The water industry is a public relations battlefield. Currently the target of a windfall tax, the companies started life born into political opposition as a privatisation too far, so controversial that the process was eventually abandoned in Scotland. Price rises followed, to fund the back-log of under-investment and demands for higher quality. Then came water shortages and allegations of incompetence, public disgust fuelled by ‘fat cat’ salaries and inflated share prices from takeovers. Hardly surprising, then, that annual surveys of corporate responsibilities regularly show water companies with the biggest gap between public expectations of social responsibility and perceived performance.
North West Water is no exception, now part of United Utilities, having taken over its regional electricity counterpart, NORWEB, in 1995. As with other companies in the industry, in seeking to rebuild reputation, it suffers from a handicap in having little direct contact with customers: the product arrives at the house or business unseen, with waste water departing equally anonymously. For the majority without meters, they need never see a North West Water employee. Indeed virtually the only contact is when the bill drops through the letter-box.
Faced with this challenges, North West Water has set about building a focused, tightly managed community programme, to identify and then meet customer expectations as a socially responsible business.
New programme focus
Over the last year, North West Water has reviewed its programme to achieve a sharper policy focus and introduce stronger management tools. Activities now centre on four topics:
education, in partnership with schools particularly to promote public awareness of the water cycle;
partnerships to protect and improve the environment, including conservation, public health and safety;
enterprise skills and regional leadership, transferring business expertise to the community to promote the region’s economic health;
people with extra needs, working with major charities to help customers and others in the community with their specific extra needs, including those who are elderly, disabled, blind or partially sighted and hearing impaired.
The existing programme is costed at £1.9 million for the year ended in March 1996; one third of this is in-kind, mainly employee time. Roughly half is devoted to education, a quarter to the environment, and the balance to the other topics.
Examples of flagship projects include:
education: five Environmental Education Centres, available free of charge to schools for a full day’s teaching; a network of forty volunteer education coordinators, participating in school industry days, careers training and mentoring;
environment: participation in the Mersey Basin Campaign, a 25 year programme to clean up the river system; a partnership with BTCV, going back 21 years, to improve and open up landholdings;
enterprise: the Blackburn Partnership, where North West Water chairs a 20 strong employers’ forum;
extra needs: a national curriculum pack in braille and on audio-tapes about the water cycle; training of staff by the RNIB on customer service; a weekend employee ‘challenge’ event to refurbish a special school for visually impaired children.
Compared to other companies in the industry, as the benchmark tables show, North West Water has a significantly bigger programme, although some companies have undervalued their programmes by not including the in-kind contribution. The chosen policy focus and types of flagship projects are similar.
Review process
The recent review to revise the programme was conducted in an exceptionally methodical and business-like manner. The six stages are worth describing in detail.
Step 1: checking alignment with business objectives. North West Water drives its business through four objectives, based on the European Foundation for Quality Management model, namely customer satisfaction, people satisfaction, business results and impact on society. Each has its own ‘champion’ director and a cross-functional team of managers. The objective under impact on society is to “protect and enhance public health, safety and the environment, and meet community expectations of us as a business leader in the North West of England”.
Step 2: listening to community opinion. A detailed survey of a representative sample of 875 customers, suppliers, employees, community leaders and opinion formers was conducted by Opinion Leader Research. The results were used to inform the review and provide targets for future improvements. Topics covered were:
the main responsibilities of companies both generally and specifically for water companies, with additional questions about social responsibilities;
the main issues of social concern in North West region;
community expectations of North West Water and how well the company meets them.
Crucially for the credibility of the process, the findings were published. Details included:
environment is cited as the top priority for companies generally and especially for water companies;
yet social concerns among the public are unemployment and crime, with environment third;
North West Water’s actual performance is seen as strong on environmental performance and business leadership in the region, but weak in acting on people’s views about social responsibility.
Step 3: auditing existing actions. BITC was commissioned to check and value the existing programme and suggest a methodology for annual assessment.
Step 4: reviewing best practice. North West Water joined the CCI Index study (see above). Also BITC’s report recommended what a leading edge programme should look like, compared with other companies.
Step 5: producing a revised policy. The impact on society ‘champion’ was Eric Harper, the quality director, who led the review with a review team drawn from across the company. The resulting programme is built around eight published “commitments”: to the four policy focus areas are added four undertakings about how the company approaches CCI:
to listen, consult and involve;
to be an open company, reporting progress over time and welcoming customers, for example through open days and access to land;
to encourage employee involvement and community partnership;
to measure the impact on society, with targets to track progress, so “the community can call us to account on our commitments”.
Step 6: announcing the new commitments. Published documents describe the revised programme and the eight commitments: a summary for use by staff and external audiences, with a longer descriptive booklet when required, highlights and results from the opinion survey, and a pamphlet describing education links. Also published are detailed performance targets for each of the four policy areas, and a pledge to report progress regularly.
Employee involvement
A key plank of the new programme is employee involvement, encouraging voluntary initiative and including activities during paid time. For example, all employees are now entitled to half a day off each month for community activities of their choice but with guidance to concentrate on the company’s four policy areas. Activities in paid time will gradually be integrated into appraisal systems, and this overt encouragement to get involved should be helpful in overcoming any resistance by front-line managers.
Other examples are the 40 education co-ordinators who are volunteers. A speakers panel of 70 staff offer to give talks about the water industry, while 150 staff regularly help with Swim Safe, a programme to demonstrate to children the dangers of swimming in reservoirs. Staff fundraising focuses on the industry charity, WaterAid, with ?800,000 raised by staff, customers and the company since 1995.
Programme management
At the centre the programme is coordinated through the communications department, led by the communications manager, Sandra Palmer, and director of communications, John Drummond. The impact on society group of 12 drawn from all aspects of the business meets quarterly, chaired by Eric Harper. Similar cross functional groups meet, each with its own lead director, for the three other business objective areas customers, people and business results.
The North West Water region is divided into 39 areas, roughly coterminous with local authority areas, each with a Territory Manager. They spend at least 10% of their time (growing to 20% by the year 2000) on community investment and have their own budgets for local projects. In the region as a whole, external communication is being extended, with a concentrated effort to improve corporate reputation through greater understanding of how the business meets its social responsibilities. One of five recent TV adverts featured the environmental education centres and press advertising is including endorsements from community partners.
Challenges
Looking ahead, the company is putting a lot of effort into employees, encouraging involvement through the innovative half-day a month offer, and consulting them on their views. The challenge will be to evaluate the business benefit from this, both from skills enhancement and through greater motivation and commitment. Without that evidence there is a danger of a backlash, perhaps from middle managers, who are under pressure to deliver tough business goals.
Externally, a big motivating factor at present is the need to demonstrate to customers and the wider public the company’s social concerns. The commitment to consult is commendable, but it will be important to explain why the company is involved, not just what activities are undertaken. Managing expectations and explaining the limits on what a company can reasonably are as important as trying to meet those expectations.
The final challenge is hypothetical at time of writing: if a new UK government does introduce a windfall tax on privatised utilities to fund a programme of employment and training for young people, companies like North West Water will need to think through the implications for the main community affairs programme and for corporate reputation. Is it simply an opportunity to draw a line under the ‘fat cats’ problems, a one-off ‘blood letting’ to provide a fresh beginning? Or can reputation be enhanced by embracing the tax and offering to add value to the new government’s schemes, perhaps releasing some employees to work alongside as mentors? And will there be expectations in later years to carry on helping even when the tax is no longer levied?
Whatever the answer, North West Water’s tight management-by-objectives approach can only stand the company in good stead to face these challenges.
BENCHMARKS
NORTH WEST WATER
Managing director: Derek Green
Turnover: £814 million Pre-tax profit: £211 million (pro-rata)
Employees: 4,770
FTSE ranking: 72 (United Utilities)
Year end: March 31, 1996
Community contribution: £1.9 million, of which in-kind £650,000
Percentage of profit: 0.9%
Per head of staff: £398
Policy focus: education, environment, enterprise skills and regional leadership, people with extra needs
Flagship projects: 1. five environmental education centres for use by local schools.2. partnership with BTCV, 21 years old.3. Blackburn Partnership, for economic development.
Employee involvement: up to half a day off a month allowed for all staff on community activities; panels of volunteers for company-supported projects; fundraising support for water industry charity and payroll giving
Management: within communications department
Contact: Sandra Palmer, communications managerAddress: Dawson House, Great Sankey, Warrington WA5 3LW, Phone: 01925 234000
THAMES WATER PLC
Chairman: Sir Robert Clarke
Group managing director: Bill Alexander
Turnover: £1.2 billion
Pre-tax profit: £229 million
Employees: 6,338 (UK utility company only)
FTSE ranking: 96
Year end: March 31, 1996
Community contribution: £375,000 (in kind not recorded)
Pre-tax profit: 0.16%
Per head of staff: £59
Policy focus: local ‘operational’ community, environment, education, recreation, health
Flagship projects: 1. Thames Valley Partnership to reduce crime and the fear of crime, working with young people.2. National and Berkshire swimming schemes for water safety and training teachers to teach swimming.3. Programme of civic environmental improvements, particularly fountain restoration.4. Promotion of low water gardens.
Employee involvement: matched funding of ?28,000 given to 43 employee projects; other staff activities not recorded.
Management: now part of corporate affairs; three staff in education unit, one in local sponsorship, one p/t in charities.
Contact: Liz Creighton, community affairs managerAddress: Nugent House, Vastern Road, Reading RG1 8DBPhone: 0118 959 3715
SEVERN TRENT WATER
Chairman: Victor Cocker
Managing director: Brian Duckworth
Turnover: £896 million
Pre-tax profit: £60 million
Employees: 5,930
FTSE ranking: 90
Year end: March 31, 1996
Community contribution: £50,000 plus substantial in-kind support
Pre-tax profit: 0.07%
Per head of staff: £42
Policy focus: health and welfare, education, environment, arts, heritage
Flagship projects: 1. Cromford Venture Centre, North Derbyshire, to help renovate an old mill as a venture centre to provide holidays for disadvantaged children.2. Princess Royal Trust for Carers, to help establish the Nottingham Centre.3. County Air Ambulance, to help maintain the helicopter.
Employee involvement: top-up funding available to match employee fundraising efforts
Management: one member of staff in corporate affairs and ten in marketing
ANGLIAN WATER
Chairman: Robin Gourlay
Chief executive: Alan Smith
Turnover: £776 million
Pre-tax profit: £239 million
Employees: 4,287
FTSE ranking: 118
Year end: March 31, 1996
Community contribution: £450,000, of which £100,000 in kind
Pre-tax profit: 0.19%
Per head of staff: £105
Policy focus: education, environment, disadvantaged/disabled groups, employee volunteering, the arts, community projects
Flagship projects: 1. Learn to Swim, which has so far enabled 100,000 children to learn to swim.2. Employee volunteering, offering an award for a charity or group with which a staff member volunteers.3. Anglia in Bloom, to encourage sustainable planting in water saving gardens.
Employee involvement: nearly 500 employees regularly volunteer
Management: part of corporate relations with one full time manager and admin back-up
Contact: Glynis Hammond, sponsorship managerAddress: Anglian House, Ambury Road, Huntingdon, Cambridgeshire PE18 6NZPhone: 01480 443000
Corporate Citizenship Briefing, issue no: 33 – Aphttp://www.severn-trent.comhttp://www.severn-trent.com”>http://www.severn-trent.com>
ANGLIAN WATER
Chairman: Robin Gourlay
Chief executive: Alan Smith
Turnover: £776 million
Pre-tax profit: £239 million
Employees: 4,287
FTSE ranking: 118
Year end: March 31, 1996
Community contribution: £450,000, of which £100,000 in kind
Pre-tax profit: 0.19%
Per head of staff: £105
Policy focus: education, environment, disadvantaged/disabled groups, employee volunteering, the arts, community projects
Flagship projects: 1. Learn to Swim, which has so far enabled 100,000 children to learn to swim.2. Employee volunteering, offering an award for a charity or group with which a staff member volunteers.3. Anglia in Bloom, to encourage sustainable planting in water saving gardens.
Employee involvement: nearly 500 employees regularly volunteer
Management: part of corporate relations with one full time manager and admin back-up
Contact: Glynis Hammond, sponsorship managerAddress: Anglian House, Ambury Road, Huntingdon, Cambridgeshire PE18 6NZPhone: 01480 443000
Corporate Citizenship Briefing, issue no: 33 – April, 1997
ANGLIAN WATER
Chairman: Robin Gourlay
Chief executive: Alan Smith
Turnover: £776 million
Pre-tax profit: £239 million
Employees: 4,287
FTSE ranking: 118
Year end: March 31, 1996
Community contribution: £450,000, of which £100,000 in kind
Pre-tax profit: 0.19%
Per head of staff: £105
Policy focus: education, environment, disadvantaged/disabled groups, employee volunteering, the arts, community projects
Flagship projects: 1. Learn to Swim, which has so far enabled 100,000 children to learn to swim.2. Employee volunteering, offering an award for a charity or group with which a staff member volunteers.3. Anglia in Bloom, to encourage sustainable planting in water saving gardens.
Employee involvement: nearly 500 employees regularly volunteer
Management: part of corporate relations with one full time manager and admin back-up
Contact: Glynis Hammond, sponsorship managerAddress: Anglian House, Ambury Road, Huntingdon, Cambridgeshire PE18 6NZPhone: 01480 443000
Corporate Citizenship Briefing, issue no: 33 – April, 1997