There was a time not so long ago that you could flip a coin to guess the professional background of just about every electric cooperative CEO. “Most of them were engineers, and those who weren’t engineers were finance people,” says Pat Mangan, NRECA director of governance education. “That was the nature of our business.”
Both were backgrounds that were well-suited to the central mission of every co-op: providing safe, reliable, and affordable electricity.
That mission will never change, but Mangan and other co-op leaders now see it as a baseline requirement in a power industry that has exploded in complexity, from operations to government regulation to member demands.
This environment, Mangan says, is driving a dramatic shift in the role of the co-op CEO.
Interviews with CEOs, board members, and NRECA recruitment and training professionals reveal a host of new demands and expectations that now come with a cooperative’s top job. When today’s boards consider CEO candidates, “they’re looking more holistically,” says Ken Holmes, NRECA director of executive search. “People skills; problem-solving skills; communication skills, particularly being able to communicate with all the stakeholders at the co-op.”
Such aptitude will be increasingly in demand in the future, Holmes notes, along with being comfortable with social media and other digital communication.
These evolving expectations were on display when Mid-Carolina Electric Cooperative in Lexington, South Carolina, was looking for a new CEO following the 2013 retirement of Jack Wolfe, who had spent 38 years leading the co-op.
“We were in a position of financial strength; we didn’t need a financial person. We had a strong engineering department; we didn’t necessarily need an engineer,” says Marvin Sox, Mid-Carolina board chairman. “We needed a visionary, someone who could help us transition to the future.”
As it turned out, B. Robert “Bob” Paulling, whom Mid-Carolina hired as its new CEO, did have an engineering background, but Sox says it was his forward-looking ideas, particularly on rate structures and distributed generation, that most impressed the board.
Since Paulling took the reins, Sox notes, the co-op has instituted a three-part rate structure that includes a basic facilities charge that pays for most fixed costs, a demand charge that takes into account peak costs, and an energy charge that is “almost a one-to-one correlation with our generation costs.”
The move allows the co-op to incorporate solar and other distributed generation in a manner that is fair to all co-op members, Sox says.
He emphasizes that the key to the rate redesign’s success was having a CEO who could take the lead in publicly representing the co-op as it instituted changes.
“We definitely wanted a person who could be the face of Mid-Carolina,” Sox says. “Whether it was with the membership, the employees, or the politicians, you want someone who was comfortable being the face of your co-op, both to the inside and the outside world.”
‘You Can’t Sit Back’
Dwayne Cartwright has spent more than a decade as a co-op chief executive. During that time, he has seen the demands of the job shift ever more toward the public policy arena.
“My job has changed so much,” says Cartwright, CEO of Berkeley Electric Cooperative in Moncks Corner, South Carolina. “What has changed is instead of me going out and talking to farmers, which I love, I find myself with legislators, I find myself in Washington, I find myself with the news media.”
His new, more public role became apparent in mid2017, when Westinghouse Electric’s bankruptcy filing forced construction to halt on the nearby V.C. Summer Nuclear Station. The news rippled through the South Carolina utility industry, particularly at investor-owned companies, which had been billing customers in advance for the cost of construction and were now being required to issue credits for the charges.
Berkeley Electric hadn’t charged its members in advance, but Cartwright still found himself dealing with lawmakers and the media to make sure the co-op’s position was understood.
“We were dragged into it even though we had nothing to do with it,” he says. “You can’t sit back and say, ‘That’s not my problem,’ because what they’re hearing affects our members.”
Being proactive with the media was a different tack for the co-op, he says, but it was key to getting ahead of the issue.
“Instead of sitting in my office and letting the (media) come to us, as we did in the past, I have to go to them,” Cartwright says. “They’re going to write the story and come to their conclusion regardless, so we have to reach out.”
Engineering and finance are still an important part of co-op operations, Cartwright says, and a CEO needs to know enough about both to make smart decisions. But a co-op manager’s priorities today often mean leaving the nuts and bolts issues to staff focused on those areas.
“I’ve got great engineers that work for me and great finance guys too,” he says. “The old-style management, I’m not knocking it, but where the manager had his thumb on everything, for a co-op our size, that’s not going to work. It’s got to be a team effort. You’ve got to hire good people, and they’ve got to be empowered to make decisions.”
Inside or Outside?
Electric cooperatives have always had a strong tradition of hiring from within, and that continues. NRECA’s Holmes says about 65 percent of electric cooperatives do no formal search or only a very cursory one when hiring a new CEO, and of those, about 70 percent end up hiring from within.
But today’s cooperatives are also finding value in seeking leadership outside the traditional paths.
Steve Epperson, CEO of Pioneer Electric Cooperative in Ulysses, Kansas, came from a decidedly unconventional background. His undergraduate major was psychology, with minors in biology and chemistry. He went on to get an MBA and started at a co-op, working in business development before becoming a senior vice president of subsidiary services, “in charge of everything but electricity,” he says.
He became CEO of Pioneer Electric in 2011.
Epperson agrees with Cartwright that managing and empowering personnel is a central part of his job.
“Honestly, my psychology degree was as good a business degree as I could have had, just in terms of building consensus and understanding what people mean to say, even though they might not be saying it,” he says.
Much of his focus, Epperson says, is on developing and implementing long-term strategies to ensure the co-op’s continued success.
“There are a lot of moving parts, not only in our industry; our territory is also changing rapidly,” he says. “The pace of change is incredible, so I spend most of my time wrapped around the question, ‘What are we going to wish we would have done five years from now?’”
The changing nature of power generation, with the growth of renewables and the evolution of the smart grid, are part of that, he says, but so are changing consumer expectations: “In the last 20 years, not just for us but in every industry, customer service and customer expectations have grown exponentially, and that has raised the bar for all of us.”
At many cooperatives, these challenges and others will be taken up by a new generation of CEOs and managers. An NRECA survey of nearly 900 cooperatives taken at the end of 2016 found that one quarter of CEOs were already eligible for retirement, and slightly more than half would be eligible within the next five years.
While many good CEOs have been promoted from within, Holmes believes value exists in a search that includes outside candidates. Even if the co-op board ends up hiring its internal candidate, he says, it will have benefited from the comparison and the process that comes with defining what you want in a new CEO.
Carrie Durden, board president at Talquin Electric Cooperative in Quincy, Florida, has been involved in three CEO searches over the years. After hiring from within the first time, the co-op worked with NRECA Executive Search for the next two hires. Both came from outside the co-op.
“There’s great value in a new pair of eyes,” she says. “As you network with other directors, you hear them say, ‘We’ve got someone in line ready to step in,’ and my comment is always, ‘Don’t overlook the value of new eyes.’”
Durden notes that cooperatives of different sizes and with different subsidiary businesses will have different expectations for their CEOs. But she believes today’s members demand a level of openness that any CEO must be comfortable with.
“Transparency is extremely important,” she says. “I put that right up there with communication. Society today expects that from us.”
‘Leading the Message’
NRECA’s Management Internship Program (MIP), a six-week course designed to prepare co-op employees to step into senior leadership roles, continuously adjusts its curriculum to take into account shifting demands, says Gary Pfann, NRECA director of executive education. The program includes a day and a half devoted to public speaking and a day and a half focused on communication planning.
“People are pushing themselves in that way right now,” he says. “We’re spending a fair amount of time on communication strategy and leading the message for key issues. Being prepared to effectively deliver the messages is also critical.”
Pfann says another priority for participants is rounding out their understanding of all co-op operations and thinking strategically about “what the culture needs to be to support success for the next five to 10 years.”
He says demand for MIP training has grown recently and that roughly 32 percent of sitting CEOs are graduates. NRECA is adding a fourth session in 2018 and ran a pilot program last year called MIP Select that offered a shorter two-week course “targeted primarily for middle management and folks who absolutely can’t be away for six weeks but still want an overview of where the industry is heading.”
Les Teel has a perspective both on where it’s been and where it’s heading. Teel is retiring this year as CEO of Columbia Rural Electric Association (REA) in Dayton, Washington, after nearly a quarter century as a co-op CEO there and elsewhere. He first started working for co-ops as a lineman in 1970.
“I think the skill level you need today, the requirements, are much higher. The demands are much higher,” he says of the CEO’s role. He points to an effort Columbia REA has been involved in: assembling a consortium of municipals, public power districts, and cooperatives to buy power together on the open market.
Necessary because generation from the Bonneville Power Administration was fully subscribed, the consortium will eventually involve 22 utilities in five states.
“We really had to develop it ourselves, from the very first document we drew up with the attorneys. It’s almost unimaginable how much work was involved,” he says. “If I’m going to have the traditional mindset of a manager from 30 or 40 years ago, I don’t know if I would have been open to the option.”
As he looks back, Teel sees one of the biggest changes as how hard co-ops have to work to keep members informed.
“In the old days, we didn’t have much more than our magazine and our bill stuffer,” he says. “Today, we have pretty much 50 percent of our members following us on Facebook. The media that we use is just so far advanced over what we had back then. The opportunity we have to reach out and touch our members is just so much more.”
But with everything that has changed, Teel says one thing has remained the same: the satisfaction that comes with being part of a movement that has the best interests of the people it serves at its core.
“I wish I could do it all over again,” he says. “My career has been extremely interesting. It’s taken me all over the United States, and I’ve met some great people on my boards, at the co-ops, and as members. I would not want to do anything else than what I’ve done over the past 47 years.”