Title
New Mexico Performance Excellence Awards Program, 2019 Feedback Report on the Department of Public Utilities' Zia Application
Recommended Action
I move that the Board of Public Utilities support reapplying for a Zia application with Quality New Mexico in July 2022 as the Department of Public Utilities seeks to obtain a Malcom Baldrige Award in year 2025.
Staff Recommendation
Staff recommends that the Board approve as presented.
Body
This past fiscal year the Board of Public Utilities (BPU) choose to apply for a Zia award from Quality New Mexico (QNM) to satisfy a charter requirement that every five years an outside agency review DPU’s operations. QNM administers the New Mexico Performance Excellence Awards program based on the national Malcolm Baldrige framework for performance excellence. Attached is the feedback report prepared by the QNM examiners upon review of DPU’s 2019 Zia application and a two-day site visit which included interviews with staff and stakeholders, as well as an audit of various documents.
While we did not win the Zia Award, we were recognized at the Roadrunner level (just below the Zia Award) with a score ranging between 327 to 430 points. Zia Award winners score above 525 points and Malcolm Baldrige winners score above 625. There are 1000 points possible.
The feedback report details DPU’s strengths and opportunities for improvement for seven categories: 1) Leadership, 2) Strategic Planning, 3) Customer Focus, 4) Measurement, Analysis, and Knowledge Management, 5) Employee Focus, 6) Operations Focus, and 7) Results.
Categories 1 - 6
For categories 1 through 6 the examiners assessed DPU’s processes and methods to improve the organization’s overall performance, based on four factors:
• Approach (How does the organization accomplish its work? How systematic and effective are its key approaches?)
• Deployment (How consistently are key approaches used in relevant parts of the organization?)
• Learning (How well has the organization evaluated and improved these key approaches? How well have the improvements been shared within the organization? Has this new knowledge led to innovation?)
• Integration (How well do these approaches reflect the organization’s current and future needs? How well are processes and operations harmonized across the organization to achieve key goals?)
DPU scored in the 30 to 45 percent band (see page 46 in the Feedback Report) for categories 1 through 6. This mean that DPU demonstrated for these categories that:
• There are effective, systematic approaches to accomplish our work,
• These approaches are deployed consistently (some areas are in the early stages of deployment),
• A systematic approach to evaluate and improve key processes is evident, but is in the early stages (learning), and
• Alignment of these approaches with the organizational needs to achieve key goals (integration) is in the early stages.
We learned from our executive briefing with the QNM examiners that they believed DPU’s processes and methods were strong in the areas of Approach and Deployment but could be stronger in the areas of Learning and Integration.
Strengths and Opportunities for Categories 1 - 6
The examiners indicated in the feedback report that DPU’s most important strengths included:
• Valuing our stakeholders,
• Utilizing dashboard for organizational knowledge, and
• Setting high expectation for the workforce.
The most significant opportunities, concerns and/or vulnerabilities included:
• Listening to our competitors’ customers to better understand the larger business ecosystem,
• Developing a process to manage customer complaints to identify trends early,
• Listening to potential new customers to identify infrastructure and service needs and possibly develop new relationships,
• Reviewing and assessing our deployed processes to ensure effective management of operations and promote organizational learning, and
• Building stronger relationships with suppliers to improve DPU’s response times with agile supplier networks.
Category 7
Examiners assessed DPU’s measured results under category 7 based on four dimensions
• Levels: What is the organization’s current performance on a meaningful measurement scale?
• Trends: Are the results improving, staying the same or getting worse?
• Comparisons: How does the organization’s performance compare with other appropriate, similar organizations or with benchmarks or industry leaders?
• Integration: Is the organization tracking performance results that are import to its business and are these results integrated into the decision-making process?
DPU scored in the 30 to 45 percent band (see page 47 in the Feedback Report) for category 7. This signifies that DPU demonstrated that the reported results included:
• Good organizational performance levels,
• Some trend data, with most of the trends presented as positive,
• Some comparative information from other like organizations, and
• Accomplishments that are important to our organization and are integrated into the decision-making process.
Strengths and Opportunities for Category 7
In the feedback report, the QNM examiners identified the following results as our significant strengths:
• Regulatory requirements,
• System reliability, and
• Workforce engagement.
They also identified the following results as the most significant opportunities, vulnerability and/or gaps:
• Lack of feedback results measured and tracked for the DPU’s largest customers
• Some adverse satisfaction trends with commercial customers, as well as customer wait-times and abandoned calls with the Customer Care Center.
• Utility price increases.
During the executive briefing, DPU staff asked the examiner team to expand on the perceived vulnerability that increases to utility prices or rates was negative. The examiners explained that this assessment assumed that DPU was not being efficient with spending. We explained that increases to utility rates demonstrates that we are reinvesting in infrastructure, which is how we maintain excellent system reliability, and yet rates are still lower than neighboring communities. The examiner team reversed their opinion on this issue. However, there is an opportunity for DPU to better demonstrate that these three items are linked to one another.
Steps DPU Plans to Implement
Overall this review process identified areas we need to focus on as we continue our journey to improve DPU’s operations. We learned from our executive briefing with QNM that to earn a Zia award DPU needs procedures to review trends and methods for integration of continuous improvement by review of data and metrics and finally a process to document how we adjust to help improve our trends. QNM describes this as cycles for improvement and DPU needs to have better systems for learning and integration. Therefore, staff recommends DPU needs to better document Standard Operating Procedures (SOPs) that are tied to performance metrics that can be reviewed at least annually in order to have a process for systematic evaluations to be performed.
An area in the application that was not clear was having declining sales is not necessarily a bad thing if we are conserving water and energy and meeting our conservation goals. Our application needs to show how we are meeting our conservation goals but also our revenue targets in order to have a sustainable enterprise.
An important outcome of this process that was identified is to have a process for organizational alignment when working with other departments such as Human Resources, Information Technology, Procurement and Fleet.
Going forward, DPU plans to find a software package to document customer service issues and have a way to gather data from this software program to use to analyze trends. In 2021 the proposed budget requests filling a conservation specialist that will also focus on the development of SOP’s in order to establish a system for continuous improvement as well as meet our conservation goals.
Conclusion
In conclusion, the QNM process is beneficial to the department to improve our operations. However, to seek a Malcom Baldrige designation, this quality improvement process needs to be repeated more often than once every five years so that our organization can better learn and adapt to changes in our business operations. Therefore, Staff recommends reapplying for a Zia designation in two years. Furthermore, the charter identifies an outside agency review of the departments condition assessments and next year’s budget sets aside operating funds to enable the department to hire such a consultant. This additional perspective can help better guide our capital planning, and repair and maintenance activities.
Alternatives
BPU could direct staff to seek out other quality programs as part of the five-year management audit requirement.
Fiscal and Staff Impact
Preparing for this application in July 2019 cost approximately $80,000 and it is anticipated to cost close to the same amount and staff recommends establishing a budget of $100,000. In addition, hiring a conservation specialist will assist with integration of the data collected, revise SOP's and hence get the department on a path of continuous improvement as well as this position will help meet BPU's environmental sustainability goals.
Attachments
A - 2019 Feedback Report