Re-Establishing Trust at Pedernales

By Cox, Patrick | Management Quarterly, Spring 2009 | Go to article overview
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Re-Establishing Trust at Pedernales


Cox, Patrick, Management Quarterly


If there is one essential, but sometimes elusive asset in today's business world it is trust. For cooperatives, trust is our member/owners' belief in our character, strength, service and integrity.

Trust can sometimes take a generation to build, but can be lost in no time at all. The nature and importance of trust means we, as corporate citizens, must take great care to protect it once it has been earned.

As a result of years of abusive, audacious, inappropriate actions--combined with a sense of entitlement by the board and former management--the Pedernales Electric Cooperative (PEC) became the poster child for mistrust in 2007. The same animosity that people across the nation have recently voiced against AIG, the failed insurance giant, is representative of the anger the members of PEC expressed during the past year.

As Fitch Ratings Services stated in a recent report, "PEC's transition from such long-established practices will take time and PEC will face continued pressure and scrutiny from its members." As a result of the longstanding problems stemming from the previous administration, Fitch stated that there could be a "lengthy process that PEC will likely encounter to rebuild trust with its membership." The transgressions of the past have been costly; although, as Bob Dylan has sung, the times they are a changing. At Pedernales Electric Cooperative, we are in the process of re-establishing trust with our members and restoring our once impeccable reputation. Throughout our service area our members, the media and legislators have questioned the previous administration's role as the stewards of the cooperative and cast serious doubt on the trust that they had invested in the running of this entity that they in fact own.

A bedrock of trust between management, governing boards and members can benefit PEC and all cooperatives in a variety of ways. For example, when it comes to making changes in electric rates, no one wants to see their monthly bill increase. Most members, however, will be more understanding of the change if they trust that their company is raising rates out of necessity to maintain quality, reliable service and not for other purposes that do not pertain to the cooperative's core mission--providing reliable, safe and affordable electric power.

How did PEC get to this low point? These were not problems that suddenly appeared or were the result of the current economic situation. These issues were years in the making. Member dissatisfaction led to a class action lawsuit, state legislative and congressional hearings and an investigation by the state attorney general's office that is now being presented to the grand jury.

Mistakes were made.

But PEC can meet the challenges that it faces today--just as the founders of the Rural Electrification Administration (REA) met the challenges of an earlier generation. Sam Rayburn, the sponsor of the 1934 REA Act, understood the necessity of bringing electricity to rural America to provide economic and social opportunity. Rayburn also instilled those values in Lyndon Johnson, the young Congressman from the Texas hill country who worked to make the PEC a reality in 1939. The people of central Texas and millions of other Americans trusted their leaders to bring power and opportunity to them in the Depression era. And as Sam Rayburn stated--There is no degree in honesty. You are either honest or dishonest.

I offer PEC as an example of the importance of building and preserving trust in rural electric cooperative communities, because what affects any one coop has the potential to affect the entire cooperative network. Cooperatives can help each other every day by working to strengthen the relationship with members and other co-ops throughout the country.

The recent economic recession has prompted the American public to view all corporations with increasing skepticism, and the companies that hold up best under this magnifying glass will be those that entered the recession with a sturdy reputation as trustworthy organizations.

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