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May/June 2000 - By Andrew W. Singer

AEP’s Ethics Interviews Are ‘About The Passion Of The People’

Like other companies getting serious about ethics, American Electric Power (Columbus, OH) pondered the evaluation question: How could the company gauge the effectiveness of its ethics/compliance efforts? As with other corporations, they began several years back with pencil and paper surveys, asking questions like: How effective is ethics training?

But this wasn’t entirely satisfactory. Pencil and paper surveys have their uses, but they offer up "cold data," notes Al Moeller, Jr., Manager, Corporate and Environmental Compliance. A company also needs to know "about the passion of the people," i.e., what employees really feel about the company and its ethics.

So in late 1996 AEP took a new approach. It interviewed—both individually and in group sessions—a sampling of employees, 300 overall. The aim was to interview these people at regular intervals—every three years—to see what changes, if any, had occurred in their perceptions of the company and its ethics. These interviews later became known as the "300 Interviews."

A cross-section

Those interviewed represented a cross-section of the company, geographically and functionally. Even the utility’s line mechanics participated. So did senior managers. Employees who had been with AEP for only a short time were not included—they wouldn’t know enough about the company to make a useful contribution, it was thought. Otherwise, Moeller made only one request of the supervisors who selected most of the participants: "We asked for people who were vocal." They were not looking for people who were supportive of the company, or employees who were particularly negative—"just people who would talk." Overall, "We didn’t know the people selected" until they appeared for interview.

Small groups, various locations

Working with outside consultant Tim Mazur, many interviews were conducted in small groups of four to six people. Others were strictly one-on-one. The sessions, which usually lasted one and a half to two hours, took place in some half dozen locations. (The company, which had $6.9 billion in revenues in 1999, provides electricity to seven Midwestern states. A merger is pending between AEP and Central and South West Corp. that will broaden its operations scope further.) "Columbus, Ohio is different than a small West Virginia town, which is different than Fort Wayne, Indiana," observes Moeller.

What sorts of questions were discussed in the interviews? "How supportive are supervisors of issues?" was one example.

Employees have faith in senior management, explains Moeller, but sometimes things get lost at the middle management level. "How vocal are middle-line managers. Do they bring up ethical issues often? Are they willing to talk about it? Are they keeping ethics up front?….They want their managers to do that."

Advantages of live sessions

Asked about the advantage of live sessions, Moeller answers: "It’s more honest. You can pick up body language. Someone will say something, and get someone else angry enough to say something." In some cases, they "let us have it with both barrels."

Overall, "people responded powerfully about areas they disliked or liked. Group dynamics comes into it." The result was some "vivid conversations."

"We tend to think that the people doing the real work out there don’t have the time to talk about ethics," he notes. But that is not the case. "It is one subject they want to talk about"—whether it be the fairness of certain policies, or the ethics of paying greater attention to larger customers than to smaller customers.

1999: Round two

A second round of interviews—with generally the same questions—was conducted in 1999. Because some employees had left the company, about 265 employees were interviewed this time. Unlike the 1996 sessions, these were conducted primarily by Moeller’s office, with Mazur, the original consultant, assisting in the process.

Some questions from the interviews:

• How do you define the phrase ‘business ethics?’

• What is your opinion of the ethical climate at AEP today? What have you seen done in the interim (i.e., since the last interviews in 1996) if anything?

• Have any programs or documents been created to help you better manage ethical issues?

• Do you feel free to be as ethical as you want to be at your job at AEP? (This question, in particular, often stirs passion in participants, notes Moeller.)

• If you could change any one thing at AEP, what would it be?

What changes, if any, were apparent between 1996 and 1999? "There were a few surprises, a few things that made us feel good, improvement in some areas, not much improvement in other areas," says Moeller.

One positive development was the increasing acceptance of the ‘Concerns Line,’ the company’s ethics/compliance hotline that is managed by Charlotte, N.C.-based Alert Line, a subsidiary of Pinkerton Services. "This was a big issue three years ago." Some supervisors would jokingly refer to it as the "Rat Line." (They were asked not to do that.)

Today, more people are willing to identify themselves on the ‘Concerns Line.’ Moeller views this as a positive sign. It suggests they are more trusting. Calls are also less trivial than was the case in the past—less likely to be communications along the lines of: ‘The supervisors are sitting around drinking coffee and laughing.’ "We don’t get those types of calls as much."

The company has developed a hotline database. Issues raised via the hotline are identified geographically and functionally. This helps pinpoint possible weaknesses in the ethics/compliance program.

High-tech self-assessment

AEP recently introduced a new high-tech self-assessment process that involves group sessions with eight to twelve people, each armed with an electronic voting device. The process is centered around the five corporate goals. Does the company ‘walk’ its ethics ‘talk’? How well is it doing? There are other simple questions, such as: Does the company have a clear policy on retribution? Would you report an instance of illegal conduct without fear of retribution?

After participants are presented with a series of such questions, a discussion follows: pros and cons are exchanged, comments made. "The conversation will take a while. Everything is recorded. It’s put up on a screen. Afterwards, they vote." Participants vote on 33 questions on a one to seven scale. Voting is confidential. Sessions last about three hours.

Afterwards, charts are generated that, among other things, compare how management views the company versus employees’ view of it. Only senior management sees these charts.

The high-tech self-assessment has been going on for some eight months; about 50 sessions have been conducted. Eventually, "we’ll do the entire company." The company is particularly sensitive to areas where there is a wide deviation between managers’ views of the company and employees.’ "The data is valid statistically, and it has been helpful," says Moeller. It can sometimes be an eye-opener, "especially when you think you’re doing a good job." They have revamped policies as a result of the self-assessment.

Aimed at provoking debate

By contrast, the "300 Interviews" process is more subjective, aimed at getting a debate going—designed to give employees an opportunity to display some "passion," to air their feelings.

The new self-assessment is "more like a survey, although it’s live, and not as cold, and you can go through people more quickly" than is the case with the live interviews. "You can determine geographic patterns, functional patterns." They plan to continue both, as well as the paper and pencil surveys.

High-level oversight

AEP’s Office of Chief Compliance Officer was created by a formal resolution of the board of directors in 1994. Bill Lhota, president of AEP’s North American Energy Delivery Group, was named Chief Compliance Officer, a title that he has held for six years.

"He is very much committed to this program," says Moeller, who runs the office on a day-to-day basis. "We’re fortunate to have a senior executive at the highest level responsible for oversight."

Andrew Singer is Co-Editor of ethikos.
Reprinted from the May/June 2000 issue of ethikos
© 2004 Ethikos, Inc. All rights reserved.

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