Omaha Public Power District

An Interview with Gary Gates, CEO and President of Omaha Public Power District
By Ryan Wade and Jamie Wewel, Creighton University MBA students

Growing up in Nebraska it is easy to forget how unique the Omaha Public Power District is in the United States. OPPD’s structure as a publicly owned utility company has allowed the cost of electricity to remain 37% lower then the national average. (1) In order to continue offering the highest level of service at the lowest cost, OPPD utilizes strong leadership. As evident in the following interview, leadership includes more then just making financial and strategic decisions. True leaders exemplify strong ethical character which they promote throughout the culture of the organization. Gary Gates is such a leader. This interview will examine OPPD’s Chief Executive Officer to determine how Gates views ethics in the business world and how he creates a culture of ethical behavior.

OPPD

The Omaha Public Power District was originally incorporated in 1917 under the name the Nebraska Power Company. That same year the Nebraska Power Company purchased Omaha Electric Light and Power Company. The company had grown to $10 million in revenue and 83,507 customers throughout the region by 1946.

The state legislature in Nebraska would make history in 1946 by creating the Omaha Public Power District. The newly created OPPD was formed as a political subdivision of the State of Nebraska. OPPD would soon acquire the Nebraska Power Company. The Eastern Nebraska Public Power District would later merge with OPPD as well, doubling its size to a service are of more than 5,000 square miles. OPPD provides power to 13 counties within southeast Nebraska.

Although OPPD is a subsidiary of the State of Nebraska, it is truly a self-supporting entity. All expenses, improvements, and expansions are paid for by the sale of electricity and related services. Major capital expenditures are paid for through the sale of corporate revenue bonds which are sold through the private market. OPPD does not receive any revenue from tax income and does not have any taxing authority.

Headquartered in Omaha Nebraska, OPPD is governed by an eight-member board of directors that is elected by the public throughout the geographical districts it services. This board appoints a Chief Executive Officer to manage all operations of the company.

Gary Gates was appointed Chief Executive Officer in January of 2004. Originally, Gates had joined OPPD in 1972 at the Fort Calhoun Power Station. Over the next 32 years, Gates would hold several positions including reactor engineer, plant supervisor, executive assistant to the president, and Division Manager of Nuclear Operations.

Ethical Foundation

Gates hails from the small town of Red Oak, IA, where he was raised as an only child spending half his time in the city helping with his Dad’s business and the other half out in the country on the farm. He states that his family and friends have kept him grounded and brought him up to do what is right. In addition to the influence from loved ones, Gates learned the value of service from participating in Boys Scouts.

After graduating from Iowa State University with a bachelor’s degree in nuclear engineering, Gates joined OPPD at the Ft. Calhoun, NE station. He went on to receive an industrial engineering degree from the University of Nebraska at Lincoln and further, obtained a masters in business administration from Creighton University. Gates comments that Creighton’s Jesuit education “brought it all together” for him – teaching him to ask questions, probe issues and most importantly, understand that it is okay to struggle when faced with a human/ ethical dilemma.

Definition of Ethical Decision Making

Gates, in speaking about ethics, comments that ethical decision making is more subtle than the fundamentals, such as facing decisions that are wrong or illegal or simply rules based. Ethics, to him, speaks more to understanding who is being served and what is in their best interest. Personally, these decisions are very hard at times. Gates notes that he doesn’t typically solve large dilemmas on his own; finding it his best

interest to talk to somebody not directly associated with the decision, maybe even outside of the company, to gain a better perspective. But, as the old adage goes, “it’s lonely at the top,” and it is often hard to find a confidant to weigh out the options.

Decisions are not easy, especially when they are conflicts of interest or when you are personally involved, Gates states. Sometimes, even the perception of being personally involved is enough to warrant skepticism from others. Gates states that you need to ensure integrity in the decision making process. If it comes down to a decision where you are personally involved, i.e. you have a personal relationship with one of the stakeholders, then remove yourself from the decision and bring in a third party, if possible. It is important that you don’t even give the impression that there could be a personal factor to the decision – perception can speak louder than the truth at times. Additionally, oftentimes a leader is not at liberty to give details behind a decision he/she has made and will not be able to defend against perception that contends wrongdoing.

Gates is quick to note a philosophy he lives by – consistency for all. Do for one what you intend to do for all others because there are no secrets in this world, Gates continues. He advises, not to “cross the bridge” with a decision if you are not willing to be on the other side for whomever else is in that situation because differential treatment can be labeled ascetics.  An example he used follows as such: An employee walks into your office and returns a box of tools that he had previously stolen. The employee asks for forgiveness and says he will never do it again. Would you react differently if the employee was a friend of the family who you spent much time with outside of the office versus an employee who you had no relationship with up until that point? Consistency is paramount.

Omaha Business Environment

When discussing the local climate in regards to ethics, Gates states that “Omaha is built on integrity.” Leaders in the Omaha community “just get it done.” For example, Gates’ organization still does energy exchanges on a handshake contract without any legal interference or roadblocks in getting business done. It’s simply amazing in today’s world, to be able to do business at that level and not be bogged down with lengthy contracts to get the job done.

The difference in Omaha is the expectation. The community is open and candid about making sure those in the business community give back of their time, talent and treasure. The expectation is never above what you can do, but rather, the expectation is that you do it without pushback. Diving into expectation, Gates uses the example of the infamous Penske racing crew in Indianapolis. This particular crew had a reputation of being best in class. They adhered to a strict schedule, strict rules and strict image and dress code policies (crew cuts, no facial hair, wearing the pressed uniform with shirts tucked in, etc). A new crew member was hired on, supposedly the best in his particular field. But this new crew member had a reputation of laxness in his dress code and had long hair and much facial hair. On the day he was to start with the Penske crew, everyone showed up early to see the verbal lashing he would get from the management team for not abiding by the image policy. However, when the new member walked in the door, he had cut his hair and shaved his face and proudly entered in his Penske uniform. The other crew members were astounded and questioned the managers if they had “laid down the law” prior to his arrival, which they hadn’t. The new member showed up as he did because he knew what the expectation was of the Penske team that he was now apart of.

Gates brought the expectation piece back to his own company in discussing the United Way campaign. T o ensure the success and participation in the program, Gates made sure senior management was a part of the program – getting into the field to promote the drive, creating a fun video to show to employees, and involving the unions. It was not just enough to talk about the expectation of participation, senior management needed to live the expectation and show the value of the program. OPPD was happy to report that they had a 70% participation rate with over $400,000 raised this year. Of course, none of the credit is attributed to management, but rather given back to the team who made the end result possible.

Cultural Changes

In speaking about the culture change at OPPD, Gates notes that in the near future, 50% of his workforce will be female.T o ensure employee satisfaction as the feminine base increases, Gates and his team meet with the women’s group to discuss what changes need to be made regarding the work environment. Gates also meets with the young professionals group to learn what is important to them when working for OPPD.

Because of the industry, Gates notes that the typical employee is resistant to change, a trait that is necessary for the work they perform and inherent in their personality. Change is necessary as time moves on and the communication of such changes has to be tailored to be effective. Gates says that it is necessary to communicate the need behind the change and recognize that it will take time for employees to digest the change, so you must be patient. One should never assume that employees don’t want to know what is going on and why it is happening. While change may be difficult and pushback will occur, Gates says, if what you are doing is right and

necessary, you can’t give people an option for acceptance. You just need to keep communicating – do it seven times in seven different ways.

Ethical Policy Making

By and large, Gates states that unethical activity will not work long term to sustain profits and should not be tolerated. At OPPD, there are policies in place to guard against this type of activity and training to educate employees. Additionally, Gates speaks openly about the values of the organization and deals quickly and seriously with unethical conduct. Gates is passionate about doing what is right and attributes this to great role models from family to business. He fosters a work environment where it is okay to admit mistakes, so individuals don’t seek out other ways to cover them up. He hopes that his legacy will be when someone says, “that would have been the decision Gary would have made.”

Conclusion

It is obvious in interviewing Gary Gates that ethical decision making is not something you turn on or off. It is a way of life. Ethical leaders surround themselves with people who they can count on when tough decisions need to made. They rely on each other for advice and consultation when ethical dilemmas blur the line between a right and a wrong decision. At the end of the day, consistency and conviction help a leader make the challenging choices. Fortunately, leaders like Gary Gates model an example of true ethical leadership in our community. There is no choice to be ethical or not, it is just what you do and something we should not forget.

(1) www. oppd. com, Coal and Rail Contracts Prompt OPPD to Propose Increase for 2009, Sept 9th, 2009. (http: //www. oppd. com/ AboutUs/ NewsEvents/22_000812#coal_090908)