Using the Power of Corporate Culture to Achieve Results: A Case Study of Sunflower Electric Power Corporation

Sunflower Electric Power Corporation was the first of several generation and transmission cooperatives (G&Ts) to default on senior debt obligations. Sunflower was driven to renegotiate its financial obligations with its creditors, including the Rural Electrification Administration, the National Rural Utilities Cooperative Finance Corporation, and the Bank for Cooperatives. The debt restructuring agreement was signed just days before CEO, Chris Hauck, was hired in 1988. Sunflower and its eight members faced a plummeting local economy, double-digit interest rates, and the problem of what to do with their brand-new $500 million coal-fired Holcomb power plant, loaded with expensive cutting-edge pollution control equipment and sized to meet an anticipated booming demand for energy that, even today, has not fully materialized. In 1988, the morale of Sunflower people was at an all-time low, as they faced an uncertain future with a debt structure thought by many to be only a temporary fix, with local newspapers leveling charges of mismanagement and corruption. In those days, some employees ev en feared cashing their paychecks in their local communities, as they felt they were blamed for the bad situation. This article summarizes the dramatic story of Sunflower's fresh approach to "business as usual." At the core of Sunflower's change in approach was the deliberate redevelopment of its corporate culture. For Sunflower, the whole, its people and culture, would become more than the sum of the parts. In reflecting on Sunflower's development from the late 80s into the 21st century, the management team identified three key elements that made the transformation possible. First, many mid-managers were ready for a change and they knew it had to be deep, not superficial. Second, the Sunflower Board of Directors brought in a new CEO committed to breaking down organizational walls between work units as well as opening up decision processes to encourage participation from everyone. Third, the new CEO brought in an organizational consulting team to help develop the processes that would make Sunflower a more effective organization. THE COMPELLING EVENT When he joined Sunflower, Hauck discovered that his predecessor had enforced an intense command-and-control culture that encouraged managers to fight over and protect turf. Power was used to advance the self-interests of this previous CEO and some managers who followed his lead. Other Sunflower managers were stifled in their efforts to do their jobs properly. Concerns about the financial condition, and questions of mismanagement, resulted in an investigation by the Kansas Corporation Commission and the Commission's support for the dismissal of the incumbent CEO. Hauck's prior employment experiences had taught him w what he did not want in a job or a company. From his past employment in senior positions, Hauck had seen bosses and work environments that no one should tolerate. He knew that as the new CEO he wanted to create an environment in which people would thrive, nor just survive. Shortly after his arrival, the new CEO had to deal with the residual effects of the previous management style. One of his senior executives was a particularly abusive manager. The manager frequently engaged in the practice of berating one supervisor until the man became physically sick. This supervisor and his group were so fearful of the executive and his predictable reaction to any mistakes they might make that they avoided raking the reasonable business risks that were necessary for them to succeed. Their work performance was dismal. Hauck dismissed the executive and made clear to all employees that he counted on them to use their judgment, including taking thoughtful risks. As the group came to believe that it really was part of their "job description" to risk reasonable mistakes, their performance improved dramatically, and these improvements led to significant, and much needed, rate reductions. …