American Water’s Susan Story On Winning Talent And Why Culture Is Key

Susan Story, president and CEO of American Water Works Company, Inc., has been leading the largest publicly-traded U.S. water and wastewater utility for more than four years, but her executive leadership experience goes back much farther. Before taking over as CEO in May 2014, Story served as chief financial officer at American Water for one year. Prior to that, she spent 31 years at Southern Company as CEO of Southern Company Services, Inc., president and CEO of Gulf Power Company, Inc. from 2003 to 2010 and executive vice president of Southern Company Engineering and Construction Services from 2001 to 2003.

In addition to leading American Water’s team of 7,100 professionals who provide service to more than 15 million people in 46 states and Ontario, Canada, she also extends her business expertise to boardrooms. Story has serves as the independent lead director for Raymond James Financial, Inc., serves on the board of directors of Dominion Resources, Inc. and is on the board of the Moffitt Cancer Center and Research Institute Board of Advisors.

Chief Executive caught up with Story to talk about the keys to building a winning team, the importance of company culture, how her leadership style has evolved over the years and balancing her responsibilities as a CEO and as a director. Below are excerpts from the conversation:

Keys to building a thriving team and finding the right talent

There are different kinds of areas that converge on this that seem like they’re very different but they’re not. And first is obviously the diversity of talent. If you surround yourself with people who think like you do, who have the same background experiences, you’re not going to make it very far. And this issue of diversity, it does include demographics but it also includes people who think very differently, who are willing to challenge, to test the waters, who think kind of outside of the way you have typically thought. And I’ll give you an example at American Water.

About two years ago, we hired a new chief technology and innovation officer. His name is Radha Swaminathan. Radha personally holds six patents in artificial intelligence. And we’re a regulated utility predominantly, and yet our goal is within two-and-a-half years to have an Amazon-like experience for our customers. As a regulated utility thinking that, yes, while most regulated utilities, we have franchises and people say, “Well, your customers don’t have a choice on who they use for the water, why do you care?” It is because the regulatory construct could go away one day, and we want our customers to choose us because they love being part of our customer base.

And part of that, for us as American Water, is our water and water services. Are we safe, are we clean, are we affordable, are we reliable? And the second thing is, am I having a good customer experience with this company? And in all honesty, the third one is, does this company reflect my values and who I am as a person and the communities that I live in? And I think that’s kind of good. And if you really are going to do all three of those, you better have a breadth of talent that doesn’t look like the talent you had in the past.

We’ve just moved into new corporate headquarters in Camden, New Jersey. It is a financial distress community, and we’re part of revitalization. We’re also across the Delaware River from Philadelphia. So in terms of recruiting the new generation of talent, there are two or three things that are important. Number one is we’re very integrally tied into our community in terms of efforts in the schools, efforts in health and human services, efforts to make the community stronger.

Number two is in our new headquarters there’s no executive suite. My office is the same size as everybody else and I have the same modular furniture everybody else does. There’s an equity nature about what we do. We have 550 feet of windows overlooking the City of Philadelphia and the Delaware River and no one has offices along those windows. They’re all open with collaboration areas that every single employee can take advantage of. So those were the things I think as we look at not just the workforce we have now and the talent we have now, but what are companies doing to ensure that they have a competitive advantage to get the best people?

And the last thing is in technology. We are doing some pretty cool stuff in terms of technology and artificial intelligence and machine learning, and we have an R&D group with 15 scientists working on water quality and water technology. And we partner with the Environmental Protection Agency, we partner with the Centers for Disease Control. We do projects with international environmental foundations to look at water and water quality. So for us, it’s interesting that we want people to come because it’s not a job, it’s a calling.

On the importance of company culture at American Water

We’re a very matrix organization, and that’s important from a governance standpoint. And it also feeds the culture, which is how do you have a local touch where the people in your states have the ability to make decisions on the frontlines for the customers without having to go through a lot of approval processes, which drive people crazy, as you know. How do you have that local touch on state regulators, state legislators, customers, but the same time leverage the bigger company? And we have 7,100 employees, and we have 16 states and regulated business and the rest of them are in our market based non-regulated business.

But then how do we leverage our size, scope, and scale for things like value procurement so we can lower the cost for our customers? How do we look at technology development in one place but still leverage the expertise of the men and women on the frontlines? Almost 50% of our workforce are in jobs represented by unions. We have 18 different unions and 69 local contracts around the country. So when you look at permeating that culture through very different workforces, we have folks on the frontline. And the one thing we all share is the commitment to the customer to provide safe water that’s healthy. Our employees live in these communities. These are their neighbors, and they feel that.

Our folks don’t have the luxury of a 7:00 to 5:00 or 8:00 to 6:00 job, we’re 24/7, 365 days a year, and when there is a main break, our employees are standing in icy water at 2:00 a.m. so people can take a shower the next morning. So the commitment is a customer-focused culture where we can pull together under a vision to provide a life-critical resource to 14 million people around the country. And I tell you, it matters. Our culture is a reflection of the commitment of the 7,100 employees—we have to do what’s right by our customers and make sure that their water is safe and clean, to make sure that every fire hydrant has the pressure so that if there’s a fire people don’t lose their lives. And the people who operate our wastewater treatment plant, people don’t think about this, but that’s the last shield between people and disease many times.

The biggest job that I have is sharing the vision, the passion, and the purpose with our employees, because our purpose is to keep life flowing for our customers, and that can sound really cheesy and just something you put on a wall somewhere, but it really is translated into what our employees do every day. So when you talk about culture, if you’re customer-focused the next step is, there’s no bad idea and people can push back. And I’ll give you a great example of the change we’ve made in technology. Several years ago we had a new back office software system put in and the people on frontlines weren’t asked about it. It was very rigid and our employees on the frontlines hated it. And it actually slowed down their ability to deliver customer service.

So with our new chief technology and innovation officer, we got a group of 13 field service reps from all over the country to and said, “Tell us what you need.” And we had technologists in the room and they built what the frontline employees told them they needed and they did it quickly. They met in April by July 31st, they had a prototype, they’re out in the field using it, they got feedback, and by the end of the year, we deployed it to 1,800 field service reps around the United States.

And I think that one of the biggest changes that we’ve made is that we’re trying to let our frontline employees dictate how we do our business, because they’re the ones interacting with our customers every day.

How her personal leadership style has evolved over the years

Number one, I think anyone as a CEO needs to be passionate about what your company does. And that may seem obvious, but I think that there will always be challenging times and it’s the passion that keeps you going. Number two, I think a critical thing for a CEO or any leader, is to respect the dignity of every single person just because they’re a human being. And that doesn’t mean I haven’t had to terminate people or those type things, but what that says is I think you can be a good leader if you truly don’t respect every person, but I don’t think you’ll ever be a great leader because it helps make sure that your decisions are done with the thought of, how will this affect our employees? How will this affect our customers? How will this affect our stakeholders?

So I think that true commitment to seeing if you can develop every person to his or her fullest potential, and if they aren’t able to do that, how you can help them find a job that helps them do that, because I think the vast majority of people really want to be successful at what they do. So it’s the passion, it’s the commitment to real people and trying to, as you do the business of the business, also do what’s best for people.

And the third one is love to win, and win the right way. Let me give you an example: The five core values of America Water are safety of our employees and customers, trust, integrity, environmental leadership—if you see a water utility that doesn’t believe in environmental leadership, run from that company—teamwork, and the last one is high-performing because people like to be part of a winning team. People love when they can say, “My values and principles align with what this company does every day. This company cares about me and my safety and that I go home with my family, and this company is the best at what it does.” Who doesn’t want to work for a company like that? If you can do those things then your issue about recruiting and retention, you won’t have the challenges that other companies do.

On balancing her CEO and boardroom responsibilities

In terms of balancing, number one is, as a CEO, if you’re going to go on another board, or like me that are on two, you’re going to spend weekends and other times reviewing information, so don’t go on the board of a company just to go on a board, you better really love that company, love what they do, see it as a learning experience and find ways that the best practices cross over, because I know I’m a better director because I’m a publicly-traded company CEO.

But don’t go into this thinking, “Oh, I’ll just spend a couple of hours here.” For board members today, it is a very serious commitment of time, it is a commitment of your reputation. I would never go on a board that I thought would be a risk to my personal reputation and the reputation of my company. I don’t care how big it is, you just don’t do it. So number one is, as CEO of your own company, is this affiliation going to be good for your company and good for you and not put a risk of your reputation?

The number one thing I would tell an active CEO is you cannot in any way to go on a board and put your company at risk. I’m very fortunate that the two boards I’m on are companies where I knew the CEOs before I joined them and I trusted them. I knew that their philosophies were similar to mine. I knew that they were ethical and had high integrity.

So, as an active CEO, before you ever go on a board, know that you’re going to put a lot of time in it. Number two, do you know some of the key executives, specifically the CEO, and do they reflect your values and what you believe in? And then third is, you had better be willing to do the very best you can and make sure that whatever board you go on does not put your company or your personal reputation at risk. I think those would be the three big lessons.

Related: PW Power Systems CEO Raul Pereda Talks Leadership & Winning Company Culture