The Cost of Diversity at a Large Utility & Energy Company Annual Revenue: 13 Billion
Principal Consultants:
President: Daniel Ulibarri, Ph.D.
Sr. Vice President: Elena Mason
This privately owned Fortune 100 utility company is the largest in the US, headquartered in the third largest state in the U.S. The company prided itself on the quality of its employees, especially its linemen and gas transmission workers. Employees in these positions have a history of responding to and working beyond the call of duty during emergencies. During extreme weather, earthquake or firestorms, workers have consistently met the challenge of bringing services on-line for it’s customers in minutes. Employees typically brag that they take on the biggest, “the baddest” challenges Mother Nature has to offer.
The tradition and loyalty associated with this type of work was well known and documented in the annals of corporate history. But, what was NOT known was the price the company and shareholders paid for this form of loyalty and camaraderie. At cost plus this was not a priority question, however, with the deregulation of utilities and the need for cost conscious budgeting, things were changing. Not unlike other utilities, the company experienced high turnovers in these positions during the fist six-months of apprentice work and even higher retention issues during the course of training.
Historically, the high turnover trend was accepted as part of the high danger - high stress, and extreme physical demands of the job - particularly among linemen jobs where “rubber gloving” was introduced. "Rubber gloving involved a lineman carrying out work on 12,000 Volt lines, using only rubber gloves. It was such a normal course of doing business that when one leaves, one gets replaced by someone of similar racial make-up. There was no room for anyone of dissimlar race.
The history and strong tradition at the company went on until efforts to diversify the workforce began. From what was largely a white-male, macho, and “cowboy” oriented mentality, in which one's ability and prowess to work in a rugged and dangerous situations rely upon one's race, PG & E decided to introduce women and minorities into the mix. With the integration of women and minorities into these highly sought after and well-paid positions, complaints increased, turnover increased even more and training retention rates dropped further. Initial internal inquiries reported that the nature of the job simply was unsuited for the smaller body types or muscular development of women, or that minorities simply choose to seek other “safer” lines of work.
Dr. Daniel Ulibarri had been brought in from Austin, Texas to lead the human resources research and manpower planning at PG&E. A native of the state and trained at UC Berkeley, he was no stranger to the reputation of the company. In fact, Dr. Ulibarri was also responsible for equal employment opportunity and diversity and had a close working relationship with employees through a network of corporate employee associations, including Black, Hispanic, Asian-American and Women’s Employee Associations.
With both research experience and networking, Dr. Ulibarri began a study of turnover and training in these positions. The study was brought about in part because of high training and recruiting costs, increased discrimination complaints and settlements, outrageous behaviors, and employee brawls between gas transmission workers and linemen at the company’s highly touted training facility.
Interviews were conducted with involved employees and supervisors throughout the most rugged regions of the company’s service territory. Eventually, armed with hard data and cost analysis results, Dr. Ulibarri recommended a drastic move in order to bring about the necessary change in a timely manner. He recommended that all settlement monies must come out of the business unit operating budgets rather than from the corporate funds. Such a move would impact bonuses at the business unit level. Reluctantly, but with individual bonuses on the line, the code of silence began to dissipate. The results were surprising and “eye-opening”; it went well beyond impact on the company’s affirmative action programs.
Results revealed that the lineman job position was indeed an informal fraternal organization within the greater corporate family. Membership in this “fraternal” organization required confidentially, secrecy and in some cases intimidation. Dr. Ulibarri discovered that linemen carried on hazing rituals and initiation rights that new linemen must go through in order to become a true lineman. Trainees who refused to participate or “could not take it” were eliminated via pressure, or self-selection. Other employees who managed to get past the hazing eventually quit or transferred out when they refused to participate in the informal and often demeaning rituals. Dr. Ulibarri also discovered that the source of the ritual could be traced to a few senior journeymen ringleaders who had inherited the practice over the history of this over 100 year old company. Not surprisingly, what was discovered was not unknown to first line supervisors, who were themselves former linemen and adhered to the “code of silence”.
Things began to slowly change at first. What was once considered “macho” tests finally fell under Federal employment regulations and standards. Sexual and racial harassment claims began to appear which resulted in costly settlement and legal fees. Dr. Ulibarri’s financial analysis revealed that over the years, the company had lost several highly trained white males, as the so-called toughness of the training was exposed as in part a willingness to be subjected to degrading and demeaning treatment.
Rather than take a hostile approach to what was clearly an institutional level problem, Dr. Ulibarri recommended education, diversity training and change management at all levels. Part of the change management included reassignments, breaking up of work groups, and rotations, or in extreme cases termination. The company immediately implemented a managers’ and employees’ training and communication program that emphasized safety, costs, and other liability issues in an attempt to change the sub-culture that had taken hold.
The change did not come easily, or without pain. Early retirements and counseling helped improve the situation as the company diligently worked to change the culture without affecting the high-level of dedication and reputation of the lineman job position. Working with employees and the employee associations, of which many line-men belonged, as well as taking a positive change management, as apposed to a punitive approach, the company was able to reduce loss of trainees, increase diversity, improve the working environment, productivity and safety, and save a lot of money due to increased productivity, a more worker friendly work environment, and reduced legal costs.
WATCH OUR SEGMENT ON WORLD BUSINESS REVIEW
UM Global HR's Dr. Daniel Ulibarri and Eléna Mason were interviewed by General Alexander Haig on The World Business Review.
