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The Effective Utility Management Initiative:Past, Present & FutureCharting a Course for the Future of Water Sector Utilities in Today’s Rapidly ChangingEconomic ClimateBy Darin Thomas and Jim HorneThe intense economic realities of the “new normal” oftoday’s business environment are driving both privateandpublic-sector entities to make significant changesto their organizations and to enhance their focus onefficiently meeting their current and future challenges. Fortoday’s utility leaders, the pressure has intensified to minimizecosts and maintain high performance while simultaneouslyaddressing a long list of challenges that confront their organizations.The emerging management framework of “effectiveutility management” — or EUM — is gaining momentum andacceptance by the water utility industry as a pathway to respondto the need of continuously improving organizational performance.For utilities, the ongoing need to address industry challengesand enhance performance is not new, but what is new isthe acceleration of changes and challenges being exacerbatedby the slowdown of the U.S. economy.Conceived by the industry, for the industry, EUM is provingto be an excellent organizational framework to help utilityexecutives, governance boards, policy-makers and regulatorsfocus on ways to improve utility performance across theboard. EUM has become an effective framework to assess,plan, and implement utility change management initiativesrequired to address the needs of tomorrow’s utilities. EUM isan organizing framework that provides utility organizations amethod to plan, implement, measure and monitor organizationalperformance enhancements against 10 specific attributesof effectively managed utilities. These 10 Attributes,which were developed by a group of leading utility managersand endorsed by the U.S. Environmental Protection Agency(EPA) and six major industry associations in 2007, describe aseries of outcomes that all water-sector utilities, regardless ofsize, should strive to achieve. They include:• Product Quality;• Customer Satisfaction;• Employee and Leadership Development;• Operational Optimization (efficiency);• Financial Viability;• Infrastructure Stability (management of assets);• Operational Resiliency (safety and security);• Community Sustainability (environmental sensitivity);• Water Resource Adequacy; and• Stakeholder Understanding and Support.In addition to the 10 Attributes, the EUM framework alsodefines “The 5 Keys to Management Success” that impact theoverall performance of a utility organization. These are:• Leadership;• Strategic Business Planning;• Organizational Approaches;• Measurement; and• Continual Improvement Management Framework.EUM’s focus is to develop a strategy which combines performancearound the 10 Attributes and 5 Keys in such a wayas to establish a high performance organization.The Past: How EUM Came to BeThe origin of the EUM program can be traced back to ameeting hosted by the EPA, which took place in July 2005in Washington, D.C. The original intent of the meeting wasto convene a cross-section of utility leaders and the industry’sleading organizations to discuss perspectives, observationsand the critical needs of the utility industry as it facesa growing list of key challenges. These challenges includeaddressing aging infrastructure, rising costs, evolving regulatoryrequirements, rapidly changing workforces and populationsshifts, just to name a few. During this meeting, whichlasted a day and a half, it became apparent that the challengesfacing our country’s utilities were all very similar andthere were common themes that transcended all utilitiesregardless of geographic location or size. As the discussionsunfolded, the group began to focus on the idea that ourindustry would benefit from the development of a strategicmanagement framework that would focus on providingguidance and resources to utilities as they work to addressthe key challenges facing their organizations. More importantly,the group realized that a coalition of leading industryassociations, with support from EPA, was needed to developa common utility management framework that could helputilities of all sizes address their management and performancechallenges.In May 2006, based on discussions following this meeting,the Association of Metropolitan Water Agencies, the AmericanPublic Works Association, the American Water WorksAssociation, the National Association of Clean Water Agencies,the National Association of Water Companies, the WaterEnvironment Federation and EPA entered into a Statement ofIntent to “formalize a collaborative effort among the signatoryorganizations in order to promote effective utility management.”These collaborating organizations chartered theEffective Utility Management Steering Committee to advisethem on a proposed joint water utility sector managementstrategy that would be applicable to water-sector utilitiesacross the country. Members of the steering committee werenominated by these associations and represented a widerange of utilities. The charter of the steering committee wasto establish a framework that would allow for industry collaborationfor the advancement of the principles and practicesof effective utility management, and to encourage andpromote their wide application.In March 2007, the steering committee released its findingsand recommendations, which became the basis for continueddevelopment of the EUM initiative and guided furtherdevelopment of a sector management strategy. The steeringcommittee’s findings and recommendations included:1.2.Establishing and adopting 10 Attributes that wouldbest frame the industry’s key focus areas for managementattention for improved performance;Adopting “The 5 Keys to Management Success” that wouldprovide utility leaders with a management approach that34 Water Utility Infrastructure ManagementNovember/December 2010
has proven to be an effective way to lead organizations;3. Promoting and advocating performance measurement.The steering committee believed strongly thateffectiveness and improved performance happensmost successfully when organizations monitor andmeasure their performance over time;4. Providing the industry with a resource tool kit whichwould include both immediately useful tools and guidanceof where management related resources couldeasily be located. The steering committee believes thatproviding the industry with useful resources will helpsupport management needs; and5. Ensuring sector promotion and advocacy of the programand available resources by the collaboratingorganizations and other stakeholders. The steeringcommittee indicated that to help create incentives formanagement focus on improved performance, theindustry’s leading organizations would need to lead inthe advocacy of the EUM program through active promotion,community outreach, recognition of commitmentto management excellence, and promotion offinancial incentives from sector financial sources.Since the release of the above findings and recommendations,considerable development work has gone into therefinement and enhancement of the EUM program. Whatstarted as a meeting to discuss industry trends and share perspectives,turned into an initiative that today is changing howutilities prepare themselves to meet the needs of tomorrow’sutility customers.The Present: What Is the CurrentState of EUM?In June 2008, the collaborating organizations released theEUM Primer, which contains the majority of the EUM frameworkresources and serves as EUM’s unifying document. It wasprepared by a 16-person utility advisory group appointed by thecollaborating organizations that comprises existing or formerutility managers representing different types of utilities from differentgeographic areas of the United States. The utility advisorygroup and representatives from each of the collaborating organizationsworked in partnership to develop the EUM Primerand used the steering committee’s findings and recommendationsreport as a guide. Additionally, the establishment of theEUM website (www.watereum.org) was completed.For the past three years numerous utility organizations haveutilized the EUM Primer to help guide them to assess, audit,plan, and implement sustained organizational improvementacross the 10 Attributes and The 5 Keys to Management Successin their utilities. A number of successful case studies now existthat serve to demonstrate the benefits of EUM assessment andthe adoption of elements of the EUM framework (we willdescribe some of these case studies in more detail in Part 2 of thisarticle in the January/February 2011 issue of UIM).The collaborating organizations continue to administer andpromote this sector strategy for improved industry performance,and an ongoing effort exists to enhance and improve the EUMinitiative to ensure that its utilization results in sustained performanceimprovements for the industry, for example:• Conferences and industry awards are now using theEUM framework as a way to organize technical programsand make achievement awards that recognizemanagement excellence;• Regulatory guidelines for utility management performanceare being released that advocate the use of theEUM framework as best practice strategies;• Bond rating agencies are starting to consider EUMconcepts as a mechanism to assess the strength of autility’s management team to arrive at bond ratings;• Management audits of utilities are being organizedaround the EUM framework;• Individual utility strategic plans are being developedto address the 10 Attributes; and• Utility managers are being trained in EUM.All of the above are resulting in a growing sector interestin the EUM initiative.The Future: Where Is EUM heading?It is difficult to predict if the EUM framework will become themanagement “standard” of the utility sector in our country. It is,by design, a simple, replicable approach that allows individualutilities to assess their strengths and opportunities for improvement,and chart a measurable course for improvement. Interestin developing more sophisticated tools associated with theAttributes is growing. Building on the EUM Primer, the WaterResearch Foundation (WRF) is now leading an effort to developa benchmarking tool based on the Attributes and associated bestpractices. Once completed, this tool will allow a utility to benchmarkits own performance and gauge its efforts with other similarutilities. Only time will tell if the benefits associated with theadoption of the 10 Attributes and the 5 Keys to ManagementSuccess will truly serve to create the standard of excellence thatwill be required from tomorrow’s utility leaders. One thing isvery clear however, the pressures associated with the “new normal”of today’s economy require a departure from the status quoof yesterday. Many of the key pieces are now in place within theEUM framework that can be used today to help our industryenhance overall utility performance.Darin Thomas serves as the director of Raftelis Financial ConsultantsInc.’s management consulting division, SUNESIS. He is a recognizedauthority within the water and sewer utility industry, and formore than 25 years he has been a significant contributor to manyof the industry’s emerging technologies and services.Jim Horne has been with the Office of Water at EPA since 1988,during which he has concentrated on educating and assistingpublic entities, including water and wastewater utilities, on variousapproaches for successfully managing their operations andreducing environmental impacts.November/December 2010Water Utility Infrastructure Management 35
Page 4: CONTENTSNOVEMBER/DECEMBER 2010COVER
Page 10 and 11: CTAMCertification of Trainingin Ass
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Page 44: For more information visit www.uimo

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