RP&L, Steve Saum and employee performance reviews

For more of my commentary on life in Richmond, Indiana check out RichmondMatters.com.

Barbary sheep ~ "head-butting"2012 has been a challenging year so far for the leadership of Richmond Power & Light, Richmond's municipally owned power company.

Most of the strife centers around the firing of RP&L General Manager Steve Saum; the short version is that the Board of Directors unexpectedly removed Saum from his position after a negative performance review, and Saum along with others are concerned that he wasn't given due process.  After the story hit the media, there's been additional concern about the way the RP&L Board has (or has not) communicated the reasoning behind their decision and what it means for the future of the utility.  There's a story in today's Palladium-Item with some new revelations about the proceedings.

Few are in any good position to pass judgment on these matters.  In my limited interactions with Steve Saum I've always found him to be a person of good intent and competence in his leadership.  I also know most of members of the RP&L Board well enough to say they are people of good intent and great care for the future of RP&L and the City.  (Full disclosure: I ran unsuccessfully for election to the RP&L Board last year.)  And no matter what you think of any of their actions or decisions, it's just a painful and messy thing when matters of someone's employment and livelihood (or managerial methods) become a topic of public conversation.

But even with the limited facts available about this series of events, it seems there are some missed opportunities to reflect on moving forward:

First, if an employer thinks an employee is performing poorly, the annual performance review is not when they should find out about it. That this apparently happened in this case is the sign of a broken review process.  If indeed Mr. Saum had gone from performing "commendably" as his last review indicated to "unsatisfactory" and not serving the needs of RP&L, or even if he was just rubbing members of the RP&L Board the wrong way, as his supervisors they had an ongoing responsibility to communicate that clearly at the first sign of a problem that might even remotely lead to his termination. "Here's our concern, here's why this is a problem, here's what we want you to do about it, here's when we'll check in again."  If the board members were getting employee calls about Mr. Saum's managerial decisions, they had a responsibility to include him in a constructive conversation about how to address those employee concerns well before they were used as evidence of his own poor performance.   Yes, there are some kinds of incompetence or insubordination that might necessitate fast, decisive action, but there's been no indication by any of the RP&L Board members that Mr. Saum's failings were so serious as to immediately endanger the future of the utility.

Second, in any given employment conversation, if the boss or supervisor is an elected official, the rules of the game change.  The same is true if the employee is in a leadership position of some prominence or public scrutiny, such as the head of a public utility.  Put those two together in the context of any kind of disagreement, and you have a recipe for an uncomfortable situation at the very best.  We should wonder whether it makes sense for elected members of the RP&L Board to be conducting performance reviews of the RP&L GM.  Are they in the best position to know how well the GM has performed?  Is there too much of a power imbalance for it to be a collegial, respectful conversation when disagreement occurs?  Or will the pressures of public scrutiny always mean that these review conversations are a power struggle instead of an opportunity for true professional development?

Third, an employer has a unique burden to bear if they're going to give someone a negative performance review without firing them on the spot.  If you've just told someone they aren't doing well enough at their job and then asked them to get back to work, this can put them in a pretty difficult position for figuring out what to do next.  It's important to provide some clear next steps, especially when what happens next affects a lot of other employees, not to mention RP&L's in-progress projects and customers.  That someone is frustrated about a negative performance review is not in itself a cause for their termination.  That they ask hard questions about the processes and information used to create that review is not a cause for termination.  Of course someone is going to be defensive if you've just told them they suck at their job. Of course someone might want to take some drastic actions to try to get on a more solid footing.  But if a supervisor and employee can't have an honest  and open - even if tense - conversation about their different perspectives on how that employee is performing with a focus on how best to move forward, then the review process itself is probably a waste of time.

Why does any of this really matter to the rest of us?  Isn't this just between RP&L and Steve Saum?

If there was some sense that this was an exceptional case of miscommunication or poor HR practices, I might not bother to blog about it.  But I hear too many stories in our community of employers and employees missing opportunities for more humane and constructive conversations around areas of conflict or disagreement.  The Really Cool Foods closing in November represents some of the worst of this: having employees show up to work only to be blocked at the gate as their employer announces going out of business that day.

The RP&L Board's treatment of Mr. Saum is different, but no less a setback in any efforts to find a model of "doing business" that honors complexity of differing interests and needs, human dignity and effective conflict resolution. I don't claim to be any expert at this, and as an employer myself who's had to struggle with these issues, I know I still have much to learn.  As with every such case, it seems worthwhile to try to learn some lessons that will help us know how to do it better the next time around.

In the meantime, let us hope for some kind of clarity and closure for Mr. Saum and for members of the RP&L Board.

12 thoughts on “RP&L, Steve Saum and employee performance reviews

  1. I have thought about this a lot. We still don't know what exactly happened but these are some of the thoughts that I have on the matter. It was said that there were some complaints by employees. I agree with Chris that those things should have been dealt with at the time and Mr. Saum was the General Manager and should have had the opportunity to make this right. Jack Elstro has a son who is an employee and therefore should have recused himself from the vote.

    You have three new council members that were not on council at the time so the information that they they got was second hand unless for some reason they were allowed to sit in on the Executive meetings last year that were suppose to be closed to the public and they were not on council at that time so they too should have recused themselves from voting on this matter. So that eliminates four of the board members out of 9 and two voted against letting him go and if these things would have been done would the remaining three still voted not to renew his contact? Two of them I sure probably would but there is one that I am not so sure.

    Maybe there was sufficient evidence to let him go I just think that it was not handled in the best manner. I like Chris hate to see anyone lose their job. Of course RP&L will still have to pay for unemployment benifits so they will have to pay that and a new employee.

  2. Chris, Thanks for saying what I have not been allowed to say. Very insightful comments and "dead on". I wish that others will view this and see what is actually happening here. Monica - I too have wondered how the three new Board members were able to make an informed decision. All Board members were told not to talk to me after my review response, so how did they know if the Chairman was telling the truth or not. No facts on the review were verified, no allegations were confirmed, due dillegence was not performed and a lot of the process was based on anonymous phone calls and letters. I stick by my original statement!

  3. There is one thing my husband and I are confused about. Both my husband and I have worked in a business where most of the employment is done by contract rather then a straight up employment. We have found it interesting that so many people feel the need to have an explanation for not renewing Mr. Saum’s contract. In 30 plus years neither one of us have ever had to explain why we were not renewing someone’s contract. On the anniversary date of the contract we would either negotiate a new contract or pat them on their head and send them on their way…end of story.

    1. dand
      Even though Mr. Saum had a contract, he was still an employee. The model you are talking about sounds more like a relationship you would have with a sub-contractor, not an employee.

  4. Steve: thanks for reading, and I'm glad I was able to help bring out some of the issues involved.

    dand: There's obviously some differences between one's legal obligations at the end of employment and what might be required within an employment model that's ethical and respectful. The RP&L Board may have honored their legal obligations, but that doesn't mean their actions were in the best interests of ethical, respectful employment. It seems like we can do better, thus the reason for my post.

  5. I read the Palladium article too and I can definitely understand why Mr. Saum was upset. I also read the previous articles about this subject and read the comments from other readers. I do not personally know any of these people involved, but I agree with Mr. Hardie’s comments here as well. Too bad Mr. Hardie was not elected. He seems to be more professional and objective than what we now have “serving” our community. I question if they really thought this decision through, or just acted emotionally. I would be on the defensive too. Shouldn't the board have met with him if they had a problem with his performance during the year instead of springing this on him at his annual review? I was under the impression that "professionals" communicate with their employees and discuss any problems or issues they have with them to either attempt to resolve those issues, or to get clarification. What professional organization would wait until the annual performance review process to tell an employee their performance was unsatisfactory, and then fire them? I have worked at some large companies in the past and this would be unheard of. Aren't they legally obligated to have conducted documented conversations with Mr. Saum earlier, before his review? Unless he has done something illegal, shouldn't they have given him an opportunity to defend himself or correct such behavior? I would say that the board displayed a lack of communication, and Mr. Saum's frustration and anger is justified. It’s as if these board members believe they are accountable to no one for their actions. They appear to lack the professional/business qualifications to exercise this level of power. Why would the board appoint an IMPA employee as the interim general manager at an extra expense instead of a current RP&L employee? There must be someone capable on the premises of RP&L who understands what is going on within the utility. Why bring in an outsider for two months that you need to bring up to speed and will be leaving in such a short time? I can't even imagine what kind of stressful/uneasy work environment this board has created for the other RP&L employees who are left bewildered with their actions and have been given no answers. If I worked there, I would be paranoid if I was next in line. Easier said than done when you are told to move on. People should put themselves in his shoes before passing judgment. Even if this is personal, that does not justify firing him. From what I’ve read in the comments on the Palladium-Item website, it sounds like the board did not communicate with him until his review. It’s a scary thought that people like this have that kind of power over an organization and can make such huge decisions when they are not even involved with day-to-day operations. Something is wrong here.

  6. I have read all the other recent articles on the Palladium-Item and Kicks96 websites about RP&L and the gasification project. The Kicks96 article sure took on a tone of attacking Mr. Saum. None of us have been a part of all of these discussions, but Mr. Saum appears to have still been in communication with Cate Street Capital before his firing. This brings up a few questions:

    1. Had the board and interim general manager been in contact with Cate Street Capital after Steve Saum was fired? If so, wouldn’t the investor have told them the project was not going to proceed before the April 20, 2012 executive session where this letter was apparently presented to them?

    2. The gasification project did not appear to be an issue on Steve Saum’s review responses posted on the Palladium-Item website back in March from the article about Mr. Saum being upset with his review. The issue brought up on the review was not that the project was being deferred, it was that the board said they were not aware the project cost increased. Why would this be an issue if the investor was paying for it, not RP&L?

    3. The Palladium-Item posted a link to a copy of Mr. Payne’s letter of December 20, 2011 stating ICM had concluded that some changes in unit design were required, they were undertaking those design changes, and would require six to nine months to complete and test. The conclusion of the letter was that Cate Street Capital must defer investment, at least until a satisfactory performance test has been completed. Defer means put off, delay, or postpone. From Mr. Saum's comments in the article, it sounds like ICM and Mr. Payne were still encouraging RP&L into 2012 that the ICM technology was still working out some issues. I would assume Mr. Payne’s focus had been directed to other potential ventures since the project was working out issues that would take six to nine months, and he would obviously be expected to be involved in other activities and not sitting on his hands while ICM completed design changes. Naturally, communications with Mr. Saum would have dropped off. I am sure Mr. Payne was likely still expecting a future positive outcome, and had encouraged RP&L of the same.

    Regardless of the status of the gasification project, it was a noble undertaking by all the parties involved. We should be happy they (Cate Street, RP&L board and employees, and ICM) were being innovative and attempting to find another source of generation with limited investment on the part of the Richmond community. They should all be commended for their efforts. All of this talk about who is to blame, and who knew what and when is unproductive. Perhaps down the road, this project could be viable. How great to keep trash out of our landfills, while providing renewable electricity. Natural gas sounds to be a good area to look into, but who knows what the cost of investment may be and what the price of natural gas, which is volatile and in high demand, may be by the time it could be up and running (maybe a couple years)? Only time will tell.

    I hope the board has not turned the project into a campaign to discredit Mr. Saum and try to justify his firing, while disregarding all the good he has done for RP&L. From the tone of Mr. Payne's letter, the gasification project being delayed appears to deal with technology issues, which are not Mr. Saum's fault. For some unknown reason, something has fallen apart after Mr. Saum's firing for the project to now be considered dead.

    The fact remains that Steve Saum was fired before the board said they knew of this letter and we have still never actually heard why he was fired. The employees of RP&L, and especially Mr. Saum, need some closure and not deflection.

  7. The Palladium-Item and Kicks96 articles indicated the project had been dead in the eyes of Cate Street Capital upper level management (Cyr), but Mr. Payne’s letter indicated it was only delayed. Mr. Payne may not have felt it was an issue to convey anything otherwise to RP&L or ICM at the time, hoping for a positive future test result. I am sure he did not realize this would blow up in the Richmond Community and could possibly be used as an attempt to make Mr. Saum look like he knew all along. I am particularly disgusted by Kicks96 laying the blame at Mr. Saum’s feet without speaking with him first. At least the Palladium-Item attempts to obtain all sides of the story and not spin it for shock purposes. Mr. Saum has stated he expected the project to move forward. How is this any type of wrongdoing on his part?

  8. Chris,

    After almost 8 months from my termination, I still have to be amazed at what happened at RP&L. The Board's actions/egos caused a major project to be cancelled, upset the lives of two people that were trying to save jobs and bring innovation to RP&L and have still not found proper leadership for RP&L. I have moved on, with greater rewards in sight, but I feel for the employees at RP&L. They are wandering the dangerous world of utility regulation without direction or leadership. If anyone thinks that the Board is leading the way, they should ask some of the candidates that have turned them down when offered the job.

    Being recruited for the GM/CEO position of an electric utility requires a person with advanced knowledge, extended experience and an eye towards the future. This person should expect and deserve to be compensated fairly, this person should be able to "MANAGE" the utility without trivial interference from inexperienced, uneducated Board members and this person must realize that communication is very necessary in the operations. After 8 months of searching, trying to find the "right fit", how can a Board that is so out of touch with the reality of operating a utility make the decision of hiring that next leader. This long "search" tells me that the interviewers have no clue what to look for, are offering such low compensation and/or are unwilling to give up the minutia control of the day-to-day operations. The employees of RP&L and the citizens of Richmond deserve to be told the truth and deserve to have leadership that is capable of doing the tasks presented.

    I have shuddered at the accusations that I had misled the Board or caused the gasification project to be terminated. The letters from Lynn James explains it all, the project was deferred, not cancelled. I have not heard the comments from KICKS, but I think one of the Board members has a very close tie that would make me believe that some information was communicated that slanted towards the Board's perspective. In any case, I hope a new GM/CEO is hired soon, with the knowledge and freedom to run the utility as it should be, because trust me, having IMPA run RP&L is like letting the fox rule the hen house.

    Thanks for listening, I hope you are still reading this blog.

    Steve

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.