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Redressing the balance

Kerry Scott, global practice leader for social inclusion

Utilities Week’s new deal debate brought into focus a fundamental need: for both parties involved in striking the deal – companies and their customers – to benefit from it.

Utilities companies’ communication and engagement with customers just isn’t working. There is not effort to see the world through customers’ eyes. As a result, trust is low.

Of course, privately-owned utilities must earn a profit. And they undoubtedly do run complex systems with diverse stakeholders. We also know that they are dealing with extraordinary changes – climatic, demographic, technological and political.

But there is a privilege and responsibility that comes with supplying essential services to the UK population. Utility services are not in the true sense ‘public goods’ but they are treated as such. The behaviours of companies that provide them need to accord with that idea, and customers expect this. At the same time, customers need help to understand that the companies’ purpose encompasses more than, purely, the provision of service. To be sustainable, they must provide a fair return on investment to shareholders, for a start.

This is nicely encapsulated in the idea of a ‘new deal’ – a negotiation between two parties for their mutual benefit. If the benefits are not equally shared, and if there’s a lack of transparency, poor communication and limited engagement, then there is no ‘deal’.

So what, from a social inclusion point of view, should a new deal for the sector entail?

First, companies must take a concerted effort to really understand their customers and communities. What are local concerns, needs, challenges? They won’t be the same in each area or for each group in the population. Understanding relies on engagement, not assumptions. It is time for some creative thinking about how best to reach out to communities and rebuild a meaningful relationship and a responsive service.

It is important that utilities suppliers work to make themselves positively known. At present, other than when signing up with a supplier or paying a bill, the provision of utility services is invisible to most people. Water, electricity, communication and waste just happen. They only become visible in the event of failure, when service breaks down. Too often, this is when customers really ‘put a face to the firm’ – the point at which they have lost faith.

Utilities therefore need to become better at explaining what they do, why and how, highlighting the risks they face, what they do to manage those risks, and what customers and communities should do in the event that risk translates into failure. They need to be clear on their purpose, values, structures and reward process. This is about transparency. It is vital for legitimacy.

Never has there been a more important time to act. Lord Deben, chair of the Committee on Climate Change, illustrated the point during the debate: “Climate change is a fact. We all know it. When we fail to act, we’re responsible.” Fellow panellists agreed. Being passive when action is needed is a dereliction of responsibility and a major reputational risk. But the ability of companies to act hinges on their relationships with their consumers. Without working in partnership with communities, they will not be able to make changes fast or deep enough to play their part in addressing the causes and effects of climate change.

And climate change is just one of many challenges.

The utilities industry should work together to address them. If one company is knocked by the media, or discontents are shared and amplified via social media, lack of trust in the whole industry is knocked. No company can reverse reputational challenges by itself. And it is difficult to make environmental strides by going it alone. It’s less a case of safety in numbers and more a case of collective action and responsibility.

Imagination is required to go beyond compliance. To change the quality of the dialogue they have with customers, companies need to seize the initiative. The time is right to redress the balance, broker partnerships and strike the new deal.

Kerry Scott

Mott MacDonald global practice leader for social inclusion

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