contractor support to supplement current City functions to largely outsourcing these functions while leaving City management control for these services in place. Q2 2014 – Issue RFP for study. ES-18 Leidos, Inc. Final 2/27/14 EXECUTIVE SUMMARY CPAU-City Cost Allocation. Complete cost allocation study and make adjustments, as appropriate. Q1 2015. CPAU Managers to Participate in Performance Reviews of the Staff in other Departments that the CPAU Funds. CPAU department managers should participate in annual performance reviews for all personnel whose costs are charged to CPAU. Annually. Improve advance planning for CIP related procurements. Action for Streamlined Procurement for Efficient and Effective Delivery (SPEED) Committee Process in place by the beginning of Q2 2015. Conduct twice yearly purchasing requisition training for CPAU staff involved in purchasing (including new hires). ASD, Purchasing Division and CPAU to develop and launch a 60 minute training Begin Q1 2015. Improve Sharing of Best Practices. CPAU to hold a forum where people from each of the Divisions present and discuss best practices. Create or expand repository for best practices and tools (possibly on SharePoint). Begin Q1 2015. Annual review of staffing adequacy for new and emerging market areas. Annually, as part of CPAU’s annual budget process and at other times as appropriate, evaluate the adequacy of staff capacity (e.g., numbers and skill mix in other areas and associated customer service functions) to ensure that adequate resources are allocated to new or emerging market developments Annually. Cost-benefit reviews of any new program. Conduct a brief cost versus benefit assessment of any new program proposals with potential material impact. Ongoing and as part of annual budget process. These recommendations are described in Section 4 to this report. Next Steps and Implementation This analysis looked at more than 20 best practices and over 40 benchmarks to gage the performance of the utility. Based on these measurements along with our interviews and discussion with management and staff, we conclude the Utilities are well managed and performing acceptably with a few areas needing attention to ensure that this level of performance can be sustained. The implementation framework in Section 5 of this study outlines an approach to address anticipated policy issues and challenges to implementation. File: 001420/3153211006 Leidos, Inc. ES-19 EXECUTIVE SUMMARY If the City and the utility are truly committed to making performance measurement an effective management tool, it is absolutely necessary to ensure that the identification of key performance indicators becomes a formal business process with dedicated resources to ensure implementation. Absent this allocation and commitment of resources, it is very likely that other priorities will surface and performance measurement and tracking will suffer. The City should incorporate monitoring and reporting the success of implementation of any actions taken in its balanced scorecard system (BSC) and update performance on the regular Strategic Planning Performance update schedule to the City Council. ES-20 Leidos, Inc. Final 2/27/14 Section 1 INTRODUCTION The City of Palo Alto (the City) is the epicenter of technology, entrepreneurship, and innovation in the Silicon Valley. For over more than 100 years, the City has grown and adapted to several waves of development and economic shifts from a college town to what the community is today. The City is the community’s tenth top employer. The City of Palo Alto Utilities (CPAU) is a well-run, reliable, and innovative utility that has won many national industry awards. One of CPAU’s many accomplishments, unlike most other California utilities, is avoiding the rolling blackouts during the summer of 2000 power shortages. The City and community look to CPAU to reflect strong values of community service, innovation, responsibility, and environmental protection. Having these opportunities are the big reasons why people choose to work for CPAU. The City and CPAU are challenged by the fiscal and industry challenges that most municipalities and their utilities are faced with including rising employee costs, an aging and increasingly mobile workforce, and demands from consumers to both provide innovative services and keep utility rates down. In order to help CPAU and the City address these challenges and to excel as an organization, the City engaged Leidos Engineering, LLC (Leidos) to conduct an independent and comprehensive review of CPAU. The objectives of this organizational assessment (study) are twofold. The first is to review the services CPAU provides to determine optimal staffing levels. The second objective is to evaluate the current trends and challenges in the multi-resource utilities industry and those that are emerging in the future to ensure that CPAU is appropriately positioned to meet these challenges. The Leidos team analyzes and presents how CPAU is organized and is performing in terms of providing highly efficient and effective utility services to the community now and over the next five to ten years. This report presents recommendations and options in order to best deliver desired services to customers in the most fiscally responsible way. Key questions addressed in this study include: What are the services that CPAU currently provides to the community? How is CPAU organized and staffed to deliver these services? Are the services currently delivered valued by customers? What services do customers want that are not currently offered? How is CPAU influenced and/or impacted by non-customer demands, such as regulatory requirements? File: 001420/3153211006 Section 1 Is CPAU positioned correctly to be appropriately innovative and effectively and efficiently using state-of-the art technology applications to serve its customers? Should CPAU take full advantage of emerging and new technologies on the horizon? What level of leadership should CPAU take as compared to its peers in the area of environmental sustainability and green technologies? What are the current CPAU efficiencies and inefficiencies? How do the services delivered by CPAU and staffing levels in place to deliver the services compare to other organizations of similar size providing similar services? Are operating costs appropriate? Is current staffing optimal to support current services? If additional services were desired, what additional resources would be needed to deliver them? What services are provided to CPAU from the City’s General Fund? Are there opportunities to hire external expertise (e.g., construction, engineering, maintenance) that could save funds? Addressing this study’s questions regarding having adequate staffing to meet the City’s needs is strongly influenced by the City’s projection that 58 percent of CPAU’s employees will retire within five years. 1.1 Approach to this Study The Leidos team conducted an on-site kick-off meeting and many interviews during the week of February 20, 2012, as well as follow-up telephone interviews and in- person interviews with several key employees. Leidos was invited to give a brief presentation on the study to the City Council in March 2012 where City Council members also asked questions. Interviews with additional people were conducted in April, September and October, as well as follow-up interviews with staff already interviewed. Leidos also provided the City with an initial Request for Information (RFI) prior to the kick-off meeting. This listing of documents, past reports, policies, work process descriptions, etc. represented the body of information Leidos believed necessary to give our team the past and current view of CPAU’s structure, operations, and interfaces with other City departments. Follow-up meetings with the City’s project leadership and CPAU’s staff continue and additional documents have been obtained. Based on the interviews and the information provided by the City, we worked with the City’s project manager to identify study priorities within the framework presented by the study questions. These priorities have helped guide and focus the study. Figure 1-1 highlights the steps we have taken to execute this approach. 1-2 Leidos, Inc. Final INTRODUCTION Source: Leidos Figure 1-1. Project Workflow Following our review of CPAU’s strategic plan and interviews with City and CPAU’s department managers, we reviewed CPAU’s financial reports for cost data for functional areas compared to industry averages across a set of metrics accepted by the City. The findings from this analysis informed our direction for further investigation, especially regarding utilities and functions that may offer opportunities for efficiency improvements. We evaluated the efficiency of CPAU’s current service delivery by: File: 001420/3153211006 Leidos, Inc. 1-3 Section 1 1. Calculating productivity or efficiency. Using those metrics, Leidos calculated selected performance indicators and compared these indicators with other utilities in the industry. 2. The Leidos team also evaluated the suite of services provided by the various CPAU divisions, and based on the team’s past experience with other municipal utilities, we assessed the appropriateness of the scope or coverage of services provided. 3. We benchmarked CPAU across more than 10 revenue, income, and cost metrics against nine similar utilities, and Pacific Gas and Electric Company (PG&E), which is a nearby investor-owned utility. 4. Also, Leidos compared CPAU to the American Public Power Association (APPA) and Northern California Power Agency (NCPA) averages. 5. Evaluated CPAU’s performance against 25 utility best practices. We also analyzed the impact and influences of the external environment (i.e., non-customer demands) on CPAU and assessed the interface between CPAU and other City Departments and the services provided to CPAU that are funded by the City’s general fund. Based on each of these analyses, we present findings and conclusions on the study questions listed above and discuss the pros and cons of various recommendations and options. Many of these findings and options were presented to the City in three memoranda that we delivered in advance of this study covering 1) the current situation, 2) the influence and demands of regulatory, market, and technology-driven factors, and 3) comparative benchmarking with other utilities on cost efficiencies and alternative service delivery structures. 1-4 Leidos, Inc. Final Section 2 CURRENT SITUATION The key questions addressed in this section are: 1. What services are delivered to the community? 2. How is CPAU organized and staffed to deliver these services? 3. What services are valued by the community? 4. How is CPAU influenced and impacted by non-customer (or external) demands, such as regulatory requirements? 5. How is CPAU responding to a new market and technology trends and developments? 6. How well is CPAU prepared to adapt to change and excel as an organization? Section 3 is a benchmarking analysis. Section 4 presents conclusions and recommendations. 2.1 Services Delivered CPAU is unique in California and is one of only a few municipal entities in the United States (U.S.) that provides natural gas, wastewater, and fiber optic services in addition to electricity and water. CPAU serves a population of approximately 64,000 in an area of 26 square miles with approximately 235 employees. CPAU serves about 29,000 electric customers. It has a peak load of 189 megawatts, with sales of about 1,040 gigawatt hours annually. CPAU’s annual electric load is 20 percent residential, 48 percent commercial, and 32 percent industrial with a customer base of 90 percent residential, 9.3 percent commercial, and 0.7 percent industrial. CPAU also serves approximately 23,000 natural gas customers and maintains over 200 miles of natural gas distribution pipeline. It serves approximately 20,000 water customers and provides wastewater collection service to about 22,000 customers. In the FY 2013 budget, approximately $254 million of the City’s total revenues of $444 million come from the sale of utilities. Of course, most of CPAU’s revenues are used to pay for the commodities provided to the community. The next highest source of revenue is property taxes at approximately $31 million. CPAU is an average-sized municipal utility within the group of 40 municipal utilities in California. Just down the peninsula, the City of Santa Clara’s Electric Utility, Silicon Valley Power, (SVP) has approximately 53,000 customers and 135 employees and covers an area of 18 square miles. Across the San Francisco Bay, Alameda Municipal Power (AMP) has 34,000 customers providing electric only services to a population of approximately 75,000 people. AMP serves an area of approximately 11 square miles. AMP has 91 employees. File: 001420/3153211006 Section 2 2.2 Current Organizational Setting and Staffing Unlike most municipal utility organizations, CPAU combines administrative and operations functions to a greater extent. The Resource Management Division (RMD), for example, addresses electric, water, gas, telecommunications, and wastewater issues; no other utility in California does this. All other California utilities have service-specific divisions that report to the general manager–water operations, gas operations, etc. CPAU’s five functional divisions are Administration, Customer Support Services, Engineering, Operations, and Resource Management. As shown in Figure 2-1, the executive and managerial leadership of CPAU is organized to leverage functional areas such as administration, engineering, operations, customer service, and resource management to provide services across the five utilities. Many of the divisions have authorized positions that have not been filled. A summary of the structure and function of each division is presented below. We note areas of concern regarding barriers to efficiency or effectiveness. Director of UtilitiesCommunications Manager Compliance Manager Administrative Assistant Senior Management Analyst Assistant Director Customer Support Services Assistant Director - Engineering Assistant Director – Resource Management Assistant Director - Operations Source: Leidos Figure 2-1. CPAU Organizational Chart 2-2 Leidos, Inc. Final CURRENT SITUATION CPAU management and individual divisions work with and rely on other City departments regularly to meet their functional responsibilities. Most of the interfacing activities are with the Human Resources (HR) Department, Administrative Services Department (ASD), Public Works Department (PWD), and the Information Technology (IT) Department. In certain cases, CPAU directly funds positions managed under these other City departments, such as in the ASD and IT Departments. CPAU management and staff also work closely with the City Manager’s office, the City Attorney’s office, the Planning and Community Environment Department, and the Utilities Advisory Commission (UAC). 3 Approximately 17 FTEs outside of CPAU are charged to CPAU’s budget. The services provided by these employees range from those provided by the City Manager’s office, financial and risk management services provided by the ASD, City Attorney services, and other services provided by the fire and public works departments to support utility operations. These individuals do not report to utility department managers, and utility department managers do not contribute to annual performance reviews for these individuals. Table 2-1 shows the allocation of FTE charges to CPAU from outside of CPAU. Table 2-1 Non-Utilities Employees that Receive Funding from CPAU Department Name Job Name Personnel Area Fund Budget FTE Administrative Services Department Sr Financial Analyst MGMT 521 0.50 Sr Financial Analyst MGMT 513 0.45 Sr Financial Analyst MGMT 514 0.05 Sr Financial Analyst MGMT 521 0.40 ASD Accounting Accountant MGMT 521 0.60 Acct Spec SEIU 521 0.85 Acct Spec SEIU 521 0.70 Sr Accountant MGMT 521 0.70 ASD Administration 1 Contracts Administrator MGMT 521 1.00 ASD Administration 2 Acct Spec SEIU 523 0.13 3 The UAC is charged with providing advice to the Council on acquisition and development of electric, gas, fiber optic communications, wastewater collection and water resources; joint action projects with other public or private entities which involve electric, gas, or water resources; and environmental implications of electric, gas, or water utility projects, conservation and demand management. The UAC is composed of seven members who are appointed by and serve at the pleasure of the City Council. The term of office of each member is three years or until his or her successor is appointed. At least six members of the Commission must be residents of the City. File: 001420/3153211006 Leidos, Inc. 2-3 Section 2 Table 2-1 Non-Utilities Employees that Receive Funding from CPAU Department Name Job Name Personnel Area Fund Budget FTE Acct Spec SEIU 524 0.13 Acct Spec SEIU 522 0.12 Acct Spec SEIU 527 0.12 Acct Spec SEIU 523 0.13 Acct Spec SEIU 524 0.13 Acct Spec SEIU 522 0.13 Acct Spec SEIU 527 0.13 Storekeeper SEIU 521 1.00 Storekeeper SEIU 521 1.00 Warehouse Supv MGMT 521 0.50 Dir Adm Svcs / Chief Financial Officer MGMT 521 0.25 Senior Performance Auditor MGMT 521 1.00 Sr. Deputy City Attorney MGMT 521 1.00 City Manager's Office Asst To City Mgr MGMT 533 0.10 Asst To City Mgr MGMT 521 0.25 Fire Department Deputy Chief/Fire Marshall MGMT 521 0.08 Hazmat Inspector IAFF 521 0.03 Hazmat Inspector IAFF 521 0.03 Planning and Transportation Planner SEIU 523 0.15 Planner SEIU 522 0.15 PWD Operations Trees Project Mgr MGMT 523 0.75 Tree Maint Person SEIU 523 1.00 Total 13.56 Source: City of Palo Alto 2-4 Leidos, Inc. Final CURRENT SITUATION Table 2-2, Summary of General Fund Transfers from the Utilities Funds, shows in FY 2012-2013 $30,814,886 transferred. Table 2-2 Summary of General Fund Transfers from CPAU Cost Element Plan Version C99 FY2013 Enterprise Cost Plan Charges $5,768,811 Communications $427,000 Interdepartmental Service Charges $44,168 General Fund Service Provision to Enterprise Funds $321,054 Engineer and Inspector–Public Works Services $40,000 Electric Line Clearing–Public Works Services $15,000 Surveying–Public Works Services $10,000 Grounds Maintenance–Public Works Service $31,424 Street Cut Fees–Internal $448,250 Facilities Rent $5,970,179 Annual Equity Fund Transfer $17,739,000 Total $30,814,886 Source: City of Palo Alto The HR Department manages all recruiting, hiring, and HR functions for CPAU. These functions involve many issues including retirement, benefits, relations with the unions, and contract negotiations. CPAU’s management and HR Department work closely on many topics including critical recruitment, retention, training, and overall efforts to reduce turnover and its impacts on the organization. The HR Department estimates that up to 58 percent of CPAU’s workforce is either eligible to retire or may take early retirement within the next five years. The Purchasing Division (PD) provides all purchasing support to CPAU except for commodities (gas, water, and electricity) purchasing that is led by the PD’s RMD. Key services that the PD provides includes managing the solicitation and contract award process, purchase card program (P-Card), vendor sourcing, and contract administration processes. The PD’s primary objectives are to ensure that the City’s purchasing policies are met and that every effort is made to meet the project schedules of their internal customers, such as CPAU. The PD has nine full-time equivalent (FTE) positions with one primarily dedicated to CPAU but with the ability for other staff to support CPAU as needed. In addition, the PD has assigned a buyer to support the CPAU’s store purchases. SAP is used to capture and process all purchase orders. Key CPAU managers and staff have access to SAP. Purchasing policies and procedures are governed by the City’s Administrative Code (Chapter 2.3.0) and the “Purchasing Manual.” File: 001420/3153211006 Leidos, Inc. 2-5 Section 2 In fiscal year 2011-2012, the total aggregate expenditures processed by the PD for the City was $137,003,815 with 2,232 contracts with an average contract value of approximately $61,000. There are approximately 250 P-Card holders. The total number of CPAU contracts procured in FY 2011-2012 was 292. CPAU’s Engineering and Operations Divisions rely on the PD more than other CPAU divisions because of their needs for contractors, parts, equipment, and supplies to accomplish their work. At least half of the PD’s workload with respect to CPAU is for the Engineering and Operations Divisions. Both CPAU and the PD acknowledge that working more closely together and more consistently implementing purchasing practices has improved the interactions and delivery of goods and services. The IT Department provides all IT software and equipment services to CPAU. This includes software purchases and services, including development and configuration. The two primary enterprise solutions that the City supports are Microsoft Exchange and SAP for Enterprise Resource Planning including all major modules including finance, purchasing and customer relationship management (CRM). Other key systems are a Pitney Bowes billing production system and the meter system (Itron). The IT Department has one person who supports the City’s Web site full time. The IT Department also provides and manages desktop equipment, servers, and phones, and provides centralized services such as security and Internet services such as Microsoft SharePoint. Two FTEs under the IT Department are dedicated to CPAU’s SAP processes. Several other IT staff support the Utilities Department part time. IT resources are assigned to engagements in CPAU’s Administrative Division (e.g., SAP) that support enterprise-wide issues and specific functions such as billing system configuration. All SAP resources are planned, prioritized, and managed through the City’s SAP Project Management Office (PMO), which is a City-wide resource that CPAU participates in. The IT Department has a CPAU Liaison Group to conduct joint planning and budgeting, and to address projects and issues. There is also a CPAU Technology Group that the IT Department supports. There are also three FTE staff that primarily support the Engineering Division for geographic information system (GIS) and other design and engineering functions. The Engineering Division also directly supervises two hourly GIS analysts that produce maps and conduct technical work for the Engineering Division. Administrative Division The Administration Division is responsible for the overall management of CPAU. In addition to the four direct reports in the organizational chart, the Utilities Communications Manager, an Administrative Assistant, a Senior Management Analyst, and a Compliance Manager also support this division. 2-6 Leidos, Inc. Final CURRENT SITUATION This division is directed by the Director of Utilities and is responsible for developing the overall goals and priorities for CPAU, including establishing policies and procedures. The division also directs operational and capital budget preparation and monitors utility compliance and performance during the year. This group acts as the primary interface with the UAC, the City Manager’s office, and other City executives. This division also handles formal communications with the community. The utility risk management function regarding risk associated with energy purchases and contracting is shared by senior staff in the RMD and is overseen by a risk management analyst, supported by a consultant, who resides in the City’s ASD. The Utilities Risk Oversight and Coordinating Committee (UROCC) oversees and governs the risk management function. More typically in the industry, the individual responsible for utility risk management reports directly to the General Manager (in this case, Director of Utilities) and/or to a Utility Risk Oversight Committee. However, the current arrangement for risk management is appropriate for the City because of the limited trading conducted compared to the past, the experienced traders in the RMD, the UROCC, and the oversight provided by the ASD. Customer Support Services Division The Customer Support Services (CSS) Division is responsible for customer services for the electric, water, gas, fiber optic communications, and wastewater collection including CPAU’s call center (that also serves the solid waste and storm drain services provided by the PWD), meter reading, utility billing, utility billing credit and collections, energy efficiency, local renewable energy programs, and liaison with key accounts. This CSS Division has 30 staff including supervisors for customer marketing, credit and collections, and customer service and meter reading. While commercial and key account ratings are strong, customer satisfaction ratings among residential customers have declined in recent standardized surveys but remain comparable to ratings of other California municipal utilities. More details on these ratings are provided in Section 2.3. The work processes undertaken by the CSS Division are those conventionally found within similar divisions of other municipally owned utilities. Six-meter readers serve this Division. Areas of Concern Turnover represents a systemic problem for one category of staff: Utility Marketing Service account representatives. At this time, there is no turnover issue regarding the key account representative positions. According to CSS Division management, a cause for the turnover problem in these categories is a lack of advancement potential because the personnel labor schedule only has a single level. Because exceptional customer service is CPAU’s top objective, minimizing turnover among these categories of staff is critically important. In the residential and small commercial energy efficiency and demand response realm, many of the opportunities for improved service over the next few years will be Internet and mobile applications. CSS managers expressed continuing concern about the ability of the IT Department to make timely modifications to the billing system (e.g., adding fields, for example). Part of the concern is that File: 001420/3153211006 Leidos, Inc. 2-7 Section 2 based on interviews with the CSS Division and IT Department staff, there is less than adequate capacity in the SAP PMO to make timely configuration changes. Training existing staff to improve their configuration capabilities or relying more on contract staff for quick turnaround support is needed. Engineering Division The Engineering Division is responsible for managing all aspects of design and construction of CPAU’s capital improvement projects as well as to service customers, particularly new connections. The Assistant Director of this Division manages an engineering manager for electric and one for water, gas, and wastewater. This Division has approximately 44 employees. The work processes undertaken by the Engineering Division are those conventionally found within similar divisions of other municipally owned utilities. Engineering services are provided for all utility areas. Engineering has a good working relationship with the Operations Division. Areas of Concern This Engineering Division interacts frequently with, and relies on, the City’s purchasing division to accomplish its objectives. Purchasing policies and operating practices have created difficulty in moving expeditiously to acquire equipment and contractors. Both CPAU and the purchasing division acknowledge that working more closely together and more consistently with implementing purchasing practices has improved the interactions and delivery of goods and services. In addition, the purchasing dedicating a full FTE purchasing representative to CPAU has helped. Both organizations also acknowledge opportunities to improve purchasing-related functions. Because of the purchasing division’s limited staffing, coupled with the amount of work to bid out and procuring contactors for large engineering or construction projects, the purchasing division managers believe it would help the purchasing division to better serve CPAU if the Division would provide information as specific as possible on the timing of upcoming projects 6 to 12 months in advance of the desired start of the procurement (e.g., advertisement). As procurement planning changes, this schedule should be updated quarterly. This process will also help the project team (CPAU, purchasing, and others) better plan and approach large projects as strategically as possible. Training is another opportunity for improvement. According to the purchasing division staff, purchasing requisition, and other documentation provided by CPAU could be more consistent. Some CPAU staff members are better trained in purchasing functions than others. With the turnover projected for CPAU over the next five years, it will be important to ensure that current and new staff are consistently trained (e.g., including informal mentoring by experienced staff) on procurement and purchasing policies and processes. 2-8 Leidos, Inc. Final CURRENT SITUATION A concern that CPAU expressed is with regard to parts purchasing. There have been instances where the purchasing division’s specifications required a particular part that is only manufactured by a single vendor, but the purchasing division required the procurement go out for bid. This process resulted in adding time to the project with no benefit. Also, while there is flexibility in purchasing policies and procedures, items above $5,000 must be competitively bid. While exceptions in the policy may allow flexibility, the current policy is that the City Manager or his designee must approve exceptions. This policy is currently being reviewed by purchasing. Purchasing division staff is working with City Management to investigate options that will increase flexibility while meeting overall purchasing requirements and policies. Turnover is affecting division effectiveness. The City has found it difficult to find experienced replacement engineers and engineering managers. While CPAU is making good progress to complete its Capital Improvement Program (CIP) for 2011-2012, CPAU could not complete the 2010-2011 CIP. Also, vacant positions (e.g., Electrical Engineering Manager) often take several months to fill. In addition, contractors are used more often each year as internal skills and capabilities are lost. While there have been concerns in the past from the Engineering Division’s management regarding effective communication and the timeliness of support provided by the City’s IT Department, with new management of the City’s IT Department, this situation is changing. The Engineering Division has benefited from IT in many ways including streamlining the work processes such that less administrative staff is needed. The Engineering Division’s managers and staff raised a need to upgrade the digital capabilities of the Engineering and Operations Divisions, including additional GIS functionality. It is important that the IT Department work closely with CPAU on this priority. As an Engineering Manager stated, because the customers and contractors work increasingly in a digital environment if CPAU had tools more similar to what their customers enjoy their productivity would improve customer service. Operations Division The Operations Division, responsible for the operations and maintenance (O&M) of the electric, water, gas, wastewater collection and fiber optic systems. The division is managed by the Assistant Director-Operations (ADO). The ADO reports directly to the Utilities Director. Reporting to the ADO are the Manager of Water Gas and Wastewater; the Manager of Electric Operations, a Utilities Safety and Security Coordinator and a Program Assistant. This organizational structure is different from most other multi-service utilities in that there are not separate management structures for the operations of the utilities. The City of Redding, City of Roseville, City of Santa Clara, for example, have separate directors for each of their utilities reporting up through a single assistant City Manager File: 001420/3153211006 Leidos, Inc. 2-9 Section 2 or directly to the City Manager. A benefit of the CPAU organization is that it is ‘flat’ and arguably more efficient. A drawback is the tremendous level of responsibility for one manager to address the myriad of financial, operational, regulatory, environmental, workforce management and political challenges unique to each of the operating utilities. Leidos is aware of no other utility with CPAU’s unique organizational structure. The work processes undertaken by the Operations Division are those conventionally found within similar divisions of other municipally owned utilities. Operations services are provided for all utility areas. The division’s primary workload is O&M and is not involved with capital projects. The Operations Division relies on contractors for some services, but to a lesser extent than the Engineering Division. For example, the Operations Division employs contractors to support electric line operations, investigate and resolve sewer blockages, provide specialized construction service such as pavement and concrete cutting; and other related services. 2.2.2 Electric Operations The Electric Operations division is responsible for operations and maintenance of electric transmission and distribution infrastructure, including: 193 miles of overhead 4-kV, 12-kV and 69-kV transmission and distribution line 250 miles of underground 4-kV and 12-kV distribution line 66 transmission and distribution circuits 9 electrical substations 6,800 wood poles 3,000 distribution transformers 950 underground electrical vaults 4,800 secondary pull boxes Traffic signals and streetlights (confirm) SCADA System Electric Meters Fiber Optic Cables and Equipment The Electric Operations Division is responsible for a wide variety of work, including: Receiving and responding to customer calls regarding electric service. Investigating electric outages and restoring service. Connecting and disconnecting service to customers. Inspecting overhead and underground infrastructure. Installing and removing meters. 2-10 Leidos, Inc. Final CURRENT SITUATION Maintenance and repair of overhead, underground and substation electrical equipment. Replacing aging electrical infrastructure such as transformers, poles, switches, cable and other equipment. Repairing storm damage. Ensuring environmental, regulatory and safety requirements are met. The EOD includes the following personnel: Electric Operations Administration – 1 Manager of Electrical Operations – 2 Administrative Associates – 1 Project Coordinator Electric Operations and Customer Service – 1 Electric Systems Supervisor – 6 System Operators – 1 Lead Electrician – 2 Electricians – 3 Utility Locators – 2 Troubleshooting Crews • 1 Lineperson/Cable Splicer • 1 Electrical Assistant • 2 OH/UG Troublemen Areas of Interest In interviews with the Operations Division staff, it is clear that there are issues with keeping up with the workload for water meter calibrations, testing, and installations. We understand that the Division is seeking to outsource all or most of these services. The interface between the Operations Division and the City’s Warehouse Services (under ASD) appears to be marginally effective. Leidos’ team believes that an analysis of the ratio of dollars expended under work orders/service to dollars expended under “blanket” accounts should be undertaken by the City. This may indicate the need for a more organized and effective approach to work order system utilization. The complexity of the SAP system may be a contributor to this issue. More generally, it would be beneficial for the Operations Division and the Warehouse Services group to meet and establish a process to improve coordination, efficiency, and effectiveness. File: 001420/3153211006 Leidos, Inc. 2-11 Section 2 Turnover may be affecting the Operations Division’s effectiveness. For example, the Division often has a vacant position(s) for line workers. In addition, more effective training is needed for new, inexperienced hires. Leidos understands that CPAU sends new electric operations employees to a training program in Oroville, California and new gas operations employees to a PG&E training session. Contractors are used more each year. Overtime is reported by division management to be approximately 8 percent. It is expected most of the overtime is used by wastewater employees. A couple of issues are creating a difficult interface with the City’s Development Center (part of the City’s Planning and Community Environment Department). According to Operations Division staff interviewed, when working with new or inexperienced staff at the Development Center, there have been time-consuming delays for operations. A paper-based work environment at the Development Center is apparently causing considerable inefficiencies. 2.2.3 Resource Management Division The RMD is responsible for 1) planning, developing strategies for acquisition, and negotiating for the gas, electric, and water supply; 2) managing risks associated with the acquisition of gas, electric, and water supply; and 3) developing retail rates for gas, electric, wastewater collection, and water. Other RMD functions include administering and monitoring contracts; developing and maintaining forecast models, legislative and regulatory tracking and advocacy; and preparing and issuing management reports. For example, the RMD helps prepare for and gives most of the presentations to the UAC. The RMD addresses electric, water, gas, telecommunications, wastewater planning, risk management, and rate setting issues; no other utility in California does this. All other California utilities have service- specific divisions that report to the general manager–water operations, gas operations, etc. NCPA provides scheduling coordination, load balancing, and power transaction settlement services to CPAU. NCPA also coordinates with legislative and regulatory intervention on behalf of Palo Alto. Based on our review of the RMD’s FY 2013 Major Work Category/Task Areas, there are 25 major projects planned for the year shared by the staff. In addition, RMD staff also performs 47 ongoing activities. The average workload for each staff member is five special projects each and six ongoing projects. RMD has 13 employees. The work processes conducted and the procedures used by RMD appear to be effective. The resource planning is sound and timely using contemporary approaches. Reporting to management and advisory and governing bodies is clear and concise. Reports are timely. The approach to developing retail rates proposals is sound using accepted utility industry techniques. We do not know of other utilities of this size with a resource-planning department with this scope of responsibilities and staffing/resourcing level. Factors that may influence differences include but may not be limited to the multiple resources managed, and extent of programs desired by the community, as well as requirements imposed by regulators. In addition, because of 2-12 Leidos, Inc. Final CURRENT SITUATION the multi-resource responsibilities, front office and contract negotiation responsibilities as well as active engagement in several energy and water groups including the Western and Bay Area Transmission Planning Group, require time from senior resource planners. Areas of Interest An area of opportunity is to evaluate if relying on NCPA or other outside parties more for resource acquisition may provide benefits to the City. NCPA provides CPAU, as part of the NCPA pool, power management services, day-ahead scheduling coordination services, and load and resource balancing in real time. These are core power supply functions requiring 24 hours per day and 7 days a week coverage, for which CPAU does not currently have the in-house capabilities to meet. Additionally, NCPA coordinates internally to provide long-term forecasting, budget development, power transaction settlement services, and legislative and regulatory intervention on behalf of the City. A number of private sector organizations, such as ACES Power, provide power scheduling and settlement services, and NCPA and members have looked at such alternative service offerings in the past. The City of Roseville chose to take service from ACES instead of NCPA for a variety of reasons unique to the City of Roseville, primarily that Roseville owns and operates its own generating resources and participates in regional power markets as a generation owner. Traditional power marketers, such as Shell Energy North America, have been providing power management services to large commercial industrial customers for years and are now entering the market to serve communities selecting to participate in the market as a Community Choice Aggregator, such as Marin County. Further, larger municipal utilities, such as Santa Clara, carry out many of their own power management activities and rely on NCPA for real-time balancing, again primarily because Santa Clara owns and operates its own generation resources. The City’s staff has explored alternatives to restructure RMD’s and NCPA’s power management services to reduce cost and/or improve the service offering to the City’s electric utility customers; however, with the increased complexity of managing an electric supply portfolio as a result of legislative and regulatory requirements for nodal pricing, resource adequacy, and renewable standards, RMD’s focus has been on meeting longer-term goals and not on short-term scheduling and balancing needs. Further, as result of the increased market complexity, CPAU now has greater reliance on NCPA for scheduling the new renewable generation contracts the City has procured and are on-line since 2005 (4 new resource contracts), managing resource adequacy requirements, and optimizing congestion revenue rights to minimize congestion costs. Additionally, the City has also placed greater reliance on NCPA for credit evaluation (staff expertise as well as KMV Moody’s software), billing and settlements, maintenance of the California Independent System Operator (CAISO) quality meters, external reporting, data management, and short-term forecasting for demand response. File: 001420/3153211006 Leidos, Inc. 2-13 Section 2 In 2009, NCPA incorporated a new cost of service model into its planning and budget process (Nexant model). This multi-year endeavor attempted to associate cost to specific power management functions and activities. Through this process, it became clear to RMD staff that many of the services listed as provided by NCPA could be considered duplicate to RMD functions, specifically those allocated to the NCPA pool, for which the City is the largest participant. As a result of this situation, RMD staff interviewed believed that the CPAU should further investigate alternative power management structures and/or potential synergistic opportunities, including: 1. Should the City take the approach of outsourcing core procurement functions to NCPA (renewable and market purchases and associated credit and risk management functions), similar to other NCPA members including all of the other purchasing pool participants? 2. Should NCPA refocus efforts and outsource its own scheduling functions to companies like ACES Power? 3. Could CPAU garner cost savings by switching to a private sector scheduler such as ACES Power or Shell Energy North America for core power management services? 4. What are the cost/benefits of retaining many of the core functions in-house (such as SVP) and/or are their opportunities to partner with other municipal utilities (SVP)? 5. Is the CAISO MSS scheduling structure, which largely ties CPAU to receive services from NCPA, still valuable to CPAU? 6. What alternatives to the current pool structure exist within the NCPA structure (e.g., SVP)? Current and Future Staffing to Support New Market Developments In addition to delivering electricity, gas, water, wastewater, and fiber services, CPAU devotes resources to delivering and developing services, capabilities, and technologies that respond to market and technological opportunities. Examples include energy efficiency, water conservation, and integrating new technologies into customer offerings including smart meters or electric vehicle (EV) charging. These programs and the trends and developments that drive them are further discussed in Section 2.5. 2-14 Leidos, Inc. Final CURRENT SITUATION CPAU estimates that these programs are currently supported by 18.3 FTEs. Current contractor annual funding to support CPAU’s implementation of these programs is approximately $2,725,000 of which $1.5 million is for implementation of the City’s energy efficiency program. If the City Council adopts more aggressive policies in these areas over the next five to eight years, an additional 17.5 FTEs may be required to implement these programs and provide the associated customer service, administrative, and systems support. Additional contractor resources are estimated at $2.5 million. It should be noted that these resource figures are only approximations because CPAU does not track labor by these categories. In addition, in most cases, the level of resources required for these programs in the future will depend on City Council policy, state, federal legislation, and regulation. Strategic Planning The City and CPAU embrace a strong “planning” philosophy that directs CPAU’s service offerings and influences the organizational structure and management processes. At a minimum, such a philosophy permits the City and CPAU to anticipate future challenges and provides an agreed upon foundation for important decisions. Although CPAU’s “Utilities Strategic Plan” was not updated for several years after 2005, the Plan was revised in 2011, and refreshed again in February of 2012. The recent strategic planning process used by CPAU and UAC was well organized and comprehensive. CPAU’s core values were developed based on an employee survey and community focus groups and serve as a foundation for the Plan. In fact, as to content, it should be pointed out that the Strategic Plan itself went considerably further than the concept of using a Strategic Plan to establish directional guideposts and bases for major decisions. Consistent with the City’s mission and values, the major core values in CPAU’s 2011 Strategic Plan are 4: 1. Honesty and Integrity: “We exhibit honesty and integrity when we model good behavior and a strong work ethic; communicate with honesty, sincerity and respect for one another; share all knowledge and create transparency; and follow-through at all levels.” 2. Teamwork: “We promote teamwork at CPAU by communicating clearly and respectfully while proving to be dependable and respectful and exhibiting a positive attitude.” 3. Accountability: “We demonstrate this value by taking responsibility for our actions; being clear about our vision, direction and expectations; following through on work tasks; and being a results-oriented and accountable employee.” 4. Quality of Service: “We each contribute to achieving quality of service by being responsive to customers’ needs and customer-focused, having a can-do attitude, and striving for excellence by operating a safe and reliable system.” 4 Utilities Strategic Plan, Finance Committee’s Staff Report (ID: 1351), March 1, 2011). File: 001420/3153211006 Leidos, Inc. 2-15 Section 2 The 2012 Strategic Plan update includes a Strategy Map that helps explain how the themes in the Strategic Plan support its vision of exceptional customer service to the community. The Strategic Plan uses a Balanced Score Card (BSC) approach to set and monitor performance. CPAU updates the UAC twice yearly on achieving BSC objectives. At the same time, CPAU adds or modifies BSC objectives and measures, as appropriate. 2.3 Services Valued by the Community CPAU works diligently and hard to develop and improve programs that align closely with what CPAU’s customers value. As such, CPAU has many informal and more formal ways in which to understand what its customers desire, ranging from residents calling CPAU, talking with customer service representatives, participating in a customer forum, attending an UAC meeting, or responding to a survey. 2.3.1 Customer Satisfaction The City participates in statewide telephone survey research conducted by RKS Research & Consulting (RKS). RKS results for residential customers for 2008 and 2010 and RKS results for commercial customers 2007, 2009, and 2011/2012 were used for comparison to results found in a more limited survey conducted by Leidos in April and May 2012. CPAU’s 2012 Residential Customer Oversample finds customer satisfaction reaching a high water mark: CPAU’s mean overall satisfaction stands at 8.6 (out of 10), significantly higher than statewide muni, NCPA and IOU levels. Despite the exceptionally positive ratings, there is still room for improvement in several areas: Overall Trust has dipped since 2010. Although customers reporting one or more outages have declined, power reliability ratings have also declined in 2012. More than one in four customers is not sure who owns CPAU. EE awareness is very strong, but participation in EE programs is substantially lower. For other attributes tested, CPAU’s results have increased since the 2010 RKS study. Factors exhibiting a rebound include: Concern for/works hard to protect environment. Works hard to keep prices down. Involvement in community/good community citizen. 2-16 Leidos, Inc. Final CURRENT SITUATION Among commercial and key account customers, Figure 2-2 shows that satisfaction levels show improvement on numerous attributes over RKS’s results from 2007 and 2009. Results found in the Leidos survey are similar to results reported by RKS in its oversampling of CPAU commercial customers in 2012. The measures that appear to be trending more positively are: Overall satisfaction. Being an organization you can trust. Works hard to improve services. After a drop in 2009, two attributes that have improved in 2012 are: Well-run utility. Provide good value for the money. It should be noted that the increase in satisfaction found in the Leidos survey is attributable to the large proportion of respondents who are key accounts (45 percent). A further caveat that is applicable to all the commercial results for the Leidos survey is that due to the small sample size (20 commercial and key account customers), results should be interpreted as directional rather than statistically significant. Source: Leidos Figure 2-2. Commercial and Key Account Customer Satisfaction 0 1 2 3 4 5 6 7 8 9 10 Overall satisfaction with utility Oganization you can trust Works hard/Concern for the environment Provides good value Good community citizen/involved in local community Well-run utility Works hard to improve the services they provide to customers Provide advice to help us save energy/RKS Key Accounts only "money saving advice" Me a n S c o r e o n 1 0 -Po i n t S c a l e Commercial and Key Account Customer Satisfaction CPAU 2007 (RKS)CPAU 2009 (RKS)CPAU 2012 (RKS)CPAU 2012 Muni 2009 Muni 2011 File: 001420/3153211006 Leidos, Inc. 2-17 Section 2 2.3.2 Priorities for Customers Not surprisingly, all customer segments place a high value on the reliable and safe delivery of electric, natural gas, water, and wastewater collection services that CPAU provides to them. Almost 90 percent of respondents indicate these services are essential to them or their business. This finding clearly aligns with CPAU’s core strategic value in this regard. As Figure 2-3 also shows, customers are much less likely to feel that fiber services or resource advice/incentives and financing are essential. As might be expected, even though customers do value energy efficiency and other green related services, they do not view them at the same indispensable level as core services. Less than one-third of residential customers think information or financial assistance or incentives for energy efficiency and water conservation measures or fiber to the premise services are essential/highly valued. Almost half of commercial/key accounts customers believe information or financial assistance for energy efficiency and water conservation is essential/highly valued, while 25 percent feel the same about fiber to the premise services. Source: Compiled by Leidos Figure 2-3. Value of Utility Services 0%20%40%60%80%100% Reliable and safe delivery of utility services Information or financial assistance for the efficient use of resources Fiber optic connection to premise Reliable and safe delivery of utility services Information or financial assistance for the efficient use of resources Fiber optic connection to premise Essential/ highly value Moderately value RESIDENTIAL COMMERCIAL/KEY ACCOUNTS 2-18 Leidos, Inc. Final CURRENT SITUATION 2.3.3 Values Alignment of Programs and Services Despite not placing the same level of importance on efficient use of resources as they do on the actual utility services delivered by CPAU, the Leidos survey results presented in Figure 2-4 show that there is a high degree of alignment between the values of the City’s residents and businesses and the energy efficiency and water conservation services and rebate programs offered by CPAU. Over three-quarters of respondents agree that the programs and services such as Palo Alto Green, Home Energy Reports, Commercial Advantage, and appliance rebates are worth it. An even higher percentage feel that these programs and services reflect the community’s values. Source: Leidos Figure 2-4. Values Alignment of Programs and Services 37% 47%49% 69% 39% 36%38% 25% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% RESIDENTIAL COMMERCIAL/KEY ACCOUNTS RESIDENTIAL COMMERCIAL/KEY ACCOUNTS Strongly Agree Somewhat Agree CPAU's programs and services are generally worth the money CPAU's programs and services reflect the values of residents/organizations in Palo Alto File: 001420/3153211006 Leidos, Inc. 2-19 Section 2 2.3.4 Services Valued But Not Provided As part of Leidos’ survey, CPAU customers were asked what additional services they would like to see offered. As shown in Table 2-3, retail telecommunications services were most frequently mentioned by residential customers as a service desired, while 3 of the 20 commercial/key account customers suggested greater support of electric EVs. Because the number of responses to the question about services desired but not provided is small compared to the number of total CPAU customers, the Leidos team recommends that CPAU further investigate these customer suggestions. We understand that CPAU providing fiber to the home has been evaluated and decided against previously and the situation has likely not changed. Table 2-3 Additional Services Desired Number of Mentions Residential Commercial/Key Accounts Fiber to the premise/high speed internet/cable TV from the City 109 (16%) 1 (5%) Install smart meters 23 (3%) Electric Vehicle rates/charging stations/help from utility 18 (3%) 3 (15%) More/different mix of rebates (e.g., attics fans, heat pumps, radiant barrier film, window and door) 16 (2%) Source: Leidos 2.3.5 Demands From Non-Customers CPAU is heavily regulated by federal, state, and regional agencies, all of which require CPAU to expend resources to comply with these requirements, including reporting to these organizations. In addition, the City’s UAC, and the City Council and its committees require several, regular internal reports to properly oversee CPAU. Understanding how complying with mandates from regulatory agencies influence CPAU and consume staff time and funding is addressed in this section. In Section 4 of this report, we aim to apply this understanding to conclude whether the current organizational structure and staffing are more or less than adequate or inadequate to meet present and future regulatory demands, market needs, and technology adoption. The many regulatory and other external requirements and demands that California utilities must satisfy have a significant influence on CPAU’s organization, operations, and expenditures. CPAU devotes approximately 12 FTEs annually or almost 5 percent of the workforce to comply with and report on regulatory requirements imposed on CPAU by federal and state agencies. CPAU’s division of labor for regulatory compliance and reporting activities is shared across each division and appropriately between people at different seniority levels and skills sets. Altogether, there are approximately 40 CPAU 2-20 Leidos, Inc. Final CURRENT SITUATION managers and staff involved in reporting. Section 2.4 provides more details on these reporting requirements and Appendix B lists resource requirements for each report. In 2010, CPAU established a position for a Compliance Manager in the Administrative Division. This manager coordinates and establishes best practices and standards for regulatory reporting. The appointment of a Compliance Manager represents a best practice in the industry for similar-sized utilities. If this position can reduce physical, regulatory, and community risks, such as improving safety, the City’s investment is well worth it. Further, the City’s commitment to this position reinforces the “culture of compliance” that clearly exists within CPAU. The oversight of the Utility Risk Oversight and Coordinating Committee, Risk Manager, UAC, and City Council reinforces this sound organizational structure to address regulatory and other external factors. This situation will continue to shape and influence CPAU as new regulatory and market factors, as well as new technologies, are adopted. The demands on CPAU are more significant than most other California utilities because CPAU is a multi-resource utility. California’s legislature has imposed several new requirements on CPAU in energy and especially in water quality and supply. Because of local concerns about gas pipeline safety due to the gas explosion on PG&E’s line in San Bruno, inspection, testing, and reporting on this issue has been and will continue to be a driving safety and regulatory concern. CPAU is responsible for complying with energy and water commodity reporting, and environmental, health, and safety compliance and associated reporting requirements demanded by regional, state, and federal agencies. Among other requirements, CPAU must comply with regulations and standards promulgated by the California Air Resources Board (AB 32, Climate Change), California Energy Commission (CEC), Federal Energy Regulatory Commission (FERC) the Western Electricity Coordinating Council (WECC), the North American Electric Reliability Corporation, and CAISO for electricity and the U.S. Department of Transportation (for gas). Each organization requires considerable efforts to collect and submit data and reporting. To demonstrate compliance with these requirements, CPAU produces 63 reports to external regulatory bodies (annually, quarterly, or monthly) at the regional, state, and national levels. Based on CPAU’s information, Appendix B summarizes these reports and the associated FTE resources. These reports are summarized below: 29 electric regulatory reports including reports on reliability, efficiency, renewables, climate, financial, and power supply. 4 electric and gas reports, covering consumption and efficiency. 3 multi-resource reports including financial and other matters. 12 gas-specific reports covering safety, commodity projection, greenhouse gas, and other issues. File: 001420/3153211006 Leidos, Inc. 2-21 Section 2 2 wastewater reports for sanitary sewer reporting. 12 water reports covering supply, quality, conservation, and drinking water issues. Comprehensive Annual Financial Report (CAFR). External requirements are expected to increase as new laws and regulations are enacted and as important deadlines approach. For example, in the last few months, CPAU identified eight new reports covering energy efficiency, water, power, etc., that must be assigned and submitted. The new Public Benefit Charge (PBC) report will include all PBC categories–low income, efficiency, research and development, and renewable energy. CPAU expects that preparing this annual report will be at least a multi-month endeavor. Over the next eight years, reporting activity will ramp up for climate and renewables compliance to achieve regulatory milestones, many of which are due by 2020. In order to better understand overall compliance and reporting demands on CPAU and to assess the adequacy of staff levels, we also studied CPAU’s internal reporting requirements. CPAU produces 23 reports (annually, quarterly, or monthly) to meet internal management requirements. Major internal reports are listed below: 4 electric reports–commodity purchases and a front office report. 2 electric and gas reports (auditor and back office review). 1 fiber report on status of ongoing fiber installations. 2 gas reports–front office and back office. 12 multi-resource reports covering a range of issues including front and back office, safety, risk, production, financial, and accounting. 2 other reports including a newsletter and a quarterly financial report. These reports are typical for California municipal utilities of a similar size. There may be more resources required of CPAU to report and present to the UAC. Table 2-4 shows that external and internal reporting consumes nearly 12 FTEs. External reporting consumes 85 percent of the FTE resources used for reporting, whereas internal reporting comprises 15 percent of the resources. Contractor resources are not included in the FTE figures. Contractors are not used to support external reporting; $65,000 of contractor resources (two FTEs at an average reporting rate of $150 an hour) are used to support internal reporting. Refer to Appendix B for more details on reporting requirements and the resources used to support them. 2-22 Leidos, Inc. Final CURRENT SITUATION Water reporting accounts for nearly 68 percent of all reporting resources that CPAU expends. Monthly reports on water quality, the annual water quality report, and the cross connection report make up the vast majority of the water related resource requirements. The Annual Water Quality Reports consume most of the water related reporting resources. In investigating how these reports are developed, Leidos found that they are compiled as part of regular daily and weekly activities (e.g., inspection, sampling) by five water operators. While not a reporting activity, the various utility services expend at least two FTEs on survey and inspection work. These activities are mostly conducted as ongoing dedicated activities and are core to the reliability and safety of the utility infrastructure. In an interview with the Regulatory and Legislation Manager at the California Municipal Utilities Association 5 to discuss resource requirements for regulatory reporting and compliance, this manager indicated that it is his understanding that most municipal utilities typically devote more than 5 percent of their total FTEs to these activities. CPAU devotes approximately 4 percent to external reporting and 0.7 percent to internal reporting for a total of 4.7 percent of total FTEs.6 Table 2-4 Reporting Resources by Utility Service Utility Service Total Annual Equivalent Hours Total Annual FTEs Total Reporting Requirements Electric 2412.8 1.2 Electric and Gas 363 0.2 Gas 1181 0.6 Wastewater 974.8 0.5 Water 16590 8.0 Fiber 104 0.1 Multiple Resource Reports 684 0.3 Energy Efficiency 1892 0.9 Other 300 0.1 Total 24502 11.9 Source: Leidos 5 Interview with Anthony Andreoni, Manager Regulatory and Legislative Manager Cal. Municipal Utilities Association by Thomas Jensen, Leidos, April 2012. 6 Based on a 2012 CPAU headcount of 251 people. File: 001420/3153211006 Leidos, Inc. 2-23 Section 2 2.4 Emerging and Future Market Demands and Opportunities New State of California and national policies are advancing actions to address environmental concerns, while at the same time, new technologies that enable these policies are becoming more cost effective. These current and future demands and opportunities have and will further influence CPAU’s organization and staffing. Over the next five to ten years, CPAU, as well as the whole utility industry, will likely see heightened interest in investing in the following technologies and policies: Create a Smart Grid to make use of computer, sensor, automation, control, and communication technologies. Achieve large-scale penetration of renewable and alternative energy technologies including meeting a 33 percent renewables goal by 2020. Maintain electric power grid reliability when integrating sources of renewable generation with traditional generation technologies. Improve energy efficiency in delivery and use including meeting a California policy for all new residential structures to be zero net energy by 2020 and for commercial structures by 2030. Enable the public to use plug-in EVs to reduce oil consumption, cut carbon emissions, and store energy for support of the electric system. Integrate local renewable energy production, principally solar photovoltaic systems, into the electric distribution system. CPAU is well aligned with what the municipal utility industry views of key roles and activities including the following:7 Provide benchmark lower rates and higher reliability that work to pressure investor owned utilities to become more cost-effective, thus directly benefiting all investment owned utility customers. Model efficiency and professionalism in the delivery of an essential service using local control, direct accountability, and transparent business practices. Bolster the economy in their service territories through lower rates, general fund contributions, and long-term planning for their energy future. Support a diverse electric system with innovative technologies and methods of service, reconnecting a myriad of local values and conditions. Lead in the development of California’s energy policy, working from decades of experience at the local, state, and national level from a public service, not-for-profit perspective. 7 Source: About Publically-Owned Utilities, California Municipal Utilities Association 2-24 Leidos, Inc. Final CURRENT SITUATION Moreover, the residents of Palo Alto are supportive of CPAU’s direction. A survey of residential and commercial customers conducted by Leidos and CPAU for this study found that the City’s residents support CPAU’s priorities, including technological and environmental initiatives such as Smart Grid adoption and energy efficiency programs. Moreover, the survey found that a majority of residents support the utility buying 100 percent carbon neutral energy. On top of meeting these new demands, the utility industry, including CPAU, is in a period of dramatic transformation that sees no end in sight. CPAU’s team will be increasingly challenged to develop and use more complex systems while at the same time dealing with tight budgets, an aging and increasingly mobile workforce,8 9 and making infrastructure upgrades. More reliance on technology, as well as the convergence of communications, computing, and energy systems means that more people with IT and energy systems integration skills will be required. In the heart of Silicon Valley, more than in most other areas of California, there are a larger number of people with these skills in the workforce; but a challenge is competing for these specialists with technology companies, other non-utility employers, or other utilities in the area, including PG&E. Many emerging and future service offerings are associated with installing smart grid infrastructure. In 2011, the City Council decided to continue to evaluate the implementation of smart meters based on a cost-benefit study10. The City decided to proceed with pilots and to continue to replace meters as part of routine maintenance with those that can be read remotely. The following section summarizes the status of the City’s adopting Smart Grid and other related technologies and programs. Advanced Metering Infrastructure, or Smart Meters. If the benefit to cost ratio reaches a level where smart grid implementation is attractive (e.g., more customer demand for Smart Grid-enabled energy management, in-home or business displays, energy efficiency, EV services, lower equipment or systems integration costs), then the City will likely proceed with Smart Grid implementation. At this time, the City has decided to hold off on smart meter implementation except for pilots and replacements. Advanced Distribution Systems (ADS). ADS includes distribution automation, distribution monitoring, and advanced distribution applications to enhance reliability and more efficient management of the distribution system. Similar to smart meters, presently the expected benefits (including improved service reliability, reduction in electricity losses, and improved customer interactions) do not exceed the costs and therefore this system will not be implemented by the City at this time. 8 The U.S. Power and Energy Engineering Workforce Collaborative found in a 2009 report that over the next five years, 45 percent of electric utility engineers may retire or leave for other reasons. 9 The U.S. Department of Labor predicts that 500,000 energy industry workers will retire over the next five to ten years, a turnover rate of 50 percent. 10 EnerNex Corporation consultant report, March 2010. File: 001420/3153211006 Leidos, Inc. 2-25 Section 2 Demand Response (DR). With a moderate climate and a relatively flat load, the potential for DR in Palo Alto is projected to be relatively small. Therefore, the City is piloting DR only at this time. Electric Vehicles. Palo Alto has a relatively high incidence of EVs compared to most communities in the San Francisco Bay area. To provide charging infrastructure, the City provides guidance to owners of EVs so that they can safely install chargers. The City has established permit requirements for commercial establishments and installed several public charging stations. As EV adoption rates increase, deploying a Smart Grid will help CPAU monitor and manage the load for EVs on the City’s electric grid. 2.5 Department’s Ability to Adapt and Excel CPAU’s, and indeed the City’s, ability to adapt to the challenges of an aging and increasingly retiring workforce, transformation being experienced in the utility industry, the fiscal pressures experienced by municipalities, and to meet the future needs and demands on CPAU is critical to maintain or enhance effectiveness and efficiency and to excel as an organization. In order to assess CPAU’s ability to adapt and excel in achieving its vision, Leidos conducted a cultural assessment survey. City Management and Council agreed that a cultural assessment would be a useful component of the study. Over 70 percent of CPAU’s employees took part. The following discussion describes the advantages of, and the process for conducting a cultural assessment. Understanding the values and potentially limiting values that exist within an organization is critical to develop plans and initiatives that will support employee retention, and a well-functioning organization including strong new employee recruitment. The tool Leidos uses to conduct such assessments is Cultural Transformation Tools® (CTT), trademarked by Barrett Values Center, a powerful instrument that describes corporate cultures by identifying the core values that exist within each functional area of the organization. This tool provides a framework for understanding how the individuals, teams, and organizations develop and grow and provides insight into how to align an organization’s culture. The CTT assessment is based on a customized survey that lists 100 values. Survey results include the top personal values selected by the employees, the top values the employees observe in the current culture, and the top values they would like to see in their organization. Top values are those that received the most votes from the respondents. 2-26 Leidos, Inc. Final CURRENT SITUATION The CTT assessment tools are based on the Seven Levels of Consciousness model. The top values selected by CPAU employees are plotted in the model below to measure the organization’s culture. Table 2-5 Levels of Consciousness SERVICE LEVEL 7 MAKING A DIFFERENCE LEVEL 6 INTERNAL COHESION LEVEL 5 TRANSFORMATION LEVEL 4 SELF-ESTEEM LEVEL 3 RELATIONSHIP LEVEL 2 SURVIVAL LEVEL 1 CPAU employees were invited to respond to this survey via the Internet, however, paper copies were also available for those employees with limited access to a computer. The survey results and analysis show the core values of the overall organization and the individual functional areas and groupings that CPAU requested, as follows: Administration Division. RMD. Engineering Division. CSS Division. Operations Division. Full-time employee positions. Full-time managers positions. Non-Service Employees Intl. Union (SEIU) affiliated employees. SEIU-affiliated employees. 2.5.1 Summary of CTT Results Leidos recognizes the brief summary of results that follows is difficult to place in context. Therefore, the full CTT report is included as Appendix A. The observations and graphs below reflect a summary of the results for the overall CPAU organization. The Personal Values of the people working for CPAU show that they demonstrate: Taking ownership of actions. An upbeat approach with attention to ongoing development and growth. Strong moral principles. Their top value was found to be accountability, a value they are currently able to take into the workplace and see as important for the future of the organization. File: 001420/3153211006 Leidos, Inc. 2-27 Section 2 The top values are concentrated at Level 5–Internal Cohesion, showing that this group sees their lives in terms of finding meaning and mission. Figure 2-5 illustrates the personal values as plotted in the Seven Levels of Consciousness model. Source: Leidos Cultural Survey of CPAU Figure 2-5. Personal Values The Current Culture of CPAU’s organization is driven by values that promote: Strong focus on meeting customer needs and achieving consistency. Taking ownership to ensure rules are adhered to and well-being is maintained. The top positive Current Culture value is customer service, a value on which they would like to see continued focus in the future. When looking at overall votes, the most positive focus is concentrated at Level 4-Transformation, showing some attention to continuous renewal and development. Source: Leidos Cultural Survey of CPAU Figure 2-6. Current Culture Values 2-28 Leidos, Inc. Final CURRENT SITUATION Cultural entropy is the amount of energy in an organization that is consumed in unproductive work. It is a measure of the conflict, friction and frustration that exists within an organization. Figure 2-6 illustrates that CPAU is experiencing a high level of entropy at 31 percent, which means that approximately one-third of the energy available within CPAU is negatively focused producing several causing factors that limit organizational performance. The cultural entropy is concentrated at Level 3-Self Esteem indicating frustration with ineffective systems and processes and Level 1-Survival. It should be noted that although taken as a whole, the level of entropy for the overall organization is high, entropy levels vary within the individual functional areas or groupings. Details on this variation are found in Appendix A. There are four potentially limiting values (white dots) among the top values observed by the employees in the current culture–bureaucracy, confusion, cost reduction, and control. These potentially limiting values illustrate: Rigid internal systems, procedures, and structures. People feeling taken advantage of, with a tendency to be held accountable for the actions of others. As shown in the interviews, CPAU’s staff’s frustrations are with interfaces that may be difficult at times with other City departments. This may at least partially explain this potentially limiting value. A focus on reducing expenditure and meeting immediate needs. A lack of clear communication with communication characterized as conservative and restrictive. In regards to what the employees would like to observe in CPAU’s culture, there are four values carried over from Current Culture: accountability, safety, customer service, and customer satisfaction. This indicates that the employees have confidence in the direction CPAU is embarking; however, they are calling for changes to occur. The desired values are concentrated at Level 4–Transformation, which indicates a desire for promoting greater employee involvement and the ongoing development of business practices. Figure 2-7 illustrates these results for the Desired Culture for the overall CPAU organization. File: 001420/3153211006 Leidos, Inc. 2-29 Section 2 Source: Leidos Cultural Survey of CPAU Figure 2-7. Desired Culture Values 2.5.2 Conclusions from Cultural Assessment The results of the cultural assessment illustrate that CPAU has a dedicated group of employees and that the concentration of values selected indicates they focus on finding purpose and meaning in life. These values support the City’s values directly. While cultural assessments do not consider what is ideal for an organization, CPAU, overall, has a culture that is positive. Ideally, organizations with strong cultures like to see as much alignment as possible with organizational and individual values and minimal entropy. When looking at the matches between the personal values and the values experienced in their work environment, there is very little overlap. However, the survey results also indicate that the employees want to build a stronger connection to their work opportunities to enhance their career and are also asking for opportunities to develop effective systems and processes. CPAU employees observe customer service as a living value within the organization and recognize it is a value that is important to maintain in the future. A matter of concern is that in the current culture the high level of limiting values direct the employees’ energy toward negative rather than positive factors. This indicates that approximately one-third of the efforts and energy is negatively focused, which impacts overall organizational performance. However, the survey also shows that the employees have a desire to improve the way the group works together to build a strong internal community and are open and ready for change. The employees are asking for a more open work environment and to be held accountable. 2-30 Leidos, Inc. Final CURRENT SITUATION The assessment’s results indicate that the organization is ready for change. Efforts should be invested in transforming the culture of the organization and addressing the potentially limiting values of bureaucracy, confusion, cost reduction, and control. CPAU should also address employee requests for accountability and development through training and recognition, competitive compensation packages, and opportunities to develop effective processes/systems and communication strategies. These steps will support the City’s retention, recruitment and succession planning initiatives (see Section 4). File: 001420/3153211006 Leidos, Inc. 2-31 Section 3 BENCHMARKING ANALYSIS 3.1 Performance Benchmarks An effective way to assess a utility’s operational performance and associated cost is to compare, or benchmark, the information with data from other utilities and with applicable published industry databases. Leidos and City representatives selected 43 performance measures for comparison. These measures are typically ratios that allow reviewers to compare costs of service without the impacts of scale. In other words, it makes little sense to compare the absolute value of operating costs from a very large water utility with those of a small water utility. But, by analyzing “unit costs,” most of the impacts of size are removed. In addition, for all measures except for electric system reliability only municipally owned utilities were chosen for the comparison group and PG&E (a neighboring utility) to ensure the business and political conditions under which the organizations operate are similar. Leidos has reviewed financial reports for cost data in each area of CPAU. In general, CPAU’s staffing levels and budget figures are appropriate and are mostly in line with similar utilities given the number and levels of service provided by CPAU. However, there are areas where current measurements are worse than the average of the group of comparison utilities. What stands out most in this comparison is the higher than average operations and maintenance costs for water and wastewater collection, average monthly water and gas bills and energy efficiency cost per customer. These deviations are examined in the following sections. We generally believe the higher operating and maintenance costs to be a result of the City’s increased efforts to reduce sanitary sewer overflows, replace aging sewer and water infrastructure, higher wholesale costs for gas and water, and significant focus on energy efficiency programs for electric customers. We would like to point out that each municipally owned utility evaluated by Leidos has its own unique set of circumstances within which it operates. These include customer demographics and market differences such as regulatory requirements and commodity prices. In addition, the facilities themselves differ as to geographic factors, age, and weather. All these factors, in different ways, affect the cost of operating a utility and opportunities for greater efficiency and effectiveness. 3.2 Benchmarking Results of Current Performance Leidos and the City have developed a suite of measures related to cost and efficiency of CPAU’s services that are used in this study. These measures were selected based on: Recognized performance measures in the utility industries for municipally owned utilities. File: 001420/3153211006 Section 3 Expected availability of comparable information for CPAU and for municipally owned utilities that the City’s management requested Leidos contact for comparative data and for other utilities in the western U.S. City management’s desires for selected measures. In the benchmarking results shown in the following figures, CPAU is compared to a group of selected, mostly regional, municipal utilities. Benchmarking data is principally for the calendar year ending December 2011. Eugene, Oregon, and Ft. Collins, Colorado utilities were also included because Leidos had their data readily available, and they are also located in relatively high cost areas. Also included in the electric utility bar charts are APPA published statistics for two groupings: 1) municipally owned utilities with 20,000 to 50,000 customers, and 2) municipally owned utilities located in the western U.S. American Water Works Association (AWWA)-published statistics data were included for comparison in certain water utility charts. Note that the far rightmost bar in most charts represents an average value for the group of utilities. This calculated average does not include CPAU values, nor the APPA or AWWA values. The information provided in much of this benchmarking analysis represents a snapshot in time, reporting the most recent fiscal year publicly available data, based on guidance from the City’s project manager. In some cases, it may be possible that a single year does not account for any one-year anomalies for any of the utilities. In these cases, more than a single year may be beneficial. Where the data indicates that CPAU is well outside of the average, where possible, we sought to further investigate reasons that may help explain the situation including one-year anomalies in a supplemental interview with CPAU managers. When a valid reason was uncovered in the interview or from another source, we attempted to characterize it in this study. Information for the benchmarking study was obtained through a variety of publicly available sources. These sources include each city's CAFR for the most recent fiscal year and Annual Reports for the utility operations (as available). Additionally, in some cases the individual city’s or utility’s annual budgets were reviewed for information such as number of FTEs by utility service and more detailed expense information. In some instances, this publicly available data was augmented as necessary with information provided from financial and/or operational staff at specific utilities. Unlike investor-owned utilities who report expenses in a standard format (FERC Form 1 for electric and FERC Form 2 for natural gas), municipal utilities typically do not follow one standard accounting method and as such, some variance in measures may be due to differing accounting practices. For example, the specific items included in the administrative and general (A&G) expenses of the comparison municipal utilities may not be disclosed and which items are classified A&G versus O&M likely vary by utility. Follow-up conservations with one of the comparison utilities revealed that several utilities do not publicly report separate measures of O&M and A&G. 3-2 Leidos, Inc. Final BENCHMARKING ANALYSIS The table below provides an overview of select benchmarking results for 34 measures. The table reflects CPAU’s operational results as being better than average, at or near average, or significantly lower than the average in comparison with the benchmark utilities. We also provide the median for each measure in the figures, which almost always shows a very similar result to the average. Table 3-1 2011 Benchmarking Overview CPAU Results (CY 2011) Measure Better than Average At or Near Average Worse Than Average Electric Revenue per kilowatt hour (kWh) Sold – All Customers (Fig. 3-1) √ Revenue per kilowatt hour (kWh) Sold – Residential (Fig. 3-2) √ Net Income per Revenue Dollar (Fig. 3-3) √ Total O&M Expense per kilowatt hour (kWh) Sold (Fig. 3-4) √ Total O&M Expense per Retail Customer (Fig. 3-5) √ kWh Sold per FTE (Fig. 3-6) √ Retail Electric Customers per FTE (Fig. 3-7) √ A&G Expense per Retail Customer (Fig. 3-8) √ A&G Expense per kWh (Fig. 3-9) √ Customer Accounting, Service, and Sales Expense per Retail Customer (Fig. 3-10) √ Customer Accounting, Service, and Sales Expense per kWh (Fig. 3- 11) √ Current Ratio (Fig. 3-12) √ Average Monthly Residential Electricity Bill based on Average Monthly Usage (Fig. 3-13) √ Annual Energy Efficiency Cost per Customer (Fig. 3-14) √ System Average Interruption Duration Index (SAIDI) (Fig. 3-15) √ System Interruption and Frequency Index (SAIFI) (Fig. 3-16) √ Water Revenue per Million Gallons Delivered (Fig. 3-17) √ Net Income per Revenue Dollar (Fig. 3-18) √ Retail Water Customers per FTE (Fig. 3-19) √ O&M Expense per Million Gallons (Fig. 3-20) √ O&M Expense per Water Retail Customer (Fig. 3-21) √ O&M Expense per Mile of Water Main (Fig. 3-22) √ File: 001420/3153211006 Leidos, Inc. 3-3 Section 3 Table 3-1 2011 Benchmarking Overview CPAU Results (CY 2011) Measure Better than Average At or Near Average Worse Than Average A&G Expense per Retail Water Customer (Fig. 3-23) √ A&G Expense per Million Gallons Processed (Fig. 3-24) √ Million Gallons per Day Delivered per FTE (Fig. 3-25) √ Average Monthly Residential Water Bill (Fig. 3-26) √ Wastewater Revenue per Million Gallons of Wastewater Collected (Fig. 3-27) √ Net Income per Revenue Dollar (Fig. 3-28) √ Retail Wastewater Customers per FTE (Fig. 3-29) √ O&M Expense per Million Gallons (Fig. 3-30) √ O&M Expense per Wastewater Retail Customer (Fig. 3-31) √ Million Gallons per Day Collected per FTE (Fig. 3-32) √ Miles of Sanitary Sewer Line per FTE (Fig. 3-33) √ Average Monthly Residential Wastewater Bill (Fig. 3-34) √ Natural Gas Natural Gas Revenue per CCF Delivered (Fig. 3-35) √ Net Income per Revenue Dollar (Fig. 3-36) √ Retail Natural Gas Customers per FTE (Fig. 3-37) √ A&G Expense per Retail Customer (Fig. 3-38) √ A&G Expense per CCF (Fig. 3-39) √ O&M Expense per CCF (Fig. 3-40) √ O&M Expenses per Mile of Main (Fig. 3-41) √ Natural Gas O&M Expense per Retail Customer (Fig. 3-42) √ Average Monthly Natural Gas Bill (Fig. 3-43) √ Source: Leidos See Appendix C to this report for more information on benchmarking data sources. 3-4 Leidos, Inc. Final BENCHMARKING ANALYSIS 3.2.1 Electric Leidos compared CPAU’s electric utility to 10 other utilities. For the reliability measures, SAIDI and SAIFI, Leidos used a different group for comparison because reliability data were only readily available for Redding and Roseville. Electric operations employees 65 people and serves 29,500 customers. Source: Leidos Figure 3-1. Revenue per kWh for All Retail Customers In this measure, revenue per kWh for all retail customers, shown in Figure 3-1, revenue per kWh, CPAU at $0.13 per kilowatt-hour (kWh) compares closely with the average for the comparison group of utilities ($0.12 per kWh). APPA statistics show values well below the comparison group average pointing out that revenues in this region of California generally outstrip other parts of the nation. For utility organizations, higher revenues generally reflect higher commodity rates. $0.129 $0.086 $0.071 $0.133 $0.156 $0.196 $0.142 $0.128 $0.132 $0.094 $0.053 $0.065 $0.141 $0.124 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Pal o A l t o AP P A 2 0 1 0 -20 k t o 50 k C u s t o m e r s AP P A 2 0 1 0 -We s t e r n US Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Pa c i f i c G a s & E l e c t r i c Av e r a g e w i t h o u t P a l o Alt o Revenue per kWh -All Retail Customers Median without Palo Alto File: 001420/3153211006 Leidos, Inc. 3-5 Section 3 Source: Leidos Figure 3-2. Revenue per kWh Sold – Residential Considering the previously discussed result for the measure, revenue per kWh for all retail customers, we would expect the measure revenue per residential customer to show CPAU above the average value for the group; that is the case as shown in Figure 3-2. For PG&E, the residential revenue per kilowatt hour is based on its 2011 FERC Form -1 filing which reports annual residential electric sales of 30,871 million kilowatt hours and revenue of 4,777 million dollars. $0.12 $0.09 $0.08 $0.14 $0.15 $0.20 $0.10 $0.09 $0.08 $0.15 $0.13 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Pal o A l t o AP P A 2 0 1 0 -20 k t o 50 k C u s t o m e r s AP P A 2 0 1 0 - We s t e r n U S Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Red d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Pa c i f i c G a s & Ele c t r i c Av e r a g e w i t h o u t Pal o A l t o Revenue per kWh Sold -Residential Median without Palo Alto Not Available Not Available 3-6 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-3. Net Income per Revenue Dollar (Electric) As shown in Figure 3-3, CPAU’s electric utility operating income (operating revenue minus operating expenses and depreciation) of $0.24 per revenue dollar is considerably higher than utilities in the comparison group ($0.09 per revenue dollar). Operating income per revenue dollar is a measure that reflects how well a utility is covering its operating expenses with its operating revenue. This situation is due in part to the relatively inexpensive commodity prices the City enjoys. CPAU’s low O&M expense also contributes to the high net income. See Figure 3-4 below. File: 001420/3153211006 Leidos, Inc. 3-7 Section 3 Source: Leidos Figure 3-4. Total O&M Expense per kWh Sold In the measure shown in Figure 3-4, total operating and maintenance expenses per total kWh sold. This metric provides a measure of costs of fuel, purchased power, administrative and general expenses, debt payments and transmission and distribution system maintenance costs. These data can vary widely by region and due to reporting convention. For the non-APPA metrics, we have included all operating and maintenance costs. Note that only Santa Clara has a lower O&M cost than CPAU among the California utilities surveyed. 3-8 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-5. Total O&M Expense per Retail Customer Figure 3-5, compares total O&M expenses, less fuel and power supply costs, per retail customer. CPAU’s electric utility at $1,081 per retail customer is slightly above the group median. Costs included in this analysis are: administrative and general, engineering, resource management and energy efficiency, transmission and distribution operations and maintenance, rent and depreciation and amortization. The APPA provided values are much lower than the average value for this group utilities and we believe that most of these utilities did not participate in the APPA survey for 2010. Another important indicator of O&M performance is the total O&M cost, less power supply costs, divided by the number of miles of transmission and distribution line maintained. While this measure was not selected by the City as an indicator, and accordingly is not included in this report, the average per mile O&M cost for this group of utilities without CPAU is approximately $170,000 per mile while CPAU’s cost is approximately $72,000 per mile indicating that O&M costs are well below average. File: 001420/3153211006 Leidos, Inc. 3-9 Section 3 Source: Leidos Figure 3-6. kWh Sold per FTE This measure shown in Figure 3-6, kWh sold per FTE, may indicate the productivity or efficiency of the electric utility compared to others with similar characteristics such as miles of lines, numbers of transformers, and the number of customers, etc. This measure sheds light on the question of how the utility is staffed compared to other similar utilities. Higher numbers of customers per FTE indicates greater productivity. However, because this metric can be strongly influenced by large kWh sales to fewer industrial and commercial customers, a utility with these types of accounts may appear to be more productive. Therefore, this should be considered along with other performance indicators in judging overall productivity. CPAU’s electric utility, at over 9 million kWh sold per FTE, is slightly higher in productivity than the comparison group average (approximately 7.3 million kWh sold per FTE) and also higher than the productivity shown by the group median. Santa Clara’s higher number likely reflects this utility’s higher proportion of sales to commercial, and industrial customers relative to residential customers. For all benchmarking that uses the number of FTE’s, we are referring to the total number of each utilities FTE’s not just operating personnel. 9,189,498 4,204,802 5,458,275 3,884,403 4,473,669 4,195,257 9,012,310 21,854,081 5,458,293 9,949,938 4,908,309 7,339,934 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Pa l o A l t o Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Pa c i f i c G a s & Ele c t r i c Av e r a g e w i t h o u t Pa l o A l t o KWH Sold per FTE Median without Palo Alto B e t t e r 3-10 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-7. Retail Electric Customers per FTE Figure 3-7, retail electric customers per FTE, also may speak to the productivity or efficiency of the electric utility. This measure may help explain how the utility is staffed compared to other similar utilities. Higher numbers of customers per FTE may indicate greater productivity if system age, size and other characteristics are similar. At 288 retail electric customers per FTE, CPAU is 18 percent lower than the comparison group average of 312 retail electric customers per FTE, and also slightly lower reported in the APPA statistics. CPAU’s electric utility may serve fewer customers per FTE than, for example, Roseville because the electric system in Roseville is newer than in Palo Alto and may require less repair. In Santa Clara, the other utility that drives up the average, there are fewer residential customers proportionally to Palo Alto. 287 324 321 377 351 183 217 236 413 388 198 452 311 312 0 50 100 150 200 250 300 350 400 450 500 Pal o A l t o AP P A 2 0 1 0 -20 k t o 5 0 k Cu s t o m e r s AP P A 2 0 1 0 -We s t e r n US Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Pac i f i c G a s & E l e c t r i c Av e r a g e w i t h o u t P a l o Alt o Retail Electric Customers per FTE Median without Palo Alto B e t t e r File: 001420/3153211006 Leidos, Inc. 3-11 Section 3 Source: Leidos Figure 3-8. A&G Expense per Retail Customer A common performance measure used in the electricity industry is an A&G expense per retail customer. As shown in Figure 3-8, CPAU’s electric utility falls well below the average level of A&G expense per retail customer for this comparison group of utilities and is also below the reported APPA average values. Azusa appears to classify items differently than do the other benchmark utilities. Azusa’s A&G ratios are significantly higher, while its customer accounting ratios are significantly lower than the other utilities included in this benchmarking analysis. A lower result is usually considered favorable in that it indicates the organization is a “lean” operation in the support areas. It should be noted that because the Administrative Division within CPAU relies on the RMD and other departments of the City for support, this expense may not be adequately represented in the figures compared to the average in the group that includes some utilities that perform all A&G functions internally. An additional factor may be that the A&G expenses are shared among five utilities. $94 $140 $154 $158 $422 $127 $37 $0 $46 $15 $261 $39 $176 $128 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Pa l o A l t o AP P A 2 0 1 0 -20 k t o 50 k C u s t o m e r s AP P A 2 0 1 0 - We s t e r n U S Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eug e n e Fo r t C o l l i n s Pa c i f i c G a s & Ele c t r i c Av e r a g e w i t h o u t Pal o A l t o A&G Expense per Retail Customer Median without Palo Alto B e t t e r Reported as O&M 3-12 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-9. A&G Expense per kWh As shown in Figure 3-9, CPAU also falls well below the average level of A&G expense per kWh in comparison to this group of utilities. Again, this result indicates the organization is operating efficiently in terms of A&G.11 11 Refer to explanation for Figure 3-8 for more details. $0.0029 $0.0142 $0.0271 $0.0060 $0.0018 $0.0020 $0.0003 $0.0046 $0.0018 $0.0112 $0.0069 $0.0000 $0.0050 $0.0100 $0.0150 $0.0200 $0.0250 $0.0300 $0.0350 $0.0400 Pa l o A l t o Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Red d i n g Ro s e v i l l e San t a C l a r a Eug e n e Fo r t C o l l i n s Pac i f i c G a s & E l e c t r i c Av e r a g e w i t h o u t P a l o Alt o A&G Expense per kWh Median without Palo Alto B e t t e r Reported as O&M File: 001420/3153211006 Leidos, Inc. 3-13 Section 3 Source: Leidos Figure 3-10. Customer Accounting, Service, and Sales Expense per Retail Customer This measure shown in Figure 3-10 compares the customer accounting, service, and sales expense per retail customer part of the electric utility operation. CPAU falls below the average value for the comparison group of utilities. For CPAU, the customer accounting, service and sales expense category includes customer service center, meter reading, billing, key accounts, and credit and collections expenses and uncollectable accounts. We made an effort to match these classifications as closely as possible for other benchmark utilities. PG&E’s customer accounting, service, and sales expense category also includes customer service, informational expenses, and sales expenses. CPAU’s relatively low expense result should be carefully analyzed further taking into consideration the CPAU’s unsatisfactory “customer satisfaction” survey results for residential customers. It should be noted that being below average in expense may be a false economy if customer facing services are rated low by customers or exhibit a downward performance trend. $64 $63 $89 $53 $5 $76 $135 $38 $265 $115 $103 $181 $108 $0 $50 $100 $150 $200 $250 $300 Pal o A l t o AP P A 2 0 1 0 -20 k t o 50 k C u s t o m e r s AP P A 2 0 1 0 - We s t e r n U S Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Pac i f i c G a s & Ele c t r i c Av e r a g e w i t h o u t Pa l o A l t o Customer Accounting, Service, and Sales Expense per Retail Customer Median without Palo Alto B e t t e r Not Available 3-14 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-11. Customer Accounting, Service, and Sales Expense per kWh As shown in Figure 3-11, this customer accounting, service, and sales expense per kWh measure compares the expense of operating the customer-related expenses of the electric utility operation on a per kWh basis. CPAU is substantially below the average value compared to this group of utilities. As mentioned under the discussion for Figure 3-10, cost savings in this area may have implications for customer service ratings. $0.0020 $0.0047 $0.0003 $0.0036 $0.0076 $0.0016 $0.0047 $0.0020 $0.0047 $0.0114 $0.0045 $0.0000 $0.0020 $0.0040 $0.0060 $0.0080 $0.0100 $0.0120 $0.0140 Pal o A l t o Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Pac i f i c G a s & E l e c t r i c Av e r a g e w i t h o u t P a l o Alt o Customer Accounting, Service, and Sales Expense per KWH Median without Palo Alto Not Available B e t t e r File: 001420/3153211006 Leidos, Inc. 3-15 Section 3 Source: Leidos Figure 3-12. Current Ratio – Electric In this measure presented in Figure 3-12, current ratio – electric, CPAU’s current ratio, defined as current assets ÷ current liabilities, is approximately 9 times higher than the group average for electric utilities. This result appears to be primarily due to CPAU’s relatively low levels of debt service. Leidos understands from discussions with the City that the City primarily pays for investments in its systems with cash. CPAU also has significant balances in reserve funds (over $126 million), and this may be causing part of the separation from the comparison group of utilities for this measure. This figure represents almost two years of electricity utility revenue. 3-16 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-13. Average Monthly Residential Electricity Bill based on Average Monthly Usage In this measure presented in Figure 3-13, average monthly residential electricity bill based on average monthly usage, the average CPAU residential customer enjoys an electric bill that is approximately $24 less than the average electric bill of the comparison group of utilities. This favorable result reflects the relatively low average usage among CPAU’s residential customers and relatively low commodity prices. $56.83 $45.10 $64.11 $65.38 $124.70 $106.64 $58.80 $102.72 $62.04 $102.28 $81.31 $65.38 $- $20 $40 $60 $80 $100 $120 $140 0 200 400 600 800 1,000 1,200 Pa l o A l t o Ala m e d a Azu s a Pa s a d e n a Red d i n g Ro s e v i l l e San t a C l a r a EW E B Fo r t C o l l i n s PG & E Av e r a g e w i t h o u t Pa l o A l t o Me d i a n w i t h o u t Pa l o A l t o Av e r a g e M o n t h l y B i l l ( $ ) Av e r a g e M o n t h l y U s a g e ( k W h ) Average Residential Monthly Bill & Usage Average Annual Monthly Bill Average Annual Monthly Usage File: 001420/3153211006 Leidos, Inc. 3-17 Section 3 Source: Leidos Figure 3-14. Annual Energy Efficiency Cost per Customer Figure 3-14 shows annual energy efficiency cost per customer. Climate, average home size, and usage habits have an impact on average energy usage, as does implementation of energy efficiency measures. CPAU spends substantially more on energy efficiency programs per customer than the average compared to this group of utilities, which together with a moderate climate likely contributes to the relatively low average usage among its residential customers. CPAU spends 138 percent more than the average and 161 percent more than the California average on energy efficiency programs per customer. A 2013 report to the California Energy Commission prepared by CMUA found that based on a key measure of cost effectiveness (Total Resource Cost Test (TRC)12 CPAU has a TRC ratio of 2.45, which is only slight lower than the average of $2.60 for California’s consumer-owned utilities. This metric means that, on average, for every dollar that Palo Alto invests in energy efficiency it generates $2.45 of societal value. Palo Alto’s 2009 kWh savings cost was 86 cents for residential and projected at 39 cents for non-residential in 2015, compared with an average of 58 cents for residential and 36 cents for non-residential for the other California municipal utilities studied. 12 According to the US EPA, TRC is the most common primary measurement of energy efficiency cost-effectiveness. $162 $17 $41 $67 $60 $43 $136 $108 $71 $69 $68 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 Pa l o A l t o Ala m e d a Az u s a Bu r b a n k Pa s a d e n a Re d d i n g Ro s e v i l l e San t a C l a r a Eug e n e Fo r t C o l l i n s Pa c i f i c G a s & E l e c t r i c Av e r a g e w i t h o u t P a l o Alt o Annual Energy Efficiency Expenditure per Customer Median without Palo Alto Not Available 3-18 Leidos, Inc. Final BENCHMARKING ANALYSIS Also, KEMA found that Palo Alto’s residential cost per first‐year kWh is the highest of all 12 utilities in the detailed study. While this study shows that CPAU compared well with other utilities in energy usage and in achieving energy efficiency potential to other utilities, the cost of the program per customer and the related TRC ratio are cause for concern and should be evaluated further by the CPAU. Source: Leidos Figure 3-15. System Average Interruption Duration Index (SAIDI) Shown in this SAIDI measure (Figure 3-15), CPAU’s system reliability is well above the group average when using the SAIDI measure. This result reflects CPAU’s diligent regular maintenance and infrastructure replacement programs. 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 2008 2009 2010 Minutes per Year System Average Interruption Duration Index SMUD Palo Alto PacifiCorp Pacific Gas & Electric Southern California Edison San Diego Gas & Electric Sierra Pacific Power Redding Roseville Average without Palo Alto Median without Palo Alto Better File: 001420/3153211006 Leidos, Inc. 3-19 Section 3 Source: Leidos Figure 3-16. System Interruption and Frequency Index (SAIFI) In this SAIFI measure shown in Figure 3-16, CPAU’s system exhibits very high reliability when compared to other regional electric utilities. Similar to the SAIDI measure shown in Figure 3-15, this positive result reflects CPAU’s proactive regular maintenance and infrastructure replacement programs. Summary of Electric System Performance Measures In summary, CPAU electric system performance compares very favorably with other regional utilities surveyed in this study, and also with the applicable APPA statistics. Conclusions that can be made by observing these results are: 1. CPAU’s net income is relatively high. This indicates that total utility expenses are under control. This is confirmed by benchmarking results for several expense categories (O&M expense, customer service expense, A&G expense). 2. Results from Leidos’ benchmarking of standard reliability measures demonstrate that the City’s electric system is more reliable than most utilities in the comparison group. 3. Productivity measure comparisons indicate that total current staffing for CPAU’s electric utility should be adequate to perform the services generally undertaken by electric utilities. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2008 2009 2010 Number of Disruptions per Year System Average Interruption Frequency Index SMUD Palo Alto PacifiCorp Pacific Gas & Electric Southern California Edison San Diego Gas & Electric Sierra Pacific Power Redding Roseville Average without Palo Alto Median without Palo Alto Better 3-20 Leidos, Inc. Final BENCHMARKING ANALYSIS 4. CPAU spends substantially more on energy efficiency programs per customer than the average compared to this group of utilities. This level of spending is helping CPAU meet its energy efficiency goals. The California Municipal Utility Association report, Energy Efficiency in California’s Public Power Sector: A 2013 Status Update, indicates that CPAU’s cost effectiveness for their energy efficiency programs is 2.45, only slightly lower than the average of California consumer-owned utilities at 2.60. 5. The Current Ratio is 9 times higher than the group average. The City should investigate this further and determine if its high use of cash and low use of debt for CIP projects is the best strategy. 3.2.2 Water Leidos compared CPAU to nine other utilities, many that overlap with the electric utility group. CPAU serves 19,600 water customers, employing 20 water operations staff. The City’s water is bought from the City of San Francisco. The City of Palo Alto generally has a high commodity cost for water provided by the SFPUC, which along with conservation measures tends to drive consumption down. Additionally, in allocating FTEs to the water utility operations, Palo Alto is more conservative in its accounting than the allocations from some of the other utilities in the benchmarking study who do not account for administrative and customer service staff in their accounting of water system operations. These factors contribute to the water productivity benchmarks. CPAU’s water utility’s benchmarking performance is worse than average in three of the ten metrics measured: 1) O&M expense per mile of water main, 2) ratio of system throughput to number of FTEs, and 3) average monthly bill. We believe that O&M expenses per mile of water main are higher due to CPAU’s increased attention to aging infrastructure. The ratio of FTE’s to volume of water delivered should be considered carefully as volume is not a strong driver of staffing as are miles of water main and number of customers. We believe that on average, CPAU customers use less water than many of the comparable utilities in response to conservation efforts, relatively high cost of water and concerns of scarcity of supply all three of which are typical behaviors for residents of Bay Area cities. CPAU’s average monthly bill is a direct reflection of water rates, which are higher than some other utilities due primarily to the higher wholesale cost of water supply. It is also important to understand the situations and challenges are never exactly the same across a group of water utility organizations because of the size and age of the facilities. Leidos concludes that the water utility is performing well and should continue its efforts to manage O&M costs and wholesale water supply costs. Comparisons for the water measures are shown in the following graphs. File: 001420/3153211006 Leidos, Inc. 3-21 Section 3 Source: Leidos Figure 3-17. Revenue per Million Gallons of Water Delivered In this measure shown in Figure 3-17, revenues directly reflect the rates charged for the commodity. CPAU’s revenue at $7,146 per one million gallons delivered is higher than the comparison group average of $3,456 per million gallons delivered, because CPAU’s water rates exceed the rates charged by utilities in the comparison group. The higher water rates directly reflect the high water commodity prices that CPAU must pay to the City of San Francisco. 3-22 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-18. Net Income per Revenue Dollar Figure 3-18 shows that CPAU’s water utility income (operating revenue minus operating costs and depreciation) of $0.13 per revenue dollar is higher than average value ($0.08) for utilities in the comparison group. This situation is largely due to the water utility recovering their expenses incurred for the water costs from the base rates. File: 001420/3153211006 Leidos, Inc. 3-23 Section 3 Source: Leidos Figure 3-19. Retail Water Customers per FTE This measure, retail water customer per FTE, may indicate the productivity or efficiency of the water utility where age and other characteristics are similar across utilities. Higher numbers of customers per FTE indicate greater productivity. CPAU, at 458 retail water customers per FTE, is slightly lower in productivity than the comparison group average of 551 retail customers per FTE (by 16 percent), but slightly higher than the average productivity reported in the published AWWA statistics. If the outlier utilities, Redding and Roseville, are not included in the comparison group, the average is 451 and the median is 497, which would place CPAU very close to the average. 458 545 497 525 274 1,023 784 551 437 326 551 422 0 200 400 600 800 1,000 1,200 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto AWWA Retail Water Customers per FTE Median without Palo Alto B e t t e r 3-24 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-20. O&M Expense per Million Gallons In this O&M expense per million gallons measure, note that CPAU’s water system treatment and delivery O&M expense of $1,311 for each million gallons sold is above the average value ($1,125) of the comparison group of regional municipally owned utilities, but below the statistics published by the AWWA for this measure. The maintenance expense for transmission and distribution systems varies greatly with system size, age, and geographic characteristics. $1,311 $1,550 $380 $1,390 $1,034 $1,376 $968 $1,230 $942 $1,257 $1,125 $1,608 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto AWWA O&M Expense per Million Gallons Median without Palo Alto B e t t e r File: 001420/3153211006 Leidos, Inc. 3-25 Section 3 Source: Leidos Figure 3-21. O&M Expense per Water Retail Customer As shown in Figure 3-21, CPAU’s water system treatment and delivery O&M expense of $241 for each water retail customer is slightly better than the average value ($257) of the comparison group of regional municipally owned utilities, and below the statistics published by the AWWA for this measure. The maintenance expense for treatment and distribution systems varies greatly with system size, age, and geographic characteristics. Generally, cities with more industry (e.g., heavy commercial, industrial customers) would exhibit higher O&M cost per retail customer than cities with a larger, but residential customer base. That, for example, may explain why Santa Clara is higher. $241 $300 $115 $294 $243 $363 $229 $329 $137 $298 $257 $339 $- $50 $100 $150 $200 $250 $300 $350 $400 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto AWWA O & M Expense per Water Retail Customer Median without Palo Alto B e t t e r 3-26 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-22. O&M Expense per Mile of Water Main In this measure shown in Figure 3-22, CPAU’s water utility exhibits higher O&M expense per mile of water main ($22,827) than the group average ($19,060). As is the case with Long Beach, Burbank and Santa Clara, aging infrastructure is a significant driver of higher operating and maintenance costs. $22,827 $31,516 $6,642 $28,100 $18,224 $18,642 $16,081 $24,930 $8,725 $18,678 $19,060 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto O&M Expense per Miles of Water Main Median without Palo Alto B e t t e r File: 001420/3153211006 Leidos, Inc. 3-27 Section 3 Source: Leidos Figure 3-23. A&G Expense per Retail Water Customer As shown in Figure 3-23, CPAU’s water utility A&G expense per retail water customer of $106 is well below the group average of $139 for A&G expense per retail customer. This result demonstrates good control of support expenses. It should be noted that because the Administrative Division within CPAU relies on the RMD and other departments of the City for support, this expense may not be adequately represented in the figures compared to the average in the group that includes some utilities that perform all A&G functions internally. An additional factor may be that the A&G expenses are shared among five utilities. $106 $177 $350 $127 $152 $54 $75 $65 $115 $139 $- $50 $100 $150 $200 $250 $300 $350 $400 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto A & G Expense per Retail Water Customer Median without Palo Alto Not Available B e t t e r 3-28 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-24. A&G Expense per Million Gallons Processed CPAU’s water utility A&G expense per million gallons processed of $576 is below the group average of $665 as shown in Figure 3-24. This result demonstrates good control of support expenses.13 13 Refer to Figure 3-23 for additional detail. $576 $912 $1,150 $1,178 $644 $228 $280 $447 $485 $665 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto A& G Expense per Retail MGals Processed Median without Palo Alto Not Available B e t t e r File: 001420/3153211006 Leidos, Inc. 3-29 Section 3 Source: Leidos Figure 3-25. Million Gallons per Day Delivered per FTE The ratio of system throughput to number of FTEs is a common high-level productivity or efficiency measure. In this measure shown in Figure 3-25, CPAU’s water utility productivity at 230,000 gallons per day delivered per FTE is below the comparison group average of 360,000 gallons per day delivered per FTE by 36 percent and below the median by 23 percent, and below the published AWWA statistics by 12 percent. Redding and Roseville serve communities that experience hot summer temperatures that drive relatively high summer water usage per customer, so it is not surprising that their delivery per FTE is above average. We understand that if one were to analyze this measure for CPAU for three or four additional years, this investigation would not result in significant changes. This is because the number of customers has not changed significantly and headcount has only increased by one FTE over the past three or four years. 0.23 0.29 0.41 0.30 0.18 0.74 0.51 0.40 0.17 0.21 0.36 0.26 - 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 Palo Alto Long Beach Azusa Burbank Pasadena Redding Roseville Santa Clara Eugene Fort Collins Average without Palo Alto AWWA Million Gallons per Day Delivered per FTE Median without Palo Alto B e t t e r 3-30 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-26. Average Monthly Residential Water Bill As shown in Figure 3-26, the average CPAU residential customer’s water bill of approximately $64 a month (based on annual average monthly usage of 12.6 CCF) is higher than all utilities in the comparison group and is approximately $22 higher than the group average. Since the water bill is mostly commodity cost, CPAU’s higher commodity cost, as a result of wholesale prices charged by the City of San Francisco, drives this unfavorable result. Summary of Water Utility System Performance In summary, CPAU’s water system comparison with other regional utilities surveyed in this study indicates that this utility is in the average range overall. From observing these results, the following conclusions can be drawn. 1. CPAU revenues are comparatively high and net income is also high. This result reflects the higher than average water rates (and bills) as a result of higher commodity costs, but we observe that overall expenses are closer to the group average. This and low debt service costs likely explain the higher net income. 2. CPAU’s water utility’s productivity falls on the low end of the averages based on the comparison group average productivity using two different measures: 1) ratio of system throughput to number of FTEs, and 2) retail water customer per FTE. Although the water utility productivity (Measure A) slightly exceeds $64.14 $44.90 $40.23 $63.02 $44.22 $35.03 $28.19 $62.03 $22.00 $37.65 $41.92 $40.23 $- $10 $20 $30 $40 $50 $60 $70 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Pa l o A l t o Lon g B e a c h Azu s a Bu r b a n k Pa s a d e n a Red d i n g Ro s e v i l l e San t a C l a r a Eu g e n e Fo r t C o l l i n s Av e r a g e w i t h o u t Pa l o A l t o Me d i a n w i t h o u t Pa l o A l t o Av e r a g e M o n t h l y B i l l ( $ ) Av e r a g e M o n t h l y U s a g e ( G a l l o n s ) Average Residential Monthly Water Bill & Usage Average Annual Monthly Bill Average Annual Monthly Usage File: 001420/3153211006 Leidos, Inc. 3-31 Section 3 one of the published AWWA productivity statistics, for Measure B, CPAU is somewhat more below the average or median number. Situations and challenges are never exactly the same across a group of utility organizations because of the size and age of the facilities. 3.2.3 Wastewater Leidos compared CPAU’s wastewater utility to seven others. CPAU provides wastewater service to 22,300 customers, collects an average of 3,392 million gallons of wastewater annually and allocates 26.5 FTEs to this purpose. Comparisons for the wastewater measures are shown in the following graphs. Source: Leidos Figure 3-27. Revenue per Million Gallons of Wastewater Collected or Processed In this measure shown in Figure 3-27, revenue per million gallons of wastewater collected or processed, revenues directly reflect the rates charged for this service. CPAU’s revenue per million gallons processed at $4,450 is above the group average of $2,648 per million gallons processed. Higher than average revenues indicate that that rates of treatment and collection are higher than others. 3-32 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-28. Net Income per Revenue Dollar Figure 3-28, net income per revenue dollar, CPAU’s wastewater utility net income (operating revenue minus operating expenses and depreciation) of $0.18 per revenue dollar is considerably higher than utilities in the comparison group (average of $0.11 per revenue dollar). Net income per revenue dollar is a measure that reflects how well a utility is covering its expenses with its operating revenue. File: 001420/3153211006 Leidos, Inc. 3-33 Section 3 Source: Leidos Figure 3-29. Retail Wastewater Customers per FTE As shown in Figure 3-29, the wastewater utility productivity (842 retail customers served per FTE) is lower than the comparison group median of 1,373 retail customers served per FTE, but exceeds the AWWA statistics. Key distinctions that should be considered in this analysis include: Palo Alto’s FTE count includes allocations for administration, engineering, customer service and other non-field operations support. Burbank’s FTE count is lower but it pays costs to other City departments for engineering, administrative and other support services. Palo Alto’s maintenance crews maintain the lower-lateral section of sewer-line (from the customer cleanout to the collector) while other utilities do not. Note that the total length of sewer lines maintained does not include the length of the lower laterals. 3-34 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-30. O&M Expense per Million Gallons In the measure shown in Figure 3-30, O&M expense per million gallons of collected wastewater, CPAU’s wastewater utility exhibits higher O&M expense per million gallons of throughput ($3,642) when compared to the group average ($2,731) and the published AWWA statistics ($2,293). Considerations when examining this metric include: Long Beach and Azusa wastewater is treated at large Los Angeles County Sanitation District treatment facilities at very costs. Water consumption, and therefore wastewater generation, in Palo Alto is generally lower than other areas due to the relative scarcity and higher price for water. This is not an indicator of poor performance as water is not an abundant resource in the Bay Area and most local utilities must address these same challenges. File: 001420/3153211006 Leidos, Inc. 3-35 Section 3 Source: Leidos Figure 3-31. O&M Expense per Water Retail Customer Figure 3-31, O&M expense per water retail customer, shows that CPAU’s wastewater utility also exhibits higher O&M expense per customer ($553) when compared to the group average ($393) and the published AWWA statistics ($213). CPAU has been working very hard to reduce sanitary sewer overflows, has an aggressive fats, oils and grease management program and is replacing aging sewer infrastructure all of which contribute to higher operating and maintenance costs for the wastewater collection system and is not necessarily an indicator of undesirable performance. 3-36 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-32. Million Gallons per Day of Wastewater per FTE In this measure shown in Figure 3-32, million gallons per day of wastewater per FTE, the wastewater utility productivity (system throughput per FTE of 350,00 gallons per day) compares is below the group average (870,000 gallons per day per FTE) and exceeds the published AWWA statistics. Considerations for this statistic include: Wastewater collection volume is determined as 39.2 percent of the total inflow into the regional wastewater treatment plant as reported in the FY11 Service Efforts and Accomplishments Report. The number of FTEs for wastewater collection is based on data provided by the CPAU and is reported as 26.5. The number of FTEs for Azusa, Burbank, Santa Clara and Long Beach do not include allocations for customer service and administration as is the case for Palo Alto, and therefore, the performance of these utilities is likely overstated for the purposes of this consideration. File: 001420/3153211006 Leidos, Inc. 3-37 Section 3 APPA Figure 3-33. Miles of Sanitary Sewer Line per FTE In this measure shown in Figure 3-33, miles of sewer line per FTE, CPAU wastewater collection personnel are responsible for the average amount of collection infrastructure. This is a stronger indicator of appropriate staffing levels that the previous indicator, which is based on a volumetric comparison. 3-38 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-34. Average Monthly Residential Wastewater Bill As shown in Figure 3-34, the wastewater utility customers see on average higher bills at $28 per month than the average bills at the comparison utilities ($24 per month). Additional comparisons could be made based on an average bill (average monthly usage multiplied by the rate), however, average monthly residential wastewater usage data was not readily available, hence an average bill was calculated at a single level of usage. Summary of Wastewater System Performance In summary, CPAU’s wastewater system comparison with other regional utilities surveyed in this study shows mixed results. From observing these results, the following conclusions can be drawn: 1. The wastewater utility’s productivity falls short of the comparison group’s average productivity using one measure and approximately equals group productivity using a second measure. However, for both measures, the wastewater utility productivity exceeds the published AWWA statistics. The lower productivity findings are for retail wastewater customers per FTE and million gallons per day of wastewater per FTE. Situations such as system age and challenges are never exactly the same across a group of utility organizations. $28 $9 $10 $22 $41 $29 $25 $31 $24 $- $5 $10 $15 $20 $25 $30 $35 $40 $45 Palo Alto Long Beach Azusa Burbank Redding Roseville Santa Clara Fort Collins Average without Palo Alto Average Monthly Residential Wastewater /Sewer Bill Median without Palo Alto File: 001420/3153211006 Leidos, Inc. 3-39 Section 3 2. CPAU has been working very hard to reduce sanitary sewer overflows, has an aggressive fats, oils and grease management program and is replacing aging sewer infrastructure all of which contribute to higher operating and maintenance costs for the wastewater collection system and is not necessarily an indicator of undesirable performance. 3.2.4 Natural Gas There is only one other municipally owned utility in California that offers natural gas to its citizens, the City of Long Beach. Across the country, municipally owned natural gas utilities are also rare, especially those of a similar size to CPAU. As such, benchmarking results for CPAU’s natural gas utility may be of more limited value than are the comparisons for the previously discussed utility services. In an attempt to provide the reader additional comparative data, Leidos included municipally owned natural gas utilities in Corpus Christi, Texas, and Richmond, Virginia and a neighboring investor-owned natural gas utility, PG&E. Comparisons for selected measures are shown in the following graphs. Data is for the fiscal year ending June 30, 2011 and does not reflect the changes in CPAU’s natural gas purchasing policies. Source: Leidos Figure 3-35. Natural Gas Revenue per CCF $1.45 $0.90 $1.03 $1.01 $1.19 $1.03 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas Revenue per CCF Median without Palo Alto 3-40 Leidos, Inc. Final BENCHMARKING ANALYSIS As Figure 3-35 shows natural gas revenue per CCF at CPAU at $1.45 per CCF is well above the average for the comparison group of utilities ($1.03 per CCF). For utility organizations, higher revenues generally reflect higher commodity rates, which is the case in Palo Alto. Source: Leidos Figure 3-36. Net Income per Revenue Dollar In this measure, net income per revenue dollar, CPAU’s natural gas utility net income (operating revenue minus operating expenses and depreciation) of $0.27 per revenue dollar is considerably higher than utilities in the comparison group (average of $0.16 per revenue dollar.). This situation is likely due to better control of overall expenses with respect to collected revenues than Corpus Christi, Texas; Richmond, Virginia; and PG&E. Figure 3-35 also reflects CPAU’s lower debt service cost. File: 001420/3153211006 Leidos, Inc. 3-41 Section 3 Source: Leidos Figure 3-37. Retail Natural Gas Customers per FTE Retail natural gas customers per FTE as shown in Figure 3-37 is a measure of the productivity or efficiency of CPAU. This sheds light on the question of how CPAU is staffed compared to other utilities. Higher numbers of customers per FTE indicates greater productivity. At 477 retail gas customers per FTE, CPAU is lower in productivity than this relatively small comparison group’s average of 793 retail customers per FTE and significantly lower in productivity than Long Beach and PG&E. However, this may reflect economies of scale that Long Beach and PG&E are able to achieve due to their larger size. The CPAU’s ratio is better than Corpus Christi, Texas and Richmond, Virginia. 477 798 404 264 1,707 793 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas Retail Customer per FTE Median without Palo Alto B e t t e r 3-42 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-38. A&G Expense per Retail Customer A common performance measure used in the energy industry is A&G expense per retail customer. As shown in Figure 3-38, CPAU’s natural gas utility A&G expense per customer is substantially lower than the average level of the comparison group. Such a result is usually considered favorable in that it indicates the organization is a “lean” operation in the support areas. It should be noted that because the Administrative Division within CPAU relies on the RMD and other departments of the City for support, this expense may not be adequately represented in the figures compared to the average in the group that includes some utilities that perform all A&G functions internally. An additional factor may be the A&G expenses are shared among five utilities. $76 $100 $122 $99 $97 $104 $0 $20 $40 $60 $80 $100 $120 $140 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas A&G Expense per Retail Customer B e t t e r File: 001420/3153211006 Leidos, Inc. 3-43 Section 3 Source: Leidos Figure 3-39. A&G Expense per CCF As shown in Figure 3-39, CPAU’s A&G expense per CCF of natural gas is also considerably below the group average, a further indication that the operation of the natural gas organization is “lean” in the support areas.14 14 Refer to Figure 3-37 for additional explanation. $0.060 $0.159 $0.214 $0.062 $0.143 $0.145 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas A&G Expense per CCF Median without Palo Alto B e t t e r 3-44 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-40. O&M Expense per CCF As shown in Figure 3-40, CPAU’s natural gas system O&M expense at $0.11 for each CCF of gas delivered is below the comparison group average of $0.32 per CCF. Maintenance expenses for gas distribution systems vary greatly with system age and geographic characteristics. $0.11 $0.17 $0.56 $0.20 $0.36 $0.32 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas O & M Expense per CCF Median without Palo Alto B e t t e r File: 001420/3153211006 Leidos, Inc. 3-45 Section 3 Source: Leidos Figure 3-41. O&M Expenses per Mile of Main As shown in Figure 3-41, in the measure of total O&M expenses per mile of natural gas main, CPAU’s natural gas utility at $16,083 is slightly lower than the group average. As previously mentioned, maintenance costs for gas distribution systems can vary greatly depending on the system age and composition of the pipes. $16,083 $16,020 $12,392 $19,419 $21,831 $17,415 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas O & M Expense per Miles of Main Median without Palo Alto B e t t e r 3-46 Leidos, Inc. Final BENCHMARKING ANALYSIS Source: Leidos Figure 3-42. O&M Expenses per Retail Customer As shown in Figure 3-42 total O&M expenses per retail customer, CPAU’s natural gas utility at $138 per retail customer is lower than the group average of $234 per retail customer. This is a primary indicator that CPAU is controlling costs well. $138 $104 $318 $314 $202 $234 $0 $50 $100 $150 $200 $250 $300 $350 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Natural Gas O & M Expense per Retail Customer Median without Palo Alto B e t t e r File: 001420/3153211006 Leidos, Inc. 3-47 Section 3 Source: Leidos Figure 3-43. Average Monthly Natural Gas Bill at 40 Therms The average monthly bill for CPAU natural gas customers who use 40 therms is higher ($53 a month) than the average bill of residential customers of the comparison utilities ($44 per month). Additional comparisons could be made based on an average bill calculated on typical usage (average monthly usage multiplied by the rate), however, average monthly residential usage data was not readily available, hence, an average bill was calculated at a single level of usage. Summary of Natural Gas System Performance Measures In summary, CPAU’s natural gas system comparison with select gas utilities included in this study shows mixed results. From observing these results, the following conclusions can be drawn: 1. CPAU revenues per volume are high compared to the other utilities as is net income. These results are a product of low commodity cost at other utilities as well as CPAU’s gas laddering strategy in a period of declining gas market prices which resulted in higher than average commodity costs. Council directed CPAU staff to implement monthly varying market-based rates, which required abandoning the gas laddering strategy. The results also indicate that CPAU is controlling expenses well, including debt service. 2. O&M expenses are generally at or lower than the group average. $53 $38 $40 $51 $47 $44 $0 $10 $20 $30 $40 $50 $60 Palo Alto Long Beach Corpus Chrisiti Richmond PG&E Average without Palo Alto Average Monthly Natural Gas Bill at 40 Therms Median without Palo Alto 3-48 Leidos, Inc. Final BENCHMARKING ANALYSIS 3. The gas utility’s productivity falls far short of that shown for Long Beach and PG&E, but is superior to the other municipal utilities. Since Long Beach is the largest municipal natural gas utility included in the study, it may be able to achieve productivity efficiencies not available to smaller natural gas utilities. 4. CPAU’s customers experience an average natural gas bill that is higher than customers at the other four utilities included in this study. This is a result of older natural gas procurement contracts with high pricing structures. These contracts will be replaced in the near future with contracts with more favorable gas pricing. 3.2.5 Dark Fiber Insufficient available comparative data prevented benchmarking CPAU’s Dark Fiber operation. 3.3 Best Practices Review Leidos conducted an extensive review of how well CPAU employs best practices in the operation of the utility. A set of over 20 best practices developed by utilities and recognized by various utility associations including the American Public Power Association (APPA), and the American Water Works Association (AWWA) are considered. To measure CPAU’s performance against best utility practices, three indicators are used: • Effective – the utility applies best practices effectively. • On-track – the utility partially applies best practices and is making progress toward effective application. • Needs attention – the utility does not apply best practices and has substantial work to do in order to implement best practices. File: 001420/3153211006 Leidos, Inc. 3-49 Section 3 Table 3-2 Best Practices Overview Effective Meets or Exceeds Best Practices On-Track Working Towards Meeting Best Practices Needs Attention Does Not Meet Best Practice Performance Level ● Strategic Planning ● Performance Measurement ● Resource Efficiency and Conservation ● Adequate Financial Resources ● Competitively Priced Services ● Managing Regulatory and Legislative Uncertainty ● Regulatory and Legislative Compliance ● Operational Resiliency ● Organizational Effectiveness Maintain Positive Investment Ratings ● Financial Risk Management ● Physical and Operating Risk Management ● Customer Service and Engagement ● Facility Adequacy ● Outsourcing ● Safety Culture ● Information and Operating Technologies ● Asset Management ● Geospatial Information Systems ● Infrastructure Planning ● Operating, Maintenance and Capital Planning ● Business Processes ● Workforce Development ● Project Management ● Work Management Strategic Planning - Effective Standards of Practice Strategic Plans exist, are regularly reviewed and are updated as necessary. Plans are developed collaboratively and acknowledged by all personnel. Plans are accompanied by implementation tactics and objectives. Strategic plans reflect community values. Plans are consistent/integrated with City-wide plans. Progress toward strategic goals are regularly reviewed and reported. Strategies and tactics are revised when progress is not as expected. Analysis Leidos reviewed CPAU’s Strategic Plan, plan updates and progress reports. We discussed the development of the plan and its upkeep with CPAU management. Based on this review we conclude that: 3-50 Leidos, Inc. Final BENCHMARKING ANALYSIS CPAU has a robust strategic plan in place that was developed with extensive input from customers, governance, management and staff. While there is not a City-wide strategic plan, the CPAU strategic plan goals reflect community values, are driven by stated mission, vision and values, are regularly measured and reported and are reviewed periodically and updated as needed. CPAU’s strategic plan is well documented, easily understood and presents clearly. Opportunities to Improve While strategic planning is clearly a priority for CPAU and its planning processes are implemented very well, we offer several suggestions for improvement including: CPAU should consider measuring and reporting progress toward goals more than twice a year. Progress information should be shared transparently with all staff. Successes should be widely and publicly shared. Shortcomings should be addressed by changing implementation tactics and reformulating solutions. CPAU should develop a complete inventory of published performance goals and results and then determine whether these goals, metrics and reporting frequencies are meaningful. Performance Measurement - Effective Standards of Practice Performance measurement is an important business process. Managers can effect great change in organizations when setting goals and measuring progress are high-priority management tools. Representative best practices for performance measurement include: Performance objectives exist for each operating division and section. Objectives and metrics are defined, accepted and acknowledged by each division's staff and management. Each division regularly and transparently measures performance, reports on progress towards meeting their objectives to staff, management, governance and the community. Performance measurements and objective, easily understood and provide clear indication as to whether desired outcomes are being achieved. File: 001420/3153211006 Leidos, Inc. 3-51 Section 3 Analysis Leidos reviewed an extensive set of performance metrics as reported in budget documents, internal audit reports, annual performance reports, quarterly updates to governance and semi-annual strategic plan updates. Based on this review, we observe that: CPAU progress measurements are objective, reliable and in most instances are based on industry accepted metrics. Performance objectives are established and performance is reported in multiple settings including: Annual Operating Budgets; the Utility Strategic Plan Semi- Annual Strategic Plan Performance Updates; Quarterly Reports; and the Service Efforts and Accomplishments Report. The setting of performance goals and reporting on performance is not particularly well coordinated and reflects some out-of-date goals that reported but not used to gage whether the utility is performing well. Varying degrees of acceptance of goals were observed (e.g., operations has other goals and objectives that seem more important such as reducing sanitary sewer overflows, replacing water and gas lines). Opportunities to Improve It is clear that CPAU tracks performance extensively. We observed dozens of metrics addressing competitiveness of rates, financial ratings, infrastructure replacement rates, and many other indicators across the enterprise. We believe that CPAU performance tracking is mostly reflective of industry best practices, but we suggest these opportunities to improve: CPAU should conduct an inventory of performance goals and performance measurement to eliminate legacy reporting and allow focus on more relevant goals. CPAU should consider measuring and reporting goals that are reflective of operational performance including miles of 4-kV conversion completed, miles of OH/UG conversion completed; miles of pipeline inspected; inspection productivity; number of sanitary sewer overflows; number of forced outages and so on. Performance metrics should be consistent throughout reports described above should be collaboratively determined; should include meaningful goals and should be based on APPA, AWWA, and other industry standards to aid in comparative analysis. Organizational Effectiveness - Effective Standards of Practice Organizational structure provides effective command, communication and control. Ratio of managers to staff provides effective and efficient performance. 3-52 Leidos, Inc. Final BENCHMARKING ANALYSIS Span of control is reasonable. Organizational effectiveness is regularly measured and results are reported and issues are addressed. Enterprise functions such as accounting, purchasing, human resources, fleet management and information technology fully support the needs of the utility. Analysis CPAU organization is not structured similar to most other multi-service utilities that have at least more than one utility director to oversee utility services provided. The tremendous compliance requirements associated with providing electric, water, wastewater collection and natural gas services warrant consideration of a broader management structure. While the current structure is functioning, the management team is challenged to address a very wide range of issues and challenges. This further exacerbates succession planning challenges as it is very difficult to find and develop personnel with the wide range of experience required of the Utility Director, and Assistant Directors each of whom oversees the entire range of electric, water, gas, wastewater and fiber communications issues. Opportunities to Improve Opportunities to improve include organizing around service lines (e.g., create AUD positions for each of the EWGWW service lines). Resource Efficiency and Conservation - Effective Standards of Practice Utility has programs in place to promote resource efficiency and conservation. Programs meet regulatory requirements, are cost-effective and adoption rates achieve stated goals. Analysis CPAU programs for resource efficiency are extensive including electricity, gas and water efficiency and conservation. Numerous energy efficiency programs exist for all customer classes. Programs are cost-effective. Has highest participation in Palo Alto Green program with 20 percent of customers choosing to purchase power from renewable resources. Water demand reduction and efficiency programs are reported to be effective. Voltage conversion projects and voltage optimization investigations are positive indicators of best practices in grid operational efficiency. File: 001420/3153211006 Leidos, Inc. 3-53 Section 3 Opportunities to Improve CPAU should consider a rigorous prioritization of the most cost-effective programs; retirement of ineffective programs; continues research into new and innovative programs. Adequate Financial Resources - Effective Standards of Practice Capital and operating budgets are sufficient to accomplish performance objectives and expenditures. Projects are prioritized based on safety, efficiency, and quality of service. Projects are completed in accordance with schedules and budgets. Analysis CPAU can afford to spend more on CIP and Operations, especially for the electric system. Current budgeting is based more on what can get done with the resources they have rather than what needs to be done to meet performance expectations. A result of the current strategy is that capital and operating projects are being deferred due to human resource limitations. Opportunities to Improve Consider turning internal resources into project managers and outsourcing more engineering, operations and construction work as a possibility for accomplishing more. Infrastructure replacement could be considered in a more coordinated approach with enterprise priorities and cross-functional project management. Competitively Priced Services - Effective Standards of Practice Rates and bills are competitive while providing adequate revenue to fund costs of services provided, cover debt service, provide sufficient reserve funds and meet other financial obligations. Costs of services provided are regularly examined, reported and reflected in rate designs. Fixed and variable costs are appropriately recovered. Analysis Except for water, CPAU services are competitively priced. High water rates are mostly attributed to the cost of water from San Francisco PUC, which is more costly than other suppliers due primarily to impacts from infrastructure replacement and emergency supply projects. CPAU closely tracks competitiveness by measuring and reporting on comparative service costs from surrounding utilities. Operating reserves are all at or above minimums. 3-54 Leidos, Inc. Final BENCHMARKING ANALYSIS Electric reserves are exceptionally high due to reserves held for funding of future large capital projects (e.g., second transmission point of interconnection). Electric cost of service analysis is out of date but an updated study is planned for the near future pending the outcome of an ongoing policy study that will address real-time and time of use pricing and pass-through charges for commodities. Opportunities to Improve One area of caution is the level of electric reserves which appear to be much higher than other representative utilities. CPAU reports that the current reserve level is high to fund a major electric interconnection project with cash instead of debt. Keeping this strategy highly visible is very important to avoid losing ground on future electric rates. Managing Regulatory and Legislative Uncertainty - Effective Standards of Practice Legislative issues are tracked and analyzed. Impacts, concerns and interests are identified and communicated to legislative bodies. Analysis CPAU is effectively using its own RMD staff supported by NCPA and CMUA for legislative and regulatory tracking, analysis and lobbying. At any time there are many tens or hundreds of state and federal legislative and regulatory issues to track. CPAU appears to be paying most attention to the highest impact concerns. Regulatory and Legislative Compliance -- Effective Standards of Practice Regulatory and legislative compliance requirements are met. Compliance needs are planned and tracked. Compliance reports, filings and activities are met. Culture of compliance exists. Analysis Leidos evaluated compliance performance by reviewing compliance requirements and reports and through interviews with CPAU management. Conclusions include: Compliance is a very high priority for CPAU management. A compliance manager was recently hired to focus on compliance issues. Compliance is regularly tracked and discussed by CPAU management. File: 001420/3153211006 Leidos, Inc. 3-55 Section 3 Opportunities to Improve Compliance Manager should develop a formal compliance management plan and master compliance schedule. Maintain Positive Investment Ratings - Effective Standards of Practice Investment ratings are positive. Coverage ratios are sufficient. Investment community is regularly engaged and communicated with. Analysis Investment ratings are positive and are a direct result of excellent financial performance, effective management, strategic planning, risk management, reserve levels and coverage ratios. Financial Risk Management - Effective Standards of Practice Financial risks are formally managed. Risk management plans exist. Risk management committees are in place. Risks and risk management strategies are regularly communicated to management and governance. Analysis Leidos interviewed CPAU management and reviewed risk management policies and agendas and notes from the CPAU risk management committee in determining that extensive risk management is apparent around transactional and financial risk. Physical and Operating Risk Management - Effective Standards of Practice Physical and operating risks are formally managed. Risk management plans exist. Risk management committees are in place. Risks and risk management strategies are regularly communicated to management and governance. 3-56 Leidos, Inc. Final BENCHMARKING ANALYSIS Analysis Risk management is priority for the utility and it puts significant effort into managing financial risks through its risk management committee and appurtenant actions. Physical risk management is addressed indirectly through normal operating procedures, city insurance and safety requirements and CPAU planning. Opportunities to Improve Utility should consider expanding the purview of the existing risk management committee to include physical and operation risks. Significant risk are evident relating to workforce retention, development and succession planning. Safety issues in the WGW operations should be considered. Risks associated with the ongoing construction activities should be reviewed to ensure the safety of the public and the workforce. Utility should consider a formal physical and operating risk management plan that identifies each risk and describes the actions that the utility is or needs to be taking to mitigate risks. Plan should be reviewed and updated at least quarterly. Customer Service and Engagement - Effective Standards of Practice Customer service is a core attribute of enterprise culture. Customer priorities are integrated into strategic plans; customer needs and interests are surveyed, reported and evaluated. Customer satisfaction is measured and reported. Customers can access a wide range of services via the internet allowing them to request service, pay bills, inquire about consumption and explore rate options and services. Customers can interact with utility using smart-device applications. Utility has a mobile device version of its web services. Interactive Voice Response system provides greater bandwidth for receiving and routing customer calls. File: 001420/3153211006 Leidos, Inc. 3-57 Section 3 Analysis Utility is doing a very good job of engaging and surveying its customer base. Basic transactions are available to customers via service counter, telephone and internet. City website provides extensive information about utility operations, performance, service requirements and agreements, rate options and other important information. Latest customer satisfaction survey results are very positive. Transaction based satisfaction surveys, when implemented, will be a very powerful tool for understanding how to maintain or even increase customer satisfaction. CPAU is currently investigating the policy, rate and other requirements to deliver more information to customers about their resource consumption behavior, which allow the utility to further encourage resource conservation and efficiency. Opportunities to Improve Focus on the actions and behaviors that effect customer satisfaction and then measuring and monitoring those behaviors to ensure high customer satisfaction is maintained. Outsourcing - Effective Standards of Practice Outsourcing is used to supplement and complement internal capabilities to achieve performance expectations. Contractors and outside experts are used to fill gaps in resource needs, expertise and capabilities and address peak workload to ensure projects and maintenance requirements are met. Analysis CPAU relies on outsourcing throughout its organization. Examples include: use of electrical contractors to supplement electric operations; but could do more to advance CIP and Operating goals with increased outsourcing of engineering, construction and operations. Opportunities to Improve Opportunities to improve include developing general engineering service agreements that allow the utility to more easily retain outside expertise to support critical technology and infrastructure project planning, design and implementation. Infrastructure Planning - Effective Standards of Practice System Master Plans exist, are updated regularly and are used to define capital, operating and maintenance budgets. System models exist, are complete and accurate, up-to-date and regularly used to analyze system performance and capability. 3-58 Leidos, Inc. Final BENCHMARKING ANALYSIS System performance and planning criteria have been defined and are used in system analysis and planning. Annual and Five Year CIP and O&M Plans are prepared and updated annually and are used to define resource needs, capital needs, budgets, work plans, projects and work orders. Budgets are driven by projects and initiatives that result from annual system review and planning exercises. Budget priorities are formally developed and reviewed by a budget committee that takes into consideration enterprise-wide issues and priorities. Capital and operating project performance, cost and schedule is tracked and reviewed and reported regularly. Analysis Master plans exist for some utilities including: 2009 Sanitary Sewer Management Plan. 2010 Urban Water Management Plan. Circa 1990’s Electric System Master Plan. Leidos has not determined status of a Gas System Master Plan and the Fiber Optic System Master Plan. Capital Improvement Plans are reported to follow the master plans and appear to do so. A system model exists for the sanitary sewer system and is being updated with the master plan update due this year. An electric system model is being developed in conjunction with the electric outage management system but that project is nearly a year behind schedule. Electric system performance assessment appears to be limited to monitoring and measurement of reliability statistics. The City and CPAU have a robust annual budgeting process. Utility projects appear to be driven by regular planning except that a contemporary plan for electric system projects is not apparent. Electric system capital improvements are purportedly based on a circa 1990's master plan. Five year operating and capital budget forecasts are prepared but it is not clear to what degree system analysis and planning activities are involved in the development of these forecasts. Leidos believes that limited human resource availability is driving capital spending rather than system expansion needs and system performance as evidenced by the observation that capital projects are being deferred due to insufficient staff. Opportunities to Improve Opportunities for improvement include: Complete the development of the electric system engineering model and update the electric system master plan. Develop a more structure planning cycle that leads into the budgeting cycle. File: 001420/3153211006 Leidos, Inc. 3-59 Section 3 Develop and implement a formal project prioritization methodology that ranks projects based on factors such as compliance, safety, efficiency, and quality of service; include resource requirements (FTEs) for engineering, construction management, construction, operations and maintenance in the CIP budget so that resource needs can be considered along with project costs in planning and implementing budgets. Improve the consistency of the use of performance requirements and metrics in developing operating and capital budgets. Operational Resiliency - Effective Standards of Practice Utility has Emergency Response Plans including disaster recovery and continuity of operations for key functions. Plans are regularly reviewed and updated as necessary to address new threats and mitigation capabilities. Plans are rehearsed through table-top exercises and other simulations. Rehearsals include regional exercises in coordination with other agencies. Plans include mutual aid agreements with other utilities and agencies. Analysis CPAU has emergency response plans, disaster recovery plans and continuity of operations. Mutual aid place are in place with regional utilities and plans are reviewed periodically and updated and necessary. Facility Adequacy - Effective Standards of Practice Operating and administrative facilities are adequate to perform duties. Facilities are properly maintained. Facilities are secure. Facilities are designed to use resources efficiently. Facilities meet regulatory requirements for building code, safety and other applicable requirements. 3-60 Leidos, Inc. Final BENCHMARKING ANALYSIS Analysis Utility personnel are located at various facilities throughout the City including City Hall, a leased Engineering Office, and the Municipal Operations Center. Our observation is that space is at a premium, especially for customer service who operate a call center and customer service operations in very confined office area. CPAU should consider customer privacy and information security issues as the call center is not in a secure facility and telephone conversations with customers are easily overheard by non-call center personnel. WGW operations personnel indicated some concern about the security of the operations yard related to potentially inadequate fencing surrounding the yard containing high copper and aluminum content materials and equipment. The installation of video monitoring, access control, motion detection, lighting and other security measures should be considered for all essential facilities. Opportunities to Improve Opportunities for improvement include: Development a long-term facilities plan. Conduct a formal premise security assessment. Evaluate the appropriateness of call-center and billing premises to ensure the protection of customer information and privacy. Safety Culture – On-track Standards of Practice Safety is a core attribute of enterprise culture. Injury and illness prevention program is in place; training is provided and compliance is monitored. Safety performance is tracked and reported and exceptions are addressed. Analysis While safety is clearly important to CPAU, there are concerns about the injury rates among the water operations workforce. Based on a review of safety reporting and interviews with operations management, a higher than desirable rate of stress and strain injuries is evident. It is not clear whether the injuries are due to training, work methods or fitness for duty. Opportunities to Improve Follow-up actions should include a careful analysis of cause of safety violations and remediation plans should be formulated and implemented. CPAU should consider using a professional safety expert to investigate injury causes and recommend changes in work practice (could be as simple as stretching before working, wearing appliances design to reduce stress/strain injuries, assessing fitness of personnel for duties assigned). May require Utility to acknowledge that this level of safety performance is unacceptable and raise the awareness of the problem among the workforce. File: 001420/3153211006 Leidos, Inc. 3-61 Section 3 Consider a tailored, focused safety initiative to illuminate the need for improved safety and use frequent monitoring and measurement to ensure results are achieved. Reporting of safety performance should be elevated to monthly frequency and included with regular reports to UCA. Current Strategic Objective BP2 Operate the System Safely should be reconsidered to add meaningful goals around reportable incidents/injuries. Information and Operating Technologies – On-track Standards of Practice Strategic Technology Plans exist that: address information and operating technology needs at least three to five years into the future; provides clear implementation direction; address emerging/evolving technologies; defines cost; schedule and resource needs to implement and maintain key technologies. IT/OT systems provide efficient execution of business processes. IT/OT systems are highly integrated allowing applications and data to work seamlessly in the enterprise. Analysis CPAU is not as advanced as some utilities in their use of information and operating technologies to achieve optimal performance. However, the utility appears to be taking a course of action to improve in this area by investigating the development of technology plan, by completing their recent smart grid technology study and implementing certain recommendations including outage management. Current challenges that the utility faces includes: adequate staffing and support from City IT department to research, procure, deploy and maintain systems. The City relies on SAP as its ERP but there is consistent dissatisfaction with the level of support to implement the features and capabilities to provide advanced billing features; implement enterprise work, asset and project management, and implement outage management capabilities. CPAU is currently implementing an engineering model and an outage management system. These projects are reported to be behind schedule due to lack of IT support from the City. Opportunities to Improve Opportunities to improve include: Complete the development of a strategic technology plan. Hire or outsource additional resources to support the planning, implementation, operations and maintenance of technologies especially customer interaction; work management, asset management, project management and outage management. 3-62 Leidos, Inc. Final BENCHMARKING ANALYSIS Asset Management - On-track Standards of Practice Utility maintains complete, accurate and up-to-date asset inventories. Asset inventories include detailed asset records of type, model, manufacturer, serial number, status, age, condition, capacity/ratings, and installation and maintenance history. Assets are regularly inspected, tested when required, and inspection records are complete, up-to-date and reviewed by management. Asset failures are recorded, examined to determine cause and failure analysis is used to plan and prioritize asset replacement. Infrastructure replacement needs are regularly examined and replacement programs are in place to replace aging and upgrade underperforming assets. Replacement rates and priorities are adequate to replace infrastructure prior to end-of-useful life. Infrastructure additions, modifications, repairs and replacements are based on formal design and performance standards and are in accordance with applicable industry standards. System performance is monitored and tracked, and deficiencies are recorded and improvements are implemented to achieve performance in acceptance with at least industry standards and best practices. Analysis Utility has asset inventories and data for all utilities. Data bases are in spreadsheets and we have not confirmed to what level of detail the asset records exist. While the utility is performing required asset management, its effectiveness could be improved with a more integrated approach to asset data collection and management. Geospatial Information Systems – On-track Standards of Practice GIS is the primary source of geospatial asset data providing a complete, up-to-date 'single version of the truth'. GIS is interfaced with enterprise systems and divisions including engineering, operation, customer information and customer service, public safety, public works, outage management, system models and workforce management, and SCADA. GIS information is available to personnel in the field. Strategies and plans are in-place for the long-term evolution and support of enterprise GIS data. File: 001420/3153211006 Leidos, Inc. 3-63 Section 3 Analysis Utilities are using TopoBase(R) to manage GIS data for utility infrastructure. TopoBase provides a user interface for utilities to access City provided base maps, manage electric, gas, wastewater, water and fiber assets, prepare infrastructure mapbooks and prepare design documents. Integration with enterprise systems is evident but may be incomplete and out-of-date. A quick review of the public facing data indicates that some utility project data is out-of-date or incomplete (e.g. electric project data stops in 2011; project descriptions are not very descriptive nor do they indicate specific CIPs). Utility mapbooks are prepared in TopoBase for operating personnel to use but that data is not made available in real-time to personnel in the field as is the case for public safety who use vehicle-based systems. Opportunities to Improve In conjunction with a recommended technology roadmap, CPAU should review GIS strategy to ensure that it is implementing a solution that maximizes the value of GIS data. GIS should be used as the primary source of asset information. GIS should be made available in the field to operating personnel. GIS business processes should be developed and implemented especially with regards to asset data management and as-constructed record keeping. Business Processes – On-track Standards of Practice Business processes exist for all important business functions. Processes are documented, staff are trained and required to follow processes. Processes are regularly reviewed and modified when needed to improve efficiency or address changing business requirements. Analysis Leidos reviewed a sampling of business processes from across the utilities. Some business processes are very well defined, especially around customer service, risk management and wholesale transactions. Other processes are reported by CPAU to be documented but were not reviewed by Leidos. In general, we find that there is benefit for CPAU to invest more time and energy in the development of business process definition. CPAU operating divisions indicate that they continuously review and refine business processes to improve customer service and operating efficiency. Opportunities to Improve While CPAU clearly recognizes the value of having well documented and up-to-date business processes, we believe that there are some essential best practices that should be implemented including: Develop a master list of all essential business processes including revision history. 3-64 Leidos, Inc. Final BENCHMARKING ANALYSIS Review, update or create well documented business processes for all essential processes especially water operations, electric outage management, asset management (e.g., inventory, inspection, and maintenance). Include with each business process definition an estimate of the manpower required for implementation in order to contribute to workforce projections as further described below. Consider the effectiveness of business process documentation for training new staff. Workforce Development – Needs Attention Standards of Practice Utility recruits and retains a workforce that is competent, motivated, adaptive, and safe-working. Establishes a participatory, collaborative organization dedicated to continual learning and improvement. Ensures employee institutional knowledge is retained and improved upon over time. Provides a focus on succession planning and emphasizes opportunities for professional and leadership development and strives to create an integrated and well-coordinated senior leadership team. Workforce is sufficient to accomplish performance objectives. Workforce needs are planned, measured, tracked and reported. Analysis CPAU struggles to recruit new workers, especially engineering and operations staff and as a result the current workforce is not sufficient. As a result the utility is deferring operating and capital work. While the number of authorized FTEs appears sufficient to accomplish work, it does not appear sufficient to also provide for succession planning and staff development needs associated with a workforce that is nearing retirement. Approximately half of the electric overhead and underground operating positions are vacant and many of those have been vacant for a long time. WGW operations is planning to develop an apprenticeship program for electrical workers but because of the time needed to develop journey level technicians (3-4 years) this cannot be the only strategy. Opportunities to Improve The City should look carefully at competitiveness of compensation to determine appropriate levels to attract qualified workers. The City and utility should evaluate effectiveness of recruiting and retention strategies and consider further outsourcing to avoid deferring capital and operating projects. File: 001420/3153211006 Leidos, Inc. 3-65 Section 3 There are indications that aging WGW workforce is struggling to work safely as lost-time and reportable accidents are high. Develop a workforce plan to: identify a sufficient number of resources to allow for succession planning; retirements; normal attrition and vacancies; consider resource needs in capital and operating budgets driven by resource forecasts that align with project cost estimates and schedule. Project Management – Needs Attention Standards of Practice Project management principles are used to manage projects effectively. Project managers are trained and certified as Project Management Professionals. Project management tools are provided and used. Project performance data is tracked and frequently reported to project managers. Enterprise Project Management System is used to define and manage project schedules and define and manage resource needs. Analysis CPAU does not have an enterprise project management system. Leidos did not observe a project management culture rather we observed that project management is what engineers do in addition to their other responsibilities. Project Management training has not occurred recently. Leidos did not identify any certified project management professionals within the organization. As is the case in many utilities without a formal project management culture, the highest level of project management occurs when implementation (design and construction) is outsourced. Opportunities to Improve Opportunities for improvement include: Establish a small project management organization whose primary focus is on the management of utility projects including technology implementation, capital improvement projects and organizational improvements. Provide project management training to personnel responsible for managing projects, Implement an enterprise project management tool that can be used to define projects and track and report project performance. Consider outsourcing management of major projects and initiatives until a project management organization is in place. Work Management – Needs Attention Standards of Practice Work Management Systems are used to create and manage work orders, define resource needs, and track and manage project budgets, costs and schedules. 3-66 Leidos, Inc. Final BENCHMARKING ANALYSIS Work Orders are closed within a reasonable time after completion of work; project costs are reconciled, as-built information is documented and deviations are documented and examined. Cost Estimating (Compatible Units) System is used to develop, manage and analyze project costs estimates. Estimating units are regularly updated to reflect actual costs. Analysis SAP provides a system for creating work orders but is not used to actively manage work. Development of a work management system for electric is underway but very early in the progress. WGW uses a combination of SAP and SOGEN programs to create work orders but there is no tracking or 'work management' capability. The combined evidence of insufficient or at least a constrained work force, deferred capital and operations work and lack of work management business processes and tools create a high-risk of less than desired performance. CPAU plans to implement an enhanced cost estimating system by the end of FY14 through the EL-13008 capital project. Important factors to monitor in developing a work management system include: 1) the underlying business processes that support the development and maintenance of project cost estimating should be reviewed and created or updated as necessary; 2) sufficient resources from WGW Engineering and City IT are available and assigned to the project to complete it in a timely fashion; and 3) adequate training is provided to users; and 4) the application receives sufficient maintenance support to ensure that it is kept up-to-date. Opportunities to Improve Create, review and update work management business processes. Procure and implement a work management system. Establish and monitor work management key performance indicators. 3.3.2 Best Practices Recommendations There are three utility best practices that CPAU should consider addressing: • Workforce Development – the utility struggles to recruit, develop and retain a sufficient workforce. In particular, a large number of unfilled positions in the electric operations division are contributing to increased system outage response times, deferred system operations and maintenance and difficulty training and developing apprentices into journeyman electrical workers. Contributing factors are that CPAU’s electrical workers are represented by SEIU while most of the qualified electrical workers in the very competitive northern California market are represented by the IBEW. The differences between the two unions make it at best difficult for qualified electrical workers who can or are willing to leave the IBEW for SEIU representation. Vacancies in engineering positions combined with other operating vacancies result in the deferral of capital projects in electric, water and gas. File: 001420/3153211006 Leidos, Inc. 3-67 Section 3 • Project Management – project management is seen by the utilities as an ‘additional’ responsibility for engineering and certain other staff that adds to an already very significant workload. Current best practices in utilities is to create a project management organization with dedicated project management professionals to manage projects. CPAU should consider developing a small project management organization with three or four dedicated project managers with formal project management training and experience to manage most of the capital, operating and maintenance projects. Doing so would free-up staff to focus on project delivery – engineering, construction and operations, for example. • Work Management – current best practice in utilities is to implement formal enterprise work management systems to plan, execute and track work. CPAU currently uses various stand alone systems to execute certain key work management functions, like SAP for work order management, but it does not have a holistic work management system that can provide an enterprise view of forecasted labor, actual labor and labor costs, project costs and other project performance metrics. A robust work management system would allow CPAU to better forecast labor needs, plan and track project performance, provide real-time operating information to operating personnel, and manage fleet and warehouse needs. 3-68 Leidos, Inc. Final Section 4 CONCLUSIONS AND RECOMMENDATIONS These conclusions and recommendations present ways to maintain and improve the functioning, efficiency, and effectiveness of CPAU and its interface with other departments at the City. Based on discussions with the City managers directing this study, the relative priority of the recommendations are the following: 1. Opportunities to improve the efficiency of core CPAU services. 2. Opportunities to improve the efficiency or effectiveness of interfaces with other departments (e.g., HR, IT, and the PD in ASD). 3. Policy, management, and capacity building actions. Each recommendation must be discussed thoroughly by City management and CPAU managers and staff. In the case of almost every recommendation, an implementation assessment is needed to determine the best implementation approach. All actions must also be guided by a clear implementation plan. The framework for such a plan is presented in Chapter 5. The key questions addressed in this section are: 1. How appropriate are CPAU’s staffing levels to provide current services desired by the community? 2. How appropriate are CPAU’s staffing levels to benefit from opportunities provided by new technology and market factors? 3. What shifts in staffing levels may be needed in the future to address these opportunities if desired by the community? 4. To what extent is CPAU staff adequately compensated so as to effectively support CPAU’s current and future services and goals? 5. How can staffing be optimized to support current services? 6. Which services should be provided internally versus externally? 7. What is the impact of the interfaces with other departments at the City that provide CPAU services on CPAU’s ability to provide services efficiently and effectively? 8. In addition to organizational and staffing changes, what are other steps, such as changes in policies and management practices, that the City can take to prepare for the future and to improve effectiveness and efficiency? Several sources of information were considered in arriving at the conclusions expressed in this section. These sources include: File: 001420/3153211006 Section 4 1. Documentation covering structure, work processes, workload, budgets, actual costs, etc., provided by CPAU, the City’s HR Department, and other City departments. 2. Interviews with CPAU management and supervisors. 3. Interviews with the City’s management and selected staff in other departments. 4. Comparisons between CPAU’s organization structure and staffing and Leidos databases and industry experience. 5. Benchmarking analyses using published industry information and surveys of regional municipally owned utilities; results of which are included in this study. In identifying and evaluating all recommendations, Leidos used the following criteria: 1. Maintain or enhance customer satisfaction, ensuring that CPAU meets its high standards and that levels acceptable in the industry are met. 2. Maintain a satisfactory level of expertise (i.e., skills and number of people with such skills) for core current and expected/emerging CPAU services. 3. Maintain or enhance CPAU’s quality, reliability, and safety as measured by standard performance criteria and generally accepted industry practices. 4. Achieve satisfactory alignment between employee goals and objectives and the goals and objectives of CPAU. 5. Support employee retention and recruitment. This is a key criterion for all recommendations given the City’s HR Department’s projection that 58 percent of CPAU’s employees will retire within five years. 6. Do not compromise effective decision-making, communication, and accountability within CPAU and between CPAU and other departments of the City. Overall, CPAU is well organized and no structural changes are recommended. The most significant issue that CPAU faces is ensuring that there is an effective succession plan to maintain the capacity of the organization given the expected losses of managers and staff due to retirement over the next five years. Potential under-investments in customer service that may contribute to unsatisfactory residential service ratings is also of significant concern and should be investigated further. Because CPAU’s current ratio for the electric utility is nearly 9 times of the average for the comparison utilities, the City should investigate if its lack of debt service for CIP projects is appropriate, especially given the low cost of borrowing (See Figure 3- 12 for more details). Regarding the types and numbers of existing staff, Leidos concludes that only minor adjustments in the numbers of personnel would be needed to optimize staffing for CPAU’s current responsibilities. 4-2 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS There appear to be opportunities for efficiency gains and in achieving reliable resourcing in current services by shifting certain CPAU functions to contractors and using master service agreements (MSAs) more to supplement engineering and other resources. CPAU currently outsources several services, notably attorney services, some CIP design, and CIP construction. CPAU also outsources peak maintenance, for example, the cross-bore program to videotape all the sewer laterals in the City to look for interference with other lines (e.g., gas lines) was outsourced. Contract labor is also used for some major electric line construction and outage related repairs. The services identified for additional outsourcing are cross connection compliance activities for the water utility and increased use of contracted services for water meter calibration and related services. Given the retention issues and associated cost impact to CPAU for line workers, the City should authorize a study on outsourcing as much of this function as is possible while still meeting customer service and reliability objectives. It should be noted that potential staffing changes as a result of outsourcing do not result in direct savings at CPAU’s bottom line. These changes may result in eliminating internal job positions, but the associated services must still be provided and will still be paid for by CPAU. Therefore, contracts with outside firms are the mechanisms that ensure the needed services continue. The expected advantages vary from consolidation of scheduled work activities in some cases to reduced O&M expenses and capital costs in other situations. Service reliability in the case of electric line work and support for CIP engineering and construction projects may also be a benefit. However, it must be noted that increased use of outside service companies does place greater pressure on CPAU managers and supervisors in those affected areas, and even personnel in other functional areas. 4.1 Appropriateness of Current CPAU Staffing Based on Leidos’ experience with other similar utilities, interviews, and benchmarking analysis, this section provides our findings with respect to the appropriateness of the staffing. CPAU’s organizational structure is appropriate and similar to what Leidos expects for a well-run and reliable city utility. Relying on support services, such as the HR Department, accounting, IT, and the PD from a City-wide shared resource is an appropriate structure for these functions provided their levels of service support CPAU’s performance goals. The following are our conclusions on the appropriateness of staffing for each utility based on interviews and where the benchmarking data shows negative variance in productivity. In this section, we also make findings and draw conclusions based on a specific analysis of staffing resources assigned to specific functions for each division. Section 3 provides more details on CPAU’s productivity. Section 2 includes a detailed description of functions and notable issues of concern for each division. File: 001420/3153211006 Leidos, Inc. 4-3 Section 4 4.1.1 Productivity by Utility Electric Productivity measure comparisons indicate that total current staffing for CPAU’s electric utility should be adequate to perform the services generally undertaken by electric utilities. This assessment is based on the authorized FTE levels, not on the current number of staff. The high number of vacancies is of paramount concern and should be addressed as soon as possible by employing the workforce development recommendations. Of particular concern is the high number of vacancies (roughly one-half) in electric operations. CPAU should continue its efforts to recruit and train staff and increase its reliance on outsourcing for as much work as practical. Exacerbating the challenge of recruiting, developing and retaining qualified electrical workers is that CPAU is represented by SEIU in a market that is dominated by the IBEW. CPAU spends substantially more on energy efficiency programs per customer than the average compared to this group of utilities. This level of spending is helping CPAU meet its energy efficiency goals. A recent CMUA report indicates that CPAU’s energy efficiency programs generate $2.45 per dollar invested just slightly less than the average of all of California’s consumer-owned utilities performance of $2.60 per dollar invested. Water CPAU’s water utility’s productivity falls on the low end of the averages based on the comparison group average productivity using two different measures: 1) ratio of system throughput to number of FTEs, and 2) retail water customer per FTE. Although the water utility productivity (Measure A) slightly exceeds one of the published AWWA productivity statistics, for Measure B, CPAU is somewhat more below the average or median number. Situations and challenges are never exactly the same across a group of utility organizations because of the size and age of the facilities. A contributing factor here is the CPAU, unlike most other utilities, is currently implementing an aggressive water distributing infrastructure replacement plan. Wastewater The productivity measure comparisons from the benchmarking analysis indicate that CPAU’s aggressive program to reduce sanitary sewer overflows through frequent inspections and fats, oils and grease reduction program causes its benchmarks to show higher O&M costs and higher average monthly bills. Our interviews and analysis of sanitary sewer overflows support this finding. The wastewater utility productivity exceeds the published AWWA statistics for both measures. A contributing factor here is that CPAU is responsible for the maintenance of the lower lateral sections of its wastewater collection system which requires more staff per customer to maintain than those utilities who are not responsible for the lower laterals. CPAU is also aggressively seeking to reduce the number and frequency of sanitary sewer overflows, most of which are attributed to lower-lateral section problems. 4-4 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS Gas The gas utility’s productivity falls far short of that shown for Long Beach and PG&E, but is superior to the other utilities we benchmarked. Since Long Beach and PG&E are larger gas utilities, they may be able to achieve productivity efficiencies not available to smaller natural gas utilities. Productivity measure comparisons indicate that total current staffing for CPAU’s gas utility are appropriate to perform the services undertaken. A contributing factor here is that CPAU has an aggressive gas pipeline replacement program. Dark Fiber Capacity Productivity for dark fiber is not assessed in this study because the set of utilities chosen to benchmark against do not provide fiber services. 4.1.2 Adequacy of Current Staffing and Opportunities for External Resources Administration The staff interviews, reviews of budgets, and organizational responsibilities show that while this division is well run and efficient, it is also taxed by the tremendous level of responsibility concentrated in top management positions. Evidence to support this includes the benchmarking analysis shows that the division staffing is smaller than the average compared to other utilities. This finding may in part reflect the situation at CPAU where some of the functions normally associated with this division are performed by the RMD and ASD and the fact that administrative costs are spread across five utilities. Recommendations Complete the recommended workforce management plan as soon as possible. Customer Support Service The CSS-related expenditure measures in Figures 3-10 and 3-11 show CPAU’s expenses to be at least 40 percent below the average. Achieving and maintaining higher levels of customer satisfaction is critical to meet CPAU’s top strategic vision to “deliver extraordinary value to customers.”15 Further, meeting customer service goals will help obtain the community’s support for future necessary rate increases (e.g., paying higher wholesale commodity prices) and for achieving energy efficiency and behavioral goals (see Section 2.3). 15 Utilities Strategic Plan, Strategy Map, 2011 File: 001420/3153211006 Leidos, Inc. 4-5 Section 4 The CSS may not have a sufficient number of account representatives and utility marketing service representatives particularly to serve residential and small business customers (where customer service ratings are unsatisfactory) or may be under- investing in customer support technologies. Also, CSS’s management stated that high turnover of trained and experienced staff in these labor categories has been and will likely continue to be a concern largely because of the lack of advancement potential in these labor categories. Freeing up existing staff in CSS, or in other divisions, to support energy efficiency programs will be important to achieve the City’s potential for energy efficiency and to meet climate protection and sustainability goals. One option is to reallocate resources from the RMD to expand their responsibilities for energy efficiency reporting with the goal of freeing up the CSS’s marketing manager to devote more time to market the programs and drive CPAU’s energy efficiency contractors to achieve or exceed their goals (see Sections 2.2 and 4.4). The City should take short-term actions to bolster capacity for energy efficiency and customer service and related communications. CPAU invests approximately $6 million dollars a year in energy efficiency. Investing in energy efficiency per kilowatt or therm reduced is almost less than half of the price of a unit of purchasing the commodity. An energy efficiency program evaluation by the CMUA of publically owned utilities found that CPAU was just slightly below the average for municipal utilities in California for cost-effective energy savings achievement (based on total resource costs) and at the average for the targets the City sets.16 Another finding that the City should consider seriously is that the City spends more per customer on energy efficiency programs than the benchmark utilities we include in this study. This finding contrasted with the CEC finding and should be further investigated. The Leidos team observes while the energy efficiency services are well integrated into customer service as they should be, the manager leading energy efficiency spends a considerable amount of time writing and managing energy efficiency and other regulatory and planning reports. In order to give energy efficiency the focus that is needed to meet the City’s potential and to improve the performance of the programs, we recommend that this person delegate reporting to others, including in the RMD, in order to devote more time to managing CPAU’s third-party contractors and enhancing CPAU’s marketing and outreach to customers. CPAU does not use an integrated information system to prioritize, market, manage, and report energy efficiency performance. We also recommend that CPAU evaluate such systems. The benefits of such systems are threefold: increase marketing yield, strengthen and make work processes more efficient, and automate reporting. In reporting alone, CPAU could save between 0.5 and 1 FTE by using an integrated information system. 16 Energy Efficiency in California’s Public Power Sector: A 2013 Status Update. 4-6 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS CPAU could also benefit from consolidating its energy efficiency programs so that fewer contractors have to be procured and managed. CPAU should also assess or reassess water conservation investments at both the customer and utility levels in light of recent increases in wholesale water prices and their impact on CPAU rate payer bills. As noted in Section 2, CPAU CSS and RMD staff believe that investing a half FTE in customer communications is needed to better serve customers. This step may also improve customer satisfaction because residential customers may become more satisfied with CPAU services if they were communicated with more effectively in terms of services and rates. As CPAU installs one- or two-way smart meters, CPAU should carefully evaluate the need for the six field customer service staff that read meters and consider options including retraining and repurposing these staff members or resizing the division. It should be noted that while smart meters are read remotely, batteries must be changed periodically. As CPAU increases the use of technology to serve or engage customers (e.g., smart meters, home energy management systems, etc.), or if CPAU decides to provide services that further enhance the customer experience, adjustments in skill mix and staff experience may be needed. Recommendations Current staffing actions: Reallocate priorities and workload for one FTE from within the RMD to support energy efficiency planning, reporting, and program development functions in CSS. The goal of this adjustment is to free up an additional one FTE in CSS to more aggressively pursue energy efficiency savings. Current staffing, probable actions: Create one additional labor category each for an account representative and utility marketing service representative to support career growth and advancement, and retention and recruiting goals. Study recommendations: Review CSS’s annual work plan against customer satisfaction goals and evaluate whether CPAU is under-investing in customer service. Make appropriate recommendations. Study to continue to improve performance and cost efficiencies in Energy Efficiency and possibly water conservation operations. The topics that should be addressed in this review are: – CPAU should evaluate the costs versus benefits of using an integrated information system to improve efficiencies of financial and technical assistance programs (e.g. energy and water conservation). File: 001420/3153211006 Leidos, Inc. 4-7 Section 4 – CPAU should analyze consolidating the number of energy efficiency contractors. CPAU should continue to evaluate the need for the six field CSS staff that read meters if the City decides to transition to two-way meters and consider options including retraining and repurposing these staff members, resizing the division, or outsourcing repair and battery replacement functions. Engineering Division The staffing for the Engineering Division is at a critical level and requires additional use of outsourcing to help complete the CIP and to reduce the risk of loss of expertise due to key staff leaving (due to retirement and other reasons). A cause of concern is that the CIP was not completed in 2011-2012, and that the reduced CIP goals are in jeopardy of being missed this year. CPAU should consider developing a project management organization that could be based under engineering management. A professional project management firm should be retained to develop project management procedure, provide project management training and provide project managers to augment staff. This will reduce engineering workload and allow engineers to focus on project delivery. The Engineering Division has MSAs for drafting, inspection, and structural engineering. The Purchasing Division believes that there is an opportunity to develop more MSAs and leverage these vehicles more than the Engineering Division currently does. See Section 4.4 for a recommendation to expand the use of MSAs in the Engineering Division. As CPAU implements a smart grid, electric vehicle charging management, and other new systems and technologies, this Division will need to invest in staff training and may need to hire or contract with subject matter experts particularly in systems automation and integration. Strengthening the Division’s GIS capacity to meet needs for digital maps is also a need. The Division management noted in the interviews that there is less of a need for administrative staff because of improvements in computer systems whereby technical staff does more of their own document production. In our interviews, the Division has reported that over the last several years there have been significant changes in the work due to computer technologies that have resulted in changes in the work processes. Due to the changes in work process, the work that was performed by administrative staff has decreased. Much of this work is now being done by other staff due to the implementation of computer technologies. At the present time, there are three administrative staff positions in the Engineering Division supporting approximately 50 staff. Two of these positions are vacant. The division suggests potentially reclassifying these open positions – one to support contract administration and the other to provide GIS mapping services. 4-8 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS It should be noted that the current situation -- two unfilled positions and hourly workers supporting the mapping/GIS functions -- is likely the least cost option. However, while the costs to implement the Division’s suggestions will be higher than either the current situation or refilling the two administrative positions, if executed properly, both changes should reduce long-term costs and risk. Having a full-time, salaried GIS position should increase capability in this important area and result in efficiencies and quality in the Engineering Division that should result in cost savings and risk reduction. The contract administrator will likely add capacity to effectively manage additional contractors, which in itself should reduce costs and the need for additional engineering positions. Recommendations Current staffing probable actions: Reclassify an administrative position (currently vacant) to a computer technician who can support GIS functions. Reclassify a second administrative position (currently vacant) to a management analyst to support contracts planning, administration, and management. Operations Division Except for electric operations, the current staffing level for the Operations Division is largely appropriate but increased outsourcing may provide increased productivity, efficiency, and in some cases, reliability. This Division operates five different utilities and does a good job leveraging management and technical expertise across its responsibilities. As noted in the productivity review, water productivity appears at an average but acceptable level. Based on our interviews and analysis, opportunities exist in water operations to improve performance and delivery with regard to water meter calibrations, testing, and installation services, and cross connection services. The benchmarking indicates that the wastewater operations are somewhat less productive than the industry average. This situation may be a result of one or more factors, such as actual headcount, management controls, training, less than efficient work processes, etc. Pinpointing the specific causes of this apparent lack of efficiency is beyond the scope of this study. Refer to Section 3, Benchmarking Analysis, for more information. File: 001420/3153211006 Leidos, Inc. 4-9 Section 4 Figure 4-1. Increasing WWO Staff Leads to Reduced Sanitary Sewer Overflows In electric operations, as noted in this study, the City has a difficult time retaining line workers which causes a concern with regard to having qualified staff for this critical function and also may call into question if the City is getting a reasonable return on its investment in training new line workers. Given the retention issues and associated cost impact to CPAU for line workers the City should authorize a study on outsourcing as much of this function as is possible while still meeting customer service and reliability objectives. While there is more industry experience in outsourcing (e.g., public-private partnerships) for water and wastewater functions,17 Leidos is familiar with examples for electric line workers. For instance, the Lafayette Utilities System in Louisiana outsources its larger new construction projects, half of its street light work, and uses contractors extensively for storm-related outages. Benefits include access to specialized labor and having the flexibility to staff up or down depending on workload. As discussed in Section 2, the interface between the Operations Division and the City’s Warehouse Services (under ASD) appears to be marginally effective. Leidos’ team believes that an analysis of the ratio of dollars expended under work orders/service to dollars expended under “blanket” accounts should be undertaken by the City. This may indicate the need for a more organized and effective approach to 17 Water and Wastewater Public-Private Partnerships, Reason Foundation. 4-10 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS work order system utilization. The complexity of the SAP system may be a contributor to this issue. More generally, it would be beneficial for the Operations Division and the Warehouse Services group to meet and establish a process to improve coordination, efficiency, and effectiveness. As part of this study, Leidos has investigated two primary options for current staff adjustments in the Operations Division that we recommend not be pursued further at this time. These options are assigning trenching and trench restoration work to the PWD and using additional contractor resources for repairing and installing laterals that convey wastewater from customers to the main pipes. In both of these cases, the disadvantages outweigh the advantages and are not expected to result in cost savings. For the first option, the savings would be minimal and also assigning these activities to the PWD may reduce the ability of CPAU to sufficiently control its projects. In the case of the second option, the Operations Division experimented with using contractors more for this function but was dissatisfied with services provided. The Operations Division prefers to use its own Division’s staff for this activity because it has proven to be more cost-effective. In order to respond to the needs of the community in the future and to address the Division’s challenges to replace employees that retire, the Operations Division will need to invest more in career development and training. See recommendation in Section 4.4. Recommendations Water Meter Calibrations We recommend that CPAU outsource all or most of the water meter calibrations, testing, and installations. This will impact two to three employees. In interviews with the Operations Division’s staff, it is clear that there are issues with keeping up with the workload for water meter calibrations, testing, and installations. We understand that the Division is seeking to outsource all or most of these services. The Operations Division sent out a Request for Proposal in September 2012 for these services for 4-inch meters and above. The Assistant Director-Operations believes that for smaller size meters it is more cost effective to replace the meters. Study recommendations: Line Workers We recommend that a study be commissioned to evaluate additional outsourcing for electric line work and construction. Depending on the results of the study, the City should act or take no action on this area of opportunity. If the study shows an additional opportunity for outsourcing related cost and reliability benefits, likely actions may be phasing in and contracting for as much of this function as is practical while maintaining customer service and reliability goals. If the study shows this strategy is favorable, there is a potential for a shift of several FTEs to contract resources over time. File: 001420/3153211006 Leidos, Inc. 4-11 Section 4 This recommendation is included for various reasons including because CPAU continues to experience difficulty in hiring and retaining experienced electric line workers. This situation may worsen with the new state legislation that caps retirement benefits for new state and local hires. Competition is severe for experienced line workers; Leidos has observed this same issue at other small to medium sized municipally owned electric utilities across the nation. This critical part of an electric utility is becoming more difficult to staff and more expensive to operate each year. CPAU has, or will effectively become, a training ground for entry-level line workers, and then lose these personnel after they gain a few years of experience. This is an expensive way to operate an electric utility. CPAU should study this opportunity and if the opportunity is favorable, plan and begin a process of using outside contractors incrementally to accomplish more of these important work activities. This may be a dramatic change for CPAU, but is probably inevitable over the long term. Contracts currently in place may be sufficient for the next 12–24 months, but more robust contracting will eventually be required to implement this approach. CPAU staff attrition will reduce line worker numbers slowly at first, but well-planned, aggressive reductions in staff numbers will be necessary under this approach. However, in actuality, many qualified personnel will move to positions with selected contractors. This potential change will also reduce the city’s costs as large, expensive, and maintenance-intense rolling stock will be removed from the City’s books. CPAU and City Warehouse Interface The Division together with the ASD should work together to improve the interface between the CPAU City’s Warehouse that is under the ASD. Specifically, the CPAU-ASD team should analyze the ratio of dollars expended under work orders/service to dollars expended under “blanket” accounts. Further, more generally, based on our interviews with ASD and CPAU managers, it would be beneficial for the Operations Division and the Warehouse Services group to meet and establish a process to improve coordination, efficiency, and effectiveness. Resource Management Division As we observed in Section 2, we are not familiar with a similar division in another municipal utility of a similar size performing strategic planning and management related functions (such as supporting the UAC). In other utilities many of these functions are usually addressed by the utility’s Administrative Division. Another explanation may be that a larger group of staff may be needed to write or manage studies on smart grid, electric vehicles, or other issues and participate in industry groups to support the City in its interests to be a leader in energy and sustainability issues. Staff in the RMD also supports work led by other divisions, such as a half FTE who assists the CSS on energy efficiency work. Not unlike other utilities, the RMD leads reporting activities for renewables and climate reporting. 4-12 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS The RMD also plans and executes commodity purchasing and contracting and produces commodity-based reports. The RMD relies on the NCPA to assist with certain commodities purchasing services. The RMD may be able to reduce staffing requirements (minimally), costs, and improve service by relying more on NCPA or other commodities/trading service providers. To address new market opportunities, the RMD is well prepared because its staff has begun to monitor and study most of these opportunities. The RMD also engages consultants to supplement its staff. Recommendations Current Staffing Probable Actions No recommended adjustments other than reallocating one FTE to support energy efficiency activities (see CSS section above for details). Study recommendation: Commodities Purchasing/Trading Leidos recommends that CPAU review commodities purchasing/trading activities to investigate additional opportunities for NCPA or other entities to perform these activities as a way to save costs and possibly ensure an adequate skill set for these functions. See Section 2 for a detailed discussion. The impact on staffing within the RMD as a result of reallocating responsibilities in purchasing and trading is expected to be minimal (e.g., approximately one FTE or less). 4.1.3 Adequate Compensation of Employees The following discussion addresses the question of to what extent is CPAU staff adequately compensated so as to support its current and future services and goals. A comparison of current salaries for various positions at CPAU with APPA data from their “2011 Survey of Management Salaries in Local Publicly Owned Electric Utilities” is shown in Table 4-1. File: 001420/3153211006 Leidos, Inc. 4-13 Section 4 Table 4-1 Comparison of Current CPAU Salaries to APPA Surveyed Salaries (dollars) APPA CPAU APPA May 2011 Salaries– Publicly Owned Utilities with Revenues of $100 Million or more ($) APPA Title City of Palo Alto Title CPAU (1) First Quartile Mean Third Quartile General Manager Utilities Director 207,085 175,475 220,393 241,750 Assistant General Manager Assistant Director Utilities Engineering 161,616 152,143 170,908 184,468 Assistant General Manager Assistant Director Utilities Operations 153,712 152,143 170,908 184,468 Assistant General Manager Assistant Director Utilities Customer Support Services 146,141 152,143 170,908 184,468 Chief Engineer Engineering Manager – Electric 146,141 121,507 151,887 173,350 Chief Accountant Manager Accounting 116,355 92,118 109,613 123,920 Director of Customer Service Manager Customer Service & Meter Reading 122,574 98,615 125,585 144,769 Information Systems Manager Manager Utilities Information System 110,698 101,543 121,549 140,061 Communications Director Communications Manager 99,923 84,861 109,519 123,141 Marketing Director Manager Utilities Marketing Services 122,574 96,348 120,162 150,871 Telecom/Broadband Manager Manager Utilities Telecomm 139,006 109,338 125,743 139,571 Rate Analyst Utilities Rate Analyst 87,048 76,800 89,973 102,483 Key Accounts Manager Utilities Key Account Representative 95,056 80,421 93,366 104,059 Source: Compiled by Leidos for other sources (1) City of Palo Alto, HR Department Data This summary level comparison indicates that when compared to other similar sized municipal utilities (revenue of $100 million or more), CPAU offer salaries that are generally near or below the mean value and in a competitive employment environment are not adequate to hire and retain workers. The high cost of living in the San Francisco Bay Area, as well as competition from other municipal utilities and PG&E, retaining and attracting talent for positions may pose a greater challenge. 4-14 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS Leidos recommends that the City go beyond the comparison herein and compare salaries for CPAU job classifications that are considered important to meeting program needs to salaries paid by other utilities and private sector companies in the San Francisco Bay Area. Leidos understands this action by the City is currently underway with an outside consulting firm. 4.2 Staffing to Support Expansions in Services and Future New Markets For a utility of its size, CPAU’s investments in emerging utility programs, including advanced energy efficiency, water conservation and recycling, renewables integration, distributed generation, and grid reliability, allow the City to position itself to meet emerging and future customer demands and contribute to national and global sustainability goals. For example, the City’s Palo Alto Green Program offers a voluntary 100 percent renewable energy alternative for retail customers. Over the years, and as recently as 2008, CPAU has won at least eight Energy Innovator Awards and one award for Continued Excellence (2006) from APPA. The Palo Alto Green Program received the 2008 U.S. Department of Energy award for Best Green Power program for a small utility. If the City desires to fully benefit from market and technology trends and be widely recognized as a leader nationally, the City will need to strengthen the managerial capacity in these areas and supplement the existing staff with additional positions and technical/subject matter experts. Table 4-2 summarizes potential future staffing needs compared to current FTEs. Current and potential future contractor resources are also included in this table. Any of these changes would require the full support of Palo Alto’s City Council. Approving any of these changes or any program with a material resource impact should also require a brief cost versus benefit assessment before proceeding. File: 001420/3153211006 Leidos, Inc. 4-15 Section 4 Table 4-2 Potential Future Annual FTEs and Contractor Costs associated with Emerging and Future Services Service Current FTEs (estimated) Current Contractor Costs (estimated) Additional FTEs/Funding (Employee and Contractor) to Meet Need Subject to Council Policy Direction Smart Grid Implementation .25 5 FTE Higher Renewable Energy Mix- 33 percent by 2020 1 $50K/yr 1 FTE Increased Distributed Generation by Customers (e.g., implementing Self-Generation Incentive Program and California Solar Initiative) 1.75 $25K/yr 1.25 FTE Energy efficiency, and demand response (e.g., increased program marketing, additional reporting requirements) 6.25 $1.5M/yr 1 FTE and Contractors Water Conservation, Recycling and Reuse (e.g., increased program marketing, additional reporting requirements) 1.25 $1M/yr 1.5 FTE Cyber Security Management (increases associated with smart grid implementation) .25 .5 FTE Electric Vehicles Charging (e.g., additional public charging, coordinating with private vendors) .2 .5 FTE Zero Net Energy Buildings Implementation (e.g., meeting new state policy, coordinating with Planning Dept) 0 0 FTE .25 FTE and contractors (not including Planning Dept). Palo Alto Technology Development Program (e.g., potentially expanding the program to additional vendors based on pilot success) .25 1.5 FTE Increased Levels of Communication both internally and with external groups including customers, agencies and the general community 1.5 $25K/yr 1.5 additional needed (.5 needed now for current needs) Managing the Customer’s Utility Billing Expectations (e.g., improved billing solutions and related communications) 5 $150K/yr 1 FTE and $50K/year for contractor support 4-16 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS Table 4-2 Potential Future Annual FTEs and Contractor Costs associated with Emerging and Future Services Service Current FTEs (estimated) Current Contractor Costs (estimated) Additional FTEs/Funding (Employee and Contractor) to Meet Need Subject to Council Policy Direction Customer Service (e.g., improved analytical and service tools (i.e., CRM) in SAP 0 0 FTE $2M for contractors CIP (one time cost) Expansion of the Tele- communications (e.g., network management of design and construction and ability to perform online maintenance .5 1.5 FTE Compliance and Reporting for all services identified above. 1 1 FTE (for compliance activities associated with above programs) Totals 19.2 $2.75M/year 19 FTE and $25K ($2M one time) Source: Compiled by Leidos from data provided by CPAU. The City has assessed the benefits of smart grid implementation and is taking reasonable steps to continue to evaluate this technology. CPAU and the City’s approach to evaluating new technology carefully (rather than acting too quickly) is commendable. CPAU benefits from strong support for these programs from the City Council, UAC, and from the community at large. The City should continue to evaluate smart meter installation, particularly as part of future cost-benefit assessments of investing in expanded energy efficiency programs. Supporting these activities over several years and the institutional support for these programs demonstrate that CPAU has the capacity to continue to develop and implement emerging utility programs. CPAU has the leaders, managers, engineers, planners, and operational staff to continue to advance these programs in most cases. Further, the pace with which CPAU and the City have responded to these policy and technology-driven industry trends is appropriate. A more accelerated pace of response or adoption is not appropriate. Retaining qualified managers and staff with expertise in these specialized areas, however, does present a risk to maintaining the City’s leadership in these areas. Recommendations Annually, as part of CPAU’s annual budget process and at other times as appropriate, evaluate the adequacy of staff capacity (e.g., numbers and skill mix in other areas and associated customer service functions) to ensure that adequate resources are allocated to new market developments. File: 001420/3153211006 Leidos, Inc. 4-17 Section 4 Conduct a brief cost versus benefit assessment of any new program proposals with potential material impact. 4.3 Cost Allocation and Services between CPAU and Other City Departments Section 2 of this report describes the interfaces between CPAU and other departments in detail and notes issues observed. As reported in Section 2, CPAU currently funds almost 17 FTEs outside of CPAU and receives services from other City departments. The CPAU also transfers approximately $13 million annually to the City’s general fund to pay for services provided from the General Fund Departments and an additional $17.7 million that pays for facilities and services that benefit the City and community. Based on our interviews, there is concern about the appropriateness about the level and structure of the cost allocation. In addition, CPAU managers would like to have a greater role in performance reviews and associated feedback loops with employees from other departments that serve the CPAU. CPAU and other managers and staff also are concerned about whether the services provided by the IT, Purchasing and HR departments could be provided more cost-effectively with a greater mix of contractors. While it is appropriate for this Utilities Department organizational assessment to highlight these concerns, actually conducting the analyses is being performed by others or is outside the scope of this assessment. For instance, regarding cost allocation, we recommend that the City complete its ongoing Cost Allocation Study. Because administrative, HR, and IT functions represent a significant cost to the City and there may be opportunities to reduce costs while maintaining or improving quality, the City should commission a study and hire a consultant to compare the quality and costs of these services provided as they are now (by City Departments) to those that could be provided by contractor resources. Alternatives should be considered such as increasing current contractor support to supplement current City functions to largely outsourcing these functions while leaving City management in control of these services. In addition, alternative strategies for providing services (e.g., using more software services to perform work) should be considered. For example, online bidding and procurement management systems have been shown to save money. Recommendations Complete cost allocation study and make adjustments, as appropriate. CPAU department managers should participate in annual performance reviews for all personnel whose costs are charged to CPAU. Commission a study to compare the costs and quality of the City’s current provision of administrative, HR, and IT functions to alternative delivery structures (e.g. contracting out more work, outsourcing, etc.). 4-18 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS 4.4 Policy, Management and Capacity Building Recommendations The recommendations provided in this section cut across the CPAU or in some cases apply to other City departments. These recommendations are drawn from findings in other sections of this report. These as well as recommendations that apply to a specific CPAU division should be reviewed and accepted as appropriate by the City Council. Section 5 of this report outlines initial implementation actions and a recommended timeframe for implementation. 4.4.1 Staff Retention, Recruiting, and Training Utility organizations across the nation, including municipally owned utilities, have for the last seven to ten years, been extremely concerned with the loss of institutional knowledge. This issue continues to trouble utilities due to the loss of baby-boomer employees to retirement. For municipally owned utilities, a second issue is a lack of ability to compete with salaries at investor-owned utilities and other industries for the utility’s skilled, experienced staff. CPAU has been losing experienced people, including leaders and seasoned technical staff, particularly since implementation of the new CalPERS policy in 2009 that placed additional limits on health benefits for future retirees. Evidence of the impact of this issue for CPAU is the inability to complete the CIP in 2011-2012, which according to CPAU’s Engineering Division, was due in part to the lack of sufficient experienced project managers. The current turnover rate is approximately 4 percent. In Leidos’ experience, a sustained turnover ratio above five to seven percent will negatively affect a utility’s capability to operate effectively because losing staff and then training new staff or staff being promoted causes inefficiencies. Over the next five years, the City’s HR Department predicts that 58 percent of CPAU’s personnel will retire because either they will qualify for retirement or they will take early retirement. Because of this situation, the turnover rate will likely become higher than its current levels. Losing qualified managers and staff and a lack of mentoring and training the next generation of leaders with expertise in new and emerging market areas, such as energy efficiency, smart grid, and customer service driven programs, presents a risk to maintaining the City’s leadership in these areas. This is because the City’s success in these areas has been largely due to the capabilities and motivation of several key individuals. One of the many other best practices within CPAU is the apprentice program for SEIU-represented field staff. This program should be strengthened for all critical field positions. Further, for other divisions, an apprentice or structured mentoring program should be considered. File: 001420/3153211006 Leidos, Inc. 4-19 Section 4 During the interviews, CPAU managers and staff raised an issue with regard to the City’s HR Department not having the utility industry contacts and knowledge to effectively identify managerial and other highly skilled candidates for new positions. Leidos understands that CPAU and the HR Department are working together on a leadership succession plan for CPAU. Recommendations CPAU and the City should review existing training, apprenticeship, retention, and recruitment policies, identify gaps against industry best practice, and make recommendations to improve these critical functions to address the challenge of replacing 58 percent of CPAU’s employees by 2018, as well as filling openings for employees that leave before retirement. See Section 2 of this report for additional findings on human resource issues for CPAU. CPAU should complete a formal succession plan as soon as possible. This process normally entails 18: Identifying the technical and team building and leadership competencies or skills that the organization will need in the next five to 10 years. Defining key positions for organizational success. Designing a systematic approach for identifying employees who are potential leadership candidates. Using high performing managers to mentor leadership candidates, thus strengthening the knowledge transfer within the organization. Crafting development plans for each leadership candidate, including any training and educational requirements. Monitoring and tracking the plan continuously. A current step that CPAU and the City could take to address recruiting challenges is for CPAU’s Administrative Division to lead recruiting for critical, difficult to fill positions and then for the HR Department to manage the interview and hiring process. Under this plan, CPAU would contract with a qualified outside recruiter. See Section 2 for more details. 4.4.2 CIP Financing CPAU has described that it uses cash reserves to finance most of its CIP. CPAU’s current ratio for the electric utility is nearly nine times the average for the comparison utilities. Particularly because CPAU’s current ratio is such an outlier compared to other utilities, the City’s limited use of debt and heavy use of cash to finance CIP projects should be considered with additional context. Issues that should be examined by the City in greater detail would include whether the projected CIP is appropriate and adequate to allow CPAU to maintain a high level of service in both the near and 18 American Public Power Assn. Workforce Planning for Public Power Utilities. Ensuring Resources to Meet Projected Needs. 2005 4-20 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS long term; whether capital projects are able to be undertaken in a timely and useful manner or if they are being postponed due to lack of other (e.g. engineering) resources; and whether revenue collection is too far out in front of expenditure patterns. Utilizing cash to fund CIP is not inappropriate, and depending on the risk tolerance profile of the City, it may be preferred. It may not, however, be the most efficient method of funding CIP, especially given the current low cost of debt and low return on cash investments. Refer to Figure 3-12 for more details. Recommendations The City should investigate reasons for the high cash accumulations and consider alternative financing strategies that may include additional low cost debt, as appropriate. 4.4.3 Strengthening CPAU’s Culture Strengthening CPAU’s culture is critical to meet the Department’s career development, retention and recruiting goals. Efforts should be invested in strengthening the culture of the organization and addressing the potentially limiting values of bureaucracy, confusion, cost reduction, and control. The City and CPAU should also address the employees’ requests for accountability and development through training and recognition, competitive compensation packages, and opportunities to develop effective processes/systems and communication strategies. Recommendations Leidos briefed CPAU’s assistant directors and managers on the cultural assessment’s findings throughout CPAU in a 90-minute session. We recommend that each division manager and top managers be briefed on the results for their divisions, a level of detail that was not possible to provide during the general session. Also, CPAU should correlate these findings with the last two annual employee surveys. Identify improvement measures in a memorandum to the City Manager and integrate findings into the overall human resources plan recommended in this section. File: 001420/3153211006 Leidos, Inc. 4-21 Section 4 4.4.4 Expand Use of Master Service Agreements Using MSAs should be expanded, particularly in the Engineering Division. There may also be opportunities to develop MSAs for other divisions as well. This will reduce labor-hours spent in the procurement process and also ensure that sufficient labor is available to meet the CIP (which was not completed in 2011-2012) and other priorities. In addition, better working relationships and more effective contract management are possible with selected contractors under a longer-term agreement (normally three years). Pasadena, Anaheim, SMUD, Burbank, and Riverside are municipal utilities that have developed MSAs for administrative, engineering, and construction services in order to expedite the procurement of services. The Engineering Division has MSAs for drafting, inspection, and structural engineering. The PD believes that there is an opportunity to develop more MSAs and leverage MSAs more than CPAU does currently. Refer to Section 2 for more details on current MSAs, their benefits and opportunities to use these vehicles more extensively. Recommendations Leidos recommends that the Engineering and Operations Divisions conduct an analysis of additional goods and services that are advantageous to be procured under MSAs. The PD should be consulted in this analysis. Leidos recommends that the other divisions, especially RMD and CSS, conduct a similar analysis. Streamlining the procurement of consultants that have shown to be of high quality may give the department more flexibility to meet its needs, particularly for one-time or periodic services. The key output from these analyses will be each division developing a prioritized list of current and potential future MSAs and preparing a schedule for executing MSAs. 4.4.5 Purchasing CPAU and Purchasing Division managers acknowledge opportunities to improve purchasing-related functions. As discussed in Section 2 of this report, over the past two years the effectiveness of the interface between PD and CPAU has substantially improved through the SPEED and other ongoing processes. Based on our interviews, there are additional steps that CPAU and the PD can take to improve the effectiveness of their interface further. These include improving advance planning for larger engineering, operations and capital projects and better training of CPAU staff on purchasing processes. Recommendations CPAU divisions should provide information as specific as possible on the timing of upcoming projects 6 to 12 months in advance of the desired start of the procurement (e.g., advertisement). As procurement planning changes, this schedule should be updated quarterly. This process will also help the project team (CPAU, PD, and others) better plan and approach large projects as strategically as possible. 4-22 Leidos, Inc. Final CONCLUSIONS AND RECOMMENDATIONS Training is another opportunity for improvement. According to the PD staff, purchasing requisition, and other documentation provided by CPAU could be more consistent. Some CPAU staff members are better trained in purchasing functions than others. With the turnover projected for CPAU over the next five years, it will be important to ensure that current and new staff are consistently trained (e.g., including informal mentoring by experienced staff) on procurement and purchasing policies and processes. The CPAU should develop or update their purchasing processes to incorporate an informal but structured training program around the purchase requisitions process. A concern that CPAU expressed is with regard to parts purchasing. There have been instances where the PD’s specifications required a particular part that is only manufactured by a single vendor, but the PD required the procurement go out for bid. This process resulted in adding time to the project with no benefit. Also, while there is flexibility in purchasing policies and procedures, items above $5,000 must be competitively bid. While exceptions in the policy may allow flexibility, the current policy is that the City Manager or his designee must approve exceptions. We understand that these policies are currently being reviewed. PD staff is working with City Management to investigate options that will increase flexibility while meeting overall purchasing requirements and policies. We encourage this process to be completed as soon as possible. 4.4.6 Improve Sharing of Best Practices Each of the divisions in CPAU has several examples of best practices, many of which may apply to other divisions and to other City departments. For example, water and wastewater operations holds “Friendly Friday Meetings” to check in with each other in an informal setting. Another example is the RMD taking a short annual retreat during which managers and staff talk about lessons learned, issues, and resource management and planning priorities for the next year. Because RMD takes on many of the strategic and long-range planning functions in CPAU, taking the time to reflect as a group to strategize and plan leads to better decisions, organizational alignment, and stronger morale. Recommendations Leidos recommends that CPAU hold a forum where people from each of the divisions present and discuss best practices, such as those described above. From this process, CPAU as a whole, and/or each division, should consider more widely adopting best practices that strengthen the organization, its culture, and improve effectiveness and efficiency. File: 001420/3153211006 Leidos, Inc. 4-23 Section 4 CPAU should also consider creating a repository for best practices or expanding an existing one, to include relevant tools and other helpful resources. This resource will also be helpful for training new employees. This repository should be either on CPAU’s shared computer drive or on its intranet. One option is to create this repository in Microsoft SharePoint, a resource that is available to CPAU through the City’s IT Department. 4-24 Leidos, Inc. Final Section 5 IMPLEMENTATION PLANNING The recommendations fall into four categories: 1. Those that do not require further analysis to take action (action recommendations). 2. Those recommendations that are probably appropriate but require an analysis to confirm their benefits and the specific course of action that the City and CPAU should take (Probable Actions). 3. Recommendations to study an option to determine if action is warranted. Each recommendation must be discussed by City and Utility staff (Study Recommendations). 4. Policy, Management and Capacity Building recommendations. In the case of almost every option, an implementation analysis (IA) will be needed to determine the best approach to implement the recommendation. Based on discussions with City managers directing this study, the relative priority of the recommendations are the following: 1. Opportunities to improve the efficiency of core Utilities Department services. 2. Opportunities to improve the efficiency or effectiveness of interfaces with other departments (e.g., HR, IT, Purchasing Division in ASD). 3. Policy, management and capacity building actions. For recommendations that the City chooses to pursue, the following five criteria should be evaluated as part of the implementation process. 1. Steps needed to implement the organizational structure. 2. Options for phasing in the recommendation. 3. Costs for implementation. 4. Staffing and additional resources required to implement the changes. 5. Changes required in existing policy. 6. Impacts to existing employees. Table 5-1 outlines the key initial actions that the City should take for each recommendation and a suggested timeframe for implementing the recommendation. The success criteria for results for implementing the recommendation mirror the evaluation criteria used to select the options presented in Section 4. The City should incorporate monitoring and reporting the success of implementation of any actions taken in its BSC system and update performance on the same schedule as the City has set for this activity. The City should add any new performance objectives and measures as appropriate to the BSC process. File: 001420/3153211006 Section 5 Table 5-1 Summary of Implementation Actions Recommendation Implementation Actions Schedule Action Recommendations CPAU Customer Service and Resource Management Divisions Reallocate priorities and workload for one FTE of resources from the RMD to energy efficiency planning, reporting and program development functions. The goal is to free up one FTE of CSS resources to invest in EE program marketing and targeted customer service projects including communication to improve satisfaction among residential customers. Develop and adopt revised Division work plans. Q1 2014 Probable Actions Customer Support Services Add one additional classification each for utility marketing representative and for customer service representative. CPAU to develop appropriate documentation to send to the HR Department. Obtain appropriate City approvals. Beginning of Q2 2014 CPAU Water-Wastewater-Gas Operations Division Outsource Water Meter Calibrations, Testing, and Installations. Operations Division has released an RFP and plans to complete outsourcing process. Immediate (no implementation plan needed). Engineering Division Reclassify two administrative positions (currently vacant). - One to a computer technician who will support GIS functions and a second position to a management analyst to support contracts planning, administration and management. Implementation analysis to compare costs against status quo and options and consider other benefits and costs. If analysis is favorable, reclassify positions in budget Make appropriate staffing changes. Start analysis immediately and implement changes by Q2 2014 Study Recommendations Resource Management Division Study of service delivery alternatives for some of resource management duties. These duties include contracting with the NCPA to conduct some of the resource acquisition or resource scheduling or contracting with another entity to perform these functions (e.g. Santa Clara, TEA, or ACES). To be determined in discussion with CPAU and ASD. By the beginning of Q2 2014 5-2 Leidos, Inc. Final IMPLEMENTATION PLANNING Table 5-1 Summary of Implementation Actions Recommendation Implementation Actions Schedule Customer Service Support Division Review CSS annual work plan against customer satisfaction goals and evaluate whether CPAU is under-investing in customer service. Make appropriate recommendations. To be determined in discussion with CPAU. Beginning of Q2 2014 CPAU should continue to evaluate the need for the six field customer service staff that read meters if the City decides to transition to two- way meters and consider options including retraining and repurposing these staff members, resizing the division or outsourcing repair and battery replacement functions. City to review annually as part of the budget process. If the City transitions to two-way meters. Operations Division, Electric and Wastewater Groups Study Shifting to More Reliance on Third Party Contractors for Electric line work and construction. Study (including costs-benefits). Issue RFP. Select Contractor(s) and negotiate contract(s). Begin study in six (6) months. If action is taken, completion of transition within two to four years. City Warehouse and CPAU- Operations Division to work to improve interface. Specifically, the CPAU-ASD team should analyze the ratio of dollars expended under work orders/service to dollars expended under “blanket” accounts. Further, more generally, the team should establish a process to improve coordination, efficiency, and effectiveness. Q2 2014 File: 001420/3153211006 Leidos, Inc. 5-3 Section 5 Policy, Management and Capacity Building Recommendations Staff Retention, Recruiting and Training. CPAU and the HR Department to develop a five-year HR plan to address retention, succession, recruiting, and replacement. Team to review existing leadership and staff compensation, development, training, apprenticeship, retention, and recruitment policies and identify gaps against industry best practice and what is needed to meet HR/staffing goals. A short-term action is for CPAU (in coordination with the HR Department) to contract with a qualified outside recruiter to focus on key hires. Q1 2014 for needs assessment and five year plan scoping. Five- year plan by May 2014. Strengthen the Department’s Culture Integrate assessment findings in HR/staffing plans. Brief divisions on the cultural assessment’s findings. Also, CPAU should correlate these findings with the last two annual employee surveys. Identify improvement measures. Q1 2014 and ongoing Investigate high current ratio- electric and approach to CIP project financing/debt service. Investigate if CPAU/City’s lack of debt service for CIP projects is appropriate, especially given the low cost of borrowing (See Figure 3-12, Current Ratio-Electric for more details). Q2 2014 Expand Use of MSAs Each division to develop a prioritized list of current and potential future MSAs and preparing a schedule for executing MSAs. Q1 2014 Cost Comparison Study for IT, Purchasing and HR Services. Commission a study and hire a consultant to compare the quality and costs of these services provided as they are now (by City Departments) to those that could be provided by contractor resources. Alternatives should be considered such as increasing current contractor support to supplement current City functions to largely outsourcing these functions while leaving City management control for these services in place. Q2 2014 – Issue RFP for study 5-4 Leidos, Inc. Final IMPLEMENTATION PLANNING CPAU-City Cost Allocation. Complete cost allocation study and make adjustments, as appropriate. Utility department managers should participate in annual performance reviews for all personnel whose costs are charged to the utility department. Q1 2014 CPAU Managers to Participate in Performance Reviews of the Staff in other Departments that the CPAU Funds. CPAU department managers should participate in annual performance reviews for all personnel whose costs are charged to CPAU. Annually Improve advance planning for CIP related procurements. Action for SPEED Committee Process in place by the beginning of Q2 2014 Conduct twice yearly purchasing requisition training for CPAU staff involved in purchasing (including new hires). ASD, Purchasing Division and CPAU to develop and launch a 60 minute training. Begin Q1 2014 Improve Sharing of Best Practices. CPAU to hold a forum where people from each of the Divisions present and discuss best practices. Create or expand repository for best practices and tools (possibly on SharePoint). 03/30/2014 Annual review of staffing adequacy for new and emerging market areas. Annually, as part of CPAU’s annual budget process and at other times as appropriate, evaluate the adequacy of staff capacity (e.g., numbers and skill mix in other areas and associated customer service functions) to ensure that adequate resources are allocated to new or emerging market developments. Annually Cost-benefit reviews of any new program. Conduct a brief cost versus benefit assessment of any new program proposals with potential material impact. Ongoing and as part of annual budget process File: 001420/3153211006 Leidos, Inc. 5-5 Appendix A Cultural Values Assessment – Barrett Values Center Cit y o f P a l o A l t o : G r o u p Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) En t r o p y : 3 1 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 1 En t r o p y : 3 1 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 4 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 4 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 4 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o n f u s i o n , c o s t r e d u c t i o n , c o n t r o l Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 bu r e a u c r a c y ( L ) 73 3 ( O ) ac c o u n t a b i l i t y 85 4 ( R ) ac c o u n t a b i l i t y 77 4 ( R ) 3 2 1 IR S ( P ) = 6 - 4 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 1 - 5 - 0 I R O S (L ) = 0 - 1 - 3 - 0 I R O S ( P ) = 1 - 4 - 5 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 cu s t o m e r s e r v i c e 72 3 ( O ) sa f e t y 72 1 ( O ) cu s t o m e r s a t i s f a c t i o n 58 2 ( O ) reg u l a t o r y c o m p l i a n c e 53 1 ( O ) f i ( L ) 48 3( O ) tea m w o r k 58 4 ( R ) sa f e t y 53 1 ( O ) cu s t o m e r s e r v i c e 47 3 ( O ) co n t i n u o u s i m p r o v e m e n t 44 4 ( O ) t t i f t i 42 2( O ) Ma t c h e s PV - C C 1 CC - D C 4 PV - D C 2 ho n e s t y 67 5 ( I ) fam i l y 50 2 ( R ) res p o n s i b i l i t y 48 4 ( I ) int e g r i t y 46 5 ( I ) t 44 2( R ) co n fus ion (L ) 48 3( O ) co s t r e d u c t i o n ( L ) 42 1 ( O ) ac c o u n t a b i l i t y 41 4 ( R ) se r v i c e r e l i a b i l i t y 41 3 ( O ) co n t r o l (L) 38 1 ( R ) cu s tom e r sa tisfac tion 42 2( O ) op e n c o m m u n i c a t i o n 39 2 ( R ) co a c h i n g / m e n t o r i n g 38 6 ( R ) lea d e r s h i p d e v e l o p m e n t 36 6 ( O ) ho n e s t y 35 5 ( I ) He a l t h I n d e x (P L ) PV - 1 0 - 0 CC - 6 - 4 DC - 1 0 - 0 res p e c t 44 2( R ) po s i t i v e a t t i t u d e 43 5 ( I ) co n t i n u o u s l e a r n i n g 42 4 ( I ) fai r n e s s 42 5 ( R ) eth i c s 39 7 ( I ) ( ) y Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 7% 7 4% 7 5% 7 6 5 C 56 28 % 8% 56 8% 6% 56 21 % 10 % 56 4 3 T 34 0% 14 % 22 % 34 14 % 15 %17 % 34 0% 15 % 27 % 34 12 S 2 1 1%1% 6% 13 % 12 11 % 6%10 % 9% 12 1%0% 9%12 % 12 CT S = 4 3 - 2 2 - 3 5 En t r o p y = 2 % CT S = 1 8 - 1 7 - 6 5 En t r o p y = 3 1 % CT S = 3 6 - 2 7 - 3 7 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) 13 % 14 % 22 % 28 % 10 % 15 % 17 % 12 % 15 % 27 % 21 % 10 % 6% 8% 7% 10 % 9% 8% 6% 4% 9% 10 % 5% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 17 % 43 % 18 % 36 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 34 % 22 % 27 % Se l f - I n t e r e s t Se l f - I n t e r e s t 31 % 33 % 36 % Cu l t u r a l E n t r o p y 2% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) Cu r r e n t C u l t u r e V a l u e s Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e co s t r e d u c t i o n ( L ) bu r e a u c r a c y ( L ) Ev o l u t i o n Cu l t u r e Fit n e s s bu r e a u c r a c y ( L ) reg u l a t o r y c o m p l i a n c e co n f u s i o n ( L ) ac c o u n t a b i l i t y se r v i c e r e l i a b i l i t y ac c o u n t a b i l i t y De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i e n t R e l a t i o n s cu s t o m e r s e r v i c e cu s t o m e r s a t i s f a c t i o n cu s t o m e r s e r v i c e cu s t o m e r s a t i s f a c t i o n Ev o l u t i o n co n t i n u o u s i m p r o v e m e n t Fit n e s s Cu l t u r e co n t r o l ( L ) tea m w o r k op e n c o m m u n i c a t i o n co a c h i n g / m e n t o r i n g So c i e t a l C o n t r i b u t i o n Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n So c i e t a l C o n t r i b u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 7 3 ) co n f u s i o n ( 4 8 ) hie r a r c h y ( 3 6 ) inf o r m a t i o n h o a r d i n g ( 2 3 ) 21 9 o u t o f 4 5 2 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s se r i o u s p r o b l e m s r e q u i r i n g c u l t u r a l d l f i 3 inf o r m a t i o n h o a r d i n g ( 2 3 ) sil o m e n t a l i t y ( 1 6 ) po w e r ( 1 3 ) lon g h o u r s ( 1 0 ) 14 % o f t o t a l v o t e s 2 bla m e ( 3 5 ) ma n i p u l a t i o n ( 3 4 ) int e r n a l c o m p e t i t i o n ( 1 6 ) 92 o u t o f 2 2 7 : 6% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion , lea d e r s h i p d e v e l o p m e n t a n d co a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu ltu ral entrop y to im prove em p i r e b u i l d i n g ( 7 ) 1 co s t r e d u c t i o n ( 4 2 ) co n t r o l ( 3 8 ) ca u t i o n ( 3 5 ) sh o r t - t e r m f o c u s ( 2 5 ) ex p l o i t a t i o n ( 1 6 ) job i n s e c u r i t y ( 1 1 ) 16 7 o u t o f 3 3 3 : 11 % o f t o t a l v o t e s cu t u a e t o p y t o p o e pe r f o r m a n c e . job i n s e c u r i t y ( 1 1 ) To t a l 47 8 o u t o f 1 5 6 9 31 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : G r o u p ( 1 5 7 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P ac c o u n t a b i l i t y 41 85 44 co a c h i n g / m e n t o r i n g 10 38 28 te a m w o r k 31 58 27 lea d e r s h i p d e v e l o p m e n t 9 36 27 ho n e s t y 8 35 27 co n t i n u o u s i m p r o v e m e n t 19 44 25 em p l o y e e f u l f i l l m e n t 5 28 23 tru s t 5 28 23 cla r i t y 4 24 20 op e n c o m m u n i c a t i o n 20 39 19 ad a p t a b i l i t y 13 32 19 ad a p t a b i l i t y 13 32 19 pr o f e s s i o n a l g r o w t h 3 22 19 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 2 6 % Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 1 En t r o p y : 2 6 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 4 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 4 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 3 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o s t r e d u c t i o n , c o n t r o l Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 regula t o r y c o m p l i a n c e 24 1 ( O ) ac c o u n t a b i l i t y 28 4 ( R ) ac c o u n t a b i l i t y 28 4 ( R ) 3 2 1 IR S ( P ) = 7 - 4 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 1 - 5 - 1 I R O S (L ) = 0 - 1 - 2 - 0 I R O S ( P ) = 2 - 3 - 4 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 g sa f e t y 19 1 ( O ) ac c o u n t a b i l i t y 18 4 ( R ) cu s t o m e r s a t i s f a c t i o n 18 2 ( O ) bu r e a u c r a c y ( L ) 17 3 ( O ) t i 17 3( O ) in t e g r i t y 19 5 ( I ) tea m w o r k 19 4 ( R ) ad a p t a b i l i t y 16 4 ( I ) sa f e t y 15 1 ( O ) ti i t 14 4( O ) Ma t c h e s PV - C C 1 CC - D C 4 PV - D C 3 ho n e s t y 24 5 ( I ) res p o n s i b i l i t y 22 4 ( I ) in t e g r i t y 19 5 ( I ) fai r n e s s 17 5 ( R ) thi 16 7( I ) cu s tom e r se r v ice 17 3( O ) co s t r e d u c t i o n ( L ) 16 1 ( O ) en v i r o n m e n t a l a w a r e n e s s 15 6 ( S ) se r v i c e r e l i a b i l i t y 15 3 ( O ) co n t r o l (L) 14 1 ( R ) co n tinu o u s imp r o v e m e n t 14 4( O ) cu s t o m e r s a t i s f a c t i o n 14 2 ( O ) cu s t o m e r s e r v i c e 13 3 ( O ) co a c h i n g / m e n t o r i n g 12 6 ( R ) He a l t h I n d e x (P L ) PV - 1 1 - 0 CC - 7 - 3 DC - 9 - 0 ethi cs 16 7( I ) co m m i t m e n t 14 5 ( I ) fam i l y 14 2 ( R ) co a c h i n g / m e n t o r i n g 13 6 ( R ) hu m o r / f u n 13 5 ( I ) ( ) po s i t i v e a t t i t u d e 13 5 ( I ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 8% 7 4% 7 6% 7 6 5 C 56 29 % 8% 56 10 % 7% 56 21 % 9% 56 4 3 T 34 0% 14 % 25 % 34 11 % 16 %18 % 34 0% 15 % 29 % 34 12 S 2 1 0%0%5% 11 % 12 11 % 4% 12 % 7% 12 1%0% 9%10 % 12 CT S = 4 5 - 2 5 - 3 0 En t r o p y = 0 % CT S = 2 1 - 1 8 - 6 1 En t r o p y = 2 6 % CT S = 3 6 - 2 9 - 3 5 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) 11 % 14 % 25 % 29 % 12 % 16 % 18 % 10 % 10 % 15 % 29 % 21 % 5% 11 % 8% 8% 7% 10 % 7% 4% 9% 10 % 9% 6% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 18 % 45 % 21 % 36 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 35 % 25 % 29 % Se l f - I n t e r e s t Se l f - I n t e r e s t 26 % 30 % 34 % Cu l t u r a l E n t r o p y 0% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e co s t r e d u c t i o n ( L ) reg u l a t o r y c o m p l i a n c e Ev o l u t i o n Cu l t u r e Fit n e s s reg u l a t o r y c o m p l i a n c e ac c o u n t a b i l i t y bu r e a u c r a c y ( L ) se r v i c e r e l i a b i l i t y ac c o u n t a b i l i t y Cl i t R l t i cu s t o m e r s a t i s f a c t i o n cu s t o m e r s a t i s f a c t i o n De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i en t R elation s cu s t o m e r s e r v i c e c u s t o m e r s e r v i c e Ev o l u t i o n ad a p t a b i l i t y co n t i n u o u s i m p r o v e m e n t Fit n e s s Cu l t u r e co n t r o l ( L ) tea m w o r k co a c h i n g / m e n t o r i n g So c i e t a l C o n t r i b u t i o n en v i r o n m e n t a l a w a r e n e s s Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 1 7 ) hie r a r c h y ( 1 2 ) co n f u s i o n ( 9 ) inf o r m a t i o n h o a r d i n g ( 5 ) 54 o u t o f 1 3 2 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s sig n i f i c a n t i s s u e s r e q u i r i n g c u l t u r a l d l f i d 3 inf o r m a t i o n h o a r d i n g ( 5 ) sil o m e n t a l i t y ( 5 ) lon g h o u r s ( 4 ) po w e r ( 2 ) 11 % o f t o t a l v o t e s 2 ma n i p u l a t i o n ( 9 ) bla m e ( 8 ) em p i r e b u i l d i n g ( 3 ) 22 o u t o f 5 9 : 4% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion a n d lea d e r s h i p c o a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu l t u r a l e n t r o p y t o i m p r o v e pe rform ance . int e r n a l c o m p e t i t i o n ( 2 ) 1 co s t r e d u c t i o n ( 1 6 ) co n t r o l ( 1 4 ) ca u t i o n ( 1 1 ) sh o r t - t e r m f o c u s ( 8 ) ex p l o i t a t i o n ( 5 ) job i n s e c u r i t y ( 1 ) 55 o u t o f 1 1 2 : 11 % o f t o t a l v o t e s pe o a c e job i n s e c u r i t y ( 1 ) To t a l 13 1 o u t o f 5 0 0 26 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : A f f i l i a t i o n N o n - S E I U e m p l o y e e ( 5 0 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P co a c h i n g / m e n t o r i n g 0 12 12 co n t i n u o u s i m p r o v e m e n t 3 14 11 ac c o u n t a b i l i t y 18 28 10 in t e g r i t y 9 19 10 te a m w o r k 9 19 10 ad a p t a b i l i t y 7 16 9 tru s t 1 9 8 ho n e s t y 3 10 7 lea d e r s h i p d e v e l o p m e n t 3 10 7 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 3 3 % Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 0 En t r o p y : 3 3 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 3 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 3 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 5 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o n f u s i o n , b l a m e , c o s t r e d u c t i o n , m a n i p u l a t i o n Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 bu r e a u c r a c y ( L ) 56 3 ( O ) ac c o u n t a b i l i t y 57 4 ( R ) ac c o u n t a b i l i t y 49 4 ( R ) 3 2 1 IR S ( P ) = 5 - 5 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 0 - 5 - 0 I R O S (L ) = 0 - 2 - 3 - 0 I R O S ( P ) = 0 - 4 - 6 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 cu s t o m e r s e r v i c e 55 3 ( O ) sa f e t y 53 1 ( O ) cu s t o m e r s a t i s f a c t i o n 40 2 ( O ) co n f u s i o n ( L ) 39 3 ( O ) l t l i 29 1( O ) tea m w o r k 39 4 ( R ) sa f e t y 38 1 ( O ) cu s t o m e r s e r v i c e 34 3 ( O ) co n t i n u o u s i m p r o v e m e n t 30 4 ( O ) ti l i 28 4( O ) Ma t c h e s PV - C C 0 CC - D C 3 PV - D C 2 ho n e s t y 43 5 ( I ) fam i l y 36 2 ( R ) res p e c t 34 2 ( R ) co n t i n u o u s l e a r n i n g 33 4 ( I ) iti t t i t d 30 5( I ) reg u latory co m p lian c e 29 1( O ) bla m e ( L ) 27 2 ( R ) co s t r e d u c t i o n ( L ) 26 1 ( O ) se r v i c e r e l i a b i l i t y 26 3 ( O ) ma n i pula t i o n (L) 25 2 ( R ) co n tinu o u s lea r n ing 28 4( O ) cu s t o m e r s a t i s f a c t i o n 28 2 ( O ) op e n c o m m u n i c a t i o n 28 2 ( R ) co a c h i n g / m e n t o r i n g 26 6 ( R ) lea d e r s h i p de v e l o pme n t 26 6 ( O ) He a l t h I n d e x (P L ) PV - 1 0 - 0 CC - 5 - 5 DC - 1 0 - 0 po s itive atti t ude 30 5( I ) int e g r i t y 27 5 ( I ) co u r t e s y 26 2 ( R ) res p o n s i b i l i t y 26 4 ( I ) tru s t 26 5 ( R ) p ( ) p p Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 7% 7 4% 7 4% 7 6 5 C 56 28 % 7% 56 7%6% 56 21 % 11 % 56 4 3 T 34 0% 15 % 21 % 34 15 % 15 % 16 % 34 0% 15 % 26 % 34 12 S 2 1 1%1% 6% 14 % 12 11 % 7%10 % 9% 12 1%0% 9%13 % 12 CT S = 4 2 - 2 1 - 3 7 En t r o p y = 2 % CT S = 1 7 - 1 6 - 6 7 En t r o p y = 3 3 % CT S = 3 6 - 2 6 - 3 8 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) 14 % 15 % 21 % 28 % 10 % 15 % 16 % 13 % 15 % 26 % 21 % 11 % 6% 7% 7 % 10 % 9% 7% 6% 4% 9% 11 % 4% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 16 % 42 % 17 % 36 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 34 % 21 % 26 % Se l f - I n t e r e s t Se l f - I n t e r e s t 33 % 35 % 37 % Cu l t u r a l E n t r o p y 2% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e co s t r e d u c t i o n ( L ) bu r e a u c r a c y ( L ) Ev o l u t i o n Cu l t u r e Fit n e s s bu r e a u c r a c y ( L ) co n f u s i o n ( L ) reg u l a t o r y c o m p l i a n c e se r v i c e r e l i a b i l i t y ac c o u n t a b i l i t y Cl i t R l t i cu s t o m e r s e r v i c e cu s t o m e r s e r v i c e De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i en t R elation s cu s t o m e r s a t i s f a c t i o n c u s t o m e r s a t i s f a c t i o n Ev o l u t i o n co n t i n u o u s i m p r o v e m e n t co n t i n u o u s l e a r n i n g tea m w o r k Fit n e s s Cu l t u r e bla m e ( L ) ma n i p u l a t i o n ( L ) tea m w o r k op e n c o m m u n i c a t i o n co a c h i n g / m e n t o r i n g So c i e t a l C o n t r i b u t i o n Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 5 6 ) co n f u s i o n ( 3 9 ) hie r a r c h y ( 2 4 ) inf o r m a t i o n h o a r d i n g ( 1 8 ) 16 5 o u t o f 3 2 0 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s se r i o u s p r o b l e m s r e q u i r i n g c u l t u r a l d l f i 3 inf o r m a t i o n h o a r d i n g ( 1 8 ) po w e r ( 1 1 ) sil o m e n t a l i t y ( 1 1 ) lon g h o u r s ( 6 ) 15 % o f t o t a l v o t e s 2 bla m e ( 2 7 ) ma n i p u l a t i o n ( 2 5 ) int e r n a l c o m p e t i t i o n ( 1 4 ) 70 o u t o f 1 6 8 : 7% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion , lea d e r s h i p d e v e l o p m e n t a n d co a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu ltu ral entrop y to im prove em p i r e b u i l d i n g ( 4 ) 1 co s t r e d u c t i o n ( 2 6 ) ca u t i o n ( 2 4 ) co n t r o l ( 2 4 ) sh o r t - t e r m f o c u s ( 1 7 ) ex p l o i t a t i o n ( 1 1 ) job i n s e c u r i t y ( 1 0 ) 11 2 o u t o f 2 2 1 : 11 % o f t o t a l v o t e s cu t u a e t o p y t o p o e pe r f o r m a n c e . job i n s e c u r i t y ( 1 0 ) To t a l 34 7 o u t o f 1 0 6 9 33 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : A f f i l i a t i o n S E I U e m p l o y e e ( 1 0 7 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P ac c o u n t a b i l i t y 23 57 34 lea d e r s h i p d e v e l o p m e n t 6 26 20 ho n e s t y 5 25 20 te a m w o r k 22 39 17 em p l o y e e f u l f i l l m e n t 4 21 17 co a c h i n g / m e n t o r i n g 10 26 16 co n t i n u o u s l e a r n i n g 13 28 15 op e n c o m m u n i c a t i o n 13 28 15 tru s t 4 19 15 cla r i t y 2 17 15 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 1 4 % Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 2 En t r o p y : 1 4 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 4 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 4 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 1 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 en v i r o n m e n t a l a w a r e n e s s 6 6 ( S ) ac c o u n t a b i l i t y 8 4 ( R ) ac c o u n t a b i l i t y 9 4 ( R ) 3 2 1 IR S ( P ) = 8 - 3 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 1 - 3 - 4 - 1 I R O S (L ) = 0 - 0 - 1 - 0 I R O S ( P ) = 1 - 6 - 3 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 sa f e t y 6 1 ( O ) inf o r m a t i o n s h a r i n g 5 4 ( O ) te a m w o r k 5 4 ( R ) ac c o u n t a b i l i t y 4 4 ( R ) b ( L) 4 3( O ) op e n c o m m u n i c a t i o n 6 2 ( R ) sa f e t y 5 1 ( O ) te a m w o r k 5 4 ( R ) tru s t 5 5 ( R ) hi / t i 4 6( R ) Ma t c h e s PV - C C 2 CC - D C 4 PV - D C 2 hu m o r / f u n 7 5 ( I ) ho n e s t y 6 5 ( I ) in t e g r i t y 6 5 ( I ) res p o n s i b i l i t y 6 4 ( I ) llb i ( h i l / bur e a u c r a c y (L ) 4 3( O ) op e n c o m m u n i c a t i o n 4 2 ( R ) qu a l i t y 4 3 ( O ) reg u l a t o r y c o m p l i a n c e 4 1 ( O ) res pon s i b i l i t y 4 4 ( I ) co a c hing / me n toring 4 6( R ) cu s t o m e r s a t i s f a c t i o n 4 2 ( O ) eth i c s 4 7 ( O ) in t e g r i t y 4 5 ( I ) res pec t 4 2 ( R ) He a l t h I n d e x (P L ) PV - 1 1 - 0 CC - 9 - 1 DC - 1 0 - 0 we ll-being (phys ica l/ em o t i o n a l / m e n t a l / sp i r i t u a l ) 5 6 ( I ) ba l a n c e ( h o m e / w o r k ) 4 4 ( I ) co o p e r a t i o n 4 5 ( R ) eff i c i e n c y 4 3( I ) p y p eff i c i e n c y 4 3( I ) fam i l y 4 2 ( R ) hu m i l i t y 4 7 ( I ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 7% 7 2% 7 4% 7 6 5 C 56 33 % 11 % 56 12 % 9% 56 17 % 12 % 56 4 3 T 34 0% 10 % 28 % 34 10 % 17 % 24 % 34 2% 13 % 23 % 34 12 S 2 1 0%1%2% 8% 12 2%2% 11 % 11 % 12 1%1% 12 %15 % 12 CT S = 5 1 - 2 8 - 2 1 En t r o p y = 1 % CT S = 2 3 - 2 4 - 5 3 En t r o p y = 1 4 % CT S = 3 3 - 2 3 - 4 4 En t r o p y = 4 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) 33 % 10 % 28 % 11 % 11 % 11 % 17 % 24 % 12 % 12 % 15 % 13 % 23 % 17 % 12 % 2% 8% 10 % 11 % 7% 11 % 11 % 9% 2% 4% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 24 % 51 % 23 % 33 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 24 % 23 % Se l f - I n t e r e s t Se l f - I n t e r e s t 20 % 39 % 40 % 28 % Cu l t u r a l E n t r o p y 1% 14 % 4% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e ac c o u n t a b i l i t y Ev o l u t i o n Cu l t u r e Fit n e s s ac c o u n t a b i l i t y bu r e a u c r a c y ( L ) qu a l i t y reg u l a t o r y c o m p l i a n c e ac c o u n t a b i l i t y Cl i t R l t i t t i f t i De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i en t R elation s cu s tom e r sa tisfac tion Ev o l u t i o n op e n c o m m u n i c a t i o n Fit n e s s Cu l t u r e tea m w o r k op e n c o m m u n i c a t i o n op e n c o m m u n i c a t i o n tea m w o r k tru s t co a c h i n g / m e n t o r i n g res p e c t Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n So c i e t a l C o n t r i b u t i o n en v i r o n m e n t a l a w a r e n e s s Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 4 ) co n f u s i o n ( 2 ) lon g h o u r s ( 2 ) hie r a r c h y ( 1 ) 12 o u t o f 3 2 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s iss u e s r e q u i r i n g c u l t u r a l o r l d j 3 hie r a r c h y ( 1 ) inf o r m a t i o n h o a r d i n g ( 1 ) po w e r ( 1 ) sil o m e n t a l i t y ( 1 ) 10 % o f t o t a l v o t e s 2 bla m e ( 1 ) int e r n a l c o m p e t i t i o n ( 1 ) ma n i pula t i o n (1) 3 o u t o f 1 6 : 2% o f t o t a l v o t e s st r u c t u r a l adj us t m e n t . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu l t u r a l e n t r o p y t o i m p r o v e pe r f o r m a n c e . p ( ) 1 co s t r e d u c t i o n ( 1 ) ex p l o i t a t i o n ( 1 ) 2 o u t o f 1 5 : 2% o f t o t a l v o t e s To t a l 17 o u t o f 1 2 0 14 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n A d m i n i s t r a t i o n ( 1 2 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P ac c o u n t a b i l i t y 4 8 4 co a c h i n g / m e n t o r i n g 0 4 4 tru s t 2 5 3 et h i c s 1 4 3 re s p e c t 1 4 3 ad a p t a b i l i t y 0 3 3 em p l o y e e f u l f i l l m e n t 0 3 3 op e n c o m m u n i c a t i o n 4 6 2 or g a n i z a t i o n a l g r o w t h 0 2 2 tra n s p a r e n c y 0 2 2 we l l be i n g ( p h y s i c a l / e m o t i o n a l / we l l -be i n g ( p h y s i c a l / e m o t i o n a l / me n t a l / s p i r i t u a l ) 0 2 2 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 2 6 % Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 2 En t r o p y : 2 6 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 5 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 5 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 3 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c a u t i o n , h i e r a r c h y Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 cu s t o m e r s a t i s f a c t i o n 12 2 ( O ) cu s t o m e r s e r v i c e 10 3 ( O ) ho n e s t y 11 5 ( I ) 3 2 1 IR S ( P ) = 9 - 2 - 2 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 2 - 4 - 2 I R O S (L ) = 1 - 0 - 2 - 0 I R O S ( P ) = 1 - 5 - 4 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 cu s t o m e r s e r v i c e 11 3 ( O ) bu r e a u c r a c y ( L ) 9 3 ( O ) ca u t i o n ( L ) 8 1 ( I ) en v i r o n m e n t a l a w a r e n e s s 8 6 ( S ) hi h ( L ) 7 3( O ) te a m w o r k 10 4 ( R ) cu s t o m e r s a t i s f a c t i o n 9 2 ( O ) ac c o u n t a b i l i t y 7 4 ( R ) lea d e r s h i p d e v e l o p m e n t 7 6 ( O ) hi / t i 6 6( R ) Ma t c h e s PV - C C 2 CC - D C 5 PV - D C 2 ac c o u n t a b i l i t y 8 4 ( R ) ma k i n g a d i f f e r e n c e 8 6 ( S ) po s i t i v e a t t i t u d e 8 5 ( I ) res p o n s i b i l i t y 8 4 ( I ) ti i t 7 5( I ) hiera r c hy (L ) 7 3( O ) ac c o u n t a b i l i t y 6 4 ( R ) co m m u n i t y i n v o l v e m e n t 6 6 ( S ) reg u l a t o r y c o m p l i a n c e 6 1 ( O ) saf e t y 6 1 ( O ) co a c hing / me n toring 6 6( R ) ho n e s t y 6 5 ( I ) op e n c o m m u n i c a t i o n 6 2 ( R ) sa f e t y 6 1 ( O ) tru s t 6 5 ( R ) He a l t h I n d e x (P L ) PV - 1 3 - 0 CC - 8 - 3 DC - 1 0 - 0 cre a tivity 7 5( I ) int e g r i t y 7 5 ( I ) en v i r o n m e n t a l a w a r e n e s s 6 6 ( S ) eth i c s 6 7 ( I ) ad a ptab i l i t y 5 4 ( I ) y te a m w o r k 6 4 ( R ) p y fai r n e s s 5 5 ( R ) hu m o r / f u n 5 5 ( I ) pe r s e v e r a n c e 5 4 ( I ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 8% 7 6% 7 5% 7 6 5 C 56 29 % 11 % 56 7%11 % 56 22 % 11 % 56 4 3 T 34 0% 13 % 22 % 34 12 %16 % 17 % 34 1% 14 % 27 % 34 12 S 2 1 1%1% 6%9% 12 9% 5%8%9% 12 2% 0% 6% 12 % 12 CT S = 4 8 - 2 2 - 3 0 En t r o p y = 2 % CT S = 2 4 - 1 7 - 5 9 En t r o p y = 2 6 % CT S = 3 8 - 2 7 - 3 5 En t r o p y = 3 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) 13 % 22 % 29 % 11 % 16 % 17 % 11 % 12 % 14 % 27 % 22 % 11 % 6% 9% 11 % 8% 8% 9% 7% 11 % 6% 6% 11 % 5% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 17 % 48 % 24 % 38 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 33 % 22 % 27 % Se l f - I n t e r e s t Se l f - I n t e r e s t 26 % 28 % 32 % Cu l t u r a l E n t r o p y 2% 3% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e bu r e a u c r a c y ( L ) Ev o l u t i o n Cu l t u r e Fit n e s s bu r e a u c r a c y ( L ) hie r a r c h y ( L ) ac c o u n t a b i l i t y reg u l a t o r y c o m p l i a n c e ac c o u n t a b i l i t y Cl i t R l t i cu s t o m e r s a t i s f a c t i o n cu s t o m e r s e r v i c e De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i en t R elation s cu s t o m e r s e r v i c e c u s t o m e r s a t i s f a c t i o n Ev o l u t i o n ca u t i o n ( L ) tea m w o r k Fit n e s s Cu l t u r e tea m w o r k tea m w o r k co a c h i n g / m e n t o r i n g op e n c o m m u n i c a t i o n tru s t So c i e t a l C o n t r i b u t i o n en v i r o n m e n t a l a w a r e n e s s Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n So c i e t a l C o n t r i b u t i o n co m m u n i t y i n v o l v e m e n t Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 9 ) hie r a r c h y ( 7 ) co n f u s i o n ( 3 ) sil o m e n t a l i t y ( 3 ) 26 o u t o f 6 0 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s sig n i f i c a n t i s s u e s r e q u i r i n g c u l t u r a l d l f i d 3 sil o m e n t a l i t y ( 3 ) lon g h o u r s ( 2 ) inf o r m a t i o n h o a r d i n g ( 1 ) po w e r ( 1 ) 12 % o f t o t a l v o t e s 2 ma n i p u l a t i o n ( 4 ) bla m e ( 3 ) int e r n a l c o m p e t i t i o n ( 3 ) 11 o u t o f 3 0 : 5% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion a n d lea d e r s h i p c o a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu l t u r a l e n t r o p y t o i m p r o v e pe rform ance . em p i r e b u i l d i n g ( 1 ) 1 ca u t i o n ( 8 ) sh o r t - t e r m f o c u s ( 4 ) co n t r o l ( 2 ) ex p l o i t a t i o n ( 2 ) co s t r e d u c t i o n ( 1 ) job i n s e c u r i t y ( 1 ) 18 o u t o f 3 5 : 9% o f t o t a l v o t e s pe o a c e job i n s e c u r i t y ( 1 ) To t a l 55 o u t o f 2 1 0 26 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n C u s t o m e r S u p p o r t S e r v i c e s ( 2 1 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P lea d e r s h i p d e v e l o p m e n t 0 7 7 ho n e s t y 0 6 6 op e n c o m m u n i c a t i o n 0 6 6 tru s t 1 6 5 eff i c i e n c y 0 5 5 inf o r m a t i o n s h a r i n g 0 5 5 te a m w o r k 6 10 4 em p o w e r m e n t 1 5 4 fai r n e s s 1 5 4 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 3 0 % Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 1 En t r o p y : 3 0 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 4 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 4 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 5 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o n f u s i o n , c o n t ro l , h i e r a r c h y , s h o r t - t e r m fo c u s Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 bu r e a u c r a c y ( L ) 18 3 ( O ) ac c o u n t a b i l i t y 18 4 ( R ) ac c o u n t a b i l i t y 19 4 ( R ) 3 2 1 IR S ( P ) = 7 - 4 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 1 - 5 - 0 I R O S (L ) = 0 - 1 - 4 - 0 I R O S ( P ) = 2 - 2 - 7 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 cu s t o m e r s a t i s f a c t i o n 18 2 ( O ) cu s t o m e r s e r v i c e 18 3 ( O ) sa f e t y 18 1 ( O ) re g u l a t o r y c o m p l i a n c e 15 1 ( O ) i l i b i l i t 13 3( O ) co n t i n u o u s i m p r o v e m e n t 13 4 ( O ) cu s t o m e r s a t i s f a c t i o n 12 2 ( O ) pr o d u c t i v i t y 11 3 ( O ) ad a p t a b i l i t y 10 4 ( I ) it t 10 5( I ) Ma t c h e s PV - C C 1 CC - D C 4 PV - D C 3 ho n e s t y 16 5 ( I ) pe r f o r m a n c e 15 3 ( I ) fam i l y 12 2 ( R ) ef f i c i e n c y 11 3 ( I ) ibi l i t 11 4( I ) se r v ice reliabil i t y 13 3( O ) co n f u s i o n ( L ) 12 3 ( O ) ac c o u n t a b i l i t y 10 4 ( R ) co n t r o l ( L ) 10 1 ( R ) hie r a r c h y (L) 10 3 ( O ) co m m itm e n t 10 5( I ) cu s t o m e r s e r v i c e 10 3 ( O ) ef f i c i e n c y 10 3 ( O ) sta f f e n g a g e m e n t 10 5 ( O ) re gul a t o r y co m plia n c e 9 1 ( O ) He a l t h I n d e x (P L ) PV - 1 1 - 0 CC - 6 - 5 DC - 1 1 - 0 res p o n s ibi l i t y 11 4( I ) co m m i t m e n t 10 5 ( I ) co n t i n u o u s l e a r n i n g 10 4 ( I ) co o p e r a t i o n 10 5 ( R ) prof e s s i o n a l grow t h 10 3 ( I ) y ( ) sh o r t - t e r m f o c u s ( L ) 10 1 ( O ) g y p tea m w o r k 9 4 ( R ) p g res p e c t 10 2 ( R ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 7% 7 3% 7 5% 7 6 5 C 56 26 % 5% 56 8% 3% 56 23 % 6% 56 4 3 T 34 1% 21 %23 % 34 15 %17 % 17 % 34 0% 18 % 27 % 34 12 S 2 1 1%0%5% 11 % 12 11 % 4% 12 % 10 % 12 1%0% 9%11 % 12 CT S = 3 8 - 2 3 - 3 9 En t r o p y = 2 % CT S = 1 4 - 1 7 - 6 9 En t r o p y = 3 0 % CT S = 3 4 - 2 7 - 3 9 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) 11 % 21 % 23 % 26 % 12 % 10 % 17 % 17 % 11 % 18 % 27 % 23 % 5% 11 % 5% 7% 10 % 8% 3% 3 % 9% 11 % 6% 5% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 14 % Co m m o n G o o d Co m m o n G o o d 17 % 38 % 14 % 34 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 39 % 23 % 27 % Se l f - I n t e r e s t Se l f - I n t e r e s t 30 % 37 % 38 % Cu l t u r a l E n t r o p y 2% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e bu r e a u c r a c y ( L ) Ev o l u t i o n Cu l t u r e Fit n e s s bu r e a u c r a c y ( L ) reg u l a t o r y c o m p l i a n c e se r v i c e r e l i a b i l i t y co n f u s i o n ( L ) ac c o u n t a b i l i t y ac c o u n t a b i l i t y pr o d u c t i v i t y eff i c i e n c y reg u l a t o r y c o m p l i a n c e De s i r e d C u l t u r e V a l u e s Ev o l u t i o n hie r a r c h y ( L ) Cl i e n t R e l a t i o n s cu s t o m e r s a t i s f a c t i o n cu s t o m e r s e r v i c e cu s t o m e r s a t i s f a c t i o n cu s t o m e r s e r v i c e E o l t i o n sh o r t ter m f o c u s ( L ) co n t i n u o u s i m p r o v e m e n t Fit n e s s Evolutio n sh o r t -ter m f o c u s ( L ) ad a p t a b i l i t y Cu l t u r e co n t r o l ( L ) sta f f e n g a g e m e n t tea m w o r k Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n So c i e t a l C o n t r i b u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 1 8 ) co n f u s i o n ( 1 2 ) hie r a r c h y ( 1 0 ) sil o m e n t a l i t y ( 6 ) 53 o u t o f 1 1 4 : 15 % o f t o t a l v o t e s Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s sig n i f i c a n t i s s u e s r e q u i r i n g c u l t u r a l d l f i d sil o m e n t a l i t y ( 6 ) inf o r m a t i o n h o a r d i n g ( 4 ) po w e r ( 3 ) 15 % o f t o t a l v o t e s 2 bla m e ( 5 ) ma n i p u l a t i o n ( 5 ) int e r n a l c o m p e t i t i o n ( 3 ) em p i r e b u i l d i n g ( 2 ) 15 o u t o f 4 9 : 4% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion a n d lea d e r s h i p c o a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu l t u r a l e n t r o p y t o i m p r o v e pe rform ance . 1 co n t r o l ( 1 0 ) sh o r t - t e r m f o c u s ( 1 0 ) ca u t i o n ( 7 ) co s t r e d u c t i o n ( 7 ) ex p l o i t a t i o n ( 4 ) job i n s e c u r i t y ( 2 ) 40 o u t o f 8 2 : 11 % o f t o t a l v o t e s pe o a c e To t a l 10 8 o u t o f 3 6 0 30 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n E n g i n e e r i n g ( 3 6 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P co n t i n u o u s i m p r o v e m e n t 4 13 9 st a f f e n g a g e m e n t 1 10 9 ac c o u n t a b i l i t y 10 18 8 ef f i c i e n c y 3 10 7 sh a r e d v i s i o n 1 8 7 lea d e r s h i p d e v e l o p m e n t 2 8 6 mi s s i o n f o c u s 2 8 6 cla r i t y 1 7 6 po s i t i v e a t t i t u d e 0 6 6 ad a p t a b i l i t y 5 10 5 or g a n i z a t i o n a l g r o w t h 2 7 5 or g a n i z a t i o n a l g r o w t h 2 7 5 co a c h i n g / m e n t o r i n g 0 5 5 em p l o y e e r e c o g n i t i o n 0 5 5 tru s t 0 5 5 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 3 6 % Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 1 En t r o p y : 3 6 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 2 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 2 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 6 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o n f u s i o n , c o s t r e d u c t i o n , b l a m e , m a n i p u l a t i o n , c o n t r o l Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 bu r e a u c r a c y ( L ) 38 3 ( O ) ac c o u n t a b i l i t y 44 4 ( R ) ac c o u n t a b i l i t y 38 4 ( R ) 3 2 1 IR S ( P ) = 6 - 6 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 0 - 4 - 0 I R O S (L ) = 0 - 3 - 3 - 0 I R O S ( P ) = 1 - 4 - 5 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 sa f e t y 37 1 ( O ) cu s t o m e r s e r v i c e 35 3 ( O ) co n f u s i o n ( L ) 30 3 ( O ) co s t r e d u c t i o n ( L ) 30 1 ( O ) bl ( L ) 25 2( R ) sa f e t y 30 1 ( O ) tea m w o r k 30 4 ( R ) cu s t o m e r s e r v i c e 22 3 ( O ) co n t i n u o u s i m p r o v e m e n t 21 4 ( O ) ti l i 21 4( O ) Ma t c h e s PV - C C 1 CC - D C 2 PV - D C 4 ho n e s t y 31 5 ( I ) fam i l y 28 2 ( R ) res p e c t 25 2 ( R ) co n t i n u o u s l e a r n i n g 23 4 ( I ) t 23 2( R ) blam e (L ) 25 2( R ) ma n i p u l a t i o n ( L ) 23 2 ( R ) cu s t o m e r s a t i s f a c t i o n 21 2 ( O ) reg u l a t o r y c o m p l i a n c e 21 1 ( O ) co n t r o l (L) 19 1 ( R ) co n tinu o u s lea r n ing 21 4( O ) ho n e s t y 21 5 ( I ) co a c h i n g / m e n t o r i n g 19 6 ( R ) lea d e r s h i p d e v e l o p m e n t 18 6 ( O ) open c o m m u n i c a t i o n 18 2 ( R ) He a l t h I n d e x (P L ) PV - 1 2 - 0 CC - 4 - 6 DC - 1 0 - 0 co u r tes y 23 2( R ) sa f e t y 23 1 ( I ) fai r n e s s 22 5 ( R ) tru s t 22 5 ( R ) co m m i t m e n t 20 5 ( I ) ( ) p eth i c s 20 7 ( I ) po s i t i v e a t t i t u d e 20 5 ( I ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 7% 7 4% 7 5% 7 6 5 C 56 29 % 6% 56 7%6% 56 21 % 11 % 56 4 3 T 34 0% 13 % 19 % 34 16 % 13 %15 % 34 0% 14 % 27 % 34 12 S 2 1 1%1% 8% 16 % 12 12 % 8%11 % 8% 12 1%0% 9%12 % 12 CT S = 4 2 - 1 9 - 3 9 En t r o p y = 2 % CT S = 1 7 - 1 5 - 6 8 En t r o p y = 3 6 % CT S = 3 7 - 2 7 - 3 6 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) 16 % 13 % 19 % 29 % 11 % 13 % 15 % 12 % 14 % 27 % 21 % 11 % 8% 6% 7% 11 % 8% 7% 6% 4% 9% 11 % 5% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 15 % 42 % 17 % 37 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 32 % 19 % 27 % Se l f - I n t e r e s t Se l f - I n t e r e s t 36 % 37 % 35 % Cu l t u r a l E n t r o p y 2% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e co s t r e d u c t i o n ( L ) bu r e a u c r a c y ( L ) Ev o l u t i o n Cu l t u r e Fit n e s s bu r e a u c r a c y ( L ) co n f u s i o n ( L ) reg u l a t o r y c o m p l i a n c e ac c o u n t a b i l i t y Cl i e n t R e l a t i o n s cu s t o m e r s e r v i c e cu s t o m e r s a t i s f a c t i o n cu s t o m e r s e r v i c e De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Ev o l u t i o n co n t i n u o u s i m p r o v e m e n t co n t i n u o u s l e a r n i n g Cu l t u r e bla m e ( L ) ma n i p u l a t i o n ( L ) tea m w o r k co a c h i n g / m e n t o r i n g Fit n e s s Cu l t u r e ma n i p u l a t i o n ( L ) co n t r o l ( L ) co a c h i n g / m e n t o r i n g op e n c o m m u n i c a t i o n So c i e t a l C o n t r i b u t i o n Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 3 8 ) co n f u s i o n ( 3 0 ) hie r a r c h y ( 1 6 ) inf o r m a t i o n h o a r d i n g ( 1 6 ) 11 7 o u t o f 2 1 1 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s se r i o u s p r o b l e m s r e q u i r i n g c u l t u r a l d l f i 3 inf o r m a t i o n h o a r d i n g ( 1 6 ) po w e r ( 7 ) lon g h o u r s ( 5 ) sil o m e n t a l i t y ( 5 ) 16 % o f t o t a l v o t e s 2 bla m e ( 2 5 ) ma n i p u l a t i o n ( 2 3 ) int e r n a l c o m p e t i t i o n ( 8 ) 60 o u t o f 1 2 0 : 8% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion , lea d e r s h i p d e v e l o p m e n t a n d co a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu ltu ral entrop y to im prove em p i r e b u i l d i n g ( 4 ) 1 co s t r e d u c t i o n ( 3 0 ) co n t r o l ( 1 9 ) ca u t i o n ( 1 3 ) sh o r t - t e r m f o c u s ( 1 1 ) ex p l o i t a t i o n ( 8 ) job i n s e c u r i t y ( 6 ) 87 o u t o f 1 6 4 : 12 % o f t o t a l v o t e s cu t u a e t o p y t o p o e pe r f o r m a n c e . job i n s e c u r i t y ( 6 ) To t a l 26 4 o u t o f 7 2 9 36 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n O p e r a t i o n s ( 7 3 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P ac c o u n t a b i l i t y 16 44 28 te a m w o r k 12 30 18 co n t i n u o u s l e a r n i n g 4 21 17 ho n e s t y 5 21 16 pr o f e s s i o n a l i s m 4 17 13 co n t i n u o u s i m p r o v e m e n t 9 21 12 co a c h i n g / m e n t o r i n g 7 19 12 pr o f e s s i o n a l g r o w t h 1 13 12 lea d e r s h i p d e v e l o p m e n t 7 18 11 em p l o y e e f u l f i l l m e n t 4 15 11 cla r i t y 3 14 11 cla r i t y 3 14 11 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 2 3 % Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 2 En t r o p y : 2 3 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 4 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 4 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 3 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . ca u t i o n , c o n t r o l , b u r e a u c r a c y Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 en v i r o n m e n t a l a w a r e n e s s 9 6 ( S ) ac c o u n t a b i l i t y 8 4 ( R ) ba l a n c e ( h o m e / w o r k ) 7 4 ( I ) 3 2 1 IR S ( P ) = 1 1 - 1 - 2 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 1 - 2 - 7 - 1 I R O S (L ) = 1 - 1 - 1 - 0 I R O S ( P ) = 1 - 3 - 5 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 ca u t i o n ( L ) 7 1 ( I ) co n t r o l ( L ) 7 1 ( R ) reg u l a t o r y c o m p l i a n c e 7 1 ( O ) ac c o u n t a b i l i t y 5 4 ( R ) t i 5 3( O ) ad a p t a b i l i t y 7 4 ( I ) co n t i n u o u s i m p r o v e m e n t 6 4 ( O ) cu s t o m e r s a t i s f a c t i o n 6 2 ( O ) se r v i c e r e l i a b i l i t y 6 3 ( O ) t 6 5( R ) Ma t c h e s PV - C C 2 CC - D C 4 PV - D C 1 int e g r i t y 7 5 ( I ) log i c 7 3 ( I ) ad a p t a b i l i t y 6 4 ( I ) ma k i n g a d i f f e r e n c e 6 6 ( S ) ibi l i t 6 4( I ) cu s tom e r se r v ice 5 3( O ) sa f e t y 5 1 ( O ) se r v i c e r e l i a b i l i t y 5 3 ( O ) bu r e a u c r a c y ( L ) 4 3 ( O ) co m m i t m e n t 4 5 ( I ) tran s p a r e n c y 6 5( R ) em p l o y e e f u l f i l l m e n t 5 6 ( O ) em p o w e r m e n t 5 4 ( R ) sa f e t y 5 1 ( O ) He a l t h I n d e x (P L ) PV - 1 4 - 0 CC - 1 1 - 3 DC - 9 - 0 res p o n s ibi l i t y 6 4( I ) en v i r o n m e n t a l a w a r e n e s s 5 6 ( S ) co m m i t m e n t 4 5 ( I ) co m p a s s i o n 4 7 ( R ) co n t i n u o u s l e a r n i n g 4 4 ( I ) cu s t o m e r s a t i s f a c t i o n 4 2 ( O ) em p l o y e e r e c o g n i t i o n 4 2 ( R ) fin a n c i a l s t a b i l i t y 4 1 ( O ) pr o f e s s i o n a l i s m 4 3 ( O ) g eff i c i e n c y 4 3 ( I ) eth i c s 4 7 ( I ) hu m o r / f u n 4 5 ( I ) ind e p e n d e n c e 4 4 ( I ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 10 % 7 5% 7 5% 7 6 5 C 56 25 % 11 % 56 10 % 11 % 56 16 % 15 % 56 4 3 T 34 1% 12 % 29 % 34 7% 16 % 17 % 34 0% 14 % 31 % 34 12 S 2 1 1%1%2% 8% 12 14 % 2% 12 % 6% 12 1%0% 9%9% 12 CT S = 4 6 - 2 9 - 2 5 En t r o p y = 3 % CT S = 2 6 - 1 7 - 5 7 En t r o p y = 2 3 % CT S = 3 6 - 3 1 - 3 3 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) 31 % 12 % 29 % 25 % 11 % 10 % 12 % 16 % 17 % 10 % 11 % 14 % 31 % 16 % 15 % 2% 8% 11 % 10 % 6% 10 % 11 % 5% 9% 9 % 5% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 17 % 46 % 26 % 36 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 34 % 29 % 17 % 31 % Se l f - I n t e r e s t Se l f - I n t e r e s t 23 % 22 % 32 % Cu l t u r a l E n t r o p y 3% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e fin a n c i a l s t a b i l i t y reg u l a t o r y c o m p l i a n c e Ev o l u t i o n Cu l t u r e Fit n e s s reg u l a t o r y c o m p l i a n c e ac c o u n t a b i l i t y se r v i c e r e l i a b i l i t y bu r e a u c r a c y ( L ) pro f e s s i o n a l i s m ac c o u n t a b i l i t y se r v i c e r e l i a b i l i t y De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i e n t R e l a t i o n s cu s t o m e r s e r v i c e cu s t o m e r s a t i s f a c t i o n cu s t o m e r s a t i s f a c t i o n Ev o l u t i o n ca u t i o n ( L ) ad a p t a b i l i t y co n t i n u o u s i m p r o v e m e n t Fit n e s s Cu l t u r e co n t r o l ( L ) em p l o y e e r e c o g n i t i o n tra n s p a r e n c y em p l o y e e f u l f i l l m e n t em p o w e r m e n t So c i e t a l C o n t r i b u t i o n en v i r o n m e n t a l a w a r e n e s s Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n So c i e t a l C o n t r i b u t i o n en v i r o n m e n t a l a w a r e n e s s Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 4 ) hie r a r c h y ( 2 ) co n f u s i o n ( 1 ) inf o r m a t i o n h o a r d i n g ( 1 ) 11 o u t o f 3 5 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s sig n i f i c a n t i s s u e s r e q u i r i n g c u l t u r a l d l f i d 3 inf o r m a t i o n h o a r d i n g ( 1 ) lon g h o u r s ( 1 ) po w e r ( 1 ) sil o m e n t a l i t y ( 1 ) 7% o f t o t a l v o t e s 2 bla m e ( 1 ) int e r n a l c o m p e t i t i o n ( 1 ) ma n i pula t i o n (1) 3 o u t o f 1 2 : 2% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion a n d lea d e r s h i p c o a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu l t u r a l e n t r o p y t o i m p r o v e pe rform ance . p ( ) 1 ca u t i o n ( 7 ) co n t r o l ( 7 ) co s t r e d u c t i o n ( 3 ) job i n s e c u r i t y ( 2 ) ex p l o i t a t i o n ( 1 ) 20 o u t o f 3 7 : 14 % o f t o t a l v o t e s pe o a c e To t a l 34 o u t o f 1 5 0 23 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : D i v i s i o n R e s o u r c e M a n a g e m e n t ( 1 5 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P ad a p t a b i l i t y 1 7 6 tra n s p a r e n c y 1 6 5 co n t i n u o u s i m p r o v e m e n t 2 6 4 em p l o y e e f u l f i l l m e n t 1 5 4 em p o w e r m e n t 1 5 4 co a c h i n g / m e n t o r i n g 0 4 4 ac c o u n t a b i l i t y 5 8 3 int e g r i t y 1 4 3 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 3 3 % Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 0 En t r o p y : 3 3 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 3 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 3 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 5 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o n f u s i o n , b l a m e , c o s t r e d u c t i o n , m a n i p u l a t i o n Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 bu r e a u c r a c y ( L ) 59 3 ( O ) ac c o u n t a b i l i t y 63 4 ( R ) ac c o u n t a b i l i t y 55 4 ( R ) 3 2 1 IR S ( P ) = 5 - 6 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 0 - 5 - 0 I R O S (L ) = 0 - 2 - 3 - 0 I R O S ( P ) = 1 - 4 - 6 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 cu s t o m e r s e r v i c e 59 3 ( O ) sa f e t y 58 1 ( O ) cu s t o m e r s a t i s f a c t i o n 45 2 ( O ) co n f u s i o n ( L ) 42 3 ( O ) bl ( L ) 32 2( R ) tea m w o r k 44 4 ( R ) sa f e t y 40 1 ( O ) co n t i n u o u s i m p r o v e m e n t 37 4 ( O ) cu s t o m e r s e r v i c e 36 3 ( O ) t t i f t i 31 2( O ) Ma t c h e s PV - C C 0 CC - D C 3 PV - D C 3 ho n e s t y 49 5 ( I ) fam i l y 38 2 ( R ) po s i t i v e a t t i t u d e 36 5 ( I ) res p e c t 36 2 ( R ) ti l i 35 4( I ) blam e (L ) 32 2( R ) reg u l a t o r y c o m p l i a n c e 31 1 ( O ) co s t r e d u c t i o n ( L ) 29 1 ( O ) ma n i p u l a t i o n ( L ) 29 2 ( R ) se r v i c e r e l i a b i l i t y 27 3 ( O ) cu s tom e r sa tisfac tion 31 2( O ) co n t i n u o u s l e a r n i n g 30 4 ( O ) op e n c o m m u n i c a t i o n 30 2 ( R ) co a c h i n g / m e n t o r i n g 28 6 ( R ) ho n e s t y 28 5 ( I ) He a l t h I n d e x (P L ) PV - 1 1 - 0 CC - 5 - 5 DC - 1 1 - 0 co n tinu o u s lea r n ing 35 4( I ) int e g r i t y 31 5 ( I ) fai r n e s s 30 5 ( R ) res p o n s i b i l i t y 30 4 ( I ) co u r t e s y 28 2 ( R ) y y lea d e r s h i p d e v e l o p m e n t 28 6 ( O ) y tru s t 28 5 ( R ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 7% 7 4% 7 5% 7 6 5 C 56 28 % 7% 56 7%6% 56 21 % 11 % 56 4 3 T 34 1% 14 % 21 % 34 15 % 15 % 16 % 34 0% 15 % 27 % 34 12 S 2 1 1%1% 6% 14 % 12 11 % 7%10 % 9% 12 1%0% 8%12 % 12 CT S = 4 2 - 2 1 - 3 7 En t r o p y = 3 % CT S = 1 7 - 1 6 - 6 7 En t r o p y = 3 3 % CT S = 3 7 - 2 7 - 3 6 En t r o p y = 1 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) 14 % 14 % 21 % 28 % 10 % 15 % 16 % 12 % 15 % 27 % 21 % 11 % 6% 7% 7 % 10 % 9% 7% 6% 4% 8% 11 % 5% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 16 % 42 % 17 % 37 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 34 % 21 % 27 % Se l f - I n t e r e s t Se l f - I n t e r e s t 33 % 34 % 35 % Cu l t u r a l E n t r o p y 3% 1% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e co s t r e d u c t i o n ( L ) bu r e a u c r a c y ( L ) Ev o l u t i o n Cu l t u r e Fit n e s s bu r e a u c r a c y ( L ) co n f u s i o n ( L ) reg u l a t o r y c o m p l i a n c e se r v i c e r e l i a b i l i t y ac c o u n t a b i l i t y Cl i t R l t i cu s t o m e r s e r v i c e cu s t o m e r s e r v i c e De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i en t R elation s cu s t o m e r s a t i s f a c t i o n c u s t o m e r s a t i s f a c t i o n Ev o l u t i o n co n t i n u o u s i m p r o v e m e n t co n t i n u o u s l e a r n i n g tea m w o r k Fit n e s s Cu l t u r e bla m e ( L ) ma n i p u l a t i o n ( L ) tea m w o r k op e n c o m m u n i c a t i o n co a c h i n g / m e n t o r i n g So c i e t a l C o n t r i b u t i o n Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 5 9 ) co n f u s i o n ( 4 2 ) hie r a r c h y ( 2 6 ) inf o r m a t i o n h o a r d i n g ( 2 0 ) 17 9 o u t o f 3 5 1 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s se r i o u s p r o b l e m s r e q u i r i n g c u l t u r a l d l f i 3 inf o r m a t i o n h o a r d i n g ( 2 0 ) po w e r ( 1 2 ) sil o m e n t a l i t y ( 1 2 ) lon g h o u r s ( 8 ) 15 % o f t o t a l v o t e s 2 bla m e ( 3 2 ) ma n i p u l a t i o n ( 2 9 ) int e r n a l c o m p e t i t i o n ( 1 5 ) 80 o u t o f 1 8 4 : 7% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion , lea d e r s h i p d e v e l o p m e n t a n d co a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu ltu ral entrop y to im prove em p i r e b u i l d i n g ( 4 ) 1 co s t r e d u c t i o n ( 2 9 ) ca u t i o n ( 2 6 ) co n t r o l ( 2 6 ) sh o r t - t e r m f o c u s ( 1 9 ) ex p l o i t a t i o n ( 1 4 ) job i n s e c u r i t y ( 1 0 ) 12 4 o u t o f 2 4 1 : 11 % o f t o t a l v o t e s cu t u a e t o p y t o p o e pe r f o r m a n c e . job i n s e c u r i t y ( 1 0 ) To t a l 38 3 o u t o f 1 1 7 9 33 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e e m p l o y e e ( 1 1 8 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P ac c o u n t a b i l i t y 26 63 37 ho n e s t y 5 28 23 lea d e r s h i p d e v e l o p m e n t 6 28 22 te a m w o r k 24 44 20 co n t i n u o u s i m p r o v e m e n t 18 37 19 co a c h i n g / m e n t o r i n g 10 28 18 em p l o y e e f u l f i l l m e n t 5 22 17 co n t i n u o u s l e a r n i n g 14 30 16 op e n c o m m u n i c a t i o n 14 30 16 tru s t 4 20 16 pr o f e s s i o n a l g r o w t h 2 18 16 pr o f e s s i o n a l g r o w t h 2 18 16 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r Pre p a r e d b y : Ba r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 En t r o p y : 2 4 % Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t Va l u e s M a t c h e s : 1 En t r o p y : 2 4 % Pe r s o n a l & C u r r e n t C u l t u r e A l i g n m e n t 3 o r m o r e . P e o p l e a r e a b l e t o b r i n g t h e m s e l v e s t o w o r k . 1- 2 . P e o p l e a r e s o m e w h a t a b l e t o b r i n g t h e m s e l v e s t o w o r k . 0- 1 0 % . H e a l t h y f u n c t i o n i n g . 11 % - 2 0 % . S o m e p r o b l e m s r e q u i r i n g c a r e f u l m o n i t o r i n g . V l M t h 6 41 % + . C r i t i c a l s i t u a t i o n r e q u i r i n g l e a d e r s h i p c h a n g e s t o a v o i d org a n i z a t i o n a l f a i l u r e 0. P e o p l e a r e n o t a b l e t o b r i n g t h e m s e l v e s t o w o r k . L o o k t o blu e v a l u e s i n D e s i r e d C u l t u r e f o r g u i d a n c e , i f a n y . Cu r r e n t & D e s i r e d C u l t u r e A l i g n m e n t 21 % - 3 0 % . S i g n i f i c a n t p r o b l e m s r e q u i r i n g i m m e d i a t e a t t e n t i o n . 31 % - 4 0 % . S e r i o u s s i t u a t i o n r e q u i r i n g i m m e d i a t e l e a d e r s h i p int e r v e n t i o n a n d c h a n g e s . NE W V A L U E S T O F O C U S O N An y v a l u e s s h o w n i n b l u e a r e v a l u e s t h a t a r e i m p o r t a n t t o t h e ind i v i d u a l s w h o w o r k f o r t h e g r o u p a n d a r e r e q u e s t e d i n t h e D e s i r e d Value s M atches : 6 org a n i z a t i o n a l f a i l u r e . 6 o r m o r e . E x c e l l e n t , s t r o n g , h e a l t h y c u l t u r e . 4- 5 , g o o d . G r o u p i s o n t h e r i g h t t r a c k . Cu l t u r e b u t a r e n o t s h o w i n g i n t h e t o p v a l u e s o f t h e C u r r e n t C u l t u r e . Ho w c a n y o u s u p p o r t y o u r s t a f f t o b r i n g t h e s e v a l u e s a n d s t r e n g t h s t o wo r k s o t h a t t h e y a n d t h e g r o u p w o u l d d e r i v e f u r t h e r b e n e f i t f r o m the m ? Lim i t i n g V a l u e s : 3 2- 3 , f a i r . G r o u p i s s o m e w h a t o n t h e r i g h t t r a c k . M o r e w o r k ne e d s t o b e d o n e . 0- 1 , p o o r . G r o u p i s u n h a p p y o r f r u s t r a t e d , w a n t s t o s e e ch a n g e s o r t a k e a n e w d i r e c t i o n . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w 3+ F e a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d 0. T h i s g r o u p d o e s n o t o p e r a t e f r o m t h e b a s i s o f f e a r . 1- 2 . M a y b e s o m e e l e m e n t o f f e a r b e h i n d h o w d e c i s i o n s a r e ma d e o r h o w p e o p l e a r e m a n a g e d . An y D e s i r e d C u l t u r e v a l u e s s h o w n i n b l a c k a r e e n t i r e l y n e w req u e s t s . T h e y d o n o t s h o w i n t h e P e r s o n a l o r C u r r e n t C u l t u r e . T o wh a t e x t e n t a r e t h e s e v a l u e s p o s i t i v e n e w r e q u e s t s , o r m a y b e a rea c t i o n t o s o m e t h i n g t h a t i s n o t h a p p e n i n g o r i s u n h e a l t h y i n t h e Cu r r e n t C u l t u r e ? W h a t t h e m e s d o y o u n o t i c e w i t h t h e s e n e w v a l u e s ? Op e n a d i a l o g u e w i t h t h e s e p e o p l e t o g a i n a d e e p e r u n d e r s t a n d i n g . 3+ . Fe a r i s a f a c t o r i n h o w t h i s g r o u p o p e r a t e s o r i s m a n a g e d . bu r e a u c r a c y , c o s t r e d u c t i o n , c o n t r o l Su m m a r y Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) Le v e l Pe r s o n a l V a l u e s ( P V ) Cu r r e n t C u l t u r e Va l u e s ( C C ) De s i r e d C u l t u r e V a l u e s ( D C ) 7 6 5 4 3 re gul a t o r y c o m p l i a n c e 22 1 ( O ) ac c o u n t a b i l i t y 22 4 ( R ) ac c o u n t a b i l i t y 22 4 ( R ) 3 2 1 IR S ( P ) = 6 - 4 - 0 I R S ( L ) = 0 - 0 - 0 I R O S ( P ) = 0 - 1 - 5 - 1 I R O S (L ) = 0 - 1 - 2 - 0 I R O S ( P ) = 2 - 4 - 8 - 0 I R O S ( L ) = 0 - 0 - 0 - 0 g ac c o u n t a b i l i t y 15 4 ( R ) bu r e a u c r a c y ( L ) 14 3 ( O ) en v i r o n m e n t a l a w a r e n e s s 14 6 ( S ) sa f e t y 14 1 ( O ) i l i b i l i t 14 3( O ) tea m w o r k 14 4 ( R ) ad a p t a b i l i t y 13 4 ( I ) in t e g r i t y 13 5 ( I ) sa f e t y 13 1 ( O ) t t i f t i 11 2( O ) Ma t c h e s PV - C C 1 CC - D C 6 PV - D C 4 ho n e s t y 18 5 ( I ) res p o n s i b i l i t y 18 4 ( I ) in t e g r i t y 15 5 ( I ) co a c h i n g / m e n t o r i n g 13 6 ( R ) th i 13 7( I ) ser v ice re liabil i t y 14 3( O ) co s t r e d u c t i o n ( L ) 13 1 ( O ) cu s t o m e r s a t i s f a c t i o n 13 2 ( O ) cu s t o m e r s e r v i c e 13 3 ( O ) co n t r o l (L) 12 1 ( R ) cu s tom e r sa tisfac tion 11 2( O ) cu s t o m e r s e r v i c e 11 3 ( O ) co a c h i n g / m e n t o r i n g 10 6 ( R ) se r v i c e r e l i a b i l i t y 10 3 ( O ) et h i c s 9 7 ( O ) He a l t h I n d e x (P L ) PV - 1 0 - 0 CC - 7 - 3 DC - 1 4 - 0 eth i cs 13 7( I ) fai r n e s s 12 5 ( R ) fam i l y 12 2 ( R ) co m m i t m e n t 11 5 ( I ) hu m o r / f u n 11 5 ( I ) ( ) fin a n c i a l s t a b i l i t y 9 1 ( O ) lon g - t e r m p e r s p e c t i v e 9 7 ( O ) op e n c o m m u n i c a t i o n 9 2 ( R ) re g u l a t o r y c o m p l i a n c e 9 1 ( O ) Va l u e s P l o t Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e I = I n d i v i d u a l R = R e l a t i o n s h i p Bla c k U n d e r l i n e = P V & C C Or a n g e = P V , C C & D C Or a n g e = C C & D C Bl u e = P V & D C P = P o s i t i v e L = P o t e n t i a l l y L i m i t i n g ( w h i t e c i r c l e ) O = O r g a n i z a t i o n a l S = S o c i e t a l Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) Pe r s o n a l V a l u e s 7 Cu r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s 7 8% 7 4% 7 6% 7 6 5 C 56 27 % 9% 56 10 % 7% 56 21 % 9% 56 4 3 T 34 0% 15 % 26 % 34 10 % 16 %18 % 34 1% 14 % 28 % 34 12 S 2 1 0%0%5%10 % 12 11 % 3% 13 % 8% 12 1%0% 10 % 10 % 12 CT S = 4 4 - 2 6 - 3 0 En t r o p y = 0 % CT S = 2 1 - 1 8 - 6 1 En t r o p y = 2 4 % CT S = 3 6 - 2 8 - 3 6 En t r o p y = 2 % Po s i t i v e V a l u e s C = C o m m o n G o o d T T n f o m t i o n 0% 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % 0 % 2 0 % 4 0 % 6 0 % Va l u e s d i s t r i b u t i o n Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Po t e n t i a l l y L i m i t i n g V a l u e s T = Transformatio n S = S e l f - I n t e r e s t Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) 10 % 15 % 26 % 27 % 13 % 16 % 18 % 10 % 10 % 10 % 14 % 28 % 21 % 5% 10 % 9% 8% 8% 10 % 7% 4% 10 % 10 % 9% 6% Le v e l 1 L e v e l 2 L e v e l 3 L e v e l 4 L e v e l 5 L e v e l 6 L e v e l 7 Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Pe r s o n a l V a l u e s Cu r r e n t C u l t u r e V a l u e s De s i r e d C u l t u r e V a l u e s Po s i t i v e V a l u e s d i s t r i b u t i o n Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) Pe r s o n a l V a l u e s C u r r e n t C u l t u r e Va l u e s De s i r e d C u l t u r e Va l u e s Co m m o n G o o d Co m m o n G o o d 18 % 44 % 21 % 36 % Tra n s f o r m a t i o n Tra n s f o r m a t i o n 37 % 26 % 28 % Se l f - I n t e r e s t Se l f - I n t e r e s t 24 % 30 % 34 % Cu l t u r a l E n t r o p y 0% 2% CT S Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Ma r c h 3 0 , 2 0 1 2 Cu r r e n t C u l t u r e V a l u e s Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) Cu r r e n t C u l t u r e V a l u e s Fin a n c e Fit n e s s Cli e n t R e l a t i o n s Cu r r e n t C u l t u r e De s i r e d C u l t u r e Fin a n c e co s t r e d u c t i o n ( L ) fin a n c i a l s t a b i l i t y reg u l a t o r y c o m p l i a n c e Ev o l u t i o n Cu l t u r e Fit n e s s reg u l a t o r y c o m p l i a n c e ac c o u n t a b i l i t y bu r e a u c r a c y ( L ) se r v i c e r e l i a b i l i t y ac c o u n t a b i l i t y se r v i c e r e l i a b i l i t y reg u l a t o r y c o m p l i a n c e Cl i t R l t i cu s t o m e r s a t i s f a c t i o n cu s t o m e r s a t i s f a c t i o n De s i r e d C u l t u r e V a l u e s Ev o l u t i o n Cl i en t R elation s cu s t o m e r s e r v i c e c u s t o m e r s e r v i c e Ev o l u t i o n ad a p t a b i l i t y lon g - t e r m p e r s p e c t i v e tea m w o r k Fit n e s s Cu l t u r e co n t r o l ( L ) tea m w o r k co a c h i n g / m e n t o r i n g op e n c o m m u n i c a t i o n So c i e t a l C o n t r i b u t i o n en v i r o n m e n t a l a w a r e n e s s Cli e n t R e l a t i o n s Cu l t u r e Ev o l u t i o n Bu s i n e s s N e e d s Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e M a r c h 3 0 , 2 0 1 2 So c i e t a l Co n t r i b u t i o n Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) En t r o p y R e p o r t Th i s d e p i c t s t h e n u m b e r o f p o t e n t i a l l y l i m i t i n g v a l u e s p e r l e v e l i n t h e C u r r e n t C u l t u r e t h a t w e r e c h o s e n b y t h e s u r v e y pa r t i c i p a n t s . T h e s e r e p r e s e n t a l l t h e p o t e n t i a l l y l i m i t i n g v a l u e s t h a t w e r e c h o s e n a n d s o m a y n o t b e i n c l u d e d i n t h e t o p t e n va l u e s o n t h e V a l u e s P l o t . P o t e n t i a l l y l i m i t i n g v a l u e s a r e f o u n d o n ly a t l e v e l s 1 , 2 a n d 3 . T h i s i s a r e f l e c t i o n o f t h e d e g r e e of dis o r d e r w i t h i n a s y s t e m . Le v e l P o t e n t i a l l y L i m i t i n g V a l u e s ( v o t e s ) Pe r c e n t a g e En t r o p y 3 bu r e a u c r a c y ( 1 4 ) hie r a r c h y ( 1 0 ) co n f u s i o n ( 6 ) sil o m e n t a l i t y ( 4 ) 40 o u t o f 1 0 1 : Th i s l e v e l o f c u l t u r a l e n t r o p y r e f l e c t s sig n i f i c a n t i s s u e s r e q u i r i n g c u l t u r a l d l f i d 3 sil o m e n t a l i t y ( 4 ) inf o r m a t i o n h o a r d i n g ( 3 ) lon g h o u r s ( 2 ) po w e r ( 1 ) 10 % o f t o t a l v o t e s 2 ma n i p u l a t i o n ( 5 ) bla m e ( 3 ) em p i r e b u i l d i n g ( 3 ) 12 o u t o f 4 3 : 3% o f t o t a l v o t e s an d st r u c t u r a l tr a n s for m a t ion a n d lea d e r s h i p c o a c h i n g . It i s i m p o r t a n t t o r e d u c e t h e l e v e l o f cu l t u r a l e n t r o p y t o i m p r o v e pe rform ance . int e r n a l c o m p e t i t i o n ( 1 ) 1 co s t r e d u c t i o n ( 1 3 ) co n t r o l ( 1 2 ) ca u t i o n ( 9 ) sh o r t - t e r m f o c u s ( 6 ) ex p l o i t a t i o n ( 2 ) job i n s e c u r i t y ( 1 ) 43 o u t o f 9 2 : 11 % o f t o t a l v o t e s pe o a c e job i n s e c u r i t y ( 1 ) To t a l 95 o u t o f 3 9 0 24 % o f t o t a l v o t e s En t r o p y T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Cit y o f P a l o A l t o : P o s i t i o n F u l l - t i m e m a n a g e r ( 3 9 ) VA L U E S J U M P S VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P A v a l u e j u m p o c c u r s w h e n t h e r e are m o r e v o t e s f o r a v a l u e i n t h e D e s i r e d C u l t u r e t h a n i n t h e C u r r e n t C u l t u r e . L i s t e d b e l o w are t h e v a l u e s w i t h t h e l a r g e s t i n cre a s e i n v o t e s . T h e v a l u e s i n bo l d are r e p r e s e n t e d i n t h e D e s i r e d C u l t u r e . VA L U E Cu r r e n t C u l t u r e V o t e s De s i r e d C u l t u r e V o t e s JU M P co a c h i n g / m e n t o r i n g 0 10 10 ad a p t a b i l i t y 5 13 8 in t e g r i t y 5 13 8 ac c o u n t a b i l i t y 15 22 7 te a m w o r k 7 14 7 eff i c i e n c y 1 8 7 tru s t 1 8 7 co n t i n u o u s i m p r o v e m e n t 1 7 6 em p l o y e e f u l f i l l m e n t 0 6 6 lon g - t e r m p e r s p e c t i v e 4 9 5 lea d e r s h i p d e v e l o p m e n t 3 8 5 lea d e r s h i p d e v e l o p m e n t 3 8 5 cla r i t y 2 7 5 Va l u e s J u m p s T a b l e Ma r c h 3 0 , 2 0 1 2 Co p y r i g h t 2 0 1 2 B a r r e t t V a l u e s C e n t r e Appendix B City Of Palo Alto Utilities, Regulatory and Internal Reporting Requirements Appendix D External and Internal Reporting Resources by Category 1 Category Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Electric Power Content Label and Source Disclosure Annual percentage of power from different source types such as hydro, wind, unspecified etc. 2 0 Electric Energy and Peak Demand forecast 10 year forecast of monthly purchases at city gate, sales by rate schedule and monthly peak demand. 160 0.08 Electric ISO summer assessment - Peak demand Annual peak forecast for Palo Alto under 1 in 5 and 1 in 10 weather scenarios 15 0.01 Electric Solar SB1 Report on number of PV systems installed and info about their installation 210 0.1 Electric Evaluation/Verification of Efficiency Results Evaluation of efficiency programs, their results and realization rate 240 0.12 Electric PBC Spending Future report to include all PBC categories--low income, efficiency, R&D, and renewable energy Electric Greenhouse Gas Emissions Net generation and greenhouse gas emissions data for all electric supply resources. 71.6 0.03 Electric Powerplant / contract investments of 5 years or greater - Title 20 of CA Code of Regulations, Chapter 11 Covered procurements (contracts/investments of 5yr or longer with baseload plants over 10 MW) entered into by local publicly owned electric utilities. 0 0 Electric COBUG's 208 0.1 Electric SF6 Assessment of SF6 inventory and leakage 24 0.01 Electric NERC Self-Certifications Self-certifications of compliance with standards identified in the WECC Compliance Monitoring and Enforcement Program (CMEP) Annual Implementation Plan 60.8 0.03 Electric NERC Violation Self- Reports Self-report of violation which includes the facts of the violation, the impact on the Bulk Electric System and description of mitigation measures to resolve the violation 0 0 Electric NERC Exception Reports Special reports as required by WECC 60.8 0.03 Electric NERC Information Supplied to NCPA Information and actual and forecast daily, monthly and/or annual demands in MW and GWh. 0 0 Electric NERC Information Supplied to CAISO Information on interruotible demand, Direct Control Load Management and Demand Side Management programs. 0 0 Appendix D External and Internal Reporting Resources by Category 2 Category Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Electric 40 CFR Part 98 Greenhouse Gas Reporting (Subpart C) - General Stationary Fuel Combustion Sources COBUG fuel consumption and greenhouse gas emissions 4 0 Electric EIA-860 Annual Electric Generator Report Basic data on the technical specifications of the COBUG 4 0 Electric EIA-861 Annual Electric Power Industry Report Information on the status of electric power industry participants involved in generation, transmission, and distribution of electric energy in the US. 13 0.01 Electric EIA-923 Power Plant Operations Report Various data on COBUG operations, including fuel consumption and energy output. 2 0 Electric CEC 1304 Power Plant Owner Report Various data on COBUG operations, including fuel consumption and energy output. 4 0 Electric CEC 1306A Sales/Deliveries Quarterly Report 2 0 Electric CEC 1306C List of Power Plants Semi-Annual Report List of all power plants larger than 100 kW in Palo Alto's service territory. 1 0 Electric CEC 1311 Efficiency and Demand Reduction Annual Report Electricity efficiency and demand reduction programs 5 0 Electric Electrical Energy Surcharge Return BOE Special Taxes and Fees 8 0 Electric Semi-annual LEAP Update Progress report on implementing LEAP 18 0.01 Electric NCPA Scheduling Expectations Palo Alto's monthly scheduling expectations for existing contracts and resources on a month-ahead basis. 18 0.01 Electric NERC Compliance Mitigation Plans Mitigation Plans required to resolve a NERC Standards violation 60.8 0.03 Electric Total 1252.8 0.6 Electric and Gas Electric and gas consumption by rate class and NAICS codes Monthly energy and gas consumption and revenues by NAICS codes. Electric and Gas Commercial Building Energy Consumption Electric and gas utilities are required to keep records of 12-months of energy consumption at nonresidential buildings and on the consent of building owners, upload consumption data to the Energy Star Portfolio Manager Electric and Gas Potential for Efficiency Programs Develop potential and savings targets for efficiency programs in upcoming 10 years 216.6666667 0.1 Electric and Gas The Climate Registry City-wide emissions inventory report 70 0.03 Electric and Gas Total 287 0.14 Electric, Gas, & Water State Controller's Report Wholesale purchases, retail sales, and number of accounts for each utility 1 0 Appendix D External and Internal Reporting Resources by Category 3 Category Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Electric, Gas, Water, and Wastewater Five-Year Financial Forecasts Forecast of costs and revenues for the next five years. Includes estimated rate adjustments over the 5-year horizon 328 0.16 Electric, Gas, Water, Wastewater, and Fiber UAC Quarterly Report Includes information on the electric and gas commodity portfolios, legislative and regulatory updates, financial actuals and projections, and other issues related to any fund 88 0.04 Multiple Resource Total 417 0.2 Gas Monthly forecasts (cold year and normal year) 10 year forecast of monthly purchases at city gate and sales by rate schedule. 160 0.08 Gas Gas Distribution System Annual Report 351.6 0.17 Gas Safety Related Condition Report 191.23 Reporting safety-related conditions. 10 0 Gas DIMP Mechanical Fitting Failure Report 191.12 Distribution Systems: Mechanical Fitting Failure Reports 149 0.07 Gas EIA-176 Annual Report of Natural Gas and Supplemental Gas Supply and Disposition 2 0 Gas 40 CFR Part 98 Greenhouse Gas Reporting (Subpart NN) - Suppliers of Natural Gas and Natural Gas Liquids Natural gas deliveries to end use customers and associated greenhouse gas emissions. 4 0 Gas AB 32 Cost of Implementation Fee Regulation (HSC 38597) - Mandatory GHG report Natural gas deliveries to end use customers and associated greenhouse gas emissions. 4 0 Gas CEC 1308A Receipt and Send-Out Quarterly Report 0 0 Gas CNG Credit Sales of natural gas to the CNG station, backup billing data 0 0 Gas Gas Receiving Stations' Pressure Regulators and Relief Valves Capacities Calculations Performs annual Gas Receiving Stations capacity and relief calculations 162 0.08 Gas Public Awareness Plan for Gas Safety Develop and update plan to keep public, safety, public officials and contractors aware of safety requirements for working in and around natural gas 210 0.1 Gas CEC 1308B Deliveries and Revenue Report 2 0 Gas Total 1053 0.51 Wastewater State Database of Sanitary Sewer Overflows (SSO) Enter number of sanitary sewer overflows and stoppages into State SSO database. 840 0.4 Appendix D External and Internal Reporting Resources by Category 4 Category Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Wastewater SS Management Plan Annual Audit of Wastewater Management Plan 134.8 0.06 Wastewater Total 974.8 0.47 Water Water Supply Assessment Assessment of whether there are sufficient water supplies to meet the demands of a new large proposed project in both drought and normal water years. 0 0 Water Urban Water Management Plan Assessment of supply and demand resources in the water utility and a plan to meet water reduction targets, including description of water efficiency programs 216 0.1 Water BMP reports Results against best management areas--mostly in conservation or operational controls 280 0.13 Water BAWSCA Annual Survey/Water Conservation Report Results against conservation programs agreed to through Water Conservation Implementation Plan; designed to meet the SFPUC/BAWSCA Interim Supply Limitation. 500 0.24 Water Water Quality Results Monthly analytical reports of water quality 1872 0.9 Water Disinfection Byproduct Results / Stage I Total Trihalomethane (TTHM) / Halacetic Acids (five) (HAA5) analytical results 76 0.04 Water Annual Report of the Drinking Water Complete overview of water quality, system, operations and maintenance and assets for prior calendar year. 7921.8 3.81 Water Consumer Confidence Report (CCR) & Certification of CCR Distribution Water quality results for both San Francisco Public Utility Commission and City of Palo Alto 782 0.38 Water Regional Water Quality Board Analytical results for all flushing to storm drain system 1044 0.5 Water Cross Connection Included in the annual drinking water report to the CDPH 3122 1.5 Water Dues Data Collection Survey Retail water sales 4 0 Water Public Water System Statistics Wholesale purchases, retail sales, and number of accounts for the water utility 772 0.37 Water Total 16590 7.98 Water, Electric, Gas, WWC and Fiber Optics funds Comprehensive Annual Financial Report (CAFR) Annual financial information of the City's Utility Funds - Water, Gas, Electric, Wastewater Collection & Fiber Optics. 300 0.14 All Resources Total 300 0.14 Total 20874.6 10.04 Appendix D External and Internal Reporting Resources by Category 5 Internal Reporting Resources by Category Commodity Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Electric Numbers on Commodity Purchases at City Gate and consumption by rate schedules Back Office Monthly Reports, Monthly and Quarterly Load Forecast Reports 112 0.05 Electric Forecasting Memo on Commodity Purchases at City Gate and consumption by rate schedules Contains the long-term (10-year) commodity usage forecasts, including all assumptions used for the forecast 504 0.24 Electric Final Memo on Commodity budget forecast Contains the budget estimate and includes all the assumptions for the development of the budget. 336 0.16 Electric Weekly Electric Front Office Report Position summary, commodity cost updates, net revenue updates 208 0.10 Electric Total 1160 0.56 Electric and Gas City Auditor Report Update on utilities department financial and operational goals 28 0.01 Electric and Gas ASD Back Office Review Review quarterly commodity purchases for Electric and gas funds 48 0.02 Electric and Gas Total 76 0.04 Fiber Fiber Project Updates Report on status of ongoing fiber installations 104 0.05 Fiber Total 104 0.05 Gas Front Office Quarterly Report Forward looking review of electric and gas portfolios as well as some backward looking review of actual volumes and cost compared to budget estimates 80 0.04 Gas Back Office Quarterly Report Backward looking comparison of actual volumes and cost compared to budget estimates, etc. 48 0.02 Gas Total 128 0.06 Appendix D External and Internal Reporting Resources by Category 6 Commodity Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Gas, Water & Electric Gas Leak Report Results of gas leak surveys for the year. 160 0.08 Gas, Water & Electric Production Reports Detailed summary of production from all divisions in WGW 252 0.12 Gas, Water & Electric Reconciliation Report Total commodity and transportation costs for each month of fiscal year through present 40 0.02 Gas, Water & Electric Risk Assessment Market price risk to portfolio 20 0.01 Gas, Water & Electric Weekly Gas Front Office Report Position summary, commodity cost updates, net revenue updates 156 0.08 Gas, Water & Electric Coordinated Annual Financial Report, Note 17 Various information related to utility operations for the previous fiscal year 8 0.00 Gas, Water, Electric Reconciliation Report Total supply cost by cost category with comparison to budget/Front Office projections. Also actual vs. projected load-to-resource balance. 52 0.03 Gas, Water & Electric Total 688 0.33 Gas, Water, Fiber & Electric Risk Assessment Assessment of portfolio cost uncertainty related to hydro generation, market prices, transmission costs, leg & reg uncertainties 20 0.01 Water, Electric, Gas, Fiber and Wastewater Collection Procurement Plan Recommended energy load-to-resource balance positions for the prior 36 month period. 100 0.05 Water, Electric, Gas, Fiber and Wastewater Collection Fiber Project Updates Report on status of ongoing fiber installations 104 0.05 Appendix D External and Internal Reporting Resources by Category 7 Commodity Report Name Report Content Total Annual Equivalent Hours Total Annual FTEs Water, Gas and Wastewater Operations SEA Report SEA Report 43 0.02 Multi Resource Total 267 0.13 Energy Efficiency Energy Efficiency Report on efficiency programs, results, costs and Total Resource Cost Tests 1740 0.84 Other Quarterly Financial Reports Quarterly profit & loss statements and reserve reports 84 0.04 Other What's New? Periodic newsletter describing CPAU activities. 64 0.03 Other Total 148 0.07 Total 4311 2.07 Appendix C Benchmarking Data Sources At t a c h m e n t E Ba c k g r o u n d Da t a So u r c e s fo r CP A U Be n c h m a r k i n g ELE C T R I C CP A U Ala m e d a Azu s a Bur b a n k Pas a d e n a Red d i n g Ros e v i l l e San t a C l a r a Eug e n e For t C o l l i n s Tot a l O & M E x p e n s e p e r k W h S o l d City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r O& M E x p e n s e City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 / J o a n n a C u c c h i City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r kW h S o l d City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 Num b e r o f C u s t o m e r s City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 Tot a l O & M E x p e n s e p e r R e t a i l C u s t o m e r City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Rev e n u e / k W h A l l R e t a i l C u s t o m e r s City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 / J o a n n a C u c c h i City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R , D e c e m b e r 31, 2 0 1 0 Tot a l R e v e n u e City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 Rev e n u e / k W h R e s i d e n t i a l City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 CA F R , J u n e 3 0 , 201 1 / A P P A P u b l i c Pow e r A n n u a l Dire c t o r y / G e o r g e Mo r r o w City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 / A P P A Pub l i c P o w e r A n n u a l Dire c t o r y Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 / Sus a n E i c h e r City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Net I n c o m e p e r R e v e n u e D o l l a r City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 At t a c h m e n t E Ba c k g r o u n d Da t a So u r c e s fo r CP A U Be n c h m a r k i n g ELE C T R I C CP A U Ala m e d a Azu s a Bur b a n k Pas a d e n a Red d i n g Ros e v i l l e San t a C l a r a Eug e n e For t C o l l i n s Ret a i l C u s t o m e r s p e r F T E City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 201 1 / S u s a n E i c h e r City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 A& G E x p e n s e p e r R e t a i l C u s t o m e r City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 Bur b a n k W a t e r & Pow e r B u d g e t , F Y 201 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 201 1 / C i t y o f S a n t a Cla r a E l e c t r i c U t i l i t y Bud g e t EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 / Sus a n E i c h e r City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Cus t o m e r A c c o u n t i n g , S e r v i c e , a n d S a l e s E x p e n s e p e r R e t a i l Cus t o m e r City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 Bur b a n k W a t e r & Pow e r B u d g e t , F Y 201 1 NA City o f R e d d i n g Bud g e t , F Y 2 0 1 1 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a Ele c t r i c U t i l i t y B u d g e t EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Cur r e n t R a t i o ( c u r r e n t a s s e t s / c u r r e n t l i a b i l i t i e s ) City o f P a l o A l t o CA F R / D a v e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 Ave r a g e R e s i d e n t i a l R a t e ( b i l l a t 7 5 0 k W h ) Cal c u l a t e d b a s e d on U t i l i t y R a t e Sch e d u l e E - 1 a t ww w . c i t y o f p a l o a l t o.o r g / c i v i c a / f i l e b a nk/b l o b d l o a d . a s p ?Bl o b I D = 8 0 8 9 Cal c u l a t e d b a s e d on r a t e s c h e d u l e D - 1 R e s o l u t i o n N o . 486 4 Cal c u l a t e d b a s e d on r a t e s f r o m : ww w . c i . a z u s a . c a . u s / inde x . a s p x ? N I D = 5 5 5 Cal c u l a t e d b a s e d o n rate s f r o m : ww w . b u r b a n k w a t e r a n dpo w e r . c o m / r e s i d e n t i al-e l e c t r i c - r a t e s - a n d - cha r g e s / r e s i d e n t i a l Pas a d e n a C o d e o f Ord i n a n c e s T i t l e 13- U t i l i t i e s a n d Sew e r s 1 3 . 0 4 . 0 4 0 - Res i d e n t i a l s i n g l e - fam i l y s e r v i c e . Sch e d u l e R - 1 City o f R e d d i n g Sch e d u l e o f R a t e s 201 1 - 2 0 1 2 f o r Res i d e n t i a l S e r v i c e Effe c t i v e D a t e Dec e m b e r 2 0 1 1 Cal c u l a t e d b a s e d o n ww w . r o s e v i l l e . c a . u s / e lect r i c / h o m e / r a t e s . a s p Re s i d e n t i a l R a t e s Cal c u l a t e d b a s e d o n Rat e S c h e d u l e D - 1 Res o l u t i o n N o . 0 9 - 7 6 7 8 Cal c u l a t e d b a s e d o n rate s f r o m ww w . e w e b . o r g / e l e c t r i c rate s / r e s i d e n t i a l s e r v i c e Cal c u l a t e d b a s e d on r a t e d a t a f o u n d : ww w . f c g o v . c o m / u t i l ities / r e s i d e n t i a l / r a t es/e l e c t r i c / FTE ’ s Dav e Y u a n Ala m e d a M u n i c i p a l Pow e r C A F R J u n e 30, 2 0 1 1 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 SVP F a c t s h e e t S u s a n E i c h e r City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 WA T E R CP A U Lon g B e a c h Azu s a Bur b a n k Pas a d e n a Red d i n g Ros e v i l l e San t a C l a r a Eug e n e For t C o l l i n s O& M p e r M g a l City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 / C i t y o f Bur b a n k B u d g e t F Y 201 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r O& M p e r C u s t o m e r City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 / C i t y o f Bur b a n k B u d g e t F Y 201 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 / R o s e v i l l e Bud g e t City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r At t a c h m e n t E Ba c k g r o u n d Da t a So u r c e s fo r CP A U Be n c h m a r k i n g ELE C T R I C CP A U Ala m e d a Azu s a Bur b a n k Pas a d e n a Red d i n g Ros e v i l l e San t a C l a r a Eug e n e For t C o l l i n s O& M p e r m i l e s o f m a i n City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R , D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Ret a i l C u s t o m e r s p e r F T E City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 201 1 / S u s a n E i c h e r - EW E B City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 Vol u m e d e l i v e r e d p e r F T E City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 201 1 / S u s a n E i c h e r - EW E B City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 A& G E x p e n s e p e r R e t a i l C u s t o m e r City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 / C i t y o f Bur b a n k B u d g e t F Y 201 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 / R o s e v i l l e Bud g e t City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Ave r a g e R e s i d e n t i a l R a t e ( $ / 1 2 C C F ’ s ) Cal c u l a t e d b a s e d on U t i l i t y R a t e Sch e d u l e W - 1 a t ww w . c i t y o f p a l o a l t o.o r g / c i v i c a / f i l e b a nk/b l o b d l o a d . a s p ?Bl o b I D = 8 0 9 7 Cal c u l a t e d b a s e d on L o n g B e a c h 201 1 - 2 0 1 2 W a t e r Rat e s f o r S i n g l e Fam i l y R e s i d e n t i a l Cal c u l a t e d b a s e d on r a t e s f r o m : ww w . c i . a z u s a . c a . u s / inde x . a s p x ? N I D = 3 7 3 5/8 ” - 1 ” M e t e r Cal c u l a t e d b a s e d o n City o f B u r b a n k Wa t e r a n d P o w e r Sin g l e F a m i l y Res i d e n t i a l S e r v i c e at ww w / b u r b a n k w a t e r a n dpo w e r . c o m / w a t e r - con s e r v a t i o n / r a t e s - and - c h a r g e s Cal c u l a t e d b a s e d on I n s i d e C i t y Com m o d i t y R a t e s from ww 2 . c i t y o f p a s a d e n a.n e t / w a t e r a n d p o w er/Y o u r Wa t e r / W a t e r R a t e s / def a u l t . a s p Cal c u l a t e d b a s e d o n City o f R e d d i n g Sch e d u l e o f R a t e s 201 1 - 2 0 1 2 S e c t i o n B for 5 / 8 ” M e t e r Effe c t i v e D a t e J u l y 1 , 201 1 Cal c u l a t e d b a s e d o n rate s a t ww w . r o s e v i l l e . c a . u s / e u/b i l l i n g _ n _ n e w _ s e r v i ce/r a t e s . a s p Cal c u l a t e d b a s e d o n 201 1 / 2 0 1 2 5 / 8 – ¾ i n c h rate s f r o m http : / / s a n t a c l a r a . g o v / i n d ex.a s p x ? p a e = 1 4 0 0 Cal c u l a t e d b a s e d o n rate s a t ww w . e w e b . p r g / w a t e r r a tes/ r e s i d e n t i a l s e r v i c e Cal c u l a t e d b a s e d on S i n g l e - F a m i l y rate s a t ww w . f c g o v . c o m / u t i l ities / r e s i d e n t i a l / r a t es/w a t e r FTE ’ s City o f P a l o A l t o CA F R / D a v e Y u a n CA F R o f t h e L o n g Bea c h W a t e r Dep a r t m e n t Sep t e m b e r 3 0 , 2 0 1 0 City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k Wa t e r a n d P o w e r Aud i t e d F i n a n c i a l Sta t e m e n t s - J u n e 30, 2 0 1 1 Pas a d e n a W a t e r & Pow e r 2 0 1 0 Ann u a l R e p o r t City o f R e d d i n g CA F R – J u n e 3 0 , 201 2 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 EW E B I n d e p e n d e n t Aud i t o r ’ s R e p o r t s & Fin a n c i a l S t a t e m e n t s , Dec e m b e r 3 1 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 WA S T E W A T E R / S E W E R CP A U Azu s a Bur b a n k Lon g B e a c h Red d i n g Ros e v i l l e San t a C l a r a Eug e n e For t C o l l i n s O& M p e r M G a l p r o c e s s e d City o f P a l o A l t o CA F R / D a v e Y u a n City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k CA F R - J u n e 3 0 , 201 1 City o f L o n g B e a c h CA F R , S e p t e m b e r 30, 2 0 1 0 City o f R e d d i n g CA F R – J u n e 3 0 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 City o f E u g e n e C A R – Jun e 3 0 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r O& M p e r C u s t o m e r City o f P a l o A l t o CA F R / D a v e Y u a n City o f A z u s a CA F R , J u n e 3 0 , 201 1 City o f B u r b a n k CA F R - J u n e 3 0 , 201 1 City o f L o n g B e a c h CA F R - S e p t e m b e r 30, 2 0 1 0 City o f R e d d i n g CA F R – J u n e 3 0 City o f R o s e v i l l e CA F R - J u n e 3 0 , 201 1 / R o s e v i l l e Bud g e t City o f S a n t a C l a r a CA F R - J u n e 3 0 , 2 0 1 1 City o f E u g e n e C A R – Jun e 3 0 , 2 0 1 1 City o f F o r t C o l l i n s CA F R - D e c e m b e r 31, 2 0 1 0 / E l l e n Sw i t z e r Appendix D Best Practices Review Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Strategic Planning Strategic Plans are regularly reviewed and updated as necessary. Plans are developed collaboratively and acknowledged by all personnel. Plans are accompanied by implementation tactics and objectives. Strategic plans reflect community values. Plans are consistent/integrated with City-wide plans. Progress toward strategic goals are regularly reviewed and reported. Strategies and tactics are revised when progress is not as expected. Utility has a robust strategic plan in place. Plan was developed with extensive input from customers, governance, management and staff. Goals reflect community values; are driven by stated mission, vision and values; are regularly measured and reported and reviewed periodically and updated as needed. Opportunities to improve include: Utility Director and Managers should frequently measure progress toward goals (more than twice a year) and share that information transparently with all staff. Success should be widely and publicly shared; shortcomings should be addressed by changing implementation tactics and reformulating solutions. CPAU has a 2010/2011 comprehensive strategic plan.. Update included significant input from UAC, customers, council and others (40+ interviews were conducted). Plan drives goals for the operations. Current plan is periodically reviewed and updated. Introduced balanced scorecard approach. Core Values are well understood by Director and management team. Last year, more people knew about the plan but management team hasn't done a refresh. New employees are not engaged in the plan and its objectives. Manager, supervisors and staff are aware of the plan. Not clear as to what level of participation staff had in development of the plan and whether they are aware of progress towards meeting objectives. City doesn’t have a strategic plan. They do have a climate protection plan. Have annually updated priorities. Infrastructure blue ribbon task force recently completed but did not address Utilities because the Utilities already have a plan in place. Utilities Infrastructure plan developed in the mid 1990's. UD and staff 'own' the plan and its approved by the City Council. System reliability, strong bond ratings, environmental sustainability, human resources, customer satisfaction, competitiveness and financial returns to the City are key goals. Working on backlog of infrastructure. Have strategic goals around people and workforce to address workforce issues such as retirements; do customer surveys to solicit feedback on service quality and what is valuable to customers. No formal plans in place at the operating levels. See discussion of Urban Water Management Plan below. That plan describes a host of regional planning for water and recycled water supply, delivery, efficiency, conservation and resiliency issues. See discussion below of Sanitary Sewer Management Plan Need to have further discussion regarding natural gas plan elements. Did review and discuss change in procurement and risk management strategies for natural gas, specifically moving away from the natural gas 'laddering' strategy. Performance Measurement -- Performance objectives exist for each division Objectives are accepted / acknowledged by each division's staff and management; Each division regularly reports on progress towards meeting their objectives to staff, management, governance and the community; Progress measurements are objective, reliable and based on industry accepted metrics Performance objectives are established in multiple settings including: Annual Operating Budgets; the Utility Strategic Plan Semi-Annual Strategic Plan Performance Updates; Quarterly Reports; and the Service Efforts and Accomplishments Report. (Need to prepare a summary of performance goals and stated performance to demonstrate how these goals and reporting could be better coordinated) Varying degrees of acceptance were observed (e.g., operations has other goals and objectives that Performance metrics in the Strategic Plan came from the Divisions. Performance Measures The targets for the following measures were met, including: restoring electrical power in less than 60 minutes responding to leaks in less than 30 minutes having zero gas incidents reporting significant outages within 90 minutes having at least 90% of surveyed customers satisfied with program experiences capturing 99% of the full capacity value of the Redwood gas pipeline Several of the performance measures were not updated either because survey results or other data were not yet available or the measure is only Call volume, email volume, transaction processing, billing adjustments, accuracy rates for meter readers based on AWWA/APPA metrics; Customer wait time phone. When SAP went live in 2009, wait time was over three minutes and now it's less than 45 seconds. Meter reading accuracy: 72,000 meters per month (12,000 AMR) 99.99% accurate. 6 regular 2 hourly and 1 lead meter reader Collections and others. Trending more important Reliability is very important. CPAU ranked second among NCPA members and in top 10 percent nationally Created (2) Troubleman classifications to be first responder to outages to and now provide coverage until 9pm on weekdays and all day on Saturday to reduce response time. Providing low cost of service is a high priority and as a public utility keeping costs down is very important. Customer service is important and is tracked on a scorecard. Outage statistics are used to identify problems with infrastructure. CPAU does not have a lot of outages which is Key performance measures include: 100% of water quality samples are acceptable; The City collects 72‐90 samples monthly to test levels of chlorine residual, coliform and pH levels are within regulatory guidelines. The 2010 Urban Water Management Plan (UWMP) includes a plan to meet the requirement to reduce per capita water usage by 20% by 2020 under the Water Conservation Act of 2009 (SBx7‐7).DSM water conservation programs represent only a portion of the 20% reduction by 2020 goal. Use of recycled water, educational programs, meter Tracking sanitary sewer overflows, percent of system inspected and flushed and video recorded. Used to have 300 reportable spills annually. Proactive maintenance has reduced that. Note that many of the WGW Operations metrics that are tracked in the Monthly Report do not have established performance goals and are not integrated with the balanced scorecard from the Strategic Plan. Gas Operations tracks number and type of leaks, service interruptions, and valve maintenance. Provides metrics and report regularly to City Council. (Unclear whether goals exist for these metrics) Key performance measures are identified in annual operating budgets and include inspection rates, gas leak repair times, and reducing consumption through gas efficiency programs. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations seem more important such as reducing sanitary sewer overflows) Opportunities to improve include: consider measuring and reporting more performance-based metrics including miles of 4- kV conversion, miles of OH/UG conversion; miles of pipeline inspection; inspection productivity; number of sanitary sewer overflows; number of forced outages and so on. Performance metrics should be consistent throughout reports described above, should be collaboratively determined; should include meaningful goals and should be based on APPA, AWWA and other industry standards to aid in comparative analysis. meaningful as an annual measurement. customer awareness of gas safety issues backlog of infrastructure beyond its useful life number of billing adjustments lost and unaccountable volumes of gas and water carbon intensity of the electric portfolio energy efficiency achievement The following performance measure targets have not yet been met: average phone wait time for customer service The primary reason CPAU did not meet this target is staffing and training. This is the first year Customer Service instituted a cross rotational task program to be able to better respond in the event there is a shortage of staff in any of its work area. Progress is discussed every other month by Assistant Directors in meetings with the Utility Director. Strategic Plan Progress Update is prepared and submitted to UAC semi-annually. Q4 Quarterly Reports to UAC provide some additional performance updates. System Evaluation and Performance Report, an independent audit by the City auditor, reflects audited performance of utilities. than goals as an indicator as to what we can modify Benchmarking very difficult based on variety of services provided. a benefit of the aggressive tree trimming program and cable replacement programs. Average Time to Restore Service Goal <90 min Average Number of Interruptions Goal <3/yr retrofits, and conservation pricing will also contribute to the reduction goal. Participation in all water programs region‐wide slipped in 2011, due to both the economy and heavy rainfall seasons. Program activity increased in 2012, mostly due to one large business efficiency program. Water reporting will likely be added to the Home Energy Reports distributed at the beginning of fiscal year 2014. From fiscal year 2010 through 2012, the cumulative water savings achieved from DSM is 2.91%. The City is on schedule to meet the 20% reduction goal and UWMP will be updated in 2015.Tracking water leaks and breaks to assess condition of infrastructure. (Observations: Monthly WGW Operations Reports are comprehensive -- should be very useful for understanding operating effectiveness. Suggest that these reports are an excellent place to start service performance goals and progress towards them.) Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Safety Culture Safety is a core attribute of enterprise culture. Injury and illness prevention program is in place; training is provided and compliance is monitored; Safety performance is tracked and reported; exceptions are addressed Safety performance in WGW operations needs careful examination and attention. High number of stress-strain injuries could be indicators of inadequate training, improper work methods and aging workforce. Consider a tailored, focused safety initiative to illuminate the need for improved safety and use frequent monitoring and measurement to ensure results are achieved. Reporting of safety performance should be elevated to monthly frequency and included with regular reports to UCA. Current Strategic Objective BP2 Operate the System Safely should be reconsidered to add meaningful goals around reportable incidents/injuries. Follow-up actions should include a careful analysis of cause of safety violations and remediation plans should be formulated and implemented. CPAU should consider using a professional safety expert to investigate injury causes and recommend changes is work practice (could be as simple as stretching before working, wearing appliances design to reduce stress/strain injuries, assessing fitness of personnel for duties assigned). May require Utility to acknowledge that this level of safety performance is unacceptable and raise the awareness of the problem among the workforce. Utility safety coordinator in place. Works with City safety coordinator; is audited regularly by City Hall (twice per year) Safety Coordinator role is not a management role as it once was. Perception is that the coordinator is not empowered to administer responsibilities from a staff/represented level Some concern that safety issues are not communicated effectively from administrative offices. Conducts worksite audits regularly Reporting of safety goals and performance is limited and less formal Meter readers exposed to the public and environment in all weather. Need to be concerned about dogs. Doing well on safety. Electric Operations has gone 2.5 years without a lost-day injury. Dealing with stress and strain injuries in WGW. Have had lost time injuries in the water meter shop attributed to the physical requirements of meter changeouts. Considering contracting-out the meter shop duties. Have looked at other utilities to find lessons learned. Have looked for patterns but couldn't find anything. Have safety councils with representation from throughout the utilities. Have monthly safety meetings. SEIU not involved in safety education or training. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Organizational Effectiveness -- Organizational structure provides effective command, communication and control Ratio of managers to staff provides effective and efficient performance Span of control is reasonable. Organizational effectiveness is regularly measured and results are reported and issues are addressed. Enterprise functions such as accounting, purchasing, human resources, fleet management and information technology fully support the needs of the utility/. CPAU organization is not structured similar to most other multi-service utilities that have at least more than one utility director to oversee utility services provided. The tremendous compliance requirements associated with providing electric, water, wastewater and natural gas services warrant consideration of a broader management structure. While the current structure is functioning, the management team is challenged to address a very wide span of control. This further exacerbates succession planning difficulty as it is very difficult to find and develop personnel with the wide range of experience required of the Utility Director, and Assistant Directors each of whom oversees the entire range of electric, water, gas, wastewater and fiber communications issues. Consider for example potential successors to the assistant utility directors that have the requisite range of experience -- SAIC did not observe candidates having the diversity of experience. Opportunities to improve include organizing around service lines (e.g., create AUD positions for each of the EWGWW service lines) Concerned about Span of Control in Customer Service and Resource Management. The latter is a huge scope of work for ADs (number of direct reports is not too great but breadth of responsibilities is significant) Concerned about span of control for all managers with multi-service responsibility and concerned about the potential for failure/breakdown in command and control. Most utilities have an organization structure with more than one Utility Director responsible for so many services. Concerned about mis-locates which could be a sign of integrity issues -- considering outsourcing to manage risk Balancing needs between broad-based experience centric organization and strong silos is challenging. Balancing between the give and take is challenging. AUD’s requires direct reports to develop succession plans; build teamwork and some others. Val believes that here directions are being implemented. Utilities is a member of the City’s procurement design team which is tasked to make recommendations to improve sole source process, increase Cal Card usage, and implement departmental BID process. The new Pcard system was rolled out in May 2012 which should result in higher participation with better internal controls and reporting. The design team and Purchasing Division will begin to offer training workshops and explore other areas of improvement. Manager of Customer Service & Meter Reading has 20 direct reports. (Need to check other span of control). Constant communication, formal and informal. Operations: 8-10 employees per supervisor, 5 supervisors reporting to Dean Batchelor. Regularly communicates financial, HR, customer and safety issues to entire staff. Open door policy affords easy access to subordinates and managers. Spends time with crews in the field to keep good communication flowing. Working to train people across the organization to develop a “bench.” All engineers deal with customer service and customer projects. Utility performs an annual employee survey. Hoping that our CTT survey would illuminate employee priorities. Not aware of any ‘measurements’ 30-40 percent participation is typical. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Resource Efficiency and Conservation – Utility has programs in place to promote resource efficiency and conservation. Programs meet regulatory requirements, are cost-effective and adoption rates achieve stated goals. CPAU programs for resource efficiency are extensive including electricity, gas and water efficiency and conservation. Numerous energy efficiency programs for all customer classes. See extensive list under Electric. CPAU should consider efficacy of programs given that TRC is below average ($2 v $3). Programs are cost- effective. Has highest participation in PaloAlto Green program with 20 percent of customers choosing to purchase power from renewable resources. Water demand reduction and efficiency programs are reported to be effective. Voltage conversion projects and voltage optimization investigations are positive indicators of best practices in grid operational efficiency. Opportunities to improve include rigorous prioritization of the most cost-effective programs; retirement of ineffective programs; continues research into new and innovative programs. CPAU successfully met its FY 2010 efficiency savings goals for water, electricity and natural gas. CPAU has many demand-side management goals for all its utilities that are designed to support the City’s environmental and sustainable policies. This achievement is attributed to the increased number of programs available for all customer types, as well as an expansion of programs administered by third party agencies. Such third party program administration enhances the City’s ability to set and achieve greater efficiency goals while freeing up staff and other resources for additional programs and projects. The redesign of the PaloAlto Green program is being done in the context of the development of the plan to achieve a carbon neutral electric supply portfolio. That plan is on track to be approved by Council in June 2013 with the redesign of the PaloAlto Green program to occur by December 2013 Customer Service Division is responsible for the marketing and implementation of resource efficiency and conservation programs to all customers. According to Energy Efficiency in CA Public Power Sector , CPAU is 14th of top 15 utilities for annual energy savings through energy efficiency programs. Area for improvement includes increasing its 09/10 TRC from 1.97 closer to the California public power average of $3.15 of benefit for ever dollar invested in energy efficiency programs. CPAUs 07-10 cumulative energy savings are twice it's goal of 10,000 MWh while the total saved by all CA POU's is about 80 percent of the statewide goal. CPAU has about 15 programs for water gas and electric. CPAU has adopted the California Urban Water Conservation Council best management practices for water conservation and efficiency Inverted water rate structure incentives customers to use less water. City is working with Santa Clara Valley Water District for assistance in increasing penetration of BMPs. 2010 Urban Water Management Plan defines and describes extensive (17 unique) water conservation and efficiency programs. CPAU has a recycled water program in place to provide landscape irrigation to offset the use of potable water for irrigation. The Palo Alto Recycled Water Project proposes the construction of a recycled water pipeline and associated facilities to provide an alternative water supply for non- potable uses. The proposed Project includes 5 miles of 12- to 18-inch pipes, an up to 1,500 square-foot booster pump station, approximately 5 miles of lateral pipelines to over 50 use sites, and an up to 1,600 square-foot pump station at the RWQCP. The Project would initially serve approximately 900 acre- feet/per year (AFY) of recycled water, primarily to the Stanford Research Park area. City has a 10-year goal to reduce natural gas use by 5.5% by 2020. Also has goal to reduce the carbon intensity of the natural gas portfolio in accordance with the Climate Protection Plan. Adequate Financial Resources – Capital and operating budgets are sufficient to accomplish performance objectives; and expenditures. Projects are prioritized based on safety, efficiency, and quality of service. Projects are completed in accordance with schedules and budgets. CPAU can afford to spend to more on CIP and Operations, especially for the electric system. Current budgeting is based more on what they can get done with the resources they have rather than what needs to be done to meet performance expectations. A result of the current strategy is that capital and operating projects are being deferred not due to financial constraints but human resource limitations. Opportunities to improve include: consider Budgets have been sufficient to accomplish plans but resources are inadequate to accomplish work budgeted. Using outsourcing where they can. May have sufficient FTE authorization but many are vacant. Don't regularly track the progress or aging of FTE's and vacancies -- Tom Marshall may be. Have five vacant linemen positions for example. Operations: Budgets are generally adequate and council provides the money we need to do what we need to do. Budgets have been sufficient to accomplish objectives. Budgets have been sufficient but reflect through decreases the inability to accomplish work with the limited engineering and operations resources (people) Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations turning internal resources into project managers and outsourcing more engineering, operations and construction work as a possibility for accomplishing more. Infrastructure replacement could be considered in a more coordinated approach with enterprise priorities and cross-functional project management. Competitively Priced Services Rates and bills are competitive while providing adequate revenue to fund costs of services provided, cover debt service, provide sufficient reserve funds and meet other financial obligations. Costs of services provided are regularly examined, reported and reflected in rate designs. Fixed and variable costs are appropriately recovered. Except for water, CPAU services are competitively priced. High water rates are mostly attributed to the cost of water from San Francisco PUC which is more costly than other suppliers due primarily to impacts from infrastructure replacement and emergency supply projects. CPAU closely tracks competitiveness. Reserves are all at or above minimums. Electric reserves are exceptionally high due to reserves held for funding of future large capital projects (second transmission point of interconnection. Electric cost of service analysis is out of date but an updated study is planned for the near future pending the outcome of an ongoing policy study that will address real-time and time of use pricing and pass-through charges for commodities. One area of caution is the level of electric reserves which appear to be much higher than other representative utilities. Marinating high reserve levels should be policy driven and by-design. CPAU reports that the current reserve level is high to fund a major electric Competitiveness is evaluated and reported at least quarterly. Where CPAU services are higher- cost than surrounding areas, deviations are understood, as in the case of water for example. CPAU is currently working with the UAC on new rate policies to address fixed charge recovery, commodity cost pass-through; and, real-time and time of use pricing strategies. Council adopted rate changes effective July 1, 2012 for gas, water and wastewater that were consistent with cost of service analysis results regarding the amount of revenues to collect from fixed and volumetric charges. CPAU is planning a cost of service study for electric in FY 2014. CPAU believes that reserve policies should also be reviewed to ensure that reserve minimums are appropriate for current financial, regulatory and legislative uncertainties. Former rates manager recently resigned and is now working for PG&E. Electric COS 2009, Water COS 2012 and just before; Wastewater 2010 and Gas 2009. Reserve funds are adequate CPAU provides the City of Palo Alto with a return on the City’s original investment in the Utilities in the form of an annual equity transfer to the City of Palo’s General Fund. The equity transfer is used by the General Fund to support activities such as Public Safety, Library, and Community Services for Palo Alto residents and businesses. CPAU is expected to meet its performance targets, with the Electric rates and average customer bills are competitive. Performance is rigorously and frequently measured and reported to UAC and City Council. Average water bills are higher than some surrounding areas due primarily to high-priced SFPUC wholesale water but also in part due to infrastructure replacement program. The initiative to reassess the gas laddering purchasing strategy is complete. The gas purchasing strategy was changed to market base pricing effective July 1, 2012. Development of a gas rate change performance measure will be a part of the new Rates Policy, which is being developed. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations interconnection project with cash instead of debt. Keeping this strategy highly visible is very important to avoid losing ground on future electric rates. Electric Fund and Gas Fund transferring $11.8 million and $6.0 million respectively to the General Fund in FY 2013, which is 100% of the amount calculated by the Council-adopted equity transfer methodology. Managing Regulatory and Legislative Uncertainty – Legislative issues are tracked and analyzed Impacts, concerns and interests are identified and communicated to legislative bodies CPAU is effectively using its own RMD staff supported by NCPA and CMUA for legislative and regulatory tracking, analysis and lobbying. At any time there are many tens or hundreds of state and federal legislative and regulatory issues to track. CPAU appears to be paying most attention to the highest impact concerns. Very active through NCPA and CMUA. Have a senior resource manager to serve as L&R manager and provide compliance management for RMD. 54 open stakeholder processes at CAISO; dozens of legislative issues; many local, state and federal regulatory issues Regulatory and Legislative Compliance Regulatory and legislative compliance requirements are met Compliance needs are planned and tracked Compliance reports, filings and activities are met. Culture of compliance exists. Culture of compliance is evident. Recently hired a compliance manager. Compliance goals exist. Compliance manager should develop a formal compliance management plan and master compliance schedule. Used to have a compliance manager (Eric Scott). Bringing on an interim compliance manager until a permanent compliance manager can be recruited. Need UMPPA position compensation plan to be approved before recruiting will begin. Gas OQ coordinator is doing a good job. Have a master compliance schedule that is used to manage compliance filings. Addresses all aspects of the utilities. State and regional WQCB, requirements; OSHA requirements. Productivity of workforce is impacted by regulatory training requirements. Maintain Positive Investment Ratings Investment ratings are positive Coverage ratios are sufficient Investment community is regularly engaged and communicated with. Investment ratings are positive but it is interesting to note that their 'pay as you go' approach to CIP de- emphasizes the importance of a strong credit rating and in some ways increases the cost of doing business in lieu of having debt. Current Ratio for electric is exceptionally high due to large reserves. CPAU exceeded its performance target to have a high credit rating for bond financing. In the recent 2002 Utility Revenue Bonds refinance, CPAU received strong ratings of AAA by S&P and Aa2 by Moody’s which was reflected in the large numbers of bidders and an exceptionally low true interest cost of 2.28%. The refinance resulted in a net present savings of over $3 million. Bonds are not frequently issued. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Financial Risk Management Financial risks are formally managed Risk management plans exist Risk management committees are in place Risks and risk management strategies are regularly communicated to management and governance Extensive risk management is apparent around transactional and financial risk -- less apparent around physical risk. Risk Management committee exists and meets regularly. Utility Risk Oversight Coordinating Committee consisting of UD, ASD, PWD, CMO, with City Attorney and Auditor advising. Jane questions whether they have too much risk management infrastructure. City hired ACES to provide Risk Management audit for the City. Utility does front office and back office, ASD does middle office. With hedging activities retreating, trading and marketing activities declining; there may be more risk management than necessary. ) CPAU has a strategic initiative to pursue gas prepay transactions to leverage the City’s low cost of capital and tax- exempt status to acquire low cost gas supply resources. CPAU is beginning to work with a risk management consultant to put structures in place when gas prices rise. Physical and Operating Risk Management Physical and operating risks are formally managed Risk management plans exist Risk management committees are in place Risks and risk management strategies are regularly communicated to management and governance Risk management is priority for the utility and it puts significant effort into managing financial risks through its risk management committee and appurtenant actions. Opportunities for improvement include: Utility should consider expanding the purview of the existing risk management committee to include physical and operation risks. Significant risk are evident relating to workforce retention, development and succession planning. Safety issues in the WGW operations should be considered. Risks associated with the ongoing construction activities should be reviewed to ensure the safety of the public and the workforce. Utility should consider a formal physical and operating risk management plan that identifies each risk and describes the actions that the utility is or needs to be taking to mitigate risks. Plan should be reviewed and updated at least quarterly. Physical risk management is a City function. Enterprise funds share in deductible reserve pools. Operations: Concerned about site security at MSC where surveillance is poor; have had break-ins; operations doesn't feel that security is up to standards. Reservoirs not protected as well as other facilities Having to deal with fewer crews to have fully staffed crews: Staff is meeting with Stanford and SLAC to discuss the feasibility of a second electric transmission line source for the City by connecting the City’s Quarry Substation to the SLAC National Accelerator Laboratory 230 kV Substation. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Workforce Development Utility recruits and retains a workforce that is competent, motivated, adaptive, and safe- working. Establishes a participatory, collaborative organization dedicated to continual learning and improvement. Ensures employee institutional knowledge is retained and improved upon over time. Provides a focus on succession planning and emphasizes opportunities for professional and leadership development and strives to create an integrated and well-coordinated senior leadership team. Workforce is sufficient to accomplish performance objectives. Workforce needs are planned, measured, tracked and reported. Utility is struggling to recruit new workers including engineering and operations staff and as a result the current workforce is not sufficient. As a result the utility is deferring operating and capital work. While the number of authorized FTE's appears sufficient to accomplish work, it does not appear sufficient to also provide for succession planning and staff development needs associated with a workforce that is nearing retirement. Approximately half of the electric overhead and underground operating positions are vacant and many of those have been vacant for a long time. WGW operations is planning to develop an apprenticeship program for electrical workers but becasue of the time needed to develop jouney level technicians (3-4 years) this cannot be the only strategy. The City should look carefully at competitiveness of compensation to determine appropriate levels to attract qualified workers. The city and utility should evaluate effectiveness of recruiting and retention strategies and consider further outsourcing to avoid deferring capital and operating projects. There are indications that aging WGW workforce is struggling to work safely as lost-time and reportable accidents are high. (Succession plans are reported to exist but we have not seen them yet). Opportunities to improve include: develop a workforce plan to identify a Workforce is not sufficient. Many vacancies and many temps in place. Know projects are behind schedule and letting people know that. Dealing with internal performance issues. Not formally reporting needs. Not easy to discuss issues with City Manager under new UMPPA representation model. Workforce needs are not planned into the future based on an empirical workload forecast. Need other tools and capabilities to do this (e.g., Work Management System). SAP won't work with other workforce planning applications. In response to recent retirements and the high number of active employees eligible for retirement, CPAU is identifying cross-training and development opportunities to fill potential staffing needs in the organization. An organizational chart has been developed to identify skill set gaps as well as employees who are currently or soon to be eligible for retirement Management will continue to identify developmental goals and objectives in the employee annual appraisal process. In triage mode dealing with SEIU and UMPPA in order to implement tactics to attract and retain staff. Early/accelerated retirements are a concern. List of key positions exists with indicators of potential issues not enough planning in place to address how to mitigate potential staff loss. Top three levels are all eligible to walk out the door at the same time. Not enough time to build from within. City took away incentive program so there is now no incentive. Union agreements restrict flexibility to provide promotions and raises CPAU conducted an employee satisfaction survey in October 2011, generating 135 responses, a 55% participation rate. The survey consisted of ten brief questions addressing career growth, training, recognition, respect, and stress at work. Overall, approximately 63% of CPAU employees were either “very satisfied” or “satisfied” with the work they do at the City. In the second survey conducted in 2012, participation rate dropped from 55% to 34% or 82 employees but overall satisfaction improved from 63% to 66%. In both surveys, the percentage of employees who responded with “neutral” on their overall satisfaction with the work they do at the City was Yes. Staff have been elevated to management positions (e.g., credit & collections) when needed; adding another credit and collection specialist; extensive cross-training for coverage and succession planning. Staff is receiving cross training, managers are rotated. Have lists of things employees need to know. Have some ex- employees back on staff to help train. No control over how to track and retain new employees. Operations is not able to get all work accomplished with existing staff. Need to use more contractors to help get work done, such as transformer replacement, crossarm replacements, etc. Using RFPs to hire contractors for specific work. Have annual contracts for non-electrical infrastructure (conduits and civil work). Have annual tree trimming contracts funded by CPAU but run by public works who use the contractor for other tree trimming work. Apprentice programs in place, considering hiring apprentices and growing internal staff; going to put and RFP for a contractor to provide support fort electrical. Develop WGW design manual. Reorganized team is taking some time to come up to speed on all disciplines. Staff is just not trained yet to do all of the different things. Have two open engineering positions but finding it very difficult to find qualified staff. Losing staff to PG&E, for example, is a risk of training but not retaining talent. Operations Sufficient staff to do existing work. Will release temporary staff when HydroMax work is completed Have annual contracts but haven't been using them -- with extended staff coverage, need for contractors is less. Still use Roto-Rooter for emergencies that City crews cannot respond to. Operations had a lot of folks retire three or four years ago. Need to grow younger folks and move them up through the organization. Developing an in-house gas training module. Key personnel recently left to work for PG&E, but their replacement has stepped up but no further succession. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations sufficient number of resources to allow for succession planning; retirements; normal attrition and vacancies; consider resource needs in capital and operating budgets driven by resource forecasts that align with project cost estimates and schedule; if a detailed succession plan does not exist, prepare one; if a staff development plan does not exist, prepare one. 13%. CPAU is committed to provide training and development for all employees to be able to be successful in their current jobs. The Operations performance measure has been fully met. 100% of Operations personnel have the appropriate certification and training for their assigned work area CPAU currently does not have sufficient staffing resources to develop its own Utilities-specific IT strategic plan but is working with IT to address our immediate technological needs. Customer Service and Engagement -- Customer service is a core attribute of enterprise culture. Customer priorities are integrated into strategic plans; customer needs and interests are surveyed, reported and evaluated. Customer satisfaction is measured and reported. Customers can access a wide range of services via the internet allowing them to request service, pay bills, inquire about consumption and explore rate options and services. Utility is doing a very good job of engaging and surveying its customer base. Basic transactions are available to customers via service counter, telephone and internet. City website provides extensive information about utility operations, performance, service requirements and agreements, rate options and other important information. Latest customer satisfaction survey results are very positive. Transaction based satisfaction surveys, when implemented, will be a very powerful tool for understanding how to maintain or even increase Customer satisfaction is a strategic plan objective and performance is measure and reported. Goals is >85% of surveyed customers satisfied -- currently at about 83%. Customer are extensively surveyed including biannual CMUA surveys and associated 'over-sample', self performed random customer surveys and surveys by the City Auditor. The Utilities Communication Plan has been redrafted for 2013 and includes plans for further expanding available mechanisms for eliciting customer feedback. CPAU plans to implement transactional based Customer Satisfaction feedback. CPAU received positive customer feedback from energy efficiency and water conservation workshops and the backflow prevention device program. Extensively survey customers including program market research, city auditor benchmarking service evaluations and performance report, energy efficiency workshops, RKS surveys through CMUA. Generally positive results and trending upward. Customers can use CPAU website to pay bills, review monthly consumption history (monthly up to 36 months), and review electronic copies of bills. CPAU is using Opower for customer engagement, request service, enroll in Customers are surveyed after providing service to them; if feedback isn't positive, managers follow-up to determine what if anything can be done to correct. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Customers can interact with utility using smart-device applications. Utility has a mobile device version of its web services. Interactive Voice Response system provides greater bandwidth for receiving and routing customer calls. customer satisfaction. CPAU is currently investigating the policy, rate and other requirements to deliver more information to customers about their resource consumption behavior which allow the utility to further encourage resource conservation and efficiency. Opportunities to improve include focusing on the actions and behaviors that effect customer satisfaction and then measuring and monitoring those behaviors to ensure high customer satisfaction is maintained. CPAU is also redesigning the “My Utilities Account” web portal and “MyCPAU Mobile App” to make it easier for users to give us feedback. programs, and contact customer services. Customers cannot report outages on-line. City is getting an application that will allow customers to report outages. Customer service tracks performance as Call Wait Times, Abandoned Calls, and Customer Satisfaction) Information and Operating Technologies Strategic Technology Plans exist; plans address Information and Operations Technology needs at least 10 years into the future; plan provides clear implementation direction; addresses emerging/evolving technologies; defines cost; schedule and resource needs to implement and maintain key technologies IT/OT systems provide efficient execution of business processes IT/OT systems are highly integrated allowing applications and data to work seamlessly in the enterprise CPAU is not as advanced as some utilities in their use of information and operating technologies to achieve optimal performance. However, the utility appears to be taking a course of action to improve in this area by investigating the development of technology plan, by completing their recent smart grid technology study and implementing certain recommendations including outage management. Current challenges that the utility faces includes: adequate staffing and support from City IT department to research, procure, deploy and maintain systems. the City relies on SAP as its ERP but there is consistent dissatisfaction with the level of support to implement the features and capabilities to provide advanced billing features; implement enterprise work, asset and project management, and implement outage management capabilities. Opportunities to Utilities active participation on the City’s IT strategic planning efforts has resulted in incorporation of certain key Utilities IT issues. The IT Department is scheduled to present a 3-year IT strategic plan to Council on May 6, 2013. . CPAU currently does not have sufficient staffing resources to develop its own Utilities-specific IT strategic plan but is working with IT to address our immediate technological needs. Currently using a contractor to develop the strategic technology (Joe Blackwell, NexLevel IT) Staff regularly discusses and shares insights with many start-up and venture capital funds managers on the viability and markets for their early stage technologies. CPAU launched the Emerging Technologies Pilot and Demonstration Program in the spring of 2012. Staff is accepting applications on a continuous basis with applications being reviewed quarterly. Thus far, we have received seven applications. CPAU has accepted one of these applications which will provide itemized energy usage per appliance along with recommendations on how to reduce energy consumption. Would like to replace customer self-service module that is going to be retired by SAP. City is completing an IT plan. CPAU will do its plan as soon as the City's plan is complete. Multiple committees (mobile apps, PMO). SAP is CIS web portal, large customer AMI program. Currently implementing an outage management system but that project is at least one year behind schedule due to inability of City IT to provide necessary servers and network architecture. Operating technology seems behind the industry, especially with mobile workforce management. Because City IT doesn’t have the manpower to support new deployments, CPAU cannot move forward with implementation. Have to hire additional resources to do data entry because the don't have resources. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations improve include completing the development of a strategic technology plan; hiring or outsourcing additional resources to support the planning, implementation, operations and maintenance of technologies especially customer interaction; work management, asset management, project management and outage management. Outsourcing -- Outsourcing is used to supplement and complement internal capabilities to achieve performance expectations. Contractors and outside experts are used to gaps in resource needs, expertise and capabilities and address peak workload to ensure projects and maintenance requirements are met. CPAU relies on outsourcing extensively but could do more to advance CIP and Operating goals with increased outsourcing of engineering, construction and operations. Opportunities to improve include developing general engineering service agreements that allow the utility to more easily retain outside expertise to support critical technology and infrastructure project planning, design and implementation. Using consultants for a wide range of services in the RMD; gas-prepay option; RCI-Flynn for transmission planning; NCPA provides scheduling coordination; JP Morgan provides gas nominations and scheduling. Recently awarded a three year construction inspection contract to Canus to support the CIP inspection requirements. 30 contracts provide energy efficiency services; contract with external collection agency; Pitney- Bowes provides billing continuity of billing operations. Using contractors for civil work; GIS management; Planning to hire contractor to support crews with pole replacements; crossarm changeouts; switch replacements; don't think that purchasing will support Master Services Agreements. Using contractors for large project design and construction management, pavement and soils testing, surveying. Have an annual contract to support wastewater group for replacement and installation of laterals, replace and repair mains under unit pricing; annual gas leak survey to walk and drive-by twice per year to look for gas leaks from mains; consulting services for cathodic protection. Piloted smart manhole covers to demonstrate effectiveness but purchasing will not allow sole sourcing beyond the pilot. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Asset Management Utility maintains complete, accurate and up-to-date asset inventories. Asset inventories include detailed asset records of type, model, manufacturer, serial number, status, age, condition, capacity/ratings, and installation and maintenance history. Assets are regularly inspected, tested when required, and inspection records are complete, up-to-date and reviewed by management. Asset failures are recorded, examined to determine cause and failure analysis is used to plan and prioritize asset replacement. Infrastructure replacement needs are regularly examined and replacement programs are in place to replace aging and upgrade underperforming assets. Replacement rates and priorities are adequate to replace infrastructure prior to end-of-useful life. Infrastructure additions, modifications, repairs and replacements are based on formal design and performance standards and are in accordance with applicable industry standards. System performance is monitored and tracked, and deficiencies are recorded and improvements are implemented to achieve performance in acceptance with at least industry standards and best practices Utility has asset inventories and data for all utilties. Data bases are in spreadsheets and we have not confirmed to what level of detail the asset records exist. Need to review further with engineering. While the utility is performing required asset management, its effectiveness could be improved with a more integrated approach to asset data collection and management. WGW inspections are well documented but aside from a 2010 CPUC GO-164 inspection we have not seen examples of electric system inspection records. Infrastructure replacement needs were looked at in the 1990's; current planning is by reviewing spreadsheets; workload forecasts don't exist; goals and performance not measured. Have some replacement plans but no annual goals (streetlights for example) Operations: Meet regularly with engineering to prioritize infrastructure replacement; WGW operations has performance goals for the maintenance of 6000 water and gas valves; must clean 100 mile of sewer per year; 72 water quality tests per month; etc. Everything that they have has been entered into GIS but QA/QC is an ongoing process. Operations Use SAP for transformer and electrical assets; brand new equipment gets asset tag in receiving; SAP maintains service orders. (Who manages meter data?) Have lots of data that is being put into GIS. Using a lot of spreadsheets and databases to track information. Drawings are in good shape. Still have some oil-filled circuit breakers and capacitor banks. Maintain 10 60/12 and 60/4 substations. Getting rid of the 60/4. Have oil containment for transformers and spill prevent plans for sites without physical containment. Electric doing GO95 and GO165 inspections. (Scott Williams). Davey or Osmose are contracted to provide wood-pole testing on a ten- year cycle. A dissolved gasses analysis (DGA) program is in place for substation transformers. Three compliance staff visually inspect entire system, including infrared (IR) underground inspections every three years and overhead IR inspections every five years. 2010 GO-165 inspection since showed that GO-95 and GO- 128 conditions are good but reporting and record-keeping needs improvements. Have some software challenges to track and manage inspections and follow-up work. At one time all cable failures with tested which lead to cable replacement program. Most recently had an issue with 200A elbows heating and failing but did not learn much from the analysis. Look at infrastructure age, condition and operating history to determine and prioritize replacements. Difficult to track when work was done and what work was done. At one time all cable failures with tested In 2012, the City of Palo Alto Utilities (CPAU) in Calif., entered its 20th year of a 25- year project to replace 75 miles of 8- to 16-inch water distribution lines. The badly corroded cast iron pipes, installed between 1896 and 1930, are at the end of their useful life or too small to supply adequate flow. Since 1993, contractors have replaced nearly three miles of pipes per year, and should complete the work in 2018. Last August, Ranger Pipelines of San Francisco won the contract to undertake Water Main Replacement Project 23/24, based on design work by CPAU engineers. The project involves installing 19,463 feet of new pipe using open trench or horizontal directional drilling, adding 289 HDPE service laterals and 33 fire hydrants, and reconnecting 15 existing fire services in 12 mostly residential neighborhoods. Crews are on schedule to complete the $4.2 million project in March. Based on data available, Palo Alto has one of the oldest water main infrastructures compared to neighboring agencies. According to the Department, Palo Alto also replaces its water utility infrastructure within the average service lives of the facilities, which is a more aggressive replacement plan than other utilities. Palo Alto’s incidence of main breaks, leaks, and outages is below average, which is further evidence of higher reliability. According to the Department, reliability and safety of the distribution system continue to be high priorities. Approximately 2,105 water CPAU contracts with Hydromax USA to inspect sewer laterals for crossbores on roughly 18,000 properties where gas lines were installed using HDD from 1977 to 2000. Hydromax averages four crossbore finds per 1,000 inspections. The city has not had a crossbore- related explosion and this inspection program has been undertaken to keep it that way. (How many sanitary sewer overflows are related to the cross-bore problem?) CPAU has an aggressive FOG reduction program employing a wide range of BMP's to ensure the FOG generating facilities install and properly maintain grease capture devices and FOG hotspots are frequently flushed to prevent SSOs. SSO have to be reported; SSO reduction goals have been stated to RWQCB (15% reduction) but goals are not stated and transmitted internally Currently rebuilding turnout stations DOT requires 20 percent of assets inspected every year -- CPAU inspects 50 percent every year. Replacing ABS is having a positive impact on leaks. The City uses a contractor to conduct mobile and walking inspections of the natural gas system. The mobile inspection covers 100 percent of the gas mains each year. The walking inspections cover 50% of the system each year. City has an ongoing program to video inspect sewer laterals for penetrations resulting from the trenchless installation of natural gas lines -- 'crossbores. City continues with a program to replace ABS plastic gas lines with PE plastic gas lines. ABS is leaking. Required to do corrosion/pit analysis of steel lines Leaks are tracked, cause is reported, pipe type is recorded and leaks are mapped in GIS. Performance goals include repairing Grade 1 leaks in less than 24 hours. (DOT requires Grade 1 leaks to be addressed immediately - - either repaired or continuous action to mitigate threat until repair is made. Repair time by the City is about 5 hours for each of the last two years. The 24 hour goal seems like it could be reduced to Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations which lead to cable replacement program. Most recently had an issue with 200A elbows heating and failing but did not learn much from the analysis. Look at infrastructure age, condition and operating history to determine and prioritize replacements. Difficult to track when work was done and what work was done. Collect outage data. Operators keep track of outages and causes. (Follow-up questions: 1) How are outages tracked, how are # of customers effected determined, how is duration determined, and what outages if any do you exclude from the statistics. Please provide some sample outage reports -- one for a specific outage and one that is a periodic summary of outages and reliability statistics. 2) Does Electric Operations prepare a monthly report of operations? If so, please provide a copy of December 2012 report and YTD 2012 info. If not, why not?) Use PG&E standards for electric design. Construction inspection is outsourced to Canus. Staff is meeting with Stanford and SLAC to discuss the feasibility of a second electric transmission line source for the City by connecting the City’s Quarry Substation to the SLAC National Accelerator Laboratory 230 kV Substation. meters were installed or replaced as part of the ongoing capital improvement project to rehabilitate the system. New meters provide additional information on system water volume and reduce the measurement of unaccountable water losses. The City of Palo Alto regularly collects and tests water samples from connection points between SFPUC/CPA, storage reservoirs, emergency wells, residential and sample station locations within the distribution system to ensure that the water quality meets all California Department of Public Health (CDPH) and U.S. Environmental Protection Agency (U.S.EPA) prescribed regulations that limit the amount of contaminants in the drinking water. The City collects 72-90 samples monthly to test levels of chlorine residual, coliform and pH levels are within regulatory guidelines. Palo Alto drinking water continues to be in complete compliance with all existing county, state and federal standards for water quality. Just updated design standards and posted on the Utilities' website Leaks are tracked, cause is reported, pipe type is recorded and leaks are mapped in GIS; services installed/upgraded; Based on the 2010 UWMP -- CPAU will compile the standard water audit and balance worksheets annually, demonstrate continued progress in water loss control performance, keep and maintain records of audit results, methodologies, and component analyses of losses and their economic value. CPAU will prepare a yearly perhaps 6 hours. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations summary of this information for submission to the CUWCC during years two through five of implementation, unless extended by the CUWCC. (Please provide sample reports to demonstrate analysis of unaccounted for water and water system losses.) Rebuilt all pumps stations is the past five years. Water and gas meters replaced every 15 years. Putting together RFP for replacement of large water meters, mostly 8- inch but down to 3-inch. Contractor will be hired to replace 3,4 and 6-in meters. Currently considering priorities. Geospatial Information Systems GIS is the primary source of geospatial asset data providing a complete, up-to-date 'single version of the truth' GIS is interfaced with enterprise systems and divisions including engineering;, operation, customer information and customer service; public safety; public works; outage management, system models and workforce management; and SCADA GIS information is available to personnel in the field Strategies and plans are in place for the long term evolution and support of enterprise GIS data. Utilities are using TopBase(R) to manage GIS data for utility infrastructure. TopoBase provides a user interface for utilities to access City provided base maps, manage electric, gas, wastewater, water and fiber assets, prepare infrastructure mapbooks and prepare design documents. Integration with enterprise systems is evident but may be incomplete and out of date. A quick review of the public facing data indicates that some utility project data is out of date or incomplete (e.g. electric project data stops in 2011; project descriptions are not very descriptive nor do they indicate specific CIPs) Utility mapbooks are prepared in TopoBase for operating personnel to us but that data is not made available in real- (We did not discuss GIS from the Management and Administrative Perspective. I have a good feel for the issue from the engineering and operations side but feel free to share your thoughts and concerns as well) Customer service will soon pick up some responsibility for premise assignments and geolocating meter locations (for meter reading). Not aware of any operational plans for the integration. Will be integrating with outage management but concerned that customer records are not currently adequate for maintaining more than one record for phones numbers. City provides a City-wide base map that the utilities use. CPAU use AutoCAD Topobase as front-end for data entry. GIS is not availble to personnel in the field. Very short on staff, using temps to enter data. Have a plan to complete but the plan is dicated by resources. Not sure if it is formal plan though. Sylvia Santos manages the project for WGW. Tom Ting manages the electric portion. Using a contractor to provide system management, specialized programming, and back-end systems configuration and management. Utilities are using TopoBase. City currently using a proprietary system based on MS SQL and Geodessey (sp?)Transitioning to make GIS the single version Water system data is in okay shape. Believes that the WW system is complete and accurate Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations time to personnel in the field as is the case for public safety who use vehicle-based systems. of the truth. Electric assets are in decent shape. Don’t have all of the installation data in GIS. Much of that data has been accumulated by hand. Operational maps are produced by GIS but accuracy is concern because quality and accuracy of source maps is not perfect. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Infrastructure Planning System Master Plans exist, are updated regularly and are used to define capital, operating and maintenance budgets. System models exist, are complete accurate, up-to-date and regularly used to analyze system performance and capability System performance and planning criteria have been defined and are used in system analysis and planning Capital and operating budgets are prepared annually based on system analysis and planning Master plan for sewer system was updated in 200; 2010 Urban Water Management Plan describes programs to achieve water system performance including adequate and reliable supply, attaining water quality standards and implementing programs to conserve water and reduce water system losses. Have not determined status of a Gas System Master Plan. Electric System Master Plan prepared in the 1990's but we have not reviewed it. CPAU should consider updating the electric system master plan. CIPs are reported to follow the master plans and appear to do so. System model exists for the sanitary sewer system and is being updated with the master plan update due this year. Electric system model is being developed in conjunction with the electric outage management system but that project is nearly a year behind schedule. Need to follow up on water system model Electric -- System performance assessment appears to be limited to monitoring and measurement of reliability statistics. CPAU reports that it is developing the capability to model and analyze the electric system but the program is behind schedule due to resource limitations. Opportunities for improvement include: completing the development of the electric system engineering model and preparing an up-to-date electric system master plan and developing and Utility has master plans for water and wastewater. Infrastructure replacement started in late 80's and 90's and most of those projects are 80-90 percent complete. Did infrastructure replacement plans for all of the utilities in 2000 and updated it in 2006. Currently updating sewer master plan, Did not discuss master planning with Customer Service) Informal plan. Thinks there is a master plan somewhere that talks about the 4-kV to 12-kV and overhead to underground conversions and such. issues as peak demand is less than it was 10 years ago Replacement of aging infrastructure is biggest driver of electric system CIP Engineering is working to tie system models into GIS. OMS is being implemented but is being held up by the need for a server that City IT has not yet provided and accordingly project is very far behind schedule. Working on SAP customer ties to the asset models. In good shape, driven by the OMS. Electric System model based on Aspen for loadflow and short-circuit studies. The City of Palo Alto Utilities has completed its 2010- 2011 Urban Water Management Plan, which was designed to assess the reliability of the City’s water sources, support to our long- term resource planning, and ensure adequate water supplies are available to meet existing and future water demands. Every five years, an Urban Water Management Plan (UWMP) is prepared and submitted as required to the California Department of Water Resources (DWR), per the Urban Water Management Planning Act. The City Council approved the plan on June 13, 2011, prior to the July 1, 2011 deadline. Formal plan prepared by consultant. Don't currently have capacity issues. Interested in performance and leaks. Have some old ACP2 type pipeline. Seismic upgrades needed at reservoirs. Using 'HYDRO' but not up to date and not being used in house In August, 2006, the City of Palo Alto Developed the SSMP. The Plan was updated in 2009. The goals of the City of Palo Alto SSMP are to: • Properly manage, operate and maintain the wastewater collection system in order to provide a reliable service now and into the future. • Develop and maintain design construction standards and specifications for the installation and repair of the collection system and its associated infrastructure. • Cost effectively minimize infiltration/inflow (I/I) and provide adequate system capacity to handle peak flows during a storm event. • Maintain a comprehensive and up-to- date map of wastewater collection system. • Coordinate with the City Public Works Operation to maintain Storm Water maps. • Respond to sanitary sewer overflows quickly and mitigate the impact of the overflow. • Implement a collection system maintenance program to minimize the frequency of sanitary sewer overflows. • Provide training on a regular basis for WGW staff in collection system maintenance and operations. • Encourage and support participation in the quarterly meetings with the neighboring collection Ongoing cathodic protection monitoring for metal portions of system Leak detection is best method to find problem materials --half the system surveyed annually walking --entire system surveyed annually mobile (from vehicle) --instruments detect as little as 5 – 1000 ppm depending on technology Flame Ionization, Combustible Gas Detector --survey results are the basis for system component replacement 1992 Replacements accelerated to 4 miles/year 1996 Replacements increased to 6 miles/year Since 1992 ~ 50% of system replaced - Medium density polyethylene specified for all new below-ground installations -Annual construction cost: ~ $6 M per year -Targeted: facilities associated with leaks Aldyl Replacement Plans medium density polyethylene material 1965-1985: installed by PG&E throughout their territory Late1972 - early 1973: some defective material manufactured Aldyl associated with recent incidents in Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations implementing a more formal planning cycle that leads into the budgeting cycle) system agencies and the partners to the City’s wastewater treatment plant. • Maintain a Fats, Oil, and Grease (FOG) program to limit fats, oils, grease, and other debris that may cause blockages in the sewage collection system. • Develop a closed-circuit televising (CCTV) program for the sewer collection system. Roseville and Cupertino Palo Alto has not experienced leaks associated with this Aldyl material --However, due to recent incidents outside of Palo Alto, replacement of this material in Barron Park will be included in the next annual gas main replacement project --Currently in design phase, the construction phase of gas main replacement project is projected to start in summer 2012 Gas Main Replacement Project-- typically ~ 6 miles of mains and 600 service lines replaced annually new parallel system is installed--all system components replaced little or no customer disruption of gas service construction duration averages ~ 300 days typical, 3 weeks per typical City block Operating, Maintenance and Capital Planning Annual and Five Year CIP and O&M Plans are prepared and updated annually and are used to define resource needs, capital needs, budgets, workplans, projects and work orders Budgets are driven by projects and initiatives that result from annual system review and planning exercises. Budget priorities are formally City has a robust budgeting process. Utility projects appear to be driven by regular planning except that the plan for electric system projects is not apparent. Electric CIPs are purportedly based on a circa 1990's master plan. Five year operating and capital budget forecasts are prepared but it is not clear to what degree system analysis and planning activities are involved in the development of these forecasts. CPAU produces a five year budget and work plan. Have specific infrastructure replacement plans, ABS pipeline in the natural gas for examples. Costs/bid price under engineer's estimates. Rarely go back for more money. CIP are being throttled to address resource constraints. Manager scans SAP monthly for cost performance. WGW looks twice a month on SAP. Schedules discuss by WGW in meetings every other week. SAP cost data is very up to date. There is some time lag for AP/AR. WGW customer service installation cost tracking is not as good as it could be because of proper workorder charging. Impacts accuracy of fee estimates. (Did not discuss CIP projects in detail.) Annually a Five Year forecast of capital and operating expenses is developed and capital and operating budgets are prepared for the following fiscal year. (It is unclear how projects are identified and become part of the CIP plan. We have not seen an Electric System Plan or similar such guiding document that would describe how capital projects are 'born')Engineering believes budgets are sufficient; that WGW Operations meets every other week to review project costs and schedule System is all 'graded' and provides the priorities that along with coordination with public works street plan drives the work.. DIMP program drives the workplan and CIP Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations developed and reviewed by a budget committee that takes into consideration enterprise-wide issues and priorities. Capital and operating project performance, cost and schedule is tracked and reviewed and reported regularly A concern should be that resource availability is driving capital projects instead of capital projects defining the need for resources as evidenced by the observation that capital projects are being deferred due to insufficient staff contrary to the City's claim that the utilities continue to implement aggressive capital improvement plans. Opportunities for improvement include developing a more structure planning cycle that leads into the budgeting cycle; develop and implement a formal project prioritization methodology that ranks projects based on factors such as compliance, safety, efficiency, and quality of service; include resource requirements (FTE's) for engineering, construction management, construction, operations and maintenance in the CIP budget so that resource needs can be considered along with project costs in planning and implementing budgets; and, improve consistency of use of performance requirements and metrics in developing operating and capital budgets. they do annual planning for capital budgets (description of this was a little fuzzy); budgets are currently being limited based on insufficient resources. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Project Management Project management principles are used to manage projects effectively Project managers are trained and certified as Project Management Professionals Project management tools are provided and used Project performance data is tracked and frequently reported to project managers. Enterprise Project Management System is used to define and manage project schedules and define and manage resource needs CPAU does not have an enterprise project management system. We did not observe a project management culture rather project management is what engineers do in addition to their other responsibilities. Project Management training is not a common occurrence. Could not identify any certified project management professionals within the organization. Highlest level of project management occurs when implementation (design and construction) is outsourced. Opportunities for improvement include providing project management training to personnel responsible for managing projects, developing and enterprise project management capability that will allow overall resource needs to be tied to project development (especially engineering anf operations personnel; developing and inplementing formal project management procedures and hiring/assigning project management professionals to manage key projects. Project management is a 'second hat'. No PMP's open staff. No project management procedures. Tracking costs on demand, regular reports are not produced. Use MS Project to develop schedules. No standard project management policies or procedures. There is a need for more consistency and training. Do not have an Enterprise Project Management System -- currently planning to procure one this summer (Did not discuss Project Management with Customer Service) Electric does more 'cradle to grave' project management. Engineers do the project management. Doing more contracting and soon it looks like even more contracting will take place. Contractors easier to manage than own crews. Have some project management tools for electric operations. Jim Butcher and Tom Ting know more. WGW recently organized into two groups: design and construction. Engineer manages projects through design, then a construction manager takes over the management of the project. Part of a recent succession planning strategy under which WGW engineers are developing capabilities across all functions Operations CIP projects are reported but maintenance are not. Electrical operation is using something. Most of the WGW work is intiated by operations as opposed to engineering. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Work Management Work Management Systems are used to create and manage work orders, define resource needs, and track and manage project budgets, costs and schedules. Work Orders are closed within a reasonable time after completion of work; project costs are reconciled, as-built information is documented and deviations are documented and examined. Cost Estimating (Compatible Units) System is used to develop, manage and analyze project costs estimates. Estimating units are regularly updated to reflect actual costs. SAP provides a system for creating work orders but is not used to manage work. Development of a work management system for electric is underway but very early in the progress. See discussion of cost estimating below. WGW uses an ad hoc combination of SAP and it SOGEN program to create work orders but there is no tracking or 'work management' capability. The combined evidence of insufficient or at least a constrained work force, deferring capital and operations work and lack oif work management business processes and tools create a high-risk of less than desired performance. CPAU plans to implement cost estimating system by the end of FY14 through the $300K EL-13008 capital project. Based on description from the CIP and based on verbal information from WGW Engineering, this appears to be a good approach to improving the the quality of cost estimating. Important factors to monitor in assuring project success include: 1) The underlying business processes that support the development and maintenance of project cost estimating should be reviewed and created or updated as necessary; 2) sufficient resources from WGW Engineering and City IT are available and assigned to the project to complete it in a timely fashion; and 3) adequate training is provided to users; and 4) the application receives Using SAP for workorder management. Don’t have a work management tool. Currently developing a work management RFP but the City is looking at the issue and so engineering is waiting. Looked at an overlay for SAP but City is going to do an evaluation of whether SAP will remain the enterprise resource tool. SAP tracks open work orders. SAP reminds of open work orders. Detailed cost tracking and review of contract work but less so for work completed internally. CIP EL-13008 will upgrade the existing electric estimating software used for preparing job estimates by integrating engineering analysis, adding predefined standards and templates, and by integrating documentation, materials ordering, and work management functions. Justification: The existing Electric estimating software does not integrate the materials requisition, engineering calculation, labor requirements, and drawing functions necessary to produce an estimate. The integration of these functions will reduce the time needed to prepare estimates and improve the accuracy and consistency of the engineering drawings, material lists and map updates. Work orders generated for meter / service trouble shooting can get lost in the Operations work management queue leaving the customers hanging and requiring back-billing, estimating more than the three month limit. Need work order aging and escalation policies. Work orders are created through SAP system. Do not have a work management system. Meeting is held at close-out. Completed as- builts are required to close-out the project. The existing electric estimating software does not integrate the materials requisition, engineering calculation, labor requirements, and drawing functions necessary to produce an estimate. Engineering plans to procure and implement a new cost estimating system that will allow integration of these functions to reduce the time needed to prepare estimates and improve the accuracy and consistency of the engineering drawings, material lists and map updates. Actual and estimated costs are not programatically reviewed -- reviews take place on an exception basis but this is not a formal business process. Two years ago began implementation of a work management/service order system, SOGEN. Next phase of the work is to integrate with SAP (labor and material). Want to build some Apps for paperless field work and provide field access to GIS; want to deploy mobile workforce management. Have many little programs to manage work -- customer service complaints go to City Hall and then to utility; Wastewater using ICOMM to schedule cleaning and track leaks. Mostly used for flushing scheduling and managing video footage from inspections. (WGW Engineering: Please provide your comments with regards to cost estimating. How do you prepare estimates; what estimating tools to you use?; are estimates reviewed and updated" Are estimating assumptions (e.g., compatible units) kept up-to-date?) Goal is to complete as-builts within 45 days of completion. As-built data is pretty efficiently collected. For outsourced work, contract drawings are always up to date but not always entered into GIS. Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations sufficent maintenance support to ensure that it is kept up-to-date. Recommend that a high priority be placed on: 1) Create, review and update work management business processes; 2) Procure and implement a work management system; and 3) Establish and monitor work management key performance indicators. Operational Resiliency Utility has Emergency Response Plans including disaster recovery and continuity of operations for key functions. Plans are regularly reviewed and updated as necessary to address new threats and mitigation capabilities Plans are rehearsed through table-top exercises and other simulations. Rehearsals include regional exercises in coordination with other agencies. Plans include mutual aid agreements with other utilities and agencies. CPAU reports to have emergency response plans, disaster recovery plans and continuity of operations plan but plans for electric, wastewater treatment and natural gas supply have not been reviewed. CPAU purports to have Electric and WGW Emergency Response Plans. Plans are reviewed annually; table top simulations are performed including a recent exercise for natural gas and will do electric next. Police and Fire are also involved and coordinate local emergency response. City has a comprehensive plan addresses 'Armageddon' Has a continuity of operations agreement with Pitney-Bowes for billing Have agreements with Santa Clara and Alameda; NCPA provides mutual aid agreement; involved with SCPPA mutual aid; (Does CPAU participate in the APPA/NRECA National Mutual Aid Agreement? If not, why not?) Water Operations reports that it coordinates emergency response plannign with county and other water agencies. A table top exercise for water coming up soon. Participates in WAREN (Water Emergency Response Network. 2011 Urban Water Management Plan describes contingency plans for water shortages. Well retrofit projects completed to provide backup water supplies. Did not discuss emergency response and disaster recovery plans for wastewater collection and wastewater treatment failure contingencies CPAU purports to have emergency response and disaster recover plan for Natural Gas System in compliance with DOT requirements. SAIC did not inspect this plan Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations Facility Adequacy Operating and Administrative facilities are adequate to perform duties. Facilities are properly maintained. Facilities are secure. Facilities are design to use resources efficiently Facilities meeting regulatory requirements for building code, safety and other applicable requirements Utility personnel are located a various facilities throughout the City including City Hall, a leased Engineering Office, and the Municipal Operations Center. Our observation is that space is at a premium, especially for customer service who operate a call center and customer service operations in very confined office area. CPAU should consider customer privacy and information security issues as the call center is not in a secure facility and telephone conversations with customers are easily overheard by non-call center personnel. WGW operations personnel indicated some concern about the security of the operations yard related to potentially inadequate fencing surrounding the yard containing high copper and aluminum content materials and equipment. Opportunities for improvement include the development of a long-term facilities plan; conduct a formal premise security assessment and evaluate the appropriateness of call- center and billing premises to ensure the protection of customer information and privacy. Management generally believes that facilities are adequate. Did not discuss resource efficiency’ Generally yes but currently reorganizing to move customer service downstairs. Operations is concerned with security of Municpal Operations Center Business Processes Business processes exist for all important business functions. Processes are documented, staff are trained and required to follow processes Processes are regularly review and modified when need to improve efficiency or address CPAU develops formal business processes for some but not all business processes? Staff receives training in business process implementation but training is mostly on the job work experience See note under Management and Administration Best Practices Stop Light Assessment Resource Management and Administration Observations Customer Service Observations Electric and Fiber Engineering and Operations Observations Water Engineering and Operations Observations Wastewater Engineering and Operations Observations Gas Engineering and Operations Observations changing business requirements. Business processes are sometimes reviewed and updated to improve performance and increase efficiency? Business processes are sometimes used to define resource and technology needs? Key Operates predominantly in accordance with best practices Indicates some operations in accordance with best practices but performs below expectations, outside of industry norms or more information needs to be provided and reviewed Operation deviates from best practices and attention is needed to develop a corrective course of action. Failure to do so will likely result in further performance degradation and potentially increases exposure to operating and finacial risk Attachment B Utilities Staff Response to: December 2013 City of Palo Alto Utilities Department Organization Assessment General Recommendations: 1. A Workforce Management Plan is Needed to Forecast Resource Needs, Identify Strategies to Recruit and Retain Staff and Plan for Succession of Key Positions City of Palo Alto Utilities (CPAU) has developed a succession plan identifying planned and potential retirements within the organization in the next five years. CPAU is also working with the People Strategy and Operations (PSO) Department to recruit and retain hard to fill positions. 2. Implement a Work Management System In 2013, Electric Operations piloted a utility work management system including order management, planning, scheduling, and dispatching. After a four month trial period, staff did not recommend purchasing the software because it was not cost-effective and it did not integrate with the City’s ERP and GIS systems. Staff will continue to evaluate other work management solutions which will meet the needs for both Operations and Engineering. 3. Review and Update Performance Tracking CPAU agrees that is important to maintain key performance metrics which are used to make management and operational decision. Staff plans to review the many performance measures that are tracked and reported in quarterly reports, CPAU’s strategic plan, the City Auditor’s annual reports, and the budget document with an eye to reduce the number to a manageable set of the most meaningful measures. These measures will be tracked and reported and accountability for them will be placed on the appropriate level of management. 4. Consider Additional Outsourcing to Address Workforce Constraints CPAU currently outsources the construction of large capital projects for electric, gas, water, and wastewater services. CPAU also contracts out other services on an annual basis including locating services for underground utilities, electric line clearing, and inspections. Periodically, CPAU will outsource for special projects including engineering design of unique projects. Technical and regulatory consultants are also brought in to provide expert advice in the evaluation of special projects such as a new electric transmission interconnection line, NERC/WECC registration, and development of new programs and plans such as the Carbon Neutral Plan or renewable energy procurement. Recently, Operations outsourced commercial water and gas meter testing and calibration, which solved a chronic staffing problem in the meter shops. Attachment B Summary of Recommendations and Utilities Plans/Response – Taken from Table ES-3 in the December 2013 City of Palo Alto Utilities Department Organization Assessment: Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action Action Recommendations CPAU Water-Wastewater-Gas Operations Division CPAU Customer Service and Resource Management Divisions Reallocate priorities and workload for one FTE of resources from the RMD to energy efficiency planning, reporting and program development functions. The goal is to free up one FTE of CSS resources to invest in EE program marketing and targeted customer service projects including communication to improve satisfaction among residential customers. Develop and adopt revised Division work plans Schedule: Implement immediately or as soon as practical COMPLETED Instead of reallocating an FTE from the Resource Management Division (RMD) to Utilities Marketing Services (UMS), in FY 2014 Utilities reallocated the workload of reporting and program development from UMS to RMD since it fits better organizationally and UMS can concentrate on delivery and marketing of resource efficiency programs. Probable Actions Customer Support Services Add one additional classification each for utility marketing representative and for customer service representative to increase career progression opportunities. CPAU to develop appropriate documentation to send to the HR Department. Obtain appropriate City approvals. Schedule: Implement immediately or as soon as practical IN PROCESS In FY 2015, Customer Service is requesting a new job classification, Revenue Protection Specialist, to investigate theft of service, unauthorized usage, fraud, destruction or tampering of system assets. UMS will also be evaluating new classification(s) for marketing representatives to improve career development. CPAU Water-Wastewater-Gas Operations Division Outsource Water Meter Calibrations, Testing, and Installations. Operations Division has released an RFP and plans to complete outsourcing process. Schedule: Immediate (no implementation plan needed). COMPLETED In FY 2014, Operations awarded a two-year contract to a 3rd party to replace and/or repair large water meters. Meter testing, calibrations, replacement and construction are underway. Attachment B Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action Engineering Division Reclassify two administrative positions (currently vacant). - One to a computer technician who will support GIS functions and a second position to a management analyst to support contracts planning, administration and management. Implementation analysis to compare costs against status quo and options and consider other benefits and costs. If analysis is favorable, reclassify positions in budget Make appropriate staffing changes Schedule: Start analysis immediately and implement changes by Q2 2014 COMPLETED In FY 2013, one administrative position was reclassified to an Engineering Technician to assist with utilities mapping in the new GIS system. In FY 2014, another administrative position was reclassified to a Utility Coordinator to develop a contract database and assist with contract administration. Study Recommendations Resource Management Division Study of service delivery alternatives for some of resource management duties. These duties include contracting with the NCPA to conduct some of the resource acquisition or resource scheduling or contracting with another entity to perform these functions (e.g. Santa Clara, TEA, or ACES). To be determined in discussion with CPAU and ASD Schedule: By the beginning of Q2 2014 IN PROCESS Resource Management Division has begun the work of evaluating service delivery options and had discussions with alternate service providers as well as with NCPA about the cost of its provision of services. The discussions with NCPA resulted in a reduction of NCPA service costs by $250,000, which is about what staff believes could save with an alternate service provider. NCPA has also agreed to update its cost allocation methodology in FY 2015 and staff will actively participate in those discussions. After the new NCPA cost allocation methodology is in place, staff will again determine whether more cost savings can be achieved by receiving services from others. Attachment B Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action Customer Service Support Division Review CSS annual workplan against customer satisfaction goals and evaluate whether CPAU is under-investing in customer service (technology, staffing, or programs). Make appropriate recommendations. To be determined in discussion with CPAU Schedule: Beginning of Q2 2014 IN PROCESS Staff has made significant progress towards improving online customer interaction, particularly via the “My Utilities Account” (MUA) portal. An extensive survey of all MUA participants, which had a remarkable 35% response rate, is being used to identify which changes being considered are the most valued by our customers. Some features have already been implemented, such as more user-friendly landing pages and internal navigation. However, CPAU is still in the process of evaluating more complex changes which are integrated with City’s ERP system. In FY 2015, CPAU will hire a consultant to conduct a Utilities e-Service Assessment to gather business requirements, develop a roadmap, and assist with vendor selection. CPAU should continue to evaluate the need for the six field customer service staff that read meters if the City decides to transition to two- way meters and consider options including retraining and repurposing these staff members, resizing the division or outsourcing repair and battery replacement functions. City to review annually as part of the budget process. Schedule: If the City transitions to two-way meters. PILOT IN PROCESS CPAU’s residential CustomerConnect pilot program using smart meters is underway and will not be concluded until the end of 2015. After the results of that pilot program are evaluated, staff will update the smart grid road map and determine whether a full roll-out of smart meters is advisable. Operations Division, Electric and Wastewater Groups Study Shifting to More Reliance on Third Party Contractors for Electric line work and construction Study (including costs-benefits) Issue RFP Select Contractor(s) and negotiate contract(s) Schedule: Begin study in six (6) months. If action is taken, completion of transition within two to four years IN PROGRESS CPAU does use third party contractors for CIP construction work. Engineering is currently working on the RFP specification for line crew support. Attachment B Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action City Warehouse and CPAU- Operations Division to work to improve interface Specifically, the CPAU-ASD team should analyze the ratio of dollars expended under work orders/service to dollars expended under “blanket” accounts. Further, more generally, the team should establish a process to improve coordination, efficiency, and effectiveness. Schedule: Q2 2014 IN PROGRESS CPAU is working with Purchasing and Stores (warehouse) to develop policies and procedures and to make improvements in inventory management. Policy, Management and Capacity Building Recommendations Staff Retention, Recruiting and Training CPAU and the HR Department to develop a five-year HR plan to address retention, succession, recruiting, and replacement. Team to review existing leadership and people development, training, apprenticeship, retention, and recruitment policies and identify gaps against industry best practice and what is needed to meet HR/staffing goals. A short-term action is for CPAU’s AD (in coordination with the HR Department) to contract with a qualified outside recruiter to focus on key hires. Schedule: Q1 2014 for needs assessment and five year plan scoping. Five-year plan by May 2014. ONGOING CPAU developed succession plans for each of its divisions and is seeking assistance from the People, Strategy and Operations (PSO) Department to address the issues related to staff retention, recruitment and training. A significant factor for attracting and retaining qualified employees is the total compensation package offered. CPAU believes that the City should complete an updated total compensation survey using CPAU competitors, including PG&E, for all critical Utilities positions so that an effective succession plan can be implemented. Formatted: Font color: Auto Attachment B Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action Strengthen the Department’s Culture Integrate assessment findings in HR/staffing plans. Brief divisions on the cultural assessment’s findings. Also, CPAU should correlate these findings with the last two annual employee surveys. Identify improvement measures. Schedule: Q1 2014 and ongoing ONGOING CPAU has conducted three annual employee surveys since 2011 and the overall employee satisfaction rating has been steadily improving. In the most recent survey, 91% of the employees acknowledge that they have the necessary tools and training to perform their jobs successfully. As a result of the employees’ feedback from the surveys, CPAU has implemented the Fred Eyerly Employee Recognition Award, My CPAU Marketing Campaign featuring employees and customer outreach programs, new job classifications for career development, and succession planning for cross-training and career growth opportunities. Even though employee satisfaction has improved year over year, one area where there are low scores is the area of compensation. Investigate high current ratio- electric and approach to CIP project financing/debt service Investigate if CPAU/City’s lack of debt service for CIP projects is appropriate, especially given the low cost of borrowing (See Figure 3-12, Current Ratio-Electric for more details). Schedule: Q2 2014 ONGOING Since CIP expenditure levels have been, and are projected to be, steady for most utilities, rate funding is appropriate. For unique or large projects, debt funding is pursued. For example, the $30 million Emergency Water Supply and Storage project was debt financed, but the annual water main replacement projects are rate funded. Expand Use of Master Service Agreements (MSAs) Each division to develop a prioritized list of current and potential future MSAs and preparing a schedule for executing MSAs Schedule: Q1 2014 DEFERRED To ensure maximum collaboration and to remove departmental silos, staff has not pursued this recommendation. In the meanwhile, CPAU is responding to and providing feedback in customer satisfaction surveys that are being conducted by other departments. Attachment B Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action Cost Comparison Study for IT, Purchasing and HR Services Commission a study and hire a consultant to compare the quality and costs of these services provided as they are now (by City Departments) to those that could be provided by contractor resources. Alternatives should be considered such as increasing current contractor support to supplement current City functions to largely outsourcing these functions while leaving City management control for these services in place. Schedule: Q2 2014 – Issue RFP for study DEFERRED Deferred until the completion of the cost allocation study. CPAU-City Cost Allocation Complete cost allocation study and make adjustments, as appropriate. Schedule: Q1 2015 DEFERRED Deferred until the completion of the cost allocation study. CPAU Managers to Participate in Performance Reviews of the Staff in other Departments that the CPAU Funds CPAU department managers should participate in annual performance reviews for all personnel whose costs are charged to CPAU. Schedule: Annually ONGOING CPAU managers currently informally provide input to the supervisors of those employees who provide services to CPAU for use in the annual performance evaluations. Improve advance planning for CIP related procurements Action for Streamlined Procurement for Efficient and Effective Delivery (SPEED) Committee Schedule: Process in place by the beginning of Q2 2015 IN PROCESS Improvements to the procurement processes have begun and are being led by ASD. Conduct twice yearly purchasing requisition training for CPAU staff involved in purchasing (including new hires) ASD, Purchasing Division and CPAU to develop and launch a 60 minute training Schedule: Begin Q1 2015 IMPLEMENTED Staff training on all aspects of the procurement processes has been implemented by ASD. Improve Sharing of Best Practices CPAU to hold a forum where people from each of the Divisions present and discuss best practices. Create or expand repository for best practices and tools (possibly on SharePoint). Schedule: Begin Q1 2015 ONGOING Sharing of best practices has been ongoing in the form of presentations at divisional staff meetings, monthly safety meetings, and special training. SharePoint is in use by the Operations and Engineering Divisions and the Rates group in the Resource Management Division. Attachment B Table ES-3 Summary of Recommendations Recommendation Implementation Actions/Schedule Utilities Action Annual review of staffing adequacy for new and emerging market areas. Annually, as part of CPAU’s annual budget process and at other times as appropriate, evaluate the adequacy of staff capacity (e.g., numbers and skill mix in other areas and associated customer service functions) to ensure that adequate resources are allocated to new or emerging market developments. Schedule: Annually ONGOING Annually, during the budget development process, management evaluates new initiatives and the staffing requirements for both new initiatives and any new regulatory requirements. The Emerging Technology/Test Bed program also receives applications for new technologies on a quarterly basis and promising ideas are tested. These are considered for ongoing implementation, as appropriate, in the budget planning process. Cost-benefit reviews of any new program Conduct a brief cost versus benefit assessment of any new program proposals with potential material impact. Schedule: Ongoing and as part of annual budget process ONGOING CPAU’s standard practice when introducing any new programs is to evaluate the cost effectiveness and impact on rates and staffing.