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({D statJe.JOI't ______ --,
July 7. 1994
Till< HONORABLE CITY COUNCIl.
Palo Alto, California
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Mcmh€r:s of the Council ~
This ):eport is intended to inform the City Council and the
community about the recent organizational changes and actions taken
by the City Nanager and the new Director nC Utilities to dE:al with
issues involving time card fraud and supervisor oversight
deficiencies in thE\-Utilities Department. This is an informational
report and no action is l"equil"ed.
1\s pat't of the City Management proceso t.O review conformance \dth
CiI..:y Policies and Procedures, to improve the work environment for
everyone and to resolve issues that. may reduce the effectiveness of
the organization, the Utilitieo Director retained the services of
a consultant. Tho consultant was asked to help determine if
management is effectively addressing areas of accountability and
review issues that may be reducing the effectivenesG and morale of
the organization. This included supervisory and personnel
management practices. The review was performed in February, 1994
thr9ugh il series of interviews with approximately 2S percent of
Operations Division employees; both Nanagem~nt and-Non-Management.
The COl18ultant's summary stated in pal.'t that II •••• employees ar~
9'enerally very satisfied with their jobs, I spoke with no employee
that was contemplat.ing leaving the city for other employ[nent, ""
And since the tenure range of those interviewed was from a few
months to almost 30 years, 1 believe this represents high marks for
the City of Palo Alto".
'fhe Consultant summary continued in part ITO n the negative side
t.here are Bevel'al areas of concern to some ~mployees '" most of
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these areas of concern can be link.ed to supervision, or more
accurately, the lack of supervision and accountability. Most of
thoso inte:rvie .... ·ed eeemed to be asking for strong and directed
hs'adershlp. ,.
Results of the roview were shared in gene:ral with all Operations
employees dUl"ing a ueries of meetings held by the Utilities
Director. Spec:a.fic issues involving individuals: that 'oIIIere brought
out during this procoss wel::e handled confidentially by management
where 'Warl"anted diaciplin1lry action iI!.'as taken,
1\fter the timecard inc.ident last August involving overtime hours
entered on timecards, but not \o,·orked. and continuing over the last
81x oonths" the City Nanagel" and Dil::ector of Utilities. have held
several moet.ings with groups of Utilities ope_n\t ions employees on
tlpecific issues rai.8t!d by staff. These meetings included
discussions ,of IT':()rale. 9UPCl-vioion and/or lack of sllpervision and
individual concerns en training, safety. etc. Many of the iBsues
'I,o."cre iltHl,,,,,·el"ed elth-er in thcuc l0eetings or by management after the
mClJtings.
At the close of the FY 1992-93 Dudget j'car, the City Nanager
requosted the Finance Director to pl-epal'c a l':eport showing overtime
",·oX'K(l'd by employees. 1'h'O reportfl we:r:e prepared. One report listed
eroployeee who earnod over $5.000 for overtime ' .... orked in 1992" and
the second report liated employees who earned ovel' $2,500 for
overtime ,,'Orl<;od the first oix months of 1993. On July 20, 1993,
this report waS distributed to Department Heads. The r.ity Nanag6l"
r'equest~d th€; U"tilities Director to investigate the department' 5
UQI:! of ovel"titll.e.
Utility Division/Section HanagerfJ :reviewed this report and prepal'ed
1"eport9 for-the 01r~ctor of Utilities; on how the overtime was used,
To· opt:!rate the Uti! ities Department. overtime is justifiably
r~quired tor emergencies, shut downs for @~intenance and at times
for ~·ork backlOg. Managcmont io responsible to monitor the amount
of overtime ea.ch el:'lployee ",,·orka, both fl·orn the safety standpoint
(~mployeea wor~ing long hours may become too fatigued to perform
thoir work in a .pafe manner), tmd from a fisce.lly responaible
position. The reports received by the Director indicated that both
of these rosponsibilities \.,.ere r.ot being entirely met by the
lli!:partment. Three con:ective actions ..... ere immediately implemented
by the: Director of Utilities:
1. On August 11. 1993:. each t-!anager \~as directed to initiate a
record collection system retroactive to the beginning of the PY
1993-94 8udget year on overti:J:le worked for:
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A. Emorgencies TnJa covers all overtit:le to rest,ore service
to customel"S.
B, Planned ,wo:rk -Pt"Qjf!cto planned for ov-el,time that can not
be accomplished during nOl"nlal work hOUl'S dlle to (1)
customer convenience and (2) opcH-ational needs,
C, Work Backlog -All overtirr.e ,'lpproved by the Kanager for
completing work: aBsignr~"ent8.
2. On September 2, 199.1, ... new oven,iclie ~pp:(ol/al policy was
established. Prior to that date. Operations field supe:rviaors
could approve overtime. The new policy establiohed by the Director
requires a higher management approval level.
A. Emergency -The }o'ield Super .... isor on the-emergency crew can
iJ,uthorize overtifl'e. As 600n as poseible {next day.,
verification 'Will be givon by the Opel"ations I".an<tger.
B, planned Work -Pre-approval of all pLumed rnaint~nance.
capital i standby or dO\lble-titt'.~ is re(]\Iil"ed by the
Operations Manager or a higher leve l of (lHloageblent.
C. ~",ork Backlog -All ov(>.:rtirr,e for gene-rrl} ,",'01.-1=. backlog Jod
maintenance requil"es the pre~appkx . .-.val of the Dil:€ctor or
Aesistant Director (for employees in .1n Assistant
Oirector1s Division) or the Managera of ReSOl,Il.'ce Planning,
Resource Conservation or Engin.eering (for en:lployees in each
Manag('l!rJs section).
3. A detail~d review of all utility c,l'ployee Dvel t.h=,~ was lTiade for
the last two complete. budget years_
Results of actions: Ovcrti«;e to date t.his budget year is down
substantially when compared with the t",,·o prc\! ioue: budget years,
projections show that total overtime in the Utilities Dep~rt~nt
will be approximately $485,000 or 36 percent lo .... ·er than the
previous three years' average. Management planning and the higher
level of .approval for the use of overtir,le have resulted in a mo:t:>e
detailed review of overtir:1e needs. However, erJ!ergenci~9 cont.inue to
be fully'cov-e-ced and customer service and the reliability of the
utility systems remain hiqh, .
In september 1993, the City' eo Payeoll Proceduro section on
Timecards {Policy and Procedure 2-6, Section II) was reviewed with
all n\embers of the Utilities Depa:t::t'ment. Specific empllasis ""as
placed on the section entitled "Review and Certification ll that
states "each employee is responsible for ,reviewing and signing
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his/her own timeca'rd being Bubmi teed to Payroll" II Periodic checks
are being made by managers to ensure that employees and supervisors
con~inue to sign th~ir completed timecal':ds. Managers arc also
including as part of their staff meetings a periodic l"eview of ·all
City Policiea and Procedures.
Reorganization
In Februax-y 1994, Council approved a reoolution authot:lzing t"'·o
management position changes in Utilities. This allowed the
Utilities Department to reorganize the Engineering and Operations
Divisions into one Division. Tl1ia will stl:"engthell the management
control in distribution planning, construction and operations. l\
national search was conducted to fill these positions" 1\0 a l:e9~llt.,
the new Assistant Director, Engineering and Operationa:, was
recently hired and will begin h'ork 011 July 11. [Ii the Interim~ the
Utilities Director has combined the Electric Engineering and, the
Electric Operations under one manager and has combined the Watet'
Gas-Wastewater Engineering and Water-Gar;: ~~aBtewaler Operations
under. one manager fol.-a stronger management contl-ol_ Both of these
Managers report to the Director. Additionally, lhese changes an.d
personnel changes at four separate managerr.ent and supervisory
levels in the Department will result in a stronger management
pl"CSellCe in the Operations Division and a closer link to the
Director's office.
In summcU:Y, the c}]anges to strengthen the supervision and
accountability of individual and organizational performance has
been supported by employees in the department, Employees want an
organization that provides a good work envil-onrn.ent with strong
direct supervision.
Respectfully submitted ..
ED(j~
Director of Utilities
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City Manager
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